4th September 2020

Orbis: How is the market up?

After the worst five-week crash ever, global stockmarkets have recovered all of their losses in just five months, with the MSCI World Index setting a new all-time high in late August. As the world continues to struggle with the pandemic, how is the market up?

There are just three sources of equity returns: fundamental growth, changes in valuations, and dividends. By splitting out each one individually, we can see what is driving markets. For fundamental growth, we can look at changes in expected earnings, and for valuations, we can look at the change in the price-earnings multiple for the index. To “look through” the extraordinary conditions of 2020, we will focus on earnings estimates for 2021.

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Important Notices

This commentary has been approved for issue in the United Kingdom by Orbis Investments (U.K.) Limited which is authorised and regulated by the Financial Conduct Authority. Orbis Investments (U.K.) Limited is registered in England and Wales and has its registered office at 28 Dorset Square, London, NW1 6QG. All information in this commentary is sourced from Orbis Investment Management Limited unless otherwise stated. Orbis Investments (U.K.) Limited and Orbis Investments Management Limited are members of the Orbis group of companies (“Orbis”). Past performance is not a reliable indicator of future results. The value of investments in the Orbis Funds may fall as well as rise and you may get back less than you originally invested. It is therefore important that you understand the risks involved before investing. This report does not constitute an offer, solicitation or recommendation to buy, sell or hold any interests, shares or other securities in the companies mentioned in it. Orbis has not considered the suitability of this investment against your individual needs and risk tolerance.To understand the general and specific risks associated with investing in this fund please read the fund’s KIID and Prospectus.  Any decision to invest must be based solely on the information contained in the Fund’s Prospectus and Key Investor Information Document. Information in this commentary is provided ‘as is’ in good faith. However, you must not reply upon this commentary or any part of it as investment advice whether in respect of the fund, the securities discussed in it, or otherwise. Orbis does not assume and will not accept responsibility or liability (whether arising in contract, tort, negligence or otherwise) for any error, omission, loss or damage (whether direct, indirect, consequential or otherwise) in connection with the information in this Report and disclaims any such liability to the maximum extent permitted by law.This commentary is provided for information only and is intended for individuals in the United Kingdom who are familiar with investment terminology. Please contact a financial adviser if you need an explanation of the terms used.This report represents Orbis' view at the date stated on the first page and may provide reasoning or rationale on why we bought or sold a particular security for the Orbis Funds. We may take the opposite view/position from that stated in this report. This is because our view may change as facts or circumstances change. In addition, please note that this commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Entities and employees of the Orbis group of companies are not subject to restrictions on dealing in relevant securities ahead of the dissemination of this review.

Investment Commentary, Investments, Market Outlook