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September performance of Element ONE

Element ONE
Issuer: ELEMENT ONE LTD 
ISIN Number: VGG299771086
IssueDescription: USD CL B SHS
ISO CFI: CICXXX

Element ONE investment fund performed -1,77% during September 2021

5 best-performing companies in our portfolio

  1. Ovintiv (Nyse: OVV)
  2. Activision Blizzard (Nasdaq: RSG)
  3. Progenity (Nasdaq: PROG)
  4. Immunome (Nasdaq: IMNM)
  5. Momentus (Nasdaq: MNTS)

In the independent rating of investment analysts — invest-idei.ru, Raison Asset Management is ranked 2nd out of more than 50 companies.

USA

The broad market index SP500 showed its worst month in a year, dropping 5.08% from 4527.75 to 4297.75. The decrease was performed by all 11 sectors included in the index.

The dollar index DXY increased by 1.69%, rising from 92.67 to 94.24.

An agreement was reached to raise the national debt ceiling by $480 billion, which prevents any default on federal payments until December.

In anticipation of this agreement, the cost of a one-year credit default swap (CDS) mounted at the moment to 27.5 (maximum since 2015). The current 5-year credit default swap is 14.10 and the implied probability of default is 0.24%.

The yield on 10-year US government bonds surged up to 1.607%.

Key points from the September Fed meeting:

  • Fed plans to continue purchasing assets for $120 billion a month until significant progress towards employment and inflation targets;
  • Fed downgraded the forecast for US GDP growth in 2021 to 5.9% (from 7%), in 2022 — improved to 3.8% (from 3.3%);
  • Fed downgraded the forecast for unemployment in the United States for 2021 to 4.8% (from 4.5%), in 2022 — kept at the level of 3.8%;
  • Fed raised the forecast for inflation in the United States for 2021 to 4.2% (from 3.4%), for 2022 — to 2.2% (from 2.1%);
  • If progress develops in accordance with expectations, then, in the opinion of the Committee, in the near future there may be a need to reduce the pace of asset purchases.

Interest rate chart of the US Federal Reserve after the meeting in September:

US Federal Reserve Chairman Jerome Powell:

  • The regulator still believes that the labour market continues to improve;
  • Inflation is high and will remain that way for several months before weakening. 
  • Inflation is projected to return to the long-term target;
  • Delta strain is a major risk to economic recovery;
  • When the main targets are reached, the FED will consider the optimal rate of withdrawal, which may happen already at the next meeting;
  • If the economy develops in the same direction, the Fed plans to complete the purchase of assets in the middle of next year.

The consensus forecast for phasing out emergency stimulus in the United States (beginningNovember 2021, endJuly 2022):

The latest statistics for the Fed’s two main benchmarks: inflation and the labor market:

  • The number of citizens employed in the non-agricultural sector has been declining for the second month in a row: actual — 194K, before — 366K.
  • At the same time, the overall unemployment rate is consistently decreasing: fact — 4.8%, before — 5.2%.
  • US GDP deflation (q/q): actual — 6.2%, before — 6.2%.

European Central Bank

Eurozone inflation accelerated to its highest level in 13 years.

Consumer prices increased by 3.4% in September, compared with a 3.3% growth forecast (Eurostat data). The indicator excluding volatile components such as food and energy raised to 1.9% (the highest since 2008).

  • The ECB predicts that inflation will reach the target of 1.5% in 2023;
  • The decision on the future stimulation of the economy will be made in December;
  • Premature tightening of monetary policy will prevent economic recovery;
  • The European Central Bank is exploring a new bond purchasing program to stave off any market shocks when emergency buying stops next year.
  • This plan will replace the existing anti-crisis instrument and complement the old perpetual quantitative easing scheme, which currently attracts 20 billion euros.

The next ECB meeting will take place on October 10 in Frankfurt.

China

People’s Bank of China:

  • Further QE purchases may disrupt the normal functioning of the markets. There is no need for QE at this time;
  • Forecasts that the potential growth rate of the Chinese economy will remain at the level of 5–6%;
  • For small and micro-businesses, the credit support course will be extended. An additional 300 billion yuan ($46.5 billion) will be allocated for on-lending.

Russian Federation

Bank of Russia Governor Elvira Nabiullina:

  • Inflation and inflation expectations in Russia need to be reduced as soon as possible;
  • Annual inflation in Russia will return to the 4–4.5% range in the second half of next year;
  • The Central Bank of the Russian Federation considers it important to extend the mechanism for limiting the full cost of loans to all types of credits, and not only to mortgages;
  • The regulator is ready to cool the consumer lending market in the Russian Federation.

Ministry of Finance of the Russian Federation:

  • The federal budget for 2022 was drawn up with a surplus of 1.41 trillion rubles or 1.1% of GDP;
  • Russia plans to place Eurobonds in the amount of up to $3 billion annually in 2022–2024;
  • The draft of the federal budget for 2022–2024 is based on the maintenance of the average contract price for gas in 2022 at $208 per cubic meter. m.;
  • The state debt of the Russian Federation in 2022–2024 is expected to be close to 20% of GDP;
  • The share of oil and gas revenues to the federal budget will decrease to one third by 2024.

Central bank rates:

  • FED: 0.25% (prev 0–0.25%)
  • ECB: 0% (prev 0–0%)
  • CBRF: 6.75% (prev 6.50%)

Rest of the World

Exceeding inflation targets in different countries (in%):

Economic growth rates in the world’s leading economies (according to OECD data):

According to a report by the Institute of International Finance, the world’s outstanding debt hiked by about $4.8 trillion in three months to a record $296 trillion.

Commodities market

The total commodity market represented by the Invesco DB Commodity Index Tracking Fund (ETF) gained 6.52%, from 19.01 to 20.25.

Due to the growth of the dollar and the yield of government bonds, the price of gold futures (GC) fell by 3.29%, ending the month at $1,757.00. The FAO Food Price Index, which tracks world prices of the world’s most traded food products, averaged 130.0 points last month, the highest since September 2011.

The gas price in Europe has once again broken a record, exceeding at the moment $1,900 per thousand cubic meters, and gas reserves are at a historically low level.

The OPEC + Monitoring Committee recommended adhering to the current terms of the deal and leaving the production growth in November at 400 thousand BPD.

Futures on the WTI mark in September soared 9.45% to $ 75.03 / bbl.

US Department of Energy forecasts:

SPAC

Stricter SPAC disclosure rules have been approved by the SEC. The advisory group recommended that the SEC conduct and publish an analysis of the SPAC industry and regulate listings “more intensively” by requiring:

  • Stricter adherence to the rules for disclosing information about the experience, contributions and conflicts of interest of SPAC sponsors;
  • Disclosures in plain language about financial incentives for various participants;
  • A clear description of the SPAC process and timeline, detailing the rules for how shareholders can vote on the deal;
  • More detailed information about the process of finding goals and opportunities, as well as the associated risks;
  • More details on due diligence that the sponsor agrees to disclose to accounting practices.

SPAC Status by IPO Years:

Summary of funds raised: