The Fund's investment activities are intended for high net worth individuals who are considered to be sophisticated investors that are looking for a fund that aims to protect the capital invested whilst at the same time generating above average returns.
Attention! This investment falls outside AFM supervision. No license and no prospectus required for this activity.
This will be achieved through investments in public and corporate stocks and bonds, financial instruments, including futures and options, and certain types of real estate, although this type of investment will not represent anything other than a small percentage of the total investment fund. The nature of this alternative investment fund is that it is able to react swiftly to ever changing possibilities and risks in the markets and as such it
is assumed that other asset classes will be traded in the future if this is seen as being beneficial to the investors by the Fund managers. In addition, new sister Funds may be established in the future that will have a more specific investment focus if this is required by investors.
FULL DETAILS OF THE INVESTMENT POLICY CAN BE VIEWED DIRECTLY
Whilst the Fund aims to generate above average returns for Investors, the main priority of the Fund is primarily the safety of the funds that have been entrusted to us by our clients. It is for this reason that one of the main targets for investment is in Europe's largest firms. In addition, the priority given to debt instruments and, where appropriate, real estate is also considered to be an important element of the investment portfolio. At the same time we do not forget that in addition to minimizing the risk for our investors, we need to maximise the value of the investments made by our clients, and repay the trust demonstrated in us to manage these conflicting forces on their behalf.
For the purpose of maximising returns made by the Fund our managers and analysts constantly monitor the market situation in all the markets in which the Fund operates and any possible new markets. With the constant flow of informed market intelligence, decisions are made and assets traded between all the markets in order to ensure the best investment profile to maximise return and minimise risk. This technique ensures the maximum possible growth of the value of the assets but also makes it possible to hedge the possible risks of changes in market prices.
Our team consists of professionals with extensive experience in the Russian and global stock and commodity markets. Most have worked in large investment houses and our analysts are included in the TOP10 according to Bloomberg. With this extensive experience the team at Capital Pi aim to surpass your expectations and achieve good but safe returns on your investments through us.
The strategy is based on operation in debt markets of the G20 countries. Funds are invested in highly liquid, supranational, sovereign, municipal and corporate debt securities with an investment grade credit rating (at least BBB-) according to the key credit rating agencies (Moody’s, Standard &Poor’s, Fitch).
The investment instrument in this strategy is eurobonds from a limited range of issuers. In the selection of issuers to be included in the portfolio, the key factors are its balance across economic sectors and across the credit quality of issuers. The share of one investment instrument can be up to 25% of the overall portfolio. The key factor enhancing the expected return of this investment product is the opportunity to raise funds against securities in the portfolio at market rates. Thus, the expected return at portfolio maturity can be higher if borrowed funds are used.
This strategy is based on expectations of the Russian government bond curve. Normally, the yield curve is a monotone increasing upward-convex curve. It means that, first of all, the yield grows with time (positive slope) and, second, the rate of yield change decreases in time (tends to zero).
