The old market saying ‘sell in May and come back on St Leger’s Day’ looks to be ringing true for 2023.
Global markets have flip-flopped between tentative optimism that we are in range of the end of this interest rate hiking cycle and deep depression that we ain’t seen the worst of it yet. UK markets have struggled to make meaningful headway, with a 3.3% fall in the FTSE 100 taking the headline index back to flat for the year.
Rolls-Royce led the FTSE in August, continuing their encouraging share price momentum seen since 2022. As air travel picks up post-lockdowns, RR benefit from increased demand for their jet engine products and services. Admiral Group rose 17% on the back of interim results that reported improved underwriting results and higher investment income (thanks to higher rates).
At the other end of the index, asset manager abrdn (no capital letters please) fell 25% as shares remain in the doldrums. abrdn also called time on their once-enormous GARS (Global Absolute Return Strategies) fund this summer after an extended period of outflows.
As has been the theme for a while now, we saw two more opportunistic bids for UK-listed businesses trading on discounts to their international peers – Ergomed and Instem.
- Ergomed is a business that we have been shareholders in since February 2022. They specialise in running outsourced clinical trials for pharmaceuticals and pharmacovigilance (monitoring performance of drugs).
- Instem (we do not hold) provide IT services to the healthcare sector, specifically used in the early-stage development of drugs.
In both cases it is sad to see innovative UK-grown businesses taken off-market and credit to the overseas bidders in both businesses that took the opportunity to add quality businesses to their stable on a double-discount (low UK market valuations and weak sterling). Public markets would do well to follow their lead and invest before all the good’uns have gone!
The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.
Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.