The strong risk sentiment persisted in July, backed by positive fund flows, a lack of primary transactions and a relatively calm month in terms of geopolitical events. The ceasefire in the trade tensions was temporarily maintained, and central banks communicated interest rate cuts, continued low interest rates and potentially increased stimulus.

The election of Boris Johnson as the new UK prime minister also passed relatively undramatically. Instead, the focus was on the reporting season, with the majority of companies posting more or less as expected but with outlooks notched down slightly against a background of trade barriers and weaker economic data. Right now, the trade war has also intensified, with new tariffs introduced by Trump. Most of the companies represented in the fund do not report until the end of august.

After a spring during which the primary market initially limped along, many companies continued to utilise the strong market right until the end of June, after which the Nordic markets were characterised by the usual July doldrums. Fund inflows and the lack of new issues have driven the risk sentiment, and many Nordic sectors have traded strongly. The European market buoyed up the activity in July, with the market’s strength demonstrated by heavily oversubscribed issues from companies including Intrum, Ellos and Oriflame.

We have continued to broaden our portfolio in the secondary market in line with inflows, and we were active this month in names like Gefion, Hedin Bil and Stillfront. The good risk appetite has continued to drive asset prices, making us even more selective as we add new names to the portfolio.

The strong performance in 2019, combined with a number of geopolitical risks, means that we intend to maintain a balanced portfolio going forward.