Weekly Update: Saxo Thematic Investing Performance Weekly Update: Saxo Thematic Investing Performance Weekly Update: Saxo Thematic Investing Performance

Weekly Update: Saxo Thematic Investing Performance

PG
Peter Garnry

Head of Equity Strategy

Summary:  The commodities basket was the best performing theme basket last week up 5.9% driven by strong performance across the energy stocks due to the OPEC+ decision last week to cut production by 2mn barrels per day. At the other end of the spectrum all of our green baskets (energy storage, renewable energy, and green transformation) were the worst performing baskets. We have also added a nuclear theme basket to be able to track the interest of this energy source as the energy crisis has clearly put nuclear power back on the map for investors.


Commodities show strength on OPEC+ and weaker USD

The best performing theme basket last week was commodities up 5.9% driven by strong gains across the whole sector as OPEC+ decided on Wednesday last week to cut production by 2mn barrels per day. In addition, the USD showed signs of weakness although the currency back during the week. Themes exposed to the physical world are still our preferred themes and they include commodities, defence, logistics, and renewable energy.

It was the energy companies that delivered the strongest gains in the commodities basket with the best performing stock being Canadian Natural Resources up 17.2% which has a higher sensitivity to oil prices given its higher cost per barrel metrics for its oil sand assets at around $30/brl. The oil company has assets with a long asset-life and low maintenance requirements, on top of a competitive advantage in a world hungry for more oil in the short-term. The company reports Q3 results on 31 October with analysts expecting revenue at CAD 10.6bn down from CAD 11.5bn in Q2 but still up 37.8% y/y. Free cash flow is expected to remain strong in the years to come with CAD 13.5bn expected in 2023 compared to an enterprise value of CAD 97.6bn.

Canadian Natural Resources share price | Source: Saxo Group

The green baskets were having a red week

All of our green baskets, energy storage (batteries, fuel cells etc.), renewable energy (production of green energy), and green transformation (companies using green energy) were underperforming last week and it has been a trend that we have observed for some time. The disruption in the European energy markets, specifically the electricity markets, is causing a headache for the industry because of pricing regulation making it more difficult to assess asset valuations. In the green transformation basket the EV makers have been under pressure due to enormous input cost pressures from high lithium and aluminum prices.

Nuclear power theme added

We have also added a nuclear theme basket which consists of companies within uranium mining, operation of nuclear power plants, and companies selling technology related to nuclear power. The basket is one way to express investor sentiment on nuclear power, but it is important to note that it is a difficult theme to construct a pure and good exposure profile around. We have also decided to remove the crypto & blockchain and 3D printing theme baskets from our core themes and thus our performance tables because both themes are small and very niche. Both themes are still available on our trading platforms under research for inspiration, but they are no longer part of our overview of themes to digest flows in the market.

Nuclear power basket

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Support Centre
For existing clients, please click here to request support via the Support Centre.

Have a question about our products, platforms or services? Visit the Support Centre to find answers for our most frequently asked questions. If you are still unable to locate an answer to your question, you will also find contact details for your local Saxo office to speak with a representative.

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.