|
|
Prudential International Growth Fund - News
|
|
|
|
|
Prudential International Growth comment - Dec 10
|
|
Monday, 7 March 2011
|
Fund Manager Comment
|
Equities generated positive returns during the quarter, thanks to improved sentiment about prospects for the global economy and some solid economic data. The mood was also boosted by the expectation of a further asset buy-back scheme by the US Federal Reserve, which was given the green light in early November. Against this generally positive backdrop, investors' mood was dampened to an extent by concerns about Ireland's financial health and banking system and ongoing sovereign debt problems of a number of other peripheral European countries.
In this environment, Japanese equities featured among the strongest performers over the quarter, followed by the US and Asia ex-Japan. The UK and Europe were behind the global average, all in sterling terms, but all main markets generated positive returns.
The trust was ahead of the index. Against a backdrop of buoyant market conditions, a range of cyclical holdings added value. In the UK, mining and metals firm First Quantum Minerals, iron ore producer Ferrexpo, mining firm Xstrata and oil company Essar Energy contributed to returns. Apart from optimism about prospects for the global economy these holdings were supported by strong commodity prices.
Similarly, certain auto-related holdings in the portfolio proved popular with investors who were increasingly confident about prospects for the sector given a more favourable economic backdrop. Specific contributors included French auto components manufacturer Valeo and German carmaker BMW.
Meanwhile, US company Royal Caribbean Cruises further supported returns. The company, which operates in the cruise holiday industry in North America and internationally, reported better-than-expected third-quarter earnings and guidance for 2011.
In Europe, a number of banks held back performance as the sector came under pressure because of concerns that Europe's sovereign debt crisis would spread. There were also worries over their potential exposure to bonds from the affected countries. Specific detractors included Italy's Intesa Sanpaolo and French bank BNP Paribas.
UK aerospace and defence company Cobham was out of favour with investors after the firm warned that underlying profit growth could be limited because of delays and deferrals in defence and security contracts in the US.
Finally, performance was held back by US agricultural commodities company Archer-Daniels-Midland, due to concern that ethanol subsidies might not be renewed at the end of the year. The excise tax credit for ethanol was extended in late December for another year, removing an overhang on the stock.
Investment outlook
Equity markets have recently been supported by general optimism about the economic recovery. Indeed, many corporate results have been better than expected and some economic indicators have been encouraging. However, this optimism is tempered by concerns about the sustainability of the recovery and further volatility might well occur in the immediate future. Longer term, the picture is rosier, with equities generally producing healthy returns for investors over time.
|
| |
|
Prudential International Growth comment - Jun 10
|
|
Thursday, 9 September 2010
|
Fund Manager Comment
|
Investor sentiment was broadly upbeat during the first quarter of 2010, due to optimism about prospects for the global recovery. There were, however, periods of risk aversion, which held back returns. For example, concerns arose that China would tighten its monetary policy in an attempt to control rising inflation, which could dampen economic activity. In addition, worries that Greece's sovereign debt problem might derail the global recovery served to undermine confidence, although investors were reassured once it became clear that the International Monetary Fund would probably become involved if necessary. Against this backdrop, global equities generated healthy returns over the review period in sterling terms, although the extent of the gains largely reflected sterling's weakness against the dollar and yen. Japan was one of the strongest performers, followed by the US, while Asia ex Japan, the UK and Europe trailed the global average, all in sterling terms. The Fund was behind the index, with performance held back by a holding in Italian bank Intesa San Paolo. As well as negative sentiment affecting the sector due to concerns about how Greece and other European countries, such as Portugal and Spain, would reduce their massive debt levels, Intesa San Paolo was hurt by fourth-quarter figures that were ahead of estimates only because of one-off items. UK insurer Prudential also hurt performance as investors digested the news that the company was making a major acquisition in the Far East and planned a $20 billion rights issue to finance the deal. Meanwhile, US IT and business services company Computer Sciences Corporation was weak after missing an important performance deadline on the UK N HS contract. More positively, the Fund's performance was boosted by a position in German engineering company Siemens, which reported strong quarterly profits after cutting jobs and lowering administrative expenses. UK pharmaceutical company Shire also announced favourable figures, with the company beating fourthquarter profit estimates, partly because of higher-than-expected US government rebates on the Adderall attention deficit pill. In addition, the company is a beneficiary of competitor problems with production quality. US department store retailer Macy's also boosted returns. Despite continued economic uncertainty, the company twice increased its earnings-per-share guidance in recent months.
|
| |
|
Prudential International Growth comment - Dec 09
|
|
Friday, 19 March 2010
|
Fund Manager Comment
|
Fund manager's feedback
Initial stockmarket gains gave way to heightened volatility in October as investors became more cautious about the pace and extent of the global economic recovery. There were also concerns that the rise in financial markets may have exceeded mixed news on economic fundamentals. November saw an improvement in sentiment following the announcement that G20 finance ministers and Asian leaders planned to keep economic stimulus measures in place. Investors were also heartened after the US Federal Reserve signaled that interest rates would remain at record lows for the foreseeable future. Meanwhile, the UK left interest rates on hold at 0.5% and the Bank of England extended the quantitative easing programme by £25 billion to £200 billion.
