Mario Becker

The final quarter, as well as the year, did considerable damage to
our safety building blocks. Above all, the building blocks that invest in European government and corporate bonds have suffered further paper losses because the ECB has made it clear that it is not yet finished with its interest rate hiking campaign.

After a strong global equity market rally in July, an equally strong correction followed in late August and throughout September, so that at the end of the third quarter we are basically back to where we saw ourselves at the end of the second quarter. This means historic losses for global government and corporate bonds, which haven’t occurred since the 1930s and 1970s, and large losses in global equities.

Due to the very poor development of the first quarter, I assumed that we should see a reprieve in the second quarter. Unfortunately, that did not happen. Instead, we had to experience another round of price drawdowns in all relevant asset classes. Interestingly, losses in the global government bond markets were also more pronounced in the second quarter than in the broadly diversified global equity markets. This is a very rare occurrence, as government bonds are primarily a portfolio stabiliser. Government bonds only move very strongly when there are unexpected changes in price levels. This is currently the case and hasn’t been seen since the 1970s.

We started 2022 with moderate expectations due to the generally good results in 2021. However, we would never have dreamed that by the end of the first quarter we would already feel as if a whole year was behind us:…

2021 was the year for which we expected victory over Covid, as it seemed that successful vaccination programs could defeat the pandemic. However, as the year progressed, it became clear that new virus variants and sluggish vaccination campaigns would prolong the crisis. This led to a 'stop and go' economy in most countries in the second half of the year, after the 'logjam' of 2020 and the most pressing supply issues seemed to have dissipated in Spring.

The 3rd quarter largely followed the developments of Q1 and Q2. Depending on the vaccination progress of a given country we can see higher or lower levels of normalisation in the economic activity. But overall, it appears that the global…

The second quarter of 2021 continued much of the same trends as the first quarter: Equities of small and mid-sized companies, as well as more cyclical industries and slow-growth segments (keyword “value”), outperformed. Shares of developing countries saw a strongly differentiated development: Shares of commodity exporters such as Saudi Arabia and Russia saw strong price gains, whereas Chinese shares could not reverse the negative trend since February and selectively even traded in the red. Even the celebrations for the 100th anniversary of the founding of the Chinese Communist Party could not ignite any price fireworks here.