We expect a neutral opening of European markets amid mixed dynamics of trading in futures for world stock indices. The yield on US Treasury bonds, for example, 10-year-olds, remains at 3.23% since the end of last week due to a decrease in the unemployment rate to 3.7% and…
We expect a neutral opening of trading on the Russian market amid mixed dynamics of trading in futures for world stock indices. The ruble has a chance to weaken due to the positive outlook from ADP for new work places in the United…
We expect a slight rise in the Russian market at the opening of trading, which, by inertia, will regain the growth of oil prices by 2.4% to $ 85 per barrel on Monday. Commodity traders buy oil because…
The FOMC Fed raised the upper interest rate by 25 bp to 2.25%, as investors had expected. In addition, most members of the Committee are waiting for another rate increase until the end of 2018,…
We expect a neutral opening of the Russian market amid rising futures for global stock indices in the range from 0.1% to 1.35%. owever, from September 24, the United States will introduce new duties of 10% on Chinese…
A major event of the week unfolded in USA. The Federal Reserve Chair addressed the Senate claiming that the interest rate might be raised in the coming months.…
As we approach the presidential elections in France (this April-May), they take a toll on investor sentiments, who prefer German sovereign bonds to French government bonds.…
In the past two months, reduced almost all global indices, as investors worried about the ambiguous of the FOMC minutes, the fed and the ECB.…
Having played at the beginning of the short week's dividend cut-off in Sberbank, NLMK, the MICEX index tried to stabilize on Tuesday in the 1860-1870 range…
We expect a neutral opening of European markets amid mixed dynamics of trading in futures for world stock indices. The yield on US Treasury bonds, for example, 10-year-olds, remains at 3.23% since the end of last week due to a decrease in the unemployment rate to 3.7% and thanks to the statement by the Head of the Fed about the continuation of the monetary policy normalization next year. In turn, such a high yield will help attract to auctions for public debt (with which, before October 15, the US Treasury plans to collect $ 50 billion in net position) more investors. Against this background, the demand for the dollar in the world market will increase. In addition, the yield on US government debt has already surpassed the gross dividend yield on the SP500 index by 1.82% at the current moment. Also, the demand for American securities will be supported by the outflow of capital from Eurozone government bonds, primarily Italian, whose profitability rose to 3.5% over 10 years due to problems with the question of increasing the budget deficit to GDP to 2.4% in 2019, when in 2017 it was 2.3%.
We expect a neutral opening of trading on the Russian market amid mixed dynamics of trading in futures for world stock indices. The ruble has a chance to weaken due to the positive outlook from ADP for new work places in the United States. If the forecast is confirmed, then official statistics, which will be published on Friday, will wait for good results, which will strengthen the dollar. However, on Thursday and Friday, the central banks of Mexico and India will publish the interest rates. The market is waiting for their increase, as a response to the increase in the rate of the US Federal Reserve. This will play in favor of the currencies of the EM sector, including the ruble. Today will begin the forum on energy in Russia, where the key players of OPEC will be. Investors are interested in the position on the prolongation of the OPEC “plus” deal, and any statements can push oil prices up, which will support the ruble.
We expect a slight rise in the Russian market at the opening of trading, which, by inertia, will regain the growth of oil prices by 2.4% to $ 85 per barrel on Monday. Commodity traders buy oil because of the projected deficit, which is based on the introduction of US sanctions against the export of Iranian oil from November, as well as problems with a lack of production and import of oil in the United States. As an example, Kuwait has reduced the volume of oil imports to the United States with 300 thousand barrels per day to 92 thousand barrels per day from the beginning of 2018, and now does refused due to unfavorable price of $ 79 per barrel, when in Asia can be sold at a higher price $ 80 a barrel. At the same time, the Russian market will be under pressure due to a 1.2% drop in the MSCI EM index, which in turn responded to the fall of the Chinese non-material Hang Seng index by 2% as a result of a warning by the Chinese authorities to the US military courts that those are close to the sovereign territory of China. Significant US statistics will not follow today, but Fed Chairman Jerome Powell will address the National Association of Business and Economics. Therefore, the weak results of purchasing managers in manufacturing, namely, due to the reduction in the number of new orders that were published yesterday, will fade into the background, and the dollar may receive support.
The FOMC Fed raised the upper interest rate by 25 bp to 2.25%, as investors had expected. In addition, most members of the Committee are waiting for another rate increase until the end of 2018, i.e. up to 2.5% against the background of a strong economic growth and a no less strong labor market when inflation is around 2%. At the same time, the Fed chief hinted that the financial regulator would not take into account the political factor: criticism of the US President for the rate increase due to the increase in payments on the state debt against the background of the budget deficit. The committee has heard widespread criticism of US-based US trade duties on imported goods, but so far does not see their impact on incoming macro statistics. From this it follows that while there is economic growth, the interest rate will be raised every quarter. This will lead to increased capital outflows from emerging markets, but the central banks of these countries will start raising rates. For example, today the Bank of Indonesia will announce the rate, and next week - Mexico and India. In anticipation of their decision, the volatility of the currencies of the EM sector will increase. Also on Thursday will release the quarterly US GDP on an annualized basis. A neutral result of 4.2% is expected, but there are predictions of a slight increase, this will play in favor of the dollar. On Friday publish the personal consumption expenditures, one of the key indicators of the Fed in the calculation of future interest rates. Expected neutral result in monthly dynamics and weak reduction in the annual dynamics, slightly cool the rising dollar. Against this background, the ruble will be under pressure. In his favor is only the payment of income tax on Friday.