In sterling terms, the UK was the strongest performer among the major markets, followed by the US, Asia ex Japan, with all three markets generating respectable gains over the quarter. Meanwhile Europe and Japan trailed the global average.
The fund was slightly behind the index and was held back by a holding in Telekom Austria. The company disappointed after warning that its profits and sales would drop in 2010 because of new taxes on mobile services in eastern Europe and fewer fixed-line subscribers in its home market. Meanwhile, US group Hartford Financial Services was weak as investors took profits. In the UK, a light exposure to mining stocks was disadvantageous for performance as investors favoured the sector because of increased optimism about economic recovery and high commodity prices.
More positively, a relatively small presence in UK banks was helpful, as the industry came under pressure due to concerns about the sector's exposure to the Middle East because of Dubai's debt problem. The fund's performance was also helped by some of its larger cap holdings in Europe, which did better over the quarter after several months of weak performance. Specific contributors to the fund's performance included Dutch parcel delivery company TNT, French auto parts supplier Valeo, French pharmaceutical firm Sanofi-Aventis and French oil company Total. In the US, insurance company Cigna added value after reaffirming its earnings guidance for 2010.
Investment outlook
Notwithstanding recent gains in stockmarkets, the economic climate remains bleak with rising unemployment and depressed demand from businesses and consumers alike. More positively, financial market conditions have improved and there are signs of increased economic activity in a range of countries, although there are concerns regarding the sustainability of some of these advances. As a result, the economic recovery is likely to be fragile and major economies such as the US are still showing mixed signals. Despite the potential for short-term volatility, the fund manager believes that equity markets will lead to healthy returns for investors once the economic recovery becomes more established.
|
| |
|
Prudential International Growth comment - Sep 09
|
|
Thursday, 17 December 2009
|
Fund Manager Comment
|
The rally in world stockmarkets that began in March 2009 continued through the third quarter due to increased optimism about prospects for the global economy. Sentiment improved as investors started to hope that steps taken by governments around the world to combat the recession could lead to a recovery. Increased confidence was also based on less negative economic data and better-than-expected second-quarter results from many companies. In an environment of surging risk appetite, global equities generated robust gains over the quarter.
In sterling terms, Europe was the strongest performer among the major markets, followed by Asia ex Japan, the UK and the US, which all had double-digit gains, but Japan lagged all major markets.
The trust outperformed the index, with Dutch parceldelivery company TNT featuring as one of the main contributors to performance. The group has been cutting jobs at its Express unit in order to offset the trade slump, but has since added a further freighter service from Hong Kong in anticipation of a rebound in world trade as the global recession starts to ease.
Other contributors included UK company Segro, which owns business parks and warehouses. The company took advantage of the deterioration in commercial real estate values in the UK to buy rival Brixton. The deal makes Segro Europe's largest real estate investment trust specialising in warehouses and industrial buildings. In the US, Hartford Financial Services, a diversified financial services organisation, also added value. The company continues to benefit from the improvement in capital markets.
In terms of detractors, a number of more defensive holdings dampened returns. Defensive stocks tend to remain stable in difficult economic conditions, but fall out of favour with investors when economies begin to recover. Utilities and telecommunications companies are generally viewed as defensive, with specific detractors including Greek electricity firm Public Power and Gennan utility RWE. Telecommunications companies Telekom Austria, Deutsche Telekom and Swisscom also held back relative performance.
Meanwhile, UK aerospace and defence company BAE Systems detracted from performance due to concerns over the resilience of government defence spending and allegations of bribery with the aim of winning contracts in eastern Europe and Africa.
Investment outlook
Investor sentiment has picked up in recent months amidst hopes that the worst may have passed. Indeed, financial market conditions have improved and there are signs of increased economic activity in a number of countries, although there are concerns regarding the sustainability of some of these advances. The possibility of short-term disappointments remains, but the fund manager takes a longer term view, believing that global equities will lead to healthy returns for investors once a sustained recovery gets underway.
|
| |
|
Prudential International Growth comment - Jun 09
|
|
Friday, 18 September 2009
|
Fund Manager Comment
|
The early stages of the quarter saw a continuation of the rally in global equity markets that began in early March. Investor sentiment was buoyed by the measures taken by the authorities in the US and the UK to boost the supply of money and stimulate economic activity. However, confidence was dampened towards the end of the quarter as renewed concerns about the outlook for US economic growth reduced investors' risk appetite.
Asia ex Japan was the strongest performer in sterling terms, with double-digit growth, and the UK, Japan and Europe all recorded healthy returns, while the US was flat. However, in local currencies, all major markets were ahead of the UK, as sterling appreciated considerably against the dollar, the yen and the euro over the quarter.
The Fund was ahead of the index, with performance boosted by a holding in French bank BNP Pari bas, which announced first-quarter earnings that were ahead of analysts' expectations. In the UK, performance was helped by a holding in National Express Group, which gained following reports that the company had rejected an unsolicited offer from rival train operator FirstGroup. Elsewhere, shares in UK mining company Xstrata were boosted by increased investor confidence in its prospects against a more positive economic outlook. In the US, contributors included Textron, which operates in the aircraft, industrial and finance industries worldwide. Shares in Textron gained after the company raised $800 million in new capital, which significantly alleviated liquidity risk.
