YUKKA Lab AG

16/11/2021

How Easily Could Have Evergrande's Downfall Been Anticipated? - (YUKKA Lab Market Update October)

After a rather neutral month of September, markets are gaining again from a sentiment perspective. This is despite the drama around the Chinese property developer Evergrande, which sent shockwaves around the world. When exactly the first signs of high risk surrounding the company surfaced will be answered in this newsletter.

Enjoy this market update for October!
How Easily Could Have Evergrande's Downfall Been Anticipated?

The in the western world previously rather unknown Chinese property giant Evergrande has moved into a global spotlight in late August and throughout the past two months. This is the result of Evergrande (the most indebted real estate company in the world) warning investors and bondholders of a high risk of company default. Since then, Evergrande has missed interest payments, been downgraded by the rating agency Moody's (not for the first time this year), and local governments in China have already started taking action.

The apparent influence of the company in and outside of China has revealed itself after shaking global stock markets around the world in recent weeks and months. This, among other factors, has led to some people and news outlets comparing the situation to that leading to the downfall of Lehman Brothers in 2007. However, as can be seen in the above graphic (sourced from the new Risk Lab feature, which will soon be launched within the wider YUKKA Lab cockpit), one could have better anticipated the downfall of Evergrande much earlier.

After staying near zero for two consecutive months, the risk score for Evergrande quickly shot up to near maximum in July after reports that the company is facing liquidity difficulties. This was not only the first time since the start of 2020 that the risk score rose above 7.0 but also the first time that it did not drop below a risk level of 4.5 after reaching an initial peak. In combination, this was the first indication that there was a bigger underlying issue.
Soon thereafter, the risk level started rising again in a steady manner and broke the 8.0 barrier again approximately three weeks before the official warnings of the company's default risk.

While the default risk of Evergrande could not have been eliminated using the new Risk Lab feature, the events could have been at least anticipated relatively long before the wider market sell-off. As a result, individual and institutional investors could have better adjusted their respective portfolios in advance and thus outperformed peers in a time of high uncertainty.
Region and Indices Sentiment Changes for October

Sentiment in all markets is increasing again by almost 4%, after a bad month in August and a stable month in September. Europe as a region is also moving into a positive direction, even though the STOXX50 index has slipped slightly in October.
The MDAX50 is the positive outlier in October, rising by more than 23% sentiment. The increase followed a pretty hard hit in September, where the index lost about 21% sentiment.
While both indices of Switzerland have managed to make substantial sentiment gains in October, the region as a whole has nevertheless a lower sentiment score compared to the previous month of September (-1.37%).
Oil & Gas With the Biggest Losses

The Oil sector in specific had a particularly tough time in the recent weeks, with prices surging all over the world. As a result, the Oil & Gas industry has taken a big hit and lost 12.66% in sentiment in October.

Trending Board - Top & Flop List

The "YUKKA Lab Trending Board" shows the top & flop movers of the last month based on an algorithm, which calculates the most relevant changes based on sentiment and news volume.
Top Companies Volume Sentiment
Monster Beverage 519 (+170%) 90% (+64%)
Broadcom Inc. 1'361 (+89%%) 88% (+62%)
General Dynamics 1'619 (+76%) 85% (+57%)
AP Moeller - Maersk 1'251 (+169%) 81% (+53%)
Texas Instruments 3'893 (+78%) 81% (+49%)
Flop Companies Volume Sentiment
Fleetwood Corp 836 (+146%) 15% (-63%)
International Consolidated Airlines 2'494 (+131%) 18% (-49%)
Drax 761 (+103%) 28% (-44%)
Whitehaven Coal 1'118 (+126%) 12% (-38%)
Workhorse Group 374 (+64%) 44% (-37%)
As a result of the uncertainties in the wider energy sector as a result of the previously mentioned oil price surges, two energy companies (Drax & Whitehaven Coal) are amongst November's Flop companies.
If you have any questions or suggestions, feel free to contact us! We are happy to receive your feedback and provide you with further information.
Kind regards,
Valentin Back
Research Assistant for Finance and Analytics

23/04/2021

Thanks Universal-Investment!
Asset Manager und Fondsinitiatoren verwenden für die Steuerung ihrer Investmentstrategien und für die Überprüfung ihrer regulatorischen Nachhaltigkeitsanforderungen vordergründig ESG-Ratings, die oft sechs Monate oder älter sind. Zusammen mit YUKKA Lab arbeitet Universal-Investment an einer news-basierten Lösung, um unseren Kunden in der schnelllebigen Zeit Veränderungen im Bereich ESG in nahezu Echtzeit bereitzustellen. CEO Andreas Pusch spricht über die die Vorteile von Augmented Language Intelligence, beim Thema und das gemeinsame Pilotprojekt. Andreas Pusch, Oliver Berchtold, Christian Richter, Daniel Andemeskel

21/04/2021

Thanks for this wonderful episode 👉 Alldus International 👍 And : Chapeau 🎉

Núria Bertomeu Castelló, Director of NLP at YUKKA Lab in Berlin joins host Mark Kelly on the AI in Action podcast to discuss the knowledge we can obtain from text mining financial news, challenges of…

12/04/2021

Growth Stocks vs Value Stocks - Who Is Ahead?
(YUKKA Lab Market Update March)

Several major incidents and scandals in March have led to sentiment decreasing heavily amongst most indices. Among the biggest losers in terms of sentiment are Credit Suisse and Nomura, in turn of the Archegos Capital meltdown, which took its toll on the Banking sector in general.
In addition, there seems to be a lot of uncertainty surrounding growth stocks recently. I thus compare these to value stocks to find out whether the uncertainty is actually as widespread as some newspapers suggest.

