Daily BriefsMacro

Macro: GEM Fund Positioning Update:  The COVID Unwind. and more

In today’s briefing:

  • GEM Fund Positioning Update:  The COVID Unwind.
  • TMI Snapshot: High-Freq US Spending Data Pullback Looks Independent of Mobility, But Is It Relevant?

GEM Fund Positioning Update:  The COVID Unwind.

By Steven Holden

  • The effect of the COVID pandemic saw an unprecedented level of sector rotation among EM active portfolios in 2020.
  • Banking stocks were hit the hardest, with Semiconductor, Internet Retail and Interactive Media industry groups the beneficiaries.
  • Banking exposure is at its lowest levels in over a decade, EM active investors at highest ever weights in Tech related Consumer Discretionary and Communication Services stocks.
  • Improving outlook for banking stocks, vaccine hopes, plus potential regulation in the Tech sector point to a potential unwind.  
  • ‘Beaten Up’ banking stocks include Itau Unibanco Holding Sa (ITUB4 BZ) , Kasikornbank PCL (KBANK TB) and Standard Bank (SBK SJ) 
  • Fully owned Tech related stocks include Meituan (3690 HK) , JD.com Inc (ADR) (JD US) and MercadoLibre Inc (MELI US) 

TMI Snapshot: High-Freq US Spending Data Pullback Looks Independent of Mobility, But Is It Relevant?

By Elan Gore

  • Data from ~30 million participants in the Chase credit card panel (US) has shown a pullback in spending in recent weeks
  • The pullback appears to be independent of mobility dynamics, as in-person shopping outperformed overall spending
  • We text-mine the media for first-person accounts of hardship to find an increase in reported layoffs & reduced personal spending, but the magnitude of increase has been encouragingly small (<1x STDEV) so far relative to readings seen in H1
  • As we highlighted in TMI Snapshots: Quantifying Relative Sector Sentiment in the Recent Rotation Via Text Mining, the cyclical rotation is alive and well on mid-term vaccine-driven recovery expectations; but the potential for vol around year-end funding or seasonal dynamics may be amplified by these weak Q4 trends once they appear in official macro releases

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