However, performance was held back by holdings in some large, defensive companies as they proved unattractive to more confident investors. Specific detractors included French entertainment company Vivendi, Dutch delivery company TNT and French pharmaceutical company Sanofi-Aventis. In addition, shares in UK music retailer HMV were weak as full-year profits dropped after a difficult trading environment. Meanwhile, US grain processor Archer Daniels Midland detracted from performance as it continues to be hurt by the global economic slowdown, especially in the corn crushing and ethanol businesses.
Investment outlook
Despite recent gains in stockmarkets, it is not clear how much longer the recession has to run and there may well be further volatility to come. On the downside, weak demand from consumers and businesses has led to downgraded forecasts for corporate earnings growth, while unemployment is rising. More positively, financial market conditions have improved and the downturn in economic activity seems to be slowing, although the timing of an end to the recession is uncertain. The possibility of short-term disappointments remains, but the fund manager believes that equities will lead to solid returns for investors once the economic climate improves.
|
| |
|
Prudential International Growth comment - Mar 09
|
|
Thursday, 11 June 2009
|
Fund Manager Comment
|
Global equities were weak for the quarter, reflecting ongoing concern about the economic slowdown and uncertainty in financial markets. Rising unemployment added to the gloom. Confidence was boosted in March as investors contemplated bold steps taken by the US authorities to soak up toxic assets from troubled banks. Furthermore, investors were encouraged when the US and the UK announced plans to buy large amounts of government bonds, effectively increasing the amount of money in their economies.
Asia ex Japan was the strongest region with a slight gain, but the US, Japan, UK and Europe all dropped sharply over the quarter, in sterling terms, as the rally towards the end of the review period failed to offset earlier losses.
The Fund was behind the index, with performance held back by a holding in German utility E.ON, which has been hurt as the recession lowers demand for energy. The company plans to sell 10 billion of assets in order to reduce debt. Similarly, German car maker Daimler is suffering as sales of its luxury vehicles in the US have fallen amid the shrinking economy.
Stocks in the UK travel sector came under pressure due to expectations that the recession would restrain traffic. In terms of individual holdings in the portfolio, coach operator National Express and rail company FirstGroup detracted from performance. FirstGroup is cutting 3,500 jobs in the US and the UK in response to the economic downturn and the company believes it can still meet its fiscal year earnings goals. Meanwhile, US company Textron, which operates in the aircraft, industrial and finance industries, further dampened returns, following weak results for the fourth quarter of 2008 and a disappointing outlook for 2009.
More positively, US financial services firm Morgan Stanley boosted performance. Although there was no specific company news, investors may be becoming more comfortable with the balance sheets of the traditional investment banks as they have aggressively marked down most of their hard-to-value assets.
In the European portion of the portfolio, Swedish company Ericsson, which makes wireless networks, also added value. The firm is gaining market share as competitors struggle to adapt their businesses to the slowing economy. Finally, UK oil and gas exploration company, Tullow Oil which has projects in Ghana and Uganda, contributed to performance. The shares gained after the company raised $2 billion in loans to fund developments and refinance debt. In addition, it announced a further discovery in Ghana.
Investment Outlook
Worries about inflationary pressures have been replaced by concerns about the prospect of a prolonged economic slump. Until it is clear that the governments' aggressive policy measures are having the desired effect, significant market volatility is likely to persist in the immediate future. Nevertheless, we are convinced that prospects for global equities are sound over the longer term.
|
| |
|
Prudential International Growth comment - Dec 08
|
|
Monday, 23 March 2009
|
Fund Manager Comment
|
The quarter under review proved very challenging for global equity markets, with investor confidence severely weakened by concerns about the economic slowdown and fears over available credit. Furthermore, the fundamental stability of the global financial system was called into question following the collapse of several institutions, starting with US investment bank Lehman Brothers. Various monetary authorities around the world implemented a series of interest rate cuts in an attempt to improve liquidity and boost economic activity.
Against this difficult backdrop, Japanese equities were among the strongest performers, while UK equities were behind most major stockmarkets over the quarter, all in sterling terms. However, this largely reflected the weakness of sterling against many currencies over the quarter. In local currencies, UK equities were ahead of most markets, although all recorded a decline.
The Fund was ahead of the index, with performance boosted by UK oil company BP. Although oil prices have been falling since July, BP intends to boost future dividends.
Performance was also helped by a number of defensive holdings, including French media company Vivendi, French drugs firm Sanofi-Aventis and Swiss telecommunications firm Swisscom. Defensive stocks tend to remain stable during difficult economic and market conditions, although they do not generally make strong gains when the environment is more positive.
In the US, grain processor Archer-Daniels-Midland continued to benefit from strong profits, which were ahead of consensus estimates, while steel company Nucor also added value.
Inevitably in such a tough environment there were some disappointments. UK mining companies Lonmin, Xstrata and Rio Tinto detracted because of lower prices for metals.
Elsewhere, French bank BN P Paribas was punished by investors after issuing an unfavourable trading update. Furthermore, the bank may lose funds through indirect exposure to Bernard Madoff's investment advisory business.
