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03.08.2020

Monthly Agenda July 2020 – Alternatives

The WilderHill New Energy Global Innovation Index tracks the performance of companies active in the renewable and low-carbon energy product innovation and development. The year to date performance of the index along with record inflows into ESG focused ETFs are seen as indications of the increasing commitment of investors to sustainable investing. The index has returned 27.2% vs -1% for the MSCI ACWI Index for the year to 30th July 2020. 12 of the 87 index constituents have doubled in price year to date as targeted fiscal stimulus from regions such as the EU act as a tailwind for these stocks. 

Chart 16: Global renewable energy outperformance (1 Jan 2020 = 100%)

Enlarge Source: Bloomberg

 

Shipments from Australia’s main iron ore export terminal, Port Headland swelled to record levels at the end of June on robust demand from China. As the world’s largest exporter of the industrial metal, Australian minders including Fortescue Metals and BHP Group have benefited from disruptions to competitors based in emerging market countries that are struggling to deal with the spread of Covid-19. Iron ore spot prices are up 12.5% year to date whilst total exports continue toward highs last seen at the end of 2017.  

Chart 17: Robust iron ore demand continues 

Enlarge Source: Bloomberg

 

With the Federal Reserve reiterating their lower for longer outlook on interest rates and a weakening USD, gold continued its surge higher setting new record prices last week, hitting a high of $1,981.27. Silver also continued its exceptional run, now up 32% for the year ahead of golds return of 25% year to date. Analysts are not forecasting a slowdown just yet however; Goldman Sachs have a $2,300 price target on gold whilst Bank of America see the safe haven asset soaring to $3,000. 

Chart 18: Precious metals prove their store of value (1 Jan 2020 = 100%)

Enlarge Source: Bloomberg

 

 

Darragh Kennelly
Investment Analyst

 

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