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Global Leaders Equity Portfolio: June 2023

Stock markets responded positively to the political agreement research to raise the US debt ceiling. The FTSE All World index gained 5.7%. There was some broadening of the market rally and it was not just those stocks exposed to the current in vogue theme of artificial intelligence that performed well. Factor analysis indicates that lower quality and more volatile stocks performed were amongst the best performing area of the market.

The Global Leaders model portfolio (USD) gained 5.1% during the month. The best performing holders included both energy service companies Halliburton (+15.7%) and Schlumberger (+15.3%) following an announcement by OPEC to reduce production which raised oil prices. While the empirical relationship of these share prices of the oil services companies to the crude oil price is well understood, fundamentally little has changed for the firms who remain at close to full fleet utilisation in an industry that has had structural underinvestment. 

NXP Semiconductors shares also performed well gaining 14.3%. Having seen a fall in share price in previous months given comments by others on a potential slow down in chip sales to the automotive industry, positive sales figures and a better appreciation of the huge increase in chip content per vehicle appears to have become better understood and communicated to the market.

There were few negative returns from fund holdings and trading was limited.

Central banks are once again in liquidity reduction mode in order to be shown to be taking action to contain inflation.