Erste Asset Management

Increasing new infections – Update from the Investment Division

Increasing new infections – Update from the Investment Division
Increasing new infections – Update from the Investment Division
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What has occurred since yesterday ?

After the easing of containment measures, global levels of new infections continue to rise. As in the last few days, the USA is particularly affected with the hotspots in the south of the country. As a result, some of the containment measures are being reintroduced. In Miami, for example, restaurants and fitness centers are being closed. The mayor of Austin, Texas, warned that hospitals could become overcrowded if the trend of the last few days continues. This has also had the first noticeable effects on the economy. As some researchers have reported based on alternative data, retail sales and restaurant reservations have already declined.

The equity markets remain unaffected by this. After yesterday’s rally in Asia, the markets in Europe and the USA also rose significantly. The US leading index S&P 500 rose by 1.6% and the EuroStoxx 50 by 1.7%. The high-yield bond markets also made significant gains yesterday. Investment grade government bonds were remained mostly unchanged compared to the previous day.

In our opinion, the reasons for the good performance of higher risk investments against the background of rising numbers of cases are as follows:

  1. Health systems and also the authorities are better prepared for the increasing number of cases, due to the experience of the last few months. For example, efficient tracing of infected persons (“contact tracing”) can be a very effective means of identifying and isolating clusters.
  2. The progress made in the development of drugs and vaccines is also creating a good mood among investors. The European Commission has recently given the green light for the marketing of Remdesivir as a treatment for Covid-19. In addition, thirteen vaccines are currently being tested on humans, some of which have shown good results in initial studies.
  3. Fiscal and monetary support measures remain in place and will be extended in some cases. For example, the UK government stated that it will announce a £3 billion package tomorrow, which will focus on environmental issues.
  4. The economic data of the last few days continues to show that the economy is recovering. Orders for industrial goods in Germany rose 10.4% in May, below expectations but still underlining the recovery. In the USA, the unemployment rate fell from 13.3% in May to 11.1% in June. In China, the purchasing managers’ indices for the service sector also showed a marked improvement over the weekend.

As news on the spread of the pandemic can change very quickly, higher volatility cannot be ruled out. On the other hand, the aforementioned trends could ensure that the equity and high-yield bond markets remain well supported.

 

Legal note:
Prognoses are no reliable indicator for future performance.

DOSSIER

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Legal disclaimer

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH. The language of communication of the sales offices is German and the languages of communication of the Management Company also include English.

The prospectus for UCITS funds (including any amendments) is prepared and published in accordance with the provisions of the InvFG 2011 as amended. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in conjunction with the InvFG 2011.

The currently valid versions of the prospectus, the Information for Investors pursuant to § 21 AIFMG, and the key information document can be found on the website www.erste-am.com under “Mandatory publications” and can be obtained free of charge by interested investors at the offices of the Management Company and at the offices of the depositary bank. The exact date of the most recent publication of the prospectus, the languages in which the key information document is available, and any other locations where the documents can be obtained are indicated on the website www.erste-am.com. A summary of the investor rights is available in German and English on the website www.erste-am.com/investor-rights and can also be obtained from the Management Company.

The Management Company can decide to suspend the provisions it has taken for the sale of unit certificates in other countries in accordance with the regulatory requirements.

Note: You are about to purchase a product that may be difficult to understand. We recommend that you read the indicated fund documents before making an investment decision. In addition to the locations listed above, you can obtain these documents free of charge at the offices of the referring Sparkassen bank and the offices of Erste Bank der oesterreichischen Sparkassen AG. You can also access these documents electronically at www.erste-am.com.

N.B.: The performance scenarios listed in the key information document are based on a calculation method that is specified in an EU regulation. The future market development cannot be accurately predicted. The depicted performance scenarios merely present potential earnings, but are based on the earnings in the recent past. The actual earnings may be lower than indicated. Our analyses and conclusions are general in nature and do not take into account the individual characteristics of our investors in terms of earnings, taxation, experience and knowledge, investment objective, financial position, capacity for loss, and risk tolerance.

Please note: Past performance is not a reliable indicator of the future performance of a fund. Investments in securities entail risks in addition to the opportunities presented here. The value of units and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your units. Persons who are interested in purchasing units in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is different than the investor’s home currency, changes in the relevant exchange rate can positively or negatively influence the value of the investment and the amount of the costs associated with the fund in the home currency.

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Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of the fund to American or Russian citizens.

It is expressly noted that this communication does not provide any investment recommendations, but only expresses our current market assessment. Thus, this communication is not a substitute for investment advice, does not take into account the legal regulations aimed at promoting the independence of financial analyses, and is not subject to a prohibition on trading following the distribution of financial analyses.

This document does not represent a sales activity of the Management Company and therefore may not be construed as an offer for the purchase or sale of financial or investment instruments.

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