UK: Suitable for retail investors. Rest of Europe and Singapore: For sophisticated investors only.

40.2%30.3%

8.3% 7.7% 4.1%

Business/manufacturing

Health care Retail Security Transportation

Source: Quilter Investors, Strategy Analytics M2M Strategies advisory service, McKinsey Global Institute, NYTimes.com.

Between the linesMulti-asset investment thinking from the Quilter Investors team.

25Week

The internet of thingsThe advent of 5G networks has made the internet of things (IoT) a reality. One day soon, everyday objects will be quietly gathering and sharing data that shapes our daily lives. By 2025 alone, the IoT is expected to account for $6.2trn in global business.

Going, going, gone…Sotheby’s, the storied British auction house, went under the hammer for $3.7bn on Monday (17 June) when the French telecom billionaire and art collector Patrick Drahi swooped in with a $57 a share cash deal.

The deal represents a premium of over 60% to Sotheby’s closing price last Friday and means that both of Britain’s premier auction houses – Sotheby’s and Christie’s – are now in French hands.

After spending just over 30 years of its 275 year life as a public company, the deal returns Sotheby’s to private ownership at a time when the art market is booming once again.

Sotheby’s famously sold the most expensive painting of 2018, Modigliani’s Nu couché, for over $157m and last month sold a Claude Monet “Meules” (Haystacks) original for over $110m.

Array of light? Pfizer’s latest cancer dealPfizer has pounced on Array, a US biopharma business, with a $10.6bn bid that represents a 60% premium to the latter’s closing price last Friday. Array’s shares jumped over 58% on Monday (17 June) meaning they have doubled so far this year.

Pfizer’s board jumped last month after Array released positive clinical data showing that its Braftovi and Mektovi treatments for melanoma, when combined with Eli Lilly’s Erbitux, helped reduce mortality risk by almost 50% for patents with certain types of colorectal cancer.

Recent years have seen Pfizer fail to convert ambitious attempted mergers with both AstraZeneca and Allergan. Its latest deal is the biggest since it spent $14bn to acquire Medivation and its prostate cancer drug Xtandi in 2016.

Credit: ProArtWork/iStock Credit: freemind-production/shutterstock

Fund managers get cold feet in MayAccording to the latest BoA Merrill Lynch survey, the last time fund managers were this nervous was just after the collapse of Lehman Brothers in 2009.

As Quilter Investors, head of dealing, Maz Alamouti observes, “This is far more than just ‘sell in May and go away’. We saw a huge shift last month; average cash levels jumped 20% [to 5.6%] and allocations to global equities fell [32%] to their lowest since March 2009. Meanwhile, equity investors have piled into classic, quality defensives.

“At the same time,” he says, “bond allocations jumped 12% and US Treasuries became the most ‘crowded trade’.

”Trade war concerns, potential recession and monetary policy impotence have made fund managers batten down the hatches.”

UK: Suitable for retail investors. Rest of Europe and Singapore: For sophisticated investors only.

This is far more than just ‘sell in May and go away’...cash levels jumped 20% and allocations to global equities fell... to the lowest since March 2009.

Chart of the weekRare events: China has always held a commanding hand in the rare earths market but recent political rumblings there suggest that these hard to refine elements could soon become front line weapons in China’s trade battle with the US.

Rare opportunity for China’s trade warriorsVeiled threats from Beijing that ‘rare earth’ metals could soon become a beachhead in its ongoing trade war with the Trump administration have seen the prices of local mining companies skyrocket as China’s propaganda machine gathers pace.

China enjoys a strangle-hold on the 17 elements in the rare earth family and accounts for around 90% of global processing. Trace amounts of rare earths are required for everything from iPhones and electric cars to weapons systems and oil refining.

China’s President Xi Jinping and his top trade negotiator made a public visit to JL MAG Rare-Earth, a major processing company in Jiangxi province, last month. Since then, its shares have gained over 190%. Shares in similar Chinese companies have also boomed with China Minmetals up 52% and China Northern Rare Earth up 34% over the same period.

Source: Quilter Investors/Scotiabank Economics, US Geological Survey.

Maz Alamouti, head of dealing, portfolio manager, Quilter Investors.

Important informationPast performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back any of the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter Investors Limited (“Quilter Investors”), Millennium Bridge House, 2 Lambeth Hill, London, England, EC4V 4AJ. Quilter Investors is registered in England and Wales (number: 04227837) and is authorised and regulated by the Financial Conduct Authority (FRN: 208543).

This communication is for information purposes only. Nothing in this communication constitutes financial, professional or investment advice or a personal recommendation. This communication should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments in any jurisdiction. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the document.

Any opinions expressed in this document are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or companies within the same group as Quilter Investors as a result of using different assumptions and criteria.

Quilter Investors is not licensed or regulated by the Monetary Authority of Singapore (“MAS”) in Singapore. This document has not been reviewed by MAS.

QIL-xxx-19/219-0647/SK18218

China dominates production

of rare earth compounds

China, 71.4%

Australia, 11.9%

USA, 8.9%

Brazil, India, Burundi, Malaysia, Thailand, Vietnam, 3.2%

Myanmar, 3.0%

Russia, 1.5%

Balancing act: Facebook to launch LibraOn Tuesday (18 June) Facebook announced the launch of a new cryptocurrency it calls Libra and a digital wallet to save, send and spend it called Calibra, which will be linked to Messenger, Instagram and WhatsApp.

It hopes the new ‘stablecoin’ (a digital currency supported by conventional government-backed securities) will one day rival the US dollar in scale. Facebook has recruited 28 partners to the Libra Association, the voting board that will guide the new currency. Its members include Mastercard, Visa, Spotify, PayPal, eBay, Uber and Vodafone.

The project offers the potential to build a vibrant global financial eco-system that enfranchises billions and generates mountainous new income streams along the way.

Credit: Ascannio/shutterstock

By humphery

Credit: humphery/shutterstock