Global equity markets had a rollercoaster ride in December. Investors were buffeted by macroeconomic concerns coupled with weakening global growth data towards the Christmas break. This concoction culminated in dramatic price movements exacerbated by reduced trading volumes in the holiday period. Real estate equities were no exception, and while the benchmark closed down 3.8% for the month, we saw an intra-month correction of -5.3% between 12 and 27 December. However, the sector outperformed broader European equities, with the STOXX Europe 600 down 5.4%, bringing the 2018 performance down to -10.2%, its worst annual performance since the global financial crisis.
The correction in global equity markets in October looked set to break with a significant rally in the first two weeks of November however this was followed by a bout of renewed weakness as investors again focused on the key issues of the slowdown in global growth, China/US trade war, Brexit and whether the Fed would maintain its hawkish stance. Pan European real estate equities performance was again bifurcated between UK stocks (-4.5% in GBP) and European names (+0.5% in EUR) with the gap opening wider towards the end of the month. The Trust’s NAV fell -1.21%, underperforming the benchmark which fell a modest -0.84%.
Global equity markets suffered a significant correction in October. The weakness experienced across many emerging markets through September spread to developed markets, with the highly valued technology stocks in the S&P 500 Index (-6.8%) leading the way down. While real estate equity markets were certainly not immune, they were far less affected. The trust’s benchmark fell -3.5% versus the STOXX Europe 600 Index’s fall of -5.5%, as the latter was led down by weakness in technology and growth-orientated companies.
The steady climb in European property shares this year came to an abrupt halt in September. The Trust’s benchmark, FTSE EPRA Nareit Developed Europe Net TR (in GBP) fell -3.5% in the month and this was the first material monthly fall since the Jan / February correction. Investors returned from their summer holidays to be confronted by a long list of macro woes ranging from the risks surrounding a US/China full scale trade war and Brexit through to the impact of a strong USD on emerging markets. The Euro also weakened against Sterling returning to pre summer levels as investors focused on concerns of a Brussels / Rome rift over the Italian’s desire to spend beyond their means and breach EU budget deficit restrictions.
Pan European property shares initially continued their positive run with the benchmark FTSE EPRA/NAREIT Developed Europe Index TR in GBP) gaining over 2.5% in the first 3 weeks of August. However there was an abrupt pullback in the last few days of the month, coinciding with the end of the holiday period. This resulted in a monthly return of 0.87% whilst the NAV total return slightly exceeded this returning 1.22%.