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D-PIMS Weekly Market Update - Week of 18th to 24th October 2021

Today’s Monday Update:

Over the course of the last week, headlines were mostly economy and Covid related:

• On Monday, Ford said it would invest up to £230 million to build electric car components at its Halewood factory in northern England.
The plant will produce around 250,000 power units a year from mid-2024, the first European in-house location to make electric vehicle parts for Ford, which has pledged that its car line-up for the continent will be all-electric by 2030. The government is contributing to the investment through its Automotive Transformation Fund, as brands intensify their electrification plans ahead of combustion engine bans, and countries vie with each other to secure jobs.

• On Tuesday, Britain said it had attracted nearly £10 billion from global investors to fund its green regeneration agenda, as it hosted an investment summit involving 200 of the world's top financiers and executives. The summit marks post-Brexit Britain's biggest push to woo investors, even leveraging the soft power of drinks with the Queen at Windsor Castle, as it seeks cash and partners to get ahead in the international race for a competitive edge in green technology. "We are rolling out the green carpet for investors," said trade department minister Gerry Grimstone ahead of the summit opening.

China's special climate envoy, Xie Zhenhua, said on Tuesday that the COP26 climate conference in Glasgow was deeply significant and that the People's Republic was working for the success of the conference. Xie, speaking through a translator via video link, said China wanted to work with the international community to slow climate change and that the world's second largest economy would do its best to achieve carbon neutrality by 2060.

Reports out on Tuesday, showed the spread of COVID-19 among children (12 to 15 year olds) in England is fuelling a recent rise in cases nationally, and causing concern among some scientists that vaccines are being rolled out in schools too slowly, risking the welfare of children and adults alike. COVID-19 cases in Britain as a whole are much higher than in other European countries and are rising.

• On Wednesday, British inflation slowed unexpectedly last month but the decline was probably only a temporary respite for consumers and is unlikely to deter the Bank of England from raising interest rates, possibly as soon as next month. Consumer prices rose 3.1% in annual terms in September, easing back from 3.2% in August, the Office for National Statistics (ONS) said.

British hospitals are on the edge and people should wear masks and come forward for vaccines to stop them being overwhelmed by a rising wave of COVID-19 cases, senior medical figures said on Wednesday, as the government resisted calls for new measures.

Britain and New Zealand have reached agreement in principle on a free trade deal designed to reduce tariffs, improve services trade, and take London one step closer to membership in a broader trans-Pacific trade agreement. Prime ministers Boris Johnson and Jacinda Ardern sealed the deal in a Zoom call on Wednesday after 16 months of negotiation. Tariffs on 97% of the products will be eliminated for both countries the day the deal comes into force.

• On Thursday, British public borrowing fell by almost half in the first six months of the current financial year from a post-World War Two high a year earlier, when the economy faced the full force of the COVID-19 pandemic. Thursday's official data will be welcome news for finance minister Rishi Sunak, who is due to present fresh budget forecasts on Oct. 27.

European Union leaders will pile pressure on their Polish counterpart on Thursday over a court ruling that questioned the primacy of European laws in a sharp escalation of ideological battles that risk precipitating a new crisis for the bloc. The French president and the Dutch premier are particularly keen to prevent their governments' cash contributions to the EU from benefiting socially conservative politicians undercutting human rights fixed in the laws of western liberal democracies.

A booster dose of the COVID-19 vaccine developed by Pfizer Inc and German partner BioNTech SE restored efficacy to 95.6% against the virus, including the Delta variant, data released by the companies from a large study showed on Thursday. The companies said the trial, tested 10,000 participants aged 16 and older. There were no reported cases of severe disease, suggesting robust protection from infection.

• A new study out on Friday from Scotland, found that the Pfizer and AstraZeneca vaccines both reduce the risk of death by 90% and 91% respectively, HealthDay News reported. The study collected data between 1st April and 27th September, meaning that it included data where the delta variant was the dominant strain. "With the Delta variant now the dominant strain in many places worldwide and posing a higher risk of hospitalisation than previous variants seen in Britain, it is reassuring to see that vaccination offers such high protection from death very shortly after the second dose," said Aziz Sheikh, director of the University of Edinburgh's Usher Institute and a leader of the study.

Britain's economy unexpectedly regained momentum in October and cost pressures rose by the most in more than 25 years, according to a survey on Friday that could encourage the Bank of England to raise interest rates for the first time since the pandemic. The preliminary "flash" IHS Markit/CIPS flash Composite Purchasing Managers' Index rose by the largest amount since May to hit 56.8 from September's 54.9. By contrast, a Reuters poll of economists had pointed to a further slowdown to 54.0.

• Over the week, the main Global Stockmarkets were mixed, with some up and some down. China and Hongkong were by far the best performers. All the D-PIMS Portfolios were up, especially the higher risk portfolios. They were helped by their China and diverse allocations.



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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.