The dominant theme in November was the successful trials of COVID-19 vaccines. The announcements by Pfizer, Moderna and Astra Zeneca turbocharged markets and led to some of the strongest monthly returns for stock markets on record! The MSCI World Index posted an exceptional 12% rise in November, coming close to matching the best ever monthly return for the global stocks benchmark. European and UK stock markets were the strongest performers (Source: Financial Express).
As confidence returned, the strong rally was characterised by investors favouring traditional value style areas such as cyclical sectors where companies’ fortunes are more aligned with the strength of the economy. Value as an investment style has been out of favour for a long time and the November rally has finally given the style a break. The most under loved sectors rebounded the strongest with the FTSE Oil & Gas sector topping the leader board in the UK, rising 31.6% on the back of a strong rise in the oil price. The Aerospace & Defence sector came a close second, rising 31.5% as airline stocks bounced on the prospect of a return to some form of normality next year (Source: Financial Express).
Growth style sectors like technology and healthcare continue to be good long-term holdings but November has reminded us of the need for balance of investment styles in any portfolio (Source: Financial Express).
One notable piece of news that may have gone unnoticed in such a crowded month was the signing of the Regional Comprehensive Economic Partnership between 15 countries in Asia. It will be the world’s largest free trade bloc encompassing two billion people and $26 trillion in GDP, representing 30% of world economy and people and highlighting the significant influence of the region. Oh yes, and Joe Biden won the US election. But we suspect you already knew that.
The information in this post is not financial advice, it is provided solely to help you make your own investment decisions. If you are unsure about whether an investment is appropriate for you, please seek professional financial advice. You can find more information here.
When you invest you should remember that the value of investments, and the income from them, can go down as well as up and that past performance is no guarantee of future return.