Investment outlook
Looking forward, worries about inflationary pressures that were prevalent only a few months ago have been replaced by concerns about deflation and the prospect of a prolonged economic slump. As a result, significant market volatility is expected to remain evident in the immediate future. Nevertheless, we are convinced that prospects for global equities remain sound over the longer term.
|
| |
|
Prudential International Growth comment - Sep 08
|
|
Tuesday, 25 November 2008
|
Fund Manager Comment
|
Volatility continued during the quarter under review, with sentiment dampened by concerns about slowing economic growth, rising inflation and fears over available credit. Turmoil in financial markets, stemming from the sub-prime mortgage crisis and the credit crunch, from mid-September led to sharp declines in global equities and most markets were down over the quarter. Against this challenging backdrop, US markets made modest gains, while the global average, Japan, Europe, the UK and Asia Pacific (ex Japan) were all in negative territory, all in sterling terms.
The Fund underperformed the index, with detractors including Greek utility Public Power, which is struggling with its restructuring plan. A range of UK companies were hurt by falling commodity and oil prices in the wake of slowing economic growth. Specific detractors included miners Xstrata, Rio Tinto, Anglo American and Lonmin and oil company Premier Oil. Performance was also held back by a holding in US firm Wachovia, one of the firms damaged by the recent turmoil affecting financial companies.
On the upside, performance was helped by holdings in French bank BNP Paribas and Italian financial services company Intesa SanPaolo. Other contributors included British Energy, which gained from takeover speculation and subsequently a bid from French company EDF. A holding in US banking group Wells Fargo also added value. The company has fared much better than its peers in an extremely challenging housing and consumer credit market.
Investment outlook
It is clear that financial markets face serious difficulties and global economic growth is slowing. In the past few months there have been dramatic developments in financial institutions and markets in the US and elsewhere and governments around the world have taken steps to ease the financial crisis. However, investors' appetite for risk has been severely depressed and further volatility is to be expected. Despite the recent declines and the current uncertainty, the fund manager remains convinced that prospects for global equities are sound over the longer term.
|
| |
|
Prudential International Growth comment - Mar 08
|
|
Friday, 23 May 2008
|
Fund Manager Comment
|
The period under review was largely characterised by periods of sharp volatility in equity markets as investors became increasingly concerned about the prospect of a global economic slowdown.
Interest rate cuts in the US and the UK brought some relief for investors, but most equity markets were in negative territory over the three months under review. Europe and Japan were ahead of the global average, while the US, Asia Pacific (ex Japan) and the UK trailed behind, all in sterling terms. The performance of Europe and Japan was significantly boosted by the strengthening of the yen and euro against the US dollar.
The Fund underperformed the index and detractors included German engineering company Siemens, which issued a profit warning in its power generation unit. Certain European telecommunication companies were hurt by an unexpectedly harsh regulatory environment in the sector. UK publishing group Informa also held back performance after its chief executive left to join a rival company. Finally, US company Sprint Nextel, which provides communication products and services, was weak after a disappointing fourth quarter with declines in both revenue and operating income.
More positively, performance was boosted by a holding in Swiss food giant Nestle, which raised its sales for the year because of price increases, as well as higher chocolate sales during Easter. Fourth-quarter earnings by Swiss insurer Zurich Financial Services were ahead of analysts' estimates, reflecting higher income at the company's property and casualty division. Performance was also supported by a holding in British Energy as a result of takeover speculation. US steel company Nucor added further value against a backdrop of strong prices.
The longer-term prospects for corporate earnings are reasonable and equities remain attractively valued, relative to other asset classes. However, in the immediate future, a good deal of doubt remains concerning the full effects of weaker economic activity in the US on the world economy and thus on companies' profits. Furthermore, after a protracted growth phase, some moderation in global expansion is also possible. There is likely to be continued volatility in equity markets until more clarity emerges, although we remain convinced about the longer-term argument for investing in equities.
|
| |
|
Prudential International Growth comment - Dec 07
|
|
Friday, 22 February 2008
|
Fund Manager Comment
|
World equity markets remained volatile over the quarter, due to continued concerns about a slowdown in US economic growth and the possibility that this would have a global impact. These worries were fuelled by the deteriorating housing market in the US and the collapse of the US sub-prime mortgage market, which lends to people with poor or no credit history, as well as the reduced availability of credit. Investor confidence was boosted in October and again in December, following cuts in US interest rates, but overall, equities were subdued over the quarter. Against this backdrop, European equities made reasonable returns, while Asia (ex Japan), UK, US and Japan were in negative territory over the quarter.
The Fund underperformed the index and detractors included US financial services provider Washington Mutual, US clothing and accessories retailer Liz Claiborne, UK mortgage lender HBOS and Swedish wireless network manufacturer Ericsson. Washington Mutual has been hurt by the deteriorating housing market in the US and faces a series of challenges, including higher credit costs and a negative mortgage environment, while Liz Claiborne's share price fell in response to a slowdown in US consumer spending due to concerns about economic activity. Elsewhere, H BOS detracted from performance due to continued negative sentiment stemming from uncertainty over the availability of credit and a weakening housing market in the UK. Shares in Ericsson dropped sharply after it announced that third-quarter profits and sales trailed forecasts. The company has been hurt by lower demand for network upgrades in North America and Europe.
