The end of June was marked by Greece defaulting on its debt which had significant ramifications upon the global market. Greece has the dubious honor of becoming the first developed economy to default on debt to the International Monetary Fund.
Greece’s primary stock index, the Athens General-Composite (ATG), has been frozen since end of trading on June 26th, and with the country’s default and national referendum rejecting further austerity measures, the possibility of a Greek exit from the Eurozone is looking increasingly plausible.
The effects have been wide-ranging with numerous stock indexes falling in value across Europe. Even in China, the Shanghai Composite Index has fallen a quarter in value—from its highest point since early 2008—in just the span of a few weeks
Considering the turbulence of global markets, iQVP was down by -1.54% for the month although we did beat our benchmark—the iShares MSCI EAFE—by a margin of 3.19%. We also outperformed the S&P Europe 350 by 3.29%.
With that in mind, we decided to look at the top performers in our IQVP (International Quantitative Value Portfolio) strategy and what effect Greece might have had.
5. Sasol (SSL) +4.48%
Sasol, the South African energy company, had two pieces of good news in June.
Not only was their Phase I of their Fischer-Tropsch Wax Expansion Project (FTWEP) successfully commissioned at its Sasolburg Operations in the country, but the country's courts also overturned a decision to fine Sasol Ltd. for overcharging customers for chemicals.
4. Bank Bradesco (BBD) +4.86%
Most speculation involving Bank Bradesco the past month revolved around HSBC’s announcement that they were willing to sell off their operations in Brazil. The Brazilian bank is reportedly one of three to have made a bid for the unit and a sale could possible come as soon as August.
3. NTT DOCOMO (DCM) +6.63%
DOCOMO has had a tremendous year so far, up 18.96% from January at the end of June, paralleling the growth seen in the Nikkei 225. The Japanese telecommunications is currently focused on a 5G mobile network which it hopes to roll out in 2020.
They recently announced OHaNAS, an interactive voice-activated toy that children and adults can verbally communicate with. The device links wirelessly with smartphones to connect to DOCOMO's cloud-based natural-language dialogue platform and will launch later this year.
2. AmBev (ABEV) +6.69%
June was a relatively quiet month for the Brazilian brewery. The company was upgraded by JP Morgan from Neutral to Overweight but that aside there is little to report on.
1. Petrobras (PBR) +8.38%
In complete contrast to AmBev, Petrobras has rarely been out of the news this year. The Brazilian state-run drilling company is embroiled in a corruption scandal that saw two more arrests in June, claimed to be the most significant yet.
Marcelo Odebrecht, head of Latin America's largest engineering and construction company, Odebrecht, and Otavio Marques Azevedo, head of Brazil's second-largest construction firm, Andrade Gutierrez, were charged to have led a “cartel” which overcharged Petrobas for work, using the extra money to bribe executives and politicians as necessary.
At the beginning of the month, the company announced that it had sold $2.5 billion in 100-year bonds and were also upgraded by JP Morgan from Neutral to Overweight. The company then announced at the end of the month that it plans to slash investments by 37% over the next five years in an urgent effort to reduce debt and recover investor confidence amid their ongoing scandal.