Affinity Insights – Issue 14 December 2020

Welcome to Affinity Insights!

As the year draws to a close and with the festive season right around the corner, we reflect on what we have accomplished this year. We would like to express our gratitude for your continued support and commitment and look forward to working with you in 2021.

Our office will be closed from 12pm Wednesday 23^rd December and will reopen again on Monday 11^th January 2021.

Whilst this year has come with challenges, we would like to use this edition of Affinity Insights to end the year on a positive note.

Warmest wishes for a joyous season and a happy and healthy New Year. Please revel in catching up with family and friends over the summer break and enjoy some well-deserved rest. The best present one can hope for this year is to spend time together!

From Rodney M. DeGabriele and Tony Vikram

Emerging market (EM) equities have been the best performing growth asset class in the past six months, beating the developed market (DM) index by around 10%. Is this the beginning of a reversal of EM fortunes after a decade of disappointment? In this note, we investigate the reason for the recent outperformance and outline why we think a meaningful exposure to EM over the long term makes sense for portfolios.

Around 5% of the outperformance is directly related to the weakening US$. However, there were more fundamental factors at play as well. China, Hong Kong, Taiwan and South Korea, countries with a substantial weight in the EM index, did not suffer a significant Autumn Covid wave (unlike the US and Europe) supporting their economies. The acceleration in credit growth in China also supported EM equities. There is a strong correlation between the relative performance of EM and DM equities and the Chinese credit cycle (see below).  EM equities have also benefited from having less growth/technology exposure than the DM index, which was hurt by the growth/value rotation in November.

Click here to continue reading.

2020 was not the year we expected; devasting bushfires, a worldwide pandemic and economic downturn – this year has tested us. While this year has been tough, there have been silver linings. Out of coronavirus we have witnessed incredible scientific discoveries and found a new appreciation for the people around us. Out of the racial activism, there has been positive changes that will have a ripple effect for generations to come.

While we are looking forward to lying on beaches over summer or catching up with friends for a glass of Australian wine, we also thought we should look back and reflect on the positive things 2020 has brought us. Here is Affinity’s list of some of the good things to come from 2020:

1. Pollution levels significantly dropped across the world; Venice’s Grand Canal even ran clear for the first time in years
2. The first cheetah cubs were born through IVF, this could help the dwindling numbers of the species
3. Italians sang beautifully from their balconies, making people feel a little less alone, proving why they are the home of Opera
4. Parasite won the Oscar for Best Film, the first ever foreign film to do so
5. We will never take a toilet paper roll for granted, ever
6. Australians and the world came together for our bushfire relief efforts, a staggering $500,000 million was raised to help those including our precious native animals affected
7. Wearing active wear became an acceptable fashion choice, all day, everyday
8. We had time to read again, and many took the opportunity to seize the moment and educate themselves on the racial justice movement, that will go onto define this generation
9. People brushed up on their sewing skills, making masks for people who need them most
10. Sure, we may have gained a little weight, but we rediscovered the joys of baking, who knew freshly baked banana bread or sourdough was so good
11. We rushed to adopt pets in need amid the pandemic, but in the wise words of the Hilltop Hoods “they were rescuing us!”
12. Never will we be more grateful to be able to spend Christmas or time in the presence of those we cherish most

This year at Affinity, we supported and donated to the Leukaemia Foundation and Love Me Love You (through 10×10 Philanthropy). We hold strong admiration to each organisation and the work they do.

The Leukaemia Foundation is dedicated to curing and conquering blood cancer. They support thousands of Australians every year through emotional support and advocacy, educational programs, transportation and accommodation services. With over 100 different types of blood cancer, they are determined to find a cure for them all, one step at a time.

Love Me Love You aims to raise awareness and challenge the views and stigmas surrounding mental health. The importance of mental health has become even more prevalent during this year whilst dealing with the impacts of Covid-19. Their vision is to deliver more than 500,000 programs and experiences to schools, workplaces, sporting clubs and community groups by 2025.

There are so many ways we can support the causes close to our hearts and one another to help end 2020 on a brighter note. Below are some ideas of how we can help our community:

1. Volunteer your time with an organisation wrapping gifts or preparing meals
2. Support local businesses by telling your family and friends and leave positive reviews on social media
3. Donate toys for children or essential household items for people living in disadvantage

Founded by three friends, the Empty Esky initiative is a national tourism movement of foodies and adventurers on a mission to support small business affected by the Australian fires. It encourages everyone to grab an empty esky and embark on a road trip to a fire-affected town and stock up with produce and wares purchased from local traders. Many of these small businesses rely on peak-tourism months to make their money in order to survive the quieter times of the year, however the bushfires and state boarder restrictions due to Covid-19 have made it impossible for them to operate and generate a living.

Let’s come together to take the Empty Esky pledge! Commit to helping our fellow neighbours and stimulating local fire and Covid-19 affected economies. It’s not only the right thing to do, it’s the Aussie thing to do.

Click here to take the pledge to visit a fire impacted town with your empty esky

Or register here if you have or know of a business affected by the fires.