ipreo regional flow of funds...
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IPREO REGIONAL FLOW OF FUNDS SERIES
Western Europe
Telecommunications
Q2 2017
Flow of Funds: WEU Telecommunications
Market Overview
Institutional Investment Flow Highlights
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
N. A
mer
ica
W. E
uro
pe
Scan
din
avia
UK
& Ir
elan
d
Asi
a
Res
t o
f W
orl
d
Oth
er
Net Change ($M Value) by Region
Q3-16
Q4-16
Q1-17
Q2-17
-4,000
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
Agg
Gr.
/Gro
wth
Dee
p V
al./
Val
ue
Ind
ex
GA
RP
Spec
ialt
y
Yiel
d
Alt
ern
ativ
e
Net Change ($M Value) by Style
Q3-16
Q4-16
Q1-17
Q2-17
N. America 33.5%
W. Europe30.2%
Scandinavia 19.6%
UK & Ireland 14.9%
Asia 0.9%
Rest of World 0.7%
Other 0.0%
Ownership by Region
Agg Gr./Growth 28.2%
Deep Val./Value 39.9%
Index 19.2%
GARP 5.0% Specialty
3.4%
Yield 2.1%
Alternative 2.3%
Ownership by Style
• The global economic recovery continued throughout H1 -17 supported by improving activity in both advanced and emerging economies on the back of improved labour markets, couple with accommodative monetary policies and renewed fiscal stimulus. Financial conditions have so far remained favourable, although rich market valuations and very low volatility in an environment of high policy uncertainty may raise the likelihood of a market correction, which could dampen growth and confidence. Equityprices in advanced economies remained strong, indicating continued market optimism regarding corporate earnings.
• Europe and the Eurozone in particular, took the lead. Ipreo's analysis of Q2-17 funds flows showed, net inflows into WEU equities continued to grow for the third successive quarter nearly tripling to +$29.9B currently vs +$9.2B in the preceding quarter. The bulk of net inflows into the region continued to be driven by North American managers,particularly Index investors. Q2-17 investor sentiment continued to show US equities out of favour. US equities were judged “by far” the most overvalued globally; with anet 84pc saying they are overvalued. Three quarters of respondents said US and global internet stocks were either “expensive” or “bubble like”, according to Bank of America Merrill Lynch (BAML) survey results for June 2017. The Eurozone was counted amongst the “most crowded trades” having enjoyed a lift after Emmanuel Macron’s victory. France was the most popular equity market in Europe in the same survey followed closely by Germany.
• WEU Technology was the least bought macro sector - though unlike WEU Energy and WEU Industrials it did not see net selling. This low interest in European Technology equities was a mirror of investor sentiment for the sector in the US where the tech-heavy Nasdaq share index was also seen as the “most crowded trade” and investors braced for a market correction.
• The bulk of net inflows into WEU Technology flowed into the Telecoms sub-sector (+$2.6B) , predominantly Telecommunication Services (+$2.1B). Semiconductors (+$348M) as well as Technology Hardware and Equipment (+$33M) registered inflows but Computer Software and Services stood out as the most sold, -$2.3B. RegionallyWEU Technology Q2-17 inflows have a North American flavour driven by Index or Alternative buyers.
• Despite WEU Telecommunications inflows indicating an upbeat momentum, some markets observers are nevertheless pointing to downside risks, including (1) the 15th
June 2017 change in European regulations aiming at eliminating or at least significantly reducing roaming charges across country members, a change which may result inprofit losses especially for smaller operators; and (2) possible near future interest rate hike rising financing cost and hence cut profits, in an industry more than ever experiencing disruptive innovations with companies requiring further investment better products and technologies to keep up with increasing competition.
• North American and WEU investors have remained consistent buyers of the sector since Q3-16 with Q2-17 inflows above +$750M from each region, albeit after a brief hiatus Q1-17 where inflows slowed to below +$130M from each region. The current quarter has seen North America inflows grow twenty fold and WEU sevenfold. NorthAmerican inflows were predominantly Index driven (+$1.4B) followed Value (+$771M) and Growth ($389M).