We expect a neutral opening of the Russian market amid rising futures for global stock indices in the range from 0.1% to 1.35%. However, from September 24, the United States will introduce new duties of 10% on Chinese goods worth $ 200 billion with the possibility of increasing the rate to 25% in the case of a similar response from China. Against this background, the high-tech sector in the SP500 fell more than the others by the SP500 index, while the index itself finished trading Monday with a decrease of 0.5% to 2888 points. This is due to the fact that most high-tech companies import components from abroad, where there is cheap labor, for example, in Asian countries. Therefore, on Tuesday morning, the Asian stock indices of the EM sector are moving in different directions. Expansion of trade war, where prices for nickel, aluminum and to a lesser extent for copper are declining due to investors' concerns about a slowdown in global demand. The yield of US government bonds has increased, which promises high demand for the placement of new bills, notes, 10-year bonds this week.
A major event of the week unfolded in USA. The Federal Reserve Chair addressed the Senate claiming that the interest rate might be raised in the coming months. Her arguments to toughen credit conditions are good domestic economic data and achievement of most targets for key macroeconomic indicators. Besides, the Fed Chair stressed that keeping low rates for too long might adversely affect all they had done to boost the economic growth. In our opinion, it might spur capital outflow from emerging markets, as LIBOR 3M rates have been growing for more than 6 consecutive months hitting 1.03%-1.05%. It tempts investors over to investments in USD denominated assets. Raising the Fed rate ceiling is up ahead, of course. For example, in March. It raises barriers for immediate purchase of assets or USD funding, as raising the rate means growing yield of debt instruments but yields of 2.3% to 2.5% might tempt institutional investors even now. Historical UST 10 Yield Curve (issue maturing on 02/15/27)Source: Bloomberg
ECB meeting minutes released this January confirm intention of monetary authorities to keep on boosting the monetary policy, as key macroeconomic indicators have not been achieved, which intention provoked traders into buying sovereign bonds of EU member countries and yields declined as little as few basis points. There have also been buys on EM debt markets.Comparative Yield of Sovereign EU and Other European 10Y Bonds (right: Germany, France, Italy, Great Britain; left: Sweden). Source: Bloomberg
As we approach the presidential elections in France (this April-May), they take a toll on investor sentiments, who prefer German sovereign bonds to French government bonds. As German government bonds build more confidence even despite parliamentary elections set for September. Comparative Yield of Sovereign EU and Other European 10Y Bonds (right: France, Germany, Switzerland) One Week Yield Curve of German 10Y Sovereign BondsSource: Bloomberg
Hedge funds are still increasing their long positions in oil. Latest reports show that hedge funds have accumulated 453,000 long contracts and 39,400 short contracts in their portfolios, which confirms a growing gap between long and short positions. Thus, the market continues to rely on the oil quotations growth, which is contributed by OPEC reports on oil production cuts by 86% of the target introduced by countries that had signed the OPEC deal.
The Fed minutes released this January did not contain any express indication that the interest rate ceiling would be raised. However, Fed Chair Janet Yellen and other FOMC members made numerous statements that it would be reasonable to raise the rate any time soon on condition that the inflation and labor market would grow as currently expected. In our opinion, the Regulator does not intend to raise the rate at the meeting scheduled for March 15. FOMC members probably would like to see specific steps of the U.S. President to boost the national economy and facilitate tax reforms. Keeping hawkish rhetoric (statements that the rate will be raised) will in turn bolster the U.S. dollar, while the public debt market will face pressure, which will beef up the bond yields.
