A clear trend in first half FY21 results season was that companies with higher revenue and profit growth expectations generally underperformed following their result. This included sectors such as Consumer Discretionary, Healthcare, Building and Construction and Technology. The market is currently looking through short term strength in profits and considering if the current valuation levels are sustainable in the medium term. The converse was true of companies with lower growth expectations and companies in the Banking, Telecommunications and Resources sectors outperformed post reporting. The market is currently looking through short term weakness in earnings if companies have the ability to recover with economic growth returning, aided by the roll out of vaccinations and continuing government stimulus. Rising bond yields remained a feature with the US 10 year yield rising more (in percentage terms) since January 2021 than it did during the whole of 2018 when the Federal Reserve was actually increasing rates.
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Ethical Partners are pleased to see Australia take the next steps to implement mandatory climate reporting with the release of draft climate standards, which we provided feedback on.
Ethical Partners have continuously called for the provision of high quality, comparable data on company’s climate governance and carbon metrics, which we believe is imperative for investors to fulfil the potential of responsible investment.
Ethical Partners have been proud to have been active supporters of the TNFD Forum over the past few years, and to provide regular feedback on the development of the official TNFD recommendations, which were launched in December, as well as to be active members of the RIAA Natural Capital Working Group.