More positively, a number of companies contributed to performance. These included Archer Daniels Midland, which processes agricultural products. The US company benefited from higher ethanol prices and a US Energy Bill, which was more favourable than expected for ethanol production over the next few years. UK miner Rio Tinto also added value. The company's share price rose sharply on the back of a hostile bid by BHP Billiton and subsequent speculation of a rival Chinese offer. Finally, Siemens added value, on the strength of healthy fourth-quarter earnings, which exceeded analysts' expectations and the announcement of a large share buyback.
Investment outlook
Following a difficult period, investor confidence is understandably low. There are, however, reasons for equity investors to be optimistic. Economic growth is continuing apace in China and economies in Eastern Europe, Asia and Latin America are also growing well. Until there is some clarity about the effect of the US sub-prime mortgage market and the credit crunch on corporate profits and the global economy, volatility is likely to continue. Regardless of any short-term volatility, prospects for equities over the longer term remain favourable.
|
| |
|
Prudential International Growth comment - Sep 07
|
|
Tuesday, 30 October 2007
|
Fund Manager Comment
|
Turmoil in the financial markets led to a flight from riskier assets around the globe that threatened to destabilise economic growth. In response, central banks in major economies injected large sums into the financial system. Markets dipped sharply in July and remained subdued in early August. Sentiment improved when the US Federal Reserve announced a surprise cut to the discount rate. The agency also revealed that it was prepared to take further actions if necessary, thus providing some relief for investors. Further relief came towards the end of the quarter when the Federal Reserve cut interest rates by 0.5%, a larger cut than had been expected. Against this backdrop, Japanese, UK and European equity markets fell over the quarter, while the US made modest gains. However, Asian equities made strong gains on the back of robust economic growth.
The Fund underperformed the index. Various European banking positions were hurt by the credit market turmoil, including Fortis, BNP Pari bas and Commerzbank. In the US, a holding in insurance and financial services company Radian Group held back performance. The company was hurt by increased fear in the credit markets related to subprime mortgage exposure. In addition, investors reacted negatively to the failed merger between Radian and MGIC Investment. Meanwhile, UK pub landlord Punch Taverns also detracted from performance. The company had performed well on the back of its property portfolio, but real estate stocks were weak throughout the quarter.
Performance was helped by a position in UK mining group Rio Tinto, which gained on sustained growth and demand from China and continued increases in commodity prices. Public Power Corp added further value on the back of hopes of reform following the Greek election. US Company Goodrich also contributed. The firm provides components, systems and services to US aviation markets and it has benefited from strong original equipment manufacturer and aftermarket sales.
Investment outlook
The reduction in US interest rates may well provide fresh impetus for the economy. Although there are question marks over the US, growth elsewhere around the globe remains robust. In Asia for example, China is still growing at a brisk pace, thereby supporting global commodity prices. Although the potential for further short-term volatility lingers, prospects for equities over the longer term remain favourable.
|
| |
|
Prudential International Growth comment - Jun 07
|
|
Tuesday, 25 September 2007
|
Fund Manager Comment
|
Global economic growth continued during the second quarter, with all major regions showing healthy advances. World equity markets made solid gains over the three months, despite a temporary dip in June. This overall good performance was helped by robust economic data and better-than-expected earnings results. The Pacific Basin and Europe continued to be the best performing regions, with UK, US and Japanese equities generating lower returns.
The Fund underperformed the index. Performance was held back by a position in UK real estate investment trust Land Securities Group. Belgian financial services company Fortis was weak, after the group's first-quarter profits missed estimates. Elsewhere, a holding in Dutch express delivery service company TNT also detracted. The company's first-quarter profit more than doubled because of the sale of a freight management unit, but TNT's shares fell due to concern that express delivery revenues would not meet the company's annual target. Finally, US clothing retailer Liz Claiborne held back performance after the company's first quarter earnings dropped sharply and it forecast an unexpected decline in annual profit.
Holdings in UK mining companies Lonmin and Rio Tinto added value to performance. Shares in the two firms gained on the back of continued high metal prices. Further contributors included German utility company EON and Siemens. German industrial giant Siemens made healthy gains as investors realised that the company's restructuring programme would continue despite the resignation of the CEO. US Armor Holdings, which makes vehicle protective systems for the military, boosted performance after Europe's BAE Systems agreed to buy the company for US$4.14 billion in cash.
|
| |
|
Prudential International Growth comment - Mar 07
|
|
Monday, 28 May 2007
|
Fund Manager Comment
|
After a strong start to the year, equity markets dropped sharply in February 2007. Investors became more risk averse because of rumours of a crackdown on illegal share trading in China and fears of a global slowdown in economic growth. Nevertheless, investors regained their confidence towards the end of the quarter and equity markets made modest gains over the three months.
The Fund was ahead of the index, helped by a position in UK internet firm PartyGaming, as investors were encouraged about the possibility of a more liberal Europe-wide online gambling market following a ruling by the European Court of Justice. Takeover activity featured prominently, which proved beneficial for the Fund. Shares in UK company, MyTravel. gained following news of a merger with travel company Thomas Cook.