In the past two months, reduced almost all global indices, as investors worried about the ambiguous of the FOMC minutes, the fed and the ECB. Among officials of the American regulator is divided on a further increase in interest rates and the normalization of the fed's balance sheet. Protocols of June meeting of the European regulator, together with the review officials hinted at a possible tapering of the policy of purchase of assets from the market, so the yield of government bonds of EU countries increased by 10 b.p. Thus, the French 10-year government bonds are trading around 0.92 percent, the German is about 0.56%, the Italian - 2,27%, etc. in addition, the Bank of England also hinted at the imminent tightening of monetary policy. Thus, the increase in rates, the tapering of QE forced investors to take profits on government bonds and the stock market.The current situation in the oil market
While there is a confrontation between the White house and the House of representatives in the U.S. Congress for adoption of the law on new sanctions against Iran and Russia, as well as limit the powers of the President of the United States oil prices are going up due to the good forecast API. So crude oil inventories fell by 8.1 million barrels, so the oil price grew 1.6% to $48.3 per barrel despite a negative report by the IEA to increase the production of shale oil with an excess of supply on the world market. In addition, while the market ignores the excess of production quotas in June, Saudi Arabia's and Saudi Aramco's statement of intention to invest about $300 billion in oil production in the next 10 years. On the part of the Saudis, the move is a response to the statement made by Qatar to increase the production of natural gas. We will remind, Qatar and Iran intend to jointly develop the North field/South Pars, where reserves are estimated at 28 trillion m 3 of gas and 7 billion tons of oil (45 billion barrels). It is interesting to note that the President of the United States actively concludes transaction for the sale of U.S. liquefied gas to Europe reinforcing its position with to protect Europe from Russian energy dependence. Although Russia may try dumping prices of gas, as the Saudis have oil to Asia despite the fact that the price war is not yet observed on the horizon. Also, the Saudis do not want to lose market share amid rising oil production in the United States. Saudi Arabia, Russia, the United States is the "three pillars" that produce 10 million b/D. the position of these countries depends on the market situation of crude oil and distillates.
Black gold didn't stand a chance
Having played at the beginning of the short week's dividend cut-off in Sberbank, NLMK, the MICEX index tried to stabilize on Tuesday in the 1860-1870 range of items, but on Wednesday dived below due to the strengthening of the dollar against the ruble above 57 rubles per dollar.
In turn, the price of oil Brent on Tuesday, on the evening session, responded to lower on disappointing data from the American petroleum Institute (API). According to his information, published on Tuesday evening, last week increased crude oil inventories in the United States by 2.75 million barrels, which reduced the price of black gold by 1.2 % to us $ 48.2 per barrel of Brent. Investors had expected in the Asian session, the situation will begin to improve, as the survey of experts on the oil market conducted by Bloomberg, contrary to the data API. Experts expect that the data of U.S. Department of energy, published on Wednesday, shows inventory decline by 2.45 million barrels. However, the price was not adjusted upwards, and was trading in the range of $ 48-48,5 per barrel, in response to the negative report from the International energy Agency and awaiting official data from the US Department of energy. The data was good, overall crude oil stockpiles and the stockpiles of Cushing decreased by 1.66 million and 1.15 million barrels, respectively. But oil production in the USA remained at a high level, 9.3 million barrels per day. After the release of such statistics, the price of Brent crude oil has fallen by 3.6 %, to $ 47 per barrel, where the last time was at the end of November 2016.
