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Simon’s weekly wrap: investing in a low-yield, recuperating world

Also this week: Europe as an investment region, the US’s stalled recovery, how cyber threats may change corporates, risks in the search for higher yield, and more.
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European stocks have long lagged their US counterparts and not even just because Europe has no real tech titans listed on their exchanges. The region was late to aggressive quantitative easing after the 2008/9 crisis and its banking sector is still struggling with the fallout from the crisis. Karim Chedid, investment strategist at BlackRock, told us it believes Europe is now the preferred investment region to the US, in part as it’s largely managed the pandemic better than the latter.

Also on Wednesday, we discussed how finding yield in this global low interest rate environment is a real challenge right now, with fixed income funds struggling to offer attractive yields. Anchor Co-CIO Nolan Wapenaar shares some red flags investors should watch out for in their search for higher yield, that may well increase the risks beyond what one would normally expect from a fixed income fund.

The US GDP was a shocker, down over 32%, but this was pretty much expected. Gary Booysen of Rand Swiss says his concern is in the initial jobless claims data that came in at over 1.4 million this past week. The initial drop-off in claims from almost seven million at the start of the pandemic was swift, but the numbers are not managing to break below one million a week, suggesting an economy that has bounced back part way but is not managing to gain further traction in its recovery.

Corporate IT security has been under the spotlight during the pandemic, as many staff members have been working from home. This opens corporate networks to new cyber threats. Last week Garmin services were suspended due to a suspected ransomware attack and Brian Pinnock from Mimecast warns that this trend will only accelerate. The bigger question is if corporates now need a chief security officer on their boards to oversee cyber security issues.

Also this week:

On Monday’s show Matete Thulare of RMB talked about the Woolies and MTN trading updates; Master Drilling CEO Danie Pretorius discussed drilling the deepest hole ever; and Petri Redelinghuys of Herenya Capital Advisors discussed trailing miner Jubilee Metals as it trades through 100c – which suggests a long-term trend change.

On Thursday’s show we had Alex Duys of Umthombo Wealth discussing the US Fed keeping rates unchanged, Sasol selling assets and EOH; Tlotliso Phakisi from Cannon Asset Managers on avoiding the herd when investing and V&A Waterfront CEO David Green on the cruise industry as liners remain docked.

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