Meanwhile, shares in Dutch bank ABN Amro gained following a takeover approach by UK banking group Barclays and French company Val eo. Performance was held back by a holding in French lender BN P Pari bas, afterfourth-quarter net income at the company's domestic retail bank business missed estimates. Power producer British Energy also detracted, reflecting investors' unease about prospects for the company's profits.
|
| |
|
Prudential International Growth comment - Dec 06
|
|
Wednesday, 14 March 2007
|
Fund Manager Comment
|
Equity markets performed strongly over the quarter. All major global regions made gains over the three months, with Pacific Basin equities among the top performers. Evidence that the US was unlikely to be heading for a recession improved investor sentiment. Lower oil prices also boosted performance by reducing inflation. This in turn lessened the probability of global interest rate increases. Cyclical sectors drove global equity performance with telecommunications services, media and utilities companies generating healthy returns.
The Fund underperformed the benchmark, with online gaming companies PartyGaming and Sportingbet among the largest detractors. Like others in the sector, the two stocks were hurt after laws were passed in the US preventing internet gambling. Shares in Swiss food company Nestle weakened after the company warned that stagnant demand in Europe would probably restrict sales growth. Meanwhile, insurer of mortgages and other debt Radian also disappointed. Shares in the US company dropped on the news that its third-quarter net income would be less than the average amount expected by analysts.
Among the contributors to performance, pub operator Punch Taverns benefited from higher sales, largely because of acquisitions and renovated properties that won more customers. UK miner Lonmin was also among the contributors due to robust demand for platinum, which is used in catalytic converters that help reduce exhaust emissions. French water company Suez added value following media speculation about a possible bid for the company, while US residential broker Realogy made good gains after Apollo Management LP agreed to buy the company for $6.6 billion.
Investment outlook
The environment for investors in global equities continues to look encouraging. Companies remain committed to improving profits, while valuations are undemanding. The rapid expansion of emerging markets, such as China, India and eastern Europe, is also providing investment opportunities for skilful equity buyers. With its broad diversification across countries and sectors, the fund is well placed to achieve pleasing returns with a low level of volatility.
|
| |
|
Prudential International Growth comment - Sep 06
|
|
Tuesday, 28 November 2006
|
Fund Manager Comment
|
Global economic growth continued positively over the quarter. Although there were signs that US growth was slowing, the indications were that a soft landing is likely rather than a significant downturn in the US economy. The central banks of the UK, the euro area and Japan raised interest rates over the period. Economic growth in the UK, continental Europe and the majority of Asian economies has continued to expand. Concerns over inflation receded in the US towards the end of the period. However, in the UK and Europe, stronger-than-expected economic data suggested that inflationary pressures remained.
Equity markets rallied over the quarter. Investor sentiment improved as robust economic conditions and a decrease in inflationary pressures lessened the likelihood of future global interest rate rises in the near term.
The Fund was behind its index. Performance was hurt by a position in online gaming company Sportingbet, which was affected by a clampdown in internet gambling in the US. A holding in oil company BP also disappointed, reflecting lower oil prices, a series of environmental blunders and a shortfall in production. Swedish firm Securitas, a provider of security services, was a further detractor after the company failed to find a buyer for its cash-handling division. Meanwhile, Caterpillar, a US manufacturer of earth-moving equipment, saw its share price fall due to investors' concerns of a slowdown in US economic growth.
More positively, a position in UK casino operator Stanley Leisure proved helpful. after Malaysian gambling group Genting agreed to buy the firm for £484 million, leading to healthy gains for the company. UK telephone company Cable & Wireless also added value as investors welcomed the firm's plans to focus on faster-growing markets by expanding overseas. Swiss insurer Baloise contributed to performance due to takeover speculat~on. Elsewhere, Swedish truckmaker Volvo's share pnce rose In response to newspaper reports of a potential buyout bid. Finally, US paint retailer Sherwin-Williams benefited from healthy demand for coatings at company-owned stores.
|
| |
|
Prudential International Growth comment - Jun 06
|
|
Wednesday, 16 August 2006
|
Fund Manager Comment
|
Following a strong start to the quarter, equity prices across the world fell back sharply in May. By the end of the quarter, most major markets ended in negative territory as investors fretted over both future monetary conditions and sharp declines in global commodity prices. Less developed markets were generally harder hit than their more developed counterparts over the three months, indicating a significant rise in investors' aversion to riskier assets.
The Fund outperformed the index, with performance helped by positions in UK platinum miner Lonmin and UK airport owner BAA. Lonmin benefited from rising demand for the precious metal. while shares in BAA rose after it received a takeover bid from Spain's Grupo Ferrovial. French bank BN P Pari bas also added value. The bank's first-quarter profits beat expectations after revenues from investment banking increased and acquisitions in the US lifted earnings from consumer lending. Shares in US energy firm Kerr-McGee gained strongly after Anadarko Petroleum agreed to buy the company.
