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:  E-commerce has been the worst performing theme basket over the past year as the pandemic led bubble has burst, but last week the industry experienced a relief rally as the lower than estimated US inflation print triggered lower long-term US interest rates. The rally in e-commerce stocks was the strongest among the smaller caps in the theme basket suggesting that retail investors were driving the price action last week.


E-commerce stocks have a monster week on lower US inflation print and China’s reopening attempt

Last week was historic in many ways when you look at the size of the market moves across different asset classes on the back of a lower than estimated US inflation figures and China’s commitment to ease its Covid policy. The lower US inflation print pushed down long-term interest rates and pricing of the Fed’s terminal rate was also lowered adding fuel to the narrative of ‘peak rates’. As we commented in our equity note Today we celebrate US inflation and tomorrow we think the inflationary pressures in the US services sector are still very high and have been stuck at very high levels for five straight months. In any case, the market has chose to disregard the underlying picture and has gone all-in on the ‘peak rates’ narrative and that China will be successful in easing its Covid policy despite rapidly rising case numbers.

The biggest winner last week based on these events was our e-commerce basket gaining 19.4% during the week easily outpacing cyber security, our second-best performing basket, up only 13.6%. While last week’s performance is spectacular the e-commerce basket is still the worst performing basket over the past year, and when we compare the performance relative to the MSCI World Index (see last chart) it becomes clear that the entire industry went into a bubble state before deflating back to where it came from before the pandemic, in relative terms to the overall equity market. While the Chinese e-commerce stocks had a good week they were not the outlier last week. The real signal was that the upper half of the basket had a median stock price performance of 11.5% while the lower half had a median stock price performance of 25.4% suggesting that relative lower quality companies outperformed. This behaviour suggests that retail investor flow was the dominant marginal price setter last week.

E-commerce basket vs MSCI World Index | Source: Bloomberg

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.