Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
ASX update; COVID-19 impacting Macquarie Group
Vaccine trial restart boosts markets, ASX strength to continue, COVID-19 impacting Macquarie Group
A positive lead from Wall Street and news that AstraZeneca plc (NYSE:AZN) had resumed their vaccine trial sent the ASX 200 (ASX:XJO) 0.7% higher on Monday. Positive news on the vaccine front support the energy and industrial sectors amid hope of a faster return to normal.
The biggest detractor was Macquarie Group Ltd (ASX:MQG) retreating 4.6% after providing a first quarter update and guiding to a 35% fall in first half earnings.
The fall is driven by two factors, the first being the company’s strong performance in 2019 making comparisons difficult and the second a general slowdown in transactional activity including IPO’s and major asset sales.
Management refused to offer guidance for FY21 citing the growing uncertainty surrounding the economic recovery. Viva Energy Ltd (ASX:VEA) appears to have staved off the closure of its Geelong refinery after a Federal Government announcing support for the sector, including minimum stockpiles and import duties; shares finished 5.6% higher.
Another big move for Qube Holdings Ltd (ASX:QUB), governance in focus in the waste sector, PEP enters the Citadel
The Australian newspaper reported that industrial property investor, Logos Group, had entered the bidding war for a portion of the $2 billion Moorebank Logistics terminal from Qube Holdings Ltd (ASX:QUB).
The industrial property sector continues to outperform as large companies like Woolworths Ltd (ASX:WOW) seek well located warehouses in an effort to streamline their supply chains post-COVID.
The company remains a unique recovery play for our export markets. Cleanaway Waste Management Ltd (ASX:CWY) was forced to respond to reports that its CEO engaged in ‘overly-assertive’ behaviour with staff during the pandemic, hitting shares to the tune of 7.2%.
Despite the change, the company is well positioned to continue growing market share in this defensive and highly profitable sector. PEP lobbed a $503 million takeover bid for software and data analytics firm Citadel Group Ltd (ASX:CGL), sending shares up over 40%.
Is this the start of another rally, M&A heats up, Europe continues to lag
The US market recovery after two weeks of losses continues to gain traction, with the S&P 500 finishing 1.6% higher and the Nasdaq rebounding 1.9% after recent underperformance.
It was a combination of acquisition activity and a bullish statement from Pfizer Inc. (NYSE:PFE) CEO suggesting a vaccine will be ready before the end of 2020, that sent markets higher.
Oracle Corporation (NYSE:ORCL) jumped 7.9% after reports that it had beaten off Microsoft Inc. (NASDAQ:MSFT) for the right to purchase Tik Toks US operations. The software company is seeking a data edge from the acquisition.
Gilead Sciences Inc. (NASDAQ:GILD) announced the $21 billion acquisition of cancer drug maker Immunomedics with the COVID-19 market offering a solid hunting ground for larger companies with capital to deploy.
European markets continue to lag, the Euro Stoxx down 0.6%, as investors fret about a no deal Brexit and spiking COVID-19 cases heightens the risk of a second wave of lockdowns.