Performance was held back by a holding in UK orthopaedic company Smith & Nephew. Investors were concerned about Smith & Nephew's longer-term growth prospects after the company cut its earnings forecast, citing lower healthcare spending in the US and Europe. A holding in Swedish wireless network maker Ericsson also detracted following a disappointing outlook statement by the company as it integrates the Marconi acquisition. Shares in US company Computer Sciences fell after it announced that it was no longer putting itself up for sale. The company has also received an informal request from the US Securities and Exchange Commission relating to stock-option grants.
|
| |
|
Prudential International Growth comment - Mar 06
|
|
Thursday, 11 May 2006
|
Fund Manager Comment
|
It was another good quarter for equities, with all major markets ending the period in positive territory. European stocks were the strongest, while the UK also generated above-average returns. Equity markets were buoyed by upward revisions to earnings forecasts across all major regions. The sole exception was the US, where concerns over consumer spending meant that forecasts remained largely unchanged.
The Fund outperformed its index over the three months. Performance was helped by bid speculation concerning various holdings in the Fund. Shares in UK platinum producer Lonmin gained after initial talks in February with a third party aroused investor interest, but the talks ended without a bid a week later and Lonmin's share price fell back. However, in common with other stocks in the sector, higher metal prices then drove the share price up further. Similarly, oil and gas company BG Group performed well, partly on the back of speculation that a rival company was interested in making a bid and partly due to high gas prices. German pharmaceutical company Schering added strong value on the back of its takeover by Bayer. Meanwhile, US steel company Nucor was a further contributor because of improved demand from builders and lower costs for the scrap the company recycles to make steel.
Performance was held back by a holding in UK newspaper group Daily Mail due to investor disappointment that the company would not after all sell its Northcliffe regional newspaper unit after receiving bids that it considered were too low. A position in Danish shipowner AP Moeller-Maersk, which saw its full-year profit fall due to higher costs and taxes, also detracted. The company warned that profit for 2006 would fall by as much as 15% because of lower freight rates. Swiss foodmaker Nestle hurt performance as higher oil prices increased its fuel bills and the cost of oil-based plastic packaging. US boats company Brunswick disappointed due to weak demand for recreational watercraft.
|
| |
|
Prudential International Growth comment - Sep 05
|
|
Wednesday, 26 October 2005
|
Fund Manager Comment
|
The third quarter of 2005 saw major gains for equity markets, based on a combination of optimism on global growth, positive news from the corporate sector and modest share valuations. However, the continued strength of the oil price has also been a factor. Once again, variations in returns from different markets and sectors were significant. The main prizes went to Japan and emerging markets, while the US continued to lag behind. Commodities and resource-related stocks were also outstanding, while the general retail sector was one of the weakest areas.
The Fund was behind the index, with performance held back by positions in Royal Bank of Scotland and UK broadcaster ITV. Royal Bank of Scotland disappointed after its first-half net income fell short of analysts' estimates. However, we are confident about the longer-term prospects for the stock as it is inexpensive and has a successful track record of building new businesses. ITV was hurt by a declining share in television audiences. However, the company is trying to reverse this trend by boosting its presence in free TV systems where it has higher ratings than pay-TV channels.
On the upside, performance was helped by holdings in UK stockbroker Collins Stewart Tuller and Rio Tinto. Shares in Collins Stewart Tuller rose more than 20% after receiving a number of takeover approaches. Mining group Rio Tinto gained because of strong prices for copper and raw materials such as iron ore, in turn due to increased demand from China. Holdings in Sandvik and Repsol also added value.
Investment outlook
The final quarter of the year is likely to trigger intense discussions about the outlook for economies and financial markets in 2006. Prospects for the US, where high oil prices and rising interest rates may lead to an economic slowdown, will be keenly debated. Investor confidence is robust, liquidity is plentiful and stockmarket valuations are comparatively undemanding. This combination should support further stockmarket gains.
|
| |
|
Prudential International Growth comment - Jun 04
|
|
Thursday, 16 September 2004
|
Fund Manager Comment
|
Fund manager's feedback
As concerns emerged about high oil prices and interest rate increases in both the US and the UK, most international equity markets made only modest gains over the quarter. In addition, investors became more cautious because of measures taken by the Chinese authorities to slow down economic growth. Over the quarter, Europe, the UK and the US made small gains, while Japan was in line with the global average. However, the Pacific region, which saw strong growth for much of 2003, fell nearly 5%. This was due to concerns about prospects for Chinese economic growth, as the region had derived considerable benefits from Chinese economic expansion.
The Fund underperformed the FTSE World Index over the quarter, with mining company Lonmin proving a disappointment. During 2003, the firm had benefited from strong demand in China for copper and platinum. However, the recent measures to cool the Chinese economy led to investor concern that an economic slowdown could lead to lower demand for a variety of metals, with potentially detrimental effects for mining companies such as Lonmin. A position in Nokia hurt performance. Security services provider Securitas also detracted, as the company's first-quarter profit declined due to a slowdown in the US, an important market for the firm.
More positively, aircraft engines manufacturer Rolls-Royce produced strong performance. Rolls-Royce is seeing greater demand for spare parts and repairs, and has also carried out successful restructuring measures. Swiss travel company Kuoni Reisen also added notable value. US insurance company Radian also added value.