On the value of Russian equities in addition to oil impact the threat of new sanctions against certain sectors of Russia's economy. This topic will get more response in the quotes after the US President will sign the bill. However, think about the consequences is now. For example, it is known that there may be a ban on investment in sovereign bonds, a ban on lending to Russian companies, participation in privatization etc., which may cause a revision of the credit ratings of the issuers of the key sectors of the Russian economy.Again, the ruble is tied to oil
The U.S. dollar yesterday, fluctuating near the mark of 57 rubles, and only after the failure of oil prices slightly rose to 57.2 ruble. Russian officials in recent years, often talking about the fact that the ruble was not bound to the price of oil. But this is only partly true. We observed increase of the ratio of the 90 - day correlation between ruble and oil in the period of 1 year up to 0.55 points in mid-June from 0.33 at the beginning of may. Correlation start increasing in may as investors waited for key events - the OPEC meeting. Now, when it became clear that the production volume will be reduced by 1.8 million barrels per day for another 9 months, investors were disappointed as was expecting big numbers for the volume reduction. Against this background, the oil price fell down by 11.3 %, to $ 48 per barrel of Brent, despite the fact that the ruble has weakened just 1.4 percent, to 57 rubles to the dollar, as investors reduced the risk premium for Russia. We believe that the weakening of the ruble will continue in June and July due to the slowdown in the growth rate of the balance of the current account that will be impacted by seasonal factors - reduction of energy demand due to warm weather, dividend payments, which immediately converts the currency for payment to holders of Depositary receipts, as well as the tourist season for Russians. Although the population continues to maintain a savings behaviors that should not lead to significant spending on vacation. But the main factor for the Russian ruble will be the meeting of the Bank of Russia key rate on June 16. Last week, the head of the Central Bank Elvira Nabiullina during a speech in the state Duma said about the possibility of a rate cut by 25 - 50 basis points to 9-8,75 % per annum .Theoretically, this should weaken the ruble and reduce the yield of OFZ. In our opinion, the dollar will get stronger against the ruble to 60.2 rubles, and at the very least. However, many traders think that the rate reduction is already incorporated in the market. On the other hand, a weak ruble will help to strengthen the position of Russian exporters on external markets. Plus money market rates will decline, which will make more affordable funding for banks and financial companies, and on this background the Russian stock market may grow.
The weakening of the U.S. dollar against foreign currencies (e.g., Euro - by more than 1%, to $1,115 per Euro) has led to the fact that investors decided to reduce positions in the shares of European companies fearing for the decline in export earnings. In turn, the us currency has experienced and will continue to experience pressure due to a new round of political aggravation around the US President, which the local newspaper was initially accused of divulging secrets at a meeting with Russian foreign Minister Sergei Lavrov, and then - the pressure on the FBI to halt investigation against its adviser.
Although, in our opinion, the closer the June meeting of Committee on operations in open market FRS of the USA at the rate, the more investors will demand for dollars, since the probability of increase in top-level stakes at this meeting is 90%. Despite the fact that the same rate for the Euro is negative due to the effect of the quantitative easing program of the ECB on financial market of the EU.
The ruble weakened with the growth of oil Starting in the morning with a light minor note, the Russian market already in the second half of the day stabilized and showed a negligible increase. The Russian ruble weakened to 57 rubles to the dollar, despite the fact that the price of oil increased. Most likely, this recorrelate was caused by an increase in crude oil inventories in the U.S. at 882 thousand barrels per week, according to the forecast of the American petroleum Institute (API), which has a solid reputation among oil traders. It could reinforce fears of traders concerning the continuation of the cyclical growth trend in oil production in the United States.
Almost year fixed weekly gain by the number of units of active drilling rigs in the US, where the main growth is accounted for rigs of horizontal drilling. This leads to a gradual increase in oil production that threatens to neutralize the efforts of the countries of the OPEC oil cartel and joined them 11 oil-producing countries to reduce production volumes of the black gold. An agreement to this reduction is expected to be extended for 25 may, but some members of the oil cartel cut prices for Asian consumers, which suggests sufficient oil reserves.
In addition, the forecasts of the US Department of energy demand and oil supply show that an insignificant imbalance in the oil market will remain in favor of the proposal to the end of the year. Data published yesterday the US Department of energy on the reduction of oil reserves, contrary to the prediction API, to 1,753 million barrels in the week threw the quotes of Brent crude by about 1% up from $52 to $52,6 per barrel. In the future, the current and the following week the Russian currency will have the support of the tax period (payout severance tax, income tax, VAT, excise duties), as exporters begin to sell dollars. We expect the strengthening of the ruble in this period.
Regarding the global market of sovereign Eurobonds note that on Wednesday the yield of gobongo countries of Asia and Europe declined because of the desire of investors to reduce positions in risky assets on the background of the same political situation in the United States. Perhaps, therefore, the auctions of the Ministry of Finance of the Russian Federation on placement of OFZ series and 26220 26221 passed without much demand, characteristic for the last 2 months. Although liquidity in the banking system enough to 2.29 trillion rubles on correspondent accounts and 551 billion on Deposit at the CBR.
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