July general market comments

“Electric Avenue” – Eddy Grant, 1982.

The world is charging down “Electric Avenue,” fueled by a surging demand for electrification. Artificial intelligence and sprawling data centers crave vast power to process and store the digital revolution, lighting up the global grid. Emerging markets are plugging into this current, electrifying homes and industries to leap into modernity. Electric vehicles are rolling off the line, their batteries humming with energy, reshaping transportation worldwide. HVAC systems, vital for comfort in a warming climate, draw more juice to cool and heat our spaces. From factories to cities, the rhythm of electrification beats stronger, echoing Eddy Grant’s call to “move to the left, move to the right” with sustainable innovation. Renewable sources like solar and wind are stepping up, yet the strain on infrastructure grows.

Yes, the world turns even more electric, as markets do: in a month of quarterly earnings reports, equities fared quite well and greed was felt all along the way. Safe havens like Gold or long term Government bonds were weak (first down month for Gold in 2025, but a shallow negative 40 bps), while one of the most speculative assets, Bitcoin, soared by 8.3%.

The MSCI World added 1.2%, the S&P 500 2.2%, the Stoxx 600 0.9%, and Emerging Markets 1.7%; Growth regained the lead with a +2.1% advance for the MSCI World Growth (+0.3% for Value), while Defensives in general had a poor month, contrarily to Cyclicals, among which Electricity and Energy Efficiency players shone.

The dollar showed some signs of rebellion, rising 2.9% and 4.5% respectively versus the Euro and the Yen, and Credit posted another solid return (+1.1% for the Itraxx Crossover, which is now up 5.1% year to date).

With tariffs heavily impacting currency markets and earnings and guidance driving equites, we witness wild moves all over the place; it is remarkable, for example, that the S&P 500 has caught up with the Stoxx 600 on a year to date basis (not adjusted by foreign exchange rates), thanks to the powering ahead of the usual suspects, namely big tech stocks that are absent from European markets.

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

June general market comments

“Positively Inclined” – Wax Tailor, 2007.

June 2025 has delivered a market performance worthy of Wax Tailor’s “Positively Inclined” (thanks Mr Aznavour for the beat…): uplifting, resilient, and forward-looking. Trade progress, central bank support, and AI-driven innovation provide a strong backbeat, but inflation, fiscal concerns, and geopolitical risks keep a lid on the upside. June has been full of headlines triggering both optimism and pessimism; as tariffs risk stabilized, entered the short-lived war between Israel and Iran that could have seriously derailed the forward march markets tried to maintain after a very good month of May, while European Nato members bended to Mr Trump’s demands for higher military spending across the Old Continent.

Equity markets shrug off the threats and focused on the positives; the MSCI World added 4.2%, the S&P 500 5%, Emerging Markets 5.6% but Europe stalled (-1.3%) in the context of a pretty strong euro (or a very weak dollar); in a quite unusual mode, currency markets did not react as one could have expected when Israel started to bomb Iran, in other words the dollar stayed unscathed, and even ended the month down 3.7% versus the euro (and now down 13.7% year to date!).

If yields differential can sometimes provide clues about currencies moves, it doesn’t seem to play out this year as US 10 year at 4.24% offer roughly 170 basis points more yield than the German 10 year Bund. Yet this spread has narrowed year to date (60 bps), but does that justify the dismal performance of the dollar? Probably not. Sticky twin deficits, huge debt and Trump’s aggressive stance towards the Fed probably had their toll, more than anything else, on the dollar.

Middle-East tensions boosted Oil, which rose 7.1% in June, but Gold barely reacted (+0.4%), while risk-prone attitude from investors was reflected in the outperformance from Growth versus Value (+4.9% vs +3.5%) and a new bout of Mag-7 dominance, the very good month for credit (+1.2% for the Itraxx Crossover) and the Bitcoin, which rose 2.6%; the latter has also been buoyed by the Genius Act (17th of June: bipartisan bill poised to create the first comprehensive federal framework for stablecoin regulation).

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

May general market comments

“If you don’t give a doggone about it” – James Brown, 1977.

As is often the case, the market tried to frustrate the majority and please the minority. After a turbulent April and amid the Q1 earnings season, it would have been tempting to reduce risk and heed the old adage, “Sell in May and go away”. What a mistake that would have been! At the beginning of May, the right decision for risk assets was to “not give a doggone about it”, as James Brown would say. These assets performed strongly (more on this later). This reversal was triggered by the satisfactory results reported by most companies so far, but also by recurring jitters around tariffs and hopes for a less radical stance from the White House.