• Meanwhile UK & Irish investors continued selling the sector although to a lesser extent in Q2-17 (-$363M). Henderson Global Investors and MFS International have ledoutflows from the sector over the last 12 months. Scandinavian investors are notable for turning net sellers in Q2-17 posting a net outflows of -$175M, following three quarters of buying.
• The investment style flows showed the common trend where passive investment inflows have outpaced active investment. Index investors were the primary source of inflows into the sector (+$1.4B) led by BlackRock and The Vanguard Group. Index investment remained positive since Q3-16. Active investment styles that bought in the quarter under review include Value oriented investors (+$930.5M) led by Capital World and Deutsche Asset Management , and Growth oriented investors (+$321M) withCarmignac Gestion and Caixabank Asset Management taking the lead.
• Value investors have remained bullish since Q3 -16, with the group being overall the largest buyers of WEU Telecommunications equities for the last 12 months. (+$6.5B) Incontrast, Growth investment continued to show cyclical patterns with the group reverting to buying in Q2-17 led by Nordea Investment Management (Sweden), DNBAsset Management and Norges Bank Investment Management
©2017 Ipreo. All rights reserved. None of Ipreo, its affiliates, or any of their third party providers is liable for any info rmational errors, incompleteness, or delays, or for any actions or decisions taken by any person as a result of any information contained herein.
Flow of Funds: WEU Telecommunications
Country / City
Total Equity Assets
($M)
Value
($M)
Activity
($M)
#
Firms Country / City
Total Equity
Assets ($M)
Value
($M)
Activity
($M)
#
Firms
France (Paris) 400,883 20,321 358 155 France (Paris) 400,883 20,321 358 155
United Kingdom (London) 2,079,440 18,999 -316 152 United Kingdom (London) 2,079,440 18,999 -316 152
Sweden (Stockholm) 331,973 16,424 -123 60 United States (New York) 3,010,490 8,213 84 110
Norway (Oslo) 669,327 10,421 -13 18 Spain (Madrid) 69,760 2,689 88 74
United States (New York) 3,010,490 8,213 84 110 Sweden (Stockholm) 331,973 16,424 -123 60
Germany (Frankfurt) 319,435 7,592 228 46 Germany (Frankfurt) 319,435 7,592 228 46
United States (Los Angeles) 1,132,300 5,564 356 11 Finland (Helsinki) 60,817 3,860 -131 42
United States (Boston) 2,247,530 4,072 62 29 Switzerland (Zürich) 291,917 3,065 46 40
Finland (Helsinki) 60,817 3,860 -131 42 Canada (Toronto) 651,418 2,214 -45 36
Switzerland (Zürich) 291,917 3,065 46 40 Luxembourg (Luxembourg) 39,877 585 32 32
Excludes Passive/Index Investors 98,531 550 663 Excludes Passive/Index Investors 83,962 220 747
Top Holders Country Turnover Value ($M) Change ($M) % Port.
% Port.
Chg
Norges Bank Investment Management (Norway) Norway Low 7,599.7 -70.2 1.2 -0.9
Bpifrance Participations S.A. France Low 5,630.9 0.0 48.2 0.0
Investment AB Kinnevik (Investment Management) Sweden Low 3,845.7 0.0 47.7 0.0
Capital World Investors (U.S.) United States Low 3,328.2 343.3 0.5 11.5
Amundi Asset Management S.A. France Medium 2,767.8 52.6 3.6 1.9
Cevian Capital AB Sweden Low 2,509.7 0.0 15.1 0.0
Deutsche Asset Management Investment GmbH Germany Low 2,283.0 155.6 1.8 7.3
Dodge & Cox United States Low 2,279.8 -2.1 1.3 -0.1
Franklin Mutual Advisers, LLC United States Low 2,250.7 122.1 4.2 5.7
Allianz Global Investors GmbH Germany Medium 2,212.0 -109.7 3.0 -4.7
23,172.3 325.8
Top Buyers Country Turnover Value ($M) Change ($M) % Port.
% Port.
