After coping with falling prices for more than a year, OPEC members have finally struck a deal to reduce oil production, but will they stick to it? For our investment competition at least, the introduction of the M2 measurement has had more impact, causing the number one to drop a staggering 32 places.
From this week onwards, the ranking will be based on the Modigliani M2 risk adjusted return, whose formula can be found here. The relative high volatility of their portfolio is quite a burden to our previous number one, Audacity, who lost 32 places. CFQ instead has conquered the top of the ranking, even though their investments in the Aerospace & Defense sector and Heineken have yielded losses.
Although most investment groups made a loss this week, almost all outperformed the benchmark indices. Metrics Fund was unfortunate due to their investment in Alibaba, the Chinese E-commerce giant, which decreased quite a lot in value, while Hercules sees an opportunity to buy the stock cheaply. Aequitas lost on their position in Facebook, Tesla and Microsoft.
Rising commodity prices have had an extra impulse by the deal that has been struck between the member states of the OPEC to reduce the supply of oil. The question is whether it will be effective, given a poor compliance record. Also, half of the 1.2m barrels/day cut has to come from major producing countries that are not members of the OPEC, but it is still not sure who will take what part. Markets reacted clearly, as Brent crude went up 8.8% as the news came out and US shale companies surged almost 11%, the biggest one-day gain in eight years.
The unemployment rate in the US did well too and has fallen to its lowest level since August 2007. European unemployment rate is also descending, albeit very slowly. The Governing Council of the ECB will meet next week and it is expected that it will extend its policy of quantitative easing to reach its goal of 2% inflation, which is expected to take at least another two years.
Apple has publicly acknowledged that it has plans to develop a self-driving car. It has promised to bring “significant societal benefits” by developing life-saving technology that should prevent millions of car crashes each year.
Glencore, the miner and commodities trader, said it will return at least $1billion to its shareholders next year. Due to improved market conditions, the company has improved its financial health and has seen its share price soaring more than 200 per cent.
Written by Lemeng Li