In this context, the MSCI World added 5.69% in May, the tech-heavy Nasdaq leading the charge with a whopping 9.04% return; the European Stoxx 600 fared well (+4.02%), like the MSCI Emerging Markets and the Japanese Topix respectively up 4.00% and 5.03%. Interestingly, all major indices are now in positive territory on a year to date basis (S&P, Stoxx, Nasdaq 100, Emerging Markets, Topix), barring the Chinese CSI300 (down 2.41%). This spectacular rally in equities logically favoured Growth versus Value: the MSCI World Growth soared by 8.58%, versus “only” +2.71% for the MSCI World Value. Even more interesting, if you didn’t give a doggone about tariffs when the mess started, you would be up 18.7% since the 8th of April by simply holding the MSCI World!

In fixed income, fates diverged between Government and credit: the former had a so-so month with yields on the rise, 24 basis points for the 10 year US and 6 basis points for the 10 year Bund, but the latter performed extremely well, in line with risk assets in general, highlighted by the Itraxx Crossover adding 2.80%, just for the month of May.
Finally, another sign that investors embraced a risk-on attitude is the very strong returns recorded by both Oil (+4.43%) and the Bitcoin (+10.84%).

How things play out from now on remains a big question mark: US markets are still expensive, and the economy has little chances to shoot up to the upside, while geopolitics remain shaky.

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

Quarterly Investment Review – Q4 2024

We don’t have inflation because the people are living too well. We have inflation because the government is living too well.

Ronald Reagan

All Government spending is taxation

Elon Musk

We all know what we need to do as politicians, we just don’t know how to get elected after we have done it.

Jean Claude Juncker

Quarterly Investment Review – Q4 2024

2024 saw the financial trends of 2023 extended. Equity markets produced strong returns, led by the US indices, with most of these returns generated by the giant technology companies. Performance was particularly strong after the victory of President Trump in the US Presidential election in early November. Most other markets in Europe and the Emerging world were more subdued. The US bond market suffered an unprecedented fourth year of decline. The US dollar remained strong against most of its international rivals, and gold had a strong return. Most remarkable was bitcoin which rose 120% during 2024.

The last quarter was dominated by the US election and Trump’s comprehensive victory. Unusually for a Republican candidate, he won the popular vote, as well as making a clean sweep of Congress, giving him a strong mandate to implement his policy platform. The result was a vote for less Government, and markets celebrated the promise of deregulation and lower taxes. The expected boost to growth is supportive of equities. So far markets have been unconcerned by the less market-friendly protectionist threats of the incoming Administration, such as the promise to curb immigration and impose draconian tariffs on foreign goods, both of which could increase prices. It is hard to say the extent to which these measures will be implemented. Judging by his first term Trump is more fluid in his policy making than other Presidents, and he will start this Administration with a different set of circumstances to his previous one.

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Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

Chart of the Month – Credit investors: beware of the re-steepening

Credit investors: beware of the re-steepening

The slope of the US yield curve, which can be illustrated among other examples, by the difference between the US 10-year yield and the US 2-year yield has been widely used as an early indicator of recessions. Its normal slope should be positive, which means fixed income investors should be rewarded with a higher yield for buying bonds with longer maturities because, among other things, they sacrifice visibility on future inflation path and economic activity.

In the past, however, the yield curve has inverted various times between the 10-year and 2-year maturities. Some of those times include 1929, 1974 and 2008, where the inversion lasted particularly long and was followed by some well-known turbulences in the market.

The reason for these turbulences can be explained as follow: as the economy is slowing down, inflation is falling and unemployment starts rising, the market anticipates that the FED will have to cut rates to avoid a recession and to protect the labor market. Although the long-term part of the curve tends to move lower on the prospect of slower economic growth, the front end is much more reactive in reflecting the expected rate cuts from the FED. This mechanism creates what we call a bull steepening of the yield curve, where the 2-year yield drops faster than the 10-year yield.

The impact on credit spreads (a gauge of credit risk) is usually negative as we normally see a flight to safety during these periods of stress, where investors will favor quality over speculative assets, in other words, investment grade over high yield.

Over the last 30 years, as seen on the chart of this month, such occurrences also included the dot com bubble and the Covid pandemic. The shaded rectangles represent the period from the lowest point in the yield curve slope (in blue) and its highest point in the cycle. The dotted blue line is the frontier where the curve becomes inverted or positive again. We can see that credit spreads (in orange) have spiked in each of these periods to a cycle high.

Contrarily to a common misconception, it is not so much the yield curve inversion that coincides with spikes in credit spreads, but rather the re-steepening following these inversions. If we take the global financial crisis, for example, we can see that the yield curve started to invert in late 2005 already, without triggering any widening in credit spreads. It is only in the summer of 2007 (a few months after the curve hit the bottom and started rebounding) that the spreads spiked from a low of 240bps to a frightening high of 1’830bps.

As we can see in the chart, the yield curve has been inverted for more than 2 years in this cycle and has now re-steepened an impressive 124bps.