Chg
Capital World Investors (U.S.) United States Low 3,328.2 343.3 0.5 11.5
Carmignac Gestion France Medium 1,403.2 232.4 6.2 19.8
Deutsche Asset Management Investment GmbH Germany Low 2,283.0 155.6 1.8 7.3
Caixabank Asset Management, S.G.I.I.C., S.A. Spain High 533.7 147.4 3.7 38.2
Artisan Partners, L.P. United States Medium 297.1 142.1 0.3 91.7
Union Investment Privatfonds GmbH Germany Medium 742.5 130.6 1.6 21.4
T. Rowe Price Associates, Inc. United States Low 1,129.6 124.5 0.2 12.4
Franklin Mutual Advisers, LLC United States Low 2,250.7 122.1 4.2 5.7
Folketrygdfondet Norway Low 1,521.4 118.6 11.4 8.5
RARE Infrastructure, LTD Australia Medium 199.0 94.0 4.9 89.5
13,688.5 1,610.7
Top Sellers Country Turnover Value ($M) Change ($M) % Port.
% Port.
Chg
Lazard Asset Management, LTD (U.K.) United Kingdom Medium 192.5 -193.0 2.1 -50.1
Fidelity International Limited - FIL Investment Services (U.K.), LTDUnited Kingdom Medium 733.0 -158.3 0.7 -17.8
Thornburg Investment Management, Inc. United States Medium 1,308.8 -140.5 4.6 -9.7
Eaton Vance Management United States Medium 23.6 -111.7 0.1 -82.6
Allianz Global Investors GmbH Germany Medium 2,212.0 -109.7 3.0 -4.7
Nordea Investment Management AB (Sweden) Sweden Low 997.1 -108.5 5.6 -9.8
DNB Asset Management AS Norway Medium 590.7 -81.9 4.1 -12.2
Columbia Wanger Asset Management, LLC United States Medium 0.3 -80.3 0.0 -99.7
Norges Bank Investment Management (Norway) Norway Low 7,599.7 -70.2 1.2 -0.9
Goldman Sachs Asset Management, L.P. (U.S.) United States Medium 153.0 -69.5 0.1 -31.2
13,810.6 -1,123.6
BOUGHT Securities Industry
Altice N.V. Telecommunication Services
SES S.A. Wireless Services
Swisscom AG Telecommunication Services
Orange SA Telecommunication Services
Deutsche Telekom AG Telecommunication Services
SOLD Securities Industry
SFR Group SA Telecommunication Services
Telefonica S.A. Telecommunication Services
Ericsson (L.M.) Telephone Co. Communications Equipment
Tele2 AB Telecommunication Services
Drillisch AG Wireless Services
Growth 13,383
Value 4,063
GARP 45,252
Growth 607,499
Value 53,665
16,627
Value
Value
Value
Value
Growth 73,874
53,665
173,337
125,553
Style
Value
Value
Specialty
Deep Value
Style
Value
Growth
Value
Value
Value
Growth
Growth
Most Invested Most Investors
Top Holders, Buyers & Sellers
Top Invested Cities
Growth
Style
Value
-70.2
Change ($M)
-299.7
-147.2
-92.6
-90.7
182.3
186.9
239.8
259.4
1,126.6
Most Bought & Sold Stocks
Change ($M)
Growth
GARP
Equity Assets ($M)
77,118
635,843
8,061
11,687
613,647
Equity Assets ($M)
635,843
22,636
125,553
14,279
42,245
73,874
87,213
Equity Assets ($M)
9,020
97,744
28,450
Value 613,647
GARP 121,001
Value 17,721
Deep Value 14,512
GARP 12,511
for any actions or decisions taken by any person as a result of any information contained herein.
©2017 Ipreo. All rights reserved. None of Ipreo, its affiliates, or any of their third party providers is liable for any info rmational errors, incompleteness, or delays, or
• The most bought securities were predominantly within the Telecommunication Services space including Altice, which saw US-based Value investor Capital World Investors investing +$589M using the American Funds EuroPacific Growth Fund. Altice also received further investment from French Growth investor Carmignac Gestion acquiring +$232M worth of stock.
• SFR Group was the most sold stock with Carmignac Gestion (-$241M) and Capital World Investor (-$120M) divesting.
0
500
1,000
1,500
2,000
2,500
Telecommunication Services Wireless Services Communications Equipment
$M
Ch
ange
Most Bought & Sold Sectors
Flow of Funds: WEU Telecommunications
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