Investment outlook
Recently, stock markets have been lacklustre, due to investor concern about ongoing hostilities in the Middle East, as well as the possible effect of the high price of oil on continued economic recovery. However, as investors are becoming more hopeful that some of these reasons for caution will be resolved, they are beginning to focus on the positive factors again.
Encouragingly, the recent weakness in equities has left us with a greater number of attractively priced investment opportunities. We believe that the Fund is sufficiently diversified to be able to maximise the return on your investment, while minimising exposure to risk.
|
| |
|
Prudential International Growth comment - Mar 04
|
|
Monday, 10 May 2004
|
Fund Manager Comment
|
Fund manager's feedback
The first quarter of the year has seen an inevitable loss of momentum after the rapid recovery of share prices and investor confidence during 2003. The US, the UK and European stock markets slipped back slightly over the quarter, while Japan and, to a lesser extent, the Pacific region, made good progress. At sector level, there has been some reversal towards defensive areas, with Real Estate and General Retailers among the top performers. Technology stocks, which had been one of the favoured areas during 2003, suffered a setback, as investors believed improved trading prospects had already been factored into the share prices, and the Software sector was one of the weakest performers. Pharmaceuticals also remained out of favour with investors.
The Fund was broadly in line with the FTSE World Index over the quarter. Contributors came from a wide range of sectors. As in the previous quarter, a number of selected European banks added to performance, with UBS and Credit Agricole contributing. An upbeat profits forecast led to good gains for Aerospace group Rolls-Royce. Although the Support Services sector was flat over the quarter, individual companies in the area added particular value. These included Serco, which is benefiting as the UK government contracts out more services, and security firm Securicor. North American contributors to performance included Leisure company Brunswick, Insurance firm Lincoln National and Retailer Federated Department Stores.
Investment outlook
Despite a volatile quarter, investors in global equities are generally optimistic that stock markets are pausing before a further upturn. Sentiment is also boosted by a revival in merger and acquisition activity, although investors are, as always awaiting further economic and corporate news. Particular attention will be paid to the first quarter 2004 US company reporting season, which is due in mid-April. Any setback to global economic recovery, is likely to shake investor confidence. In Europe, currency issues remain a concern.
Whichever direction the global marketplace takes from here, however, the Fund is sufficiently diversified to be able to maximise the return on your investment, whilst minimising exposure to risk.
|
| |
|
Prudential International Growth comment - Dec 03
|
|
Monday, 9 February 2004
|
Fund Manager Comment
|
The vast majority of equity markets gained over the fourth quarter of 2003. The global recovery which began in March 2003 continued, producing steady growth over the three months. The strongest gains were made by China, which is experiencing exceptional growth, and to a lesser extent Brazil, India and Argentina. European markets rose more than the global market, as did the UK. Japanese stocks were flat, but this is likely to reflect a period of consolidation after earlier strong gains. At sector level, results were mixed, with cyclical consumer goods and non-cyclical services ahead of the market. Cyclical services and non-cyclical consumer goods trailed behind.
The Fund outperformed the FTSE World Index over the quarter. Banks had a positive effect on performance, with the sector outperforming the market. Individual European banks, such as Deutsche Bank, BNP Paribas and Danske Bank, in particular, featured prominently. Telecommunications group Deutsche Telekom also added value as investors welcomed its improved financial performance and efforts to reduce debt. Raw materials industries, such as steel and mining, also made good gains.
Investment outlook
Investors in global equities are confident that stronger US economic growth will boost other parts of the world. This optimism goes a long way towards supporting equities. Any actual improvement in overall economic conditions should benefit global stock markets considerably. Certain positive economic data emerging from the US holds promise for a continued upturn in the economy. These include improved consumer spending and belatedly, signs of employment growth. Nevertheless, investor confidence is fragile and there are still risks which could damage long-term growth in both economies and stock markets. For example, any disappointing economic news from the US could easily shake investor confidence, which could hurt share prices. We are confident that the Fund is sufficiently diversified to be able to maximise the return on shareholders' investments, while ensuring a careful approach to risk.
|
| |
|
Prudential International Growth comment - Jun 03
|
|
Wednesday, 13 August 2003
|
Fund Manager Comment
|
The second quarter of the year has seen a welcome recovery in equity markets and a partial restoration in confidence. There are now some tentative signs of recovery in the US economy, although growth forecasts elsewhere, especially in Europe, are still being scaled back.
On a sector level, shares in companies which three months ago were regarded as being most at risk have enjoyed the biggest re-rating. Banking and insurance stocks in particular have seen good growth over the quarter. More defensive stocks, however, have not been as responsive to an upsurge in the markets. Bonds and gold in particular have seen comparatively little interest from investors.
In terms of the Fund's performance over the quarter, returns were hindered marginally by disappointing performances from the mining and metals industries. Companies in these sectors dropped slightly in value as investors moved away from these defensive areas towards more cyclical stocks.
Nevertheless, losses here were offset by gains elsewhere in the Fund, as a range of sectors contributed to performance. Both pharmaceuticals stocks and technology shares performed particularly well over the period, rallying strongly as investors gained confidence in these areas. As technology stocks are the Fund's largest overweight, and the Fund is also overweight in pharmaceuticals, it was able to benefit well from the gain.
|
| |
|
|