Today, credit spreads have remained muted and are below their historical average (the dotted orange line). It is of course not certain that history will repeat itself and that they will spike to new highs, but it is very unlikely that they will remain at such tight levels, especially given the uncertainty stemming from the approaching US elections and the two ongoing conflicts in Ukraine and in the Middle East.

Therefore, in such an environment, one should beware of the re-steepening of the yield curve and favor a higher quality in his or her credit portfolio.

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request.
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Quarterly Investment Review – Q3 2024

Markets rose during the third quarter as most Central Banks started to ease policy by cutting interest rates, causing the yield on the US 10-year bond to fall from 4.40% to 3.78%. Stock markets moved up in tandem with the rate cuts, but this masked significant gyrations in early August. The combination of falling US interest rates and rising Japanese rates caused the yen to rise dramatically, and the Japanese market crashed 22% in three days. The VIX index, which measures volatility, reached its third highest ever reading. Most of these moves occurred within a few hours on the 5th and 6th August in thin trading, and the recovery was equally abrupt. By the end of the month the Japanese index had recovered everything when measured in dollars. However, the size of the moves indicates the potential vulnerability of markets even with relatively minor disruptions.

The rise in Japanese interest rates marks the end of the last source of free money in global markets. Since 2008 global Central Banks have kept interest rates close to zero and provided plentiful liquidity. The inflationary burst in 2022/23 brought this to an end and led most banks to raise interest rates and rein in liquidity, except in Japan. Japan was more reluctant to normalise its policy because it has spent the last thirty years escaping from a debt and deflationary bust caused by one of the largest property and stock market bubbles in history that peaked in 1989. It cut interest rates to zero in 1997, and from 2013 adopted an aggressive printing policy. As a result, Japanese money was pressured into seeking returns elsewhere, and Japanese liquidity has flooded world markets. These flows have supported asset prices but may start to retreat. Meanwhile the summer saw other developments. There were increasing signs that the US economy was less strong than previously thought with a record revision of US jobs numbers, and China’s economy has continued to disappoint. There were also signs that the dominance of the massive technology companies may be starting to wane. These three areas have been the major supports to the bull market in the last decade, so if they are deteriorating it will have significant implications for investors.

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Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

June General Market Comments

“In the Summertime” – Mungo Jerry, 1970

Yes, it’s now summertime; a season supposed to be quieter for financial markets. But history suggests that it’s not necessarily the case and that, for whatever reasons, there can be significant spikes of volatility during the summer months. In Mungo Jerry’s song, it’s all about easy and pleasant choices to be made in summertime, while, for investors, choices can be tricky, especially after the very particular first half we’ve been through and the multiple possible troublemakers ahead, like US elections and the Democrat candidate debate, French elections, continuous geopolitical tensions, Central Banks policies, the Yen’s incredible weakness (is it hiding something serious?), and, of course, demanding valuations in equity markets which are more polarized than ever, with the spectacular dominance from AI-related plays and Growth versus the rest of the market, not to mention very tight credit spreads which are at relatively dangerous levels if we look at the past occurrences when it reached these lows.

June 2024 has been kind of a redux of the last 18 months for equities: the MSCI World Growth added 4.8% while the MSCI World Value lost more than 1%, this says it all. The dynamics around AI and especially Nvidia buoyed the Nasdaq again (+6.2%), and the S&P 500 benefited as well with a +3.5% return. European markets have been weak, with the French elections possibly jeopardizing an historical centre (left or right) oriented National Assembly: the Stoxx 600 lost 1.3% and the euro fell 1.24% versus the dollar. Sovereign spreads also tended to widen on the Old Continent. The Japanese Topix added 1.3%, the MSCI Emerging Markets 3.6% and the Chinese CSI lost 3.3%. When measured into USD, many markets struggle versus the S&P 500 year to date: Europe is 11% behind, Japan 10%, China 16% and EM 8%.

Long term Government yields receded somewhat with better inflation gauges, Credit was down, and Gold stayed flat while Oil added 5.9%, outstripping the shiny stuff for the year (+13.8% versus +12.8%).

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

Quarterly Investment Review – Q2 2024

“Americans prefer strong and wrong to weak and right.” Warren Buffett

The second quarter was an unsettled one. The bond market rose modestly. In April the technology sector fell sharply before rallying strongly over the rest of the quarter. Most of the rest of the market did the exact opposite. In a year full of elections, the Indian result surprised with Prime Minister Modi experiencing a setback. In the European parliamentary elections, the parties with more nationalist tendencies did well, and in France this triggered a further election to take place in early July. As we enter the third quarter the US Presidential elections in November will start to dominate headlines in what looks a close race between two ageing and uninspiring candidates. Political uncertainty looks set to continue.

