In the USA, France, and UK, political transitions are expected following imminent elections. These “lame duck” periods can create uncertainty in markets as outgoing leaders finalise their terms. While investors closely monitor policy decisions during this time, trade agreements and regulatory changes tend to be held-up so the focus shifts to future in-bound policy particularly any strategy changes including fiscal stimulus plans. Meanwhile monetary policy remains critical to market returns. Central banks are grappling with sticky inflation rates which impact their policy decisions. The Federal Reserve’s (Fed) dot plots continue to suggest rate cuts in the US though this is partially offset by a lower level of quantitative tightening.

Overall, earnings delivery during the first half of the year has exceeded expectations, supporting equity markets. The Bloomberg World Index gained 2.2% during the month of June, while the Ashburton Global Leaders Model Portfolio (USD) gained 1.7%.

The biggest gainers held during the month were Nvidia (12.7%), Samsung (12.1%) and Apple (9.6%). While Nvidia’s ten-for-one stock split has no economic benefit, as anticipated it generated substantial retail interest in the company. Strength in Apple’s share price continued as the company unveiled new Artificial Intelligence (AI) features which are likely to support handset sales. Samsung continues to benefit from a recovery in the memory chip market and the excitement around AI.

The worst performers held during the month were VW (-9.5%), PayPal (-7.9%) and Haliburton (-7.5%). VW’s share price appears to currently be driven the changing outlook in European and Chinese import tariffs. While we acknowledge these risks, we consider the shares undervalued considering the company’s free cash flow generation particularly as reduced capital expenditure is planned following recent expansion over the medium term. PayPal continues to face significant competition to its leading position as a global online payment processor. The firm continues to grow, albeit at a slower pace than upcoming competitors. New management has begun to show subtle business improvements, and we believe that the growing transaction volumes are underappreciated by the market.

Trading activity was limited during the month.

Weaker consumer spending and moderating growth hint at potential headwinds to come. While “lame ducks” prepare to hand over their responsibilities, markets anticipate smoother transitions.

Disclaimer:

Waystone Management Company (Lux) S.A. is regulated by the Commission de Surveillance du Secteur Financier (CSSF) (ref A00000395 & S00000734), Waystone Management Company (Lux) S.A. is a company located in Luxembourg, L-1273 Luxembourg at 19, Rue de Bitbourg. This document is issued by Ashburton (Jersey) Limited (The Investment Manager) which has its registered office at IFC1, The Esplanade, St Helier, Jersey JE4 8SJ, Channel Islands and is regulated by the Jersey Financial Services Commission. Ashburton Investments is a registered trading name of Ashburton (Jersey) Limited. In the event a potential investor requires material risks disclosures for the foreign securities included in a portfolio, the manager will upon request provide such potential investor with a document, outlining potential constraints on liquidity & repatriation of funds; Macroeconomics risk; Political risk; Foreign Exchange risk; Tax risk; Settlement risk; and Potential limitations on the availability of market information. The value of participatory interests and the income from them may go down as well as up and is not guaranteed. Past performance is not necessarily a guide to the future performance. Where an investment involves exposure to a currency other than that in which it is denominated, changes in rates of exchange may cause the value of the investment to go up or down. CIS portfolios are traded at ruling prices and can engage in borrowing and scrip lending. A full detailed schedule of fees, charges and commissions is available from Ashburton on request and incentives may be paid and if so, would be included in the overall costs. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The manager has a right to close the portfolio to new investors in order to manage the portfolio more efficiently in accordance with its mandate. This document does not constitute an offer or solicitation to any person in any jurisdiction in which Ashburton Investments is not authorised or permitted to communicate with potential investors, or to anyone who would be an unlawful recipient. The original recipient is solely responsible for any actions in further distribution of this document and should be satisfied in doing so that there is no breach of local legislation or regulations. This is a marketing communication. Additional information about this product, including brochures, application forms and annual or half-yearly reports, can be obtained from the Manager, free of charge, and from the website: www.ashburtoninvestments.com. In South Africa, the Fund(s) is/are approved for promotion under section 65 of the Collective Investment Schemes Control Act 2002. The Fund Prospectus, and further information including pricing and changes, may be viewed at the Fund’s representative office in South Africa: Ashburton Management Company (RF) Proprietary Limited (“Ashburton CIS”), 3 Merchant Place, 1 Fredman Drive, Sandton 2196. Ashburton CIS is an approved collective investment schemes manager regulated by the Financial Sector Conduct Authority and a full member of the Association of Saving and Investments South Africa.