Mawer Quarterly Investment Newsletter | Mawer Investment Management Ltd.

Second Quarter | 2020

Following the market’s quick plunge into bear territory and ultimate low on March 23, the second quarter of 2020 saw an exuberant rebound.

The emergence and spread of the COVID-19 virus have precipitated an extraordinary effort to contain the outbreak globally. While these initiatives are of utmost importance in defeating the virus’ spread, they have also resulted in significant economic deterioration, including the closure of businesses, a rise in furlough or unemployment, and have fueled steep declines in risky assets around the world.

Fourth Quarter | 2019

What a stark contrast a year brings. A year ago, in the fourth quarter of 2018, we were in the midst of a sudden, sharp market decline. Interest rates were rising, parts of the yield curve had inverted, and fears of a global recession were rampant. Uncertainty abounded, most notably with respect to the future path of interest rates, U.S./China trade negotiations, and Brexit.

Third Quarter | 2019

Managing through uncertainty is what we do and Q3 of 2019 has proven rife with unpredictability. But this is to be expected in an environment of experimental monetary policy, negative yields/low discount rates, elevated debt levels, inverted yield curves, trade wars, and slowing global economic growth.

Second Quarter | 2019

“Lower rates for longer!” appears to be the new battle cry, as the 180-degree turnabout by many central banks that we wrote about in Q1 has persisted, with numerous banks cutting rates and/or signalling cuts or other expansionary policies to come.

First Quarter | 2019

What a difference a quarter can make! Not a typical statement from us at Mawer given we are long-term investors, but after the steep decline in global equities at the end of 4Q18, stock markets, led by the U.S. and Canada, snapped back in the first three months of 2019.

Fourth Quarter | 2018

After years of generally rising equity markets, 2018 saw broad equity declines with pronounced volatility in the final quarter where markets swung up and down by multiple percentage points on many days. Global equities as measured by the MSCI All-Country World Index dropped 7.8% during the quarter. The main catalysts of the weakness appear to be worries about rising interest rates, trade actions, slowing global economic growth, and the flattening of the U.S. treasury yield curve.

Third Quarter | 2018

Global economic signals presented a mixed picture in the third quarter of 2018. The U.S. economy forged ahead posting 4.2% real GDP growth, China implemented policies to broaden domestic demand, the U.S. and China announced retaliatory tariffs, NAFTA trade talks dragged out (only to be resolved on the last day of the quarter), and the U.K. continued to prepare for Brexit.

Second Quarter | 2018

The year began with a more volatile backdrop as rising interest rates and the price investors are willing to pay for investments turned into a bit of a tug-o-war. The second quarter of 2018 can be characterized as mostly positive for investment returns—perhaps surprisingly so, given the worries about escalating trade disputes and rising interest rates. A contributing factor was strong global economic growth.

First Quarter | 2018

Although 2018 began with a continuation of the strong equity performance investors saw in 2017, by late January the threat of rising interest rates and inflation expectations led to a deterioration in investor psychology. Equity markets around the world declined markedly, and while this appeared short-lived at first, the emergence of protectionist rhetoric and volatility in the technology sector late in the quarter led equity markets lower again in March.

Mawer Quarterly