Election years tend to witness heavy spending because democratically elected Governments choose fiscal misbehaviour over unpopularity every time. There has been a relentless deterioration in western Government finances. US Federal spending increased 22% year over year to May and is up 55% since 2019 while the population has grown only 2%. The Federal debt has risen from 30% of GDP to 120% since the late 1970’s. As interest rates rise the government is being hurt as much as anyone. US Government debt now stands at $34.7 trillion and is increasing at a rate of $1 trillion every 100 days. If it had to pay 4.5% (the current two-year rate) on all of that, then that implies $1.56 trillion of interest payments annually. This sum is equivalent to the GDP of countries like Australia or South Korea. US economic growth has been exceptional over the last five years, adding approximately $6 trillion of GDP, but how much of this growth is due to fiscal spending?

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Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

May General Market Comments

“All eyez on me” – 2Pac, 1996

All eyes on who or what? Central Banks, geopolitics, US or European elections? No, all eyes on Nvidia, at least when it comes to equity markets.

Just to highlight how flabbergasting Nvidia’s impact has been this year (not even to mention 2023), the stock is up 121% year to date at the end of May, contributing to no less than 27% of the MSCI World’s performance for 2024 (just as a reminder, this index comprises 1’450 stocks). Even more eye-popping, if we focus on the US market, Nvidia alone has accounted for around 45% of the S&P 500’s 6% year-over-year earnings growth, excluding NVDA, the S&P’s earnings growth would fall to only 3.3%.

Such an outstanding performance from the – so far – big winner of the AI investing theme has allowed a vast array of Information Technology and Communication Services stocks to grind higher also, which drove us back to where we’ve been for the last 18 months or so, in other words an uber dominance from Growth versus Value. As the MSCI World has added 4.23% in May, its Growth component has soared 5.6% while Value “only” rose 2.8%. US equities logically led the march, with the S&P500 up 4.8% and the Nasdaq 100 up 6.3%. European equities fared correctly with the Stoxx 600 up 2.6%, while Emerging Markets struggled to add 0.3% and are only up 2.5% year to date, versus +10.6% for the S&P500. The lack of IT and Communication Services behemoths is being felt everywhere outside the US.

All eyes on Nvidia, yes, but some developments are worth mentioning elsewhere: with softer economic data, hopes that Central Banks will soon ease resurfaced, the US dollar fell 1.6% versus the euro and US 10 year yields receded by 18 bps. Gold benefited and added 1.8%, and a more pedestrian economic growth pushed Oil down 6%. Looming rate cuts favoured credit, with the Itraxx Crossover up 1.6%, and the Yen finally resisted somewhat and regained a modest 0.1% versus the USD.

That’s it for this month’s Market Comments, stay tuned, markets never skip a beat.

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

April General Market Comments

“Superstition” – Stevie Wonder, 1971

Everybody knows the old market quip “Sell in May and go away”, which sounds like a superstitious motto, but, depending on which side of the pond you’re based, the timing for coming back differs significantly. In the US, that’s Labor Day (beginning of September), and on the other side of the Ocean, that’s Derby Day (Epsom horses races in the UK, beginning of June). This adage is simply based on historical observations: there is statistical evidence that equity markets returns are, on average, much better between November and April than between May and October. But the rationale behind this performance gap remains nebulous: the most common belief is that volumes tend to dry up as the sun becomes more present, investors swapping their prescription glasses for sunglasses and being more focus on sunscreen than desktop screens. That doesn’t sound very serious, but there is no other real explanation. “You believe in things you don’t understand”, as Stevie sings.

Well, in 2024, the selling season has started earlier, as April was pretty poor; is this an effect of Climate Change? Probably not: there is more and more evidence that inflation targets will prove challenging to reach, especially in the US, which questions the previously expected rate cuts by the Fed this year, some participants even suggesting a possible hike, something that was clearly not in the cards. As a result, long term yields shot up (+48 bps for the US 10 year, +28 bps for the 10 year Bund), the dollar rose with +1.66% for the broad DXY index, and most equity markets fell: the MSCI World abandoned 3.9%, the S&P 4.2%, the Nasdaq 4.5% and the Stoxx 600 1.5%. Some surprises to mention though: despite a strong dollar and rising yields, Gold shone and added 2.5%, Emerging Markets equities resisted and ended the month up 0.3%, and the Chinese CSI 300 index surged 1.9%.

Value and Growth were both weak (-3.6% for the MSCI World Value and -4.1% for the MSCI World Growth), but the Japanese Yen takes the cake for weakness with a 4% fall versus the dollar (-11.6% ytd), mitigating the apparent strong Topix performance: in USD terms, the Japanese equity index lags the S&P 500 by almost 150 bps year to date.

That’s it for this month’s Market Comments, stay tuned, markets never skip a beat.

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group