D-PIMS Weekly Market Update - Week of 13th to 19th July 2020
Today’s Monday Update:
Over the last week, most news was focused on either the Coronavirus and relations between the West and China:
• An information campaign called “The UK’s new start: let’s get going.” Was launched by the Government on Monday, with ads appearing on TV, radio, billboards and online. This was to urge businesses and individuals to prepare for the 31st December end of the Brexit transition period
• Prime Minister Boris Johnson ordered Huawei equipment to be purged completely from Britain’s 5G network by the end of 2027, risking the ire of China by signalling that the world’s biggest telecoms equipment maker is not welcome in the West. Fears over the security of Huawei have forced Johnson to choose between global rivals the United States and China.
Reversing a January decision to allow Huawei to supply up to 35% of the non-core 5G network, Johnson banned British telecoms operators from buying any 5G equipment from Huawei by year-end and gave them seven years to remove existing gear. The reason given for the about-turn was the impact of new U.S. sanctions on chip technology, which Britain’s National Cyber Security Centre, part of the GCHQ eavesdropping agency, had told ministers meant Huawei was not a reliable supplier.
Tuesday’s decision will delay the roll-out of 5G — cast as the nervous system of the future economy — by two to three years, and add costs of up to £2 billion.
Also on Tuesday President Donald Trump ordered an end to Hong Kong’s special status under U.S. law to punish China for what he called “oppressive actions” against the former British colony, prompting Beijing to warn of retaliatory sanctions.
Under the executive order, U.S. property would be blocked of any person determined to be responsible for or complicit in “actions or policies that undermine democratic processes or institutions in Hong Kong,” according to the text of the document released by the White House.
Moderna Inc’s experimental vaccine for COVID-19 showed it was safe and provoked immune responses in all 45 healthy volunteers in an ongoing early-stage study, U.S. researchers reported on Tuesday. Moderna said it will follow study volunteers for a year to look for side effects and check how long immunity lasts.
Volunteers who got two doses of the vaccine had high levels of virus-killing antibodies that exceeded the average levels seen in people who had recovered from COVID-19, the team reported in the New England Journal of Medicine. They expect to start a phase 3 trial on July 27.
• China said on Wednesday it will take all necessary measures to safeguard its interests following Britain’s decision to purge all Huawei Technologies Co Ltd equipment from its 5G network by the end of 2027. Chinese foreign ministry spokeswoman Hua Chunying told reporters that China strongly opposes Britain’s decision and said the decision was driven by the politicization of commercial and technological issues and not by national security.
China’s foreign ministry also said on Wednesday, that Beijing will impose retaliatory sanctions against U.S. individuals and entities in response to the US law targeting banks, though the statement released through state media did not reference the President’s executive order. “Hong Kong affairs are purely China’s internal affairs and no foreign country has the right to interfere,” the ministry said.
• The reproductive number of COVID-19 in England may been lower than previously thought in May, research published by scientists at Imperial College London said on Wednesday, suggesting the government’s COVID-19 lockdown worked to reduce infection rates. The research showed the rates of infection fell during May, the last month of full lockdown, halving every eight to nine days.
The study found there were on average 13 positive cases for every 10,000 people, with an overall reproduction number of 0.57. That is lower than the government’s official figures for that time, estimating a so-called “R” number of 0.7-0.9 when lockdown was eased. An R number of less than 1 indicates an epidemic is shrinking.
• Thursday - U.S. retail sales increased more than expected in June, but the budding economic recovery is being threatened by a resurgence in new COVID-19 infections and high unemployment. The US Commerce Department said on Thursday retail sales rose 7.5% last month. That was on top of the 18.2% jump in May, which was the biggest gain since the government started tracking the series in 1992. Economists polled by Reuters had forecast retail sales advancing 5% in June.
Retail sales have rebounded as businesses resumed operations after being closed in mid-March in an effort to slow the spread of the coronavirus. But new cases of the respiratory illness have increased, especially in the densely populated South and West, forcing some authorities in these regions to either close businesses again or pause re-openings.
• Over the week, the main Global Stockmarket indices were generally up, apart from the Far East. All the investment D-PIMS Portfolios were up over the week especially the higher risk Portfolios. They were helped by their diverse exposure.
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The comments made above represent our interpretation of events and market views and are in no way a guarantee of future investment performance.