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Global Leaders Equity Fund: May 2024

Global equity markets rose in May. Overall, the FTSE All World Index gained 4.1% while the Ashburton Global Leaders Fund (I class USD) returned 4.3%. Outperforming stocks held during the month included Nvidia (26.9%), Apple (13%) and Ping An (10.1%).

Delving into the Nvidia results, which were again ahead of consensus expectations, management’s positive outlook for AI spending helped explain such a big share price increase. Better-than-expected earnings were also reported by Apple. Year-on-year premium income continues to rise at Ping An and we believe there remains considerable scope for this to continue, given excess household savings, as confidence returns among Chinese consumers.  Earnings reported by PayPal were below expectations and, though we believe new management is beginning to improve the business, this saw shares decline 7.3%. Labour union plans to strike in South Korea, the first in their history, saw Samsung shares fall 5.4%. Our understanding is this will have minimal impact on the company’s operations given the firm’s high degree of automation. Valuation concerns continue to surround Schlumberger Limited’s (SLB’s) share based acquisition of ChampionX which saw their shares decline a further 3.3%. Energy services is a concentrated sector, and this is one of the few sets of quality assets available, with the deal expected to generate at least $400m of synergies.

Justification of short-term market movements, as discussed last month, is a fool’s errand. Indicators in the long term remain generally positive for equites with companies generating aggregate earnings growth, liquidity remaining buoyant, and valuations not being overly stretched. Many elections will occur globally this year and while technically they are independent, central banks historically appear to have supported liquidity in election years. More cautiously, thinking longer term, equity market corrections have often historically been foreshadowed by high bond yields and low equity risk premia. Yields of bonds continue to be somewhat at odds with the earnings yields of equities, though this is not currently at levels to cause great concern.


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