International equities were stronger across the board in November, as multiple COVID-19 vaccines proved efficacy, sparking a global value and cyclical rotation. Japan (Nikkei 225 +15.0%) and Korea (KOSPI +14.7%) were the best performers, with what is seen to be an easier road to recovery than that of their Western peers. Europe (MSCI Europe ex-UK +14.1%) and the United Kingdom (FTSE 100 +12.4%) performed better than the American markets (S&P 500 +11.3%, NASDAQ +11.8%) due to their higher exposure to value names over growth and technology companies. Chinese markets (CSI 300 +5.6%, Hang Seng +9.3%) were the worst performers, having outperformed in previous months.

Domestically, the S&P/ASX 200 Accumulation Index was up 10.21% during the period. Energy (+28.4%) was the best performing sector during the period, as vaccine news caused a market-wide rotation into value and procyclical names. Oil and gas majors Woodside Petroleum (WPL +29.1%) and Santos (STO +29.4%) led the sector higher as oil prices staged a strong rebound. Financials (+15.2%) also benefited from the value rotation as banks (NAB +23.1%) and insurers (SUN +22.5%) are expected to benefit from a stronger global growth outlook. Consumer Staples (-0.7%) was the worst performer, with investors pulling out of the defensive, COVID-19 beneficiaries like Woolworths Group (WOW 4.7%) and Coles Group (COL -0.6%). Utilities (+1.2%) underperformed, with the defensive earnings of APA (APA -1.4%) and Ausnet (AST -7.3%) less favourable in a cyclical rotation.

Disclaimer
This document has been prepared by DNR Capital Pty Ltd, AFS Representative – 294844 of DNR AFSL Pty Ltd ABN 39 118 946 400, AFSL 301658. It is general information only and is not intended to be a recommendation to invest in any product or financial service mentioned above. Whilst DNR Capital has used its best endeavours to ensure the information within this document is accurate it cannot be relied upon in any way and recipients must make their own enquiries concerning the accuracy of the information within. The general information in this document has been prepared without reference to any recipient’s objectives, financial situation or needs. Before making any financial investment decisions we recommend recipients obtain legal and taxation advice appropriate to their particular needs. Investment in a DNR Capital managed account can only be made on completion of all the required documentation.

Source: Motor Trader e-Magazine (December 2020/January 2021).

16 December 2020