Perpetua Perspectives Spring 2020

After a remarkable recovery for in the second quarter, global markets rose a further 8.1% in the 3 months to the end of September, as measured by the MSCI All Country World Index.

The local JSE All Share Index was relatively flat but the much-maligned small cap sector gained 3.5% while mid-caps also outperformed perhaps pointing to a recovery in deeply discounted value opportunities.

In our global insights piece in this edition of Perpetua Perspectives, we discuss the fundamental differences in value factor investing and traditional value investing while covering our views on the underperformance of the value-growth cycle over the past 13 years.

In our domestic equity sector focus, we discuss the impact of COVID-19 on company results and consider the themes and trends we read from these results across different sectors, searching for clues on what to expect going forward.

We also analyse the first set of results of South African banks after the COVID-induced lockdown, and their resilience in the face of record impairments. Naspers management’s efforts to drive the narrowing of the valuation discount that has haunted the company for the past few years have not yielded any success to date.

We discuss our views on why we think the discount exists and whether or not the discount has an increasing probability of being unlocked. In our global stock piece we discuss consumer discretionary company and retailer, Bed, Bath & Beyond, the largest position in the Perpetua Global Equity UCITS Fund and how we took advantage of the market’s short-termism.

In our new quarterly regular feature, Responsible Investing in focus or “RI in focus” we will be casting the spotlight on the increasingly significant aspect of Responsible Investing and its many facets.

The Spring Edition of our regular Explained feature focuses on Variable Interest Entities, what they offer and what to be aware of when considering regulatory and governance risks.

Finally, in our new Getting to Know Perpetua feature, we cast the spotlight on some of our team members in a discussion on gender diversity and our 3rd Annual Investment Career Workshop, which was held virtually on the 29 August 2020.

We hope that you enjoy these insights by our Perpetua team and that you find them useful.

ENDS