August was a tale of two halves, starting off on a negative note with the Bloomberg World Index  dropping 6.5% in the first few days. One of the catalysts for the negative sentiment was a surprise Bank of Japan (BoJ) rate hike. This caused an unwind of the YEN carry trade. This had been predicated on a weak Yen and relatively low Japanese interest rates and had supported large amounts of Japanese capital moving offshore into foreign equity markets. As interest rates went up and the Yen strengthened this trade reversed with capital hence flowing out of foreign equity markets. The technology sector in particular was impacted, which fell 10% at the start of the month. At the same time weaker-than-expected employment numbers sparked fears of a US recession. However the rise in unemployment figures is partly due to an increased participation ratio as more people move from ‘not working and not looking’ to ‘actively looking’ and employment growth was positive. The BoJ calmed markets by saying that it won’t increase interest rates while financial and capital markets are unstable after which markets gradually started to recover and ended on a positive note when the US Bureau of Economic Analysis (BEA) revised US GDP growth higher from 2.8% to 3% for Q2. Overall, the Bloomberg World Index gained 2.5%, while the Ashburton Global Equity Growth Portfolio was 2.10%. 

Axon shares are up 21.7% after another beat and raise. The company reported continued strength in Q2 and lifted guidance for the second half of the year. The company is demonstrating strength across all its business lines and regions.

SEA Limited reported Q2 revenues that exceeded market expectations with good performance in both its e-commerce and financial services businesses. The share ended the month up 20%.

Tripadvisor was down 17.7% after missing Q2 estimates. The company’s shares have now fallen substantially after the Board set up a Special Committee to evaluate a possible merger but later determined that there was no transaction with a third party that was in the best interest of the company and its shareholders. Management believes that any proposal did not reflect the company’s prospects and value, however, the market has been very disappointed by this.

At the beginning of the month the full position in Avolta was sold. Although the company has an attractive valuation it has failed to rerate after numerous positive catalysts, and we felt that the capital could be used better elsewhere. We entered a position into Samsung electronics. Samsung trades on an attractive valuation and is one of the cheapest AI-related plays that we see globally. Our positions in SEA Limited and Grab were trimmed.

Looking ahead, September is likely to bring the first US rate cut as US Federal Reserve Chair, Jerome Powell said ‘The time has come for policy to adjust’ at the recent Jackson Hole Economic Symposium. Looser monetary policy should alleviate some concerns around a US recession and Powell’s comments reflect confidence that inflation is now contained with the focus of the committee shifting to supporting the labour market.

Disclaimer:

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