Optimus Capital specialises in asset management, delivering highly sophisticated investment solutions to both private and institutional clients. Our diversified portfolios, constructed using a disciplined qualitative and quantitative investment management process, are designed to meet the unique objectives, risk tolerances and performance aspirations of our clients.
In addition, Optimus Capital uses its extensive network of institutions, family offices and high net worth individuals to engage in private placements.
7 May 2021, 3 mins.
Last week we mentioned that four of the five biggest US tech stocks delivered outstanding first quarter earnings. Yet this week those same stocks fell around 3% while global equities are more or less flat. NASDAQ, the US tech heavy stock index, declined by 3% this week too. So what is going on?
We think that investors are witnessing a rotation from stocks with more dependable earnings growth to stocks which benefit relatively from a cyclical recovery. Simply put demand is not the problem.
In fact global demand is so strong that a gap is opening up between the new orders component of purchasing manager indices – so-called PMIs – and actual output. Normally these two measures move very much in lockstep.
For example, when orders for new equipment increase then manufacturing output goes up as well to fulfil that order.
However, in the major economies across the world orders are high and manufacturing is struggling to keep up.
Once these temporary COVID-19 induced bottlenecks are sorted out we expect a strong reacceleration of global industrial production growth later in the year.
We believe that markets are anticipating this and hence more cyclical stocks are starting to benefit again, repeating the price-action we saw at the beginning of the year.
This is favourable for those investors who continue to be overweight such names.
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