Enjoy this market update for March!

Growth Stocks vs Value Stocks - Who Is Ahead?

Sentiment of Growth Stock Portfolio (average of 30 stocks)

Sentiment of Value Stock Portfolio (average of 30 stocks)
In last month's Market Update, I have covered the potential impact of the $1.9tn US stimulus package. One major area that seemed affected by this was that of growth stocks. The value of such stocks is endangered when yields rise, as it erodes their long-term cash flows. As a result, many people have called for a shift from growth stocks to so-called value stocks (which have a lower growth expectation and are thus less impacted by the rising yields). Throughout the past weeks, growth stocks have thus been quite volatile and have seen large price swings on a daily basis.
However, is the sentiment around growth stocks really as bad as one might expect from reading the headlines? To answer this question, I have constructed two virtual sentiment portfolios - each with 30 stocks that are considered being value or growth stocks (based on the 30 largest holdings in percentage terms of the "iShares Core S&P U.S. Growth ETF" and "iShares S&P 500 Value ETF").

As we can see in the two charts above, both portfolios have had fairly similar sentiment averages throughout the past ten months. The situation also has not significantly changed during 2021, when the stimulus package plan was announced and realised. Both, the value stocks portfolio's sentiment and the growth stocks portfolio's sentiment were hovering around the 70% mark, with a tendency to be above rather than below this mark. Similarly, both portfolios had their respective sentiment highs in early December 2020 (growth stocks 81%, value stocks 86%), and their sentiment lows in January (growth stocks 58%, value stocks 63%). Interestingly, growth stocks have overall not been more volatile than value stocks from a sentiment point of view. Similarly, sentiment movements of the growth stocks portfolio have been more regular, especially in February and March, which closely resemble the movements on the stock markets.

Of course, the scope of this newsletter does not allow for a fully-fledged scientific analysis. Nevertheless, the above-mentioned is an indicator that people still value growth stocks, despite the negative effects of the rising yields. Whether this is because this space is part of a larger bubble or because these companies will continue to outperform is up to debate and remains to be seen in the coming months.
Region, Index, and Sector Sentiment Changes for March

Almost all sentiment gains of February have been eroded in March in a spectacular fashion. The MDAX50, the only index under observation that has managed a positive shift in sentiment, has not been able to counteract the almost free-falling sentiment of the other markets. As a result, all markets under observation have lost 13.98% in sentiment compared to last month.
Ahead of them all is the SMI, which has lost 42.50% in sentiment, driven by Credit Suisse (see the trending table down below).
The worries surrounding the global supply chain disruptions caused by the Ever Given explain and complement the general negativity.
Archegos Capital Scandal Draws Banks Lower

Numerous banks have been affected by the recent Archegos Capital Management scandal. As a result, the Banks sector is among the biggest losers this month with a sentiment loss of 13.33%

Trending Board - Top & Flop List

The "YUKKA Lab Trending Board" shows the top & flop movers of the last month based on an algorithm, which calculates the most relevant changes based on sentiment and news volume.

Top Companies Volume Sentiment
Advantest 1'178 (+109%) 88% (+57%)
Innogy 1'180 (+230%) 74% (+53%)
Devon Energy 914 (+99%) 87% (+45%)
Sonova 585 (+84%) 72% (+41%)
Zalando 4'504 (+126%) 90% (+35%)
Flop Companies Volume Sentiment
Amdocs 696 (+97%) 19% (-74%)
Credit Suisse 38'000 (+146%) 23% (-67%)
Michael Kors 1'192 (+68%) 30% (-63%)
Nomura 7'807 (+327%) 39% (-55%)
Hennes & Mauritz 13'000 (+288%) 28% (-34%)

Unsurprisingly, Credit Suisse and Nomura are among the top five of March's flop companies after losing several billion USD as a result of the Archegos Capital scandal that started to unfold in late March. Given that this scandal is still developing, the sentiment of these two companies and others involved should be followed closely.

If you have any questions or suggestions, feel free to contact us! We are happy to receive your feedback and provide you with further information.

Kind regards,
Valentin Back
Research Assistant for Finance and Analytics

04/04/2021

Das ganze YUKKA-Team wünscht ein schönes Osterfest!

29/03/2021

Wir freuen uns auf die spannende Zusammenarbeit mit 👉 Universal-Investment, um sie und ihre Kunden im Bereich ESG-Anlagen mit unseren News-Analytics tatkräftig unterstützen zu können! 💥👍

Das Berliner Fintech YUKKA Lab und die Frankfurter Fonds-Service-Plattform Universal-Investment starten eine gemeinsame Kooperation rund um...

08/03/2021

Happy international women's day💥

03/02/2021

💥 Sehr cool & vielen Dank an TheScreener Investor Services 👏

Der Researchanbieter erweitert seine Top Applikation für Assetmanager um die Realtime News Analyse von Yukka Lab.