In the U.S.:
- December IHS Markit flash manufacturing PMI was down 1.4 points m/m to 53.9 versus November’s 55.3 reading. New order growth was the weakest in over a year and manufacturing employment growth was the softest since Aug-17.
A report on Dealreporter stating that Simon Property Group (SPG) could have been weighing a bid for Macerich Company (MAC) was denied by a Simon spokesman to Bloomberg news. Shares of MAC had jumped over 7% on the news but later lost most of the gains following the denial by SPG.
- The trade war with the US seems to be easing with both sides claiming constructive talks. In addition, China further eased tensions by following through on a prior pact to lower auto tariffs and purchase US soybeans.
- November industrial production growth slowed to 5.4% y/y versus October’s 5.9% y/y reading. Weakness in autos and retail sales were cited as the main catalysts to the lackluster reading.
- December flash manufacturing PMI rose slightly to 52.4 versus November’s 52.2 reading. Of note, export orders fell to a preliminary 48.0 versus November’s 50.8 reading, marking the sharpest contraction since August 2016.
Link REIT announced the sale of 12 Hong Kong Shopping Malls to a consortium led by Gaw Capital Partners for approximately $1.53B. The price represents a 32% premium to the appraised value of the portfolio as of September 30, 2018.
- On the Brexit front, UK Prime Minister Theresa May was forced to abandon the Brexit vote and then survived a no confidence motion lodged by her own party. All of the political turmoil surrounding the deal has added to the uncertainty that a deal would be reached before the March 29, 2019 deadline.
- As expected, the ECB left its key policy settings unchanged and formally ended QE. The ECB stated that it intends to continue reinvesting maturing securities for an extended period past the date when it starts raising rates, and for as long as necessary.
- Following Italy’s proposal of a 2019 deficit of 2.04%, the EU is still pushing for more changes. La Stampa reported that the EU is looking for Italy to make a further savings of €4B to bring the deficit just under 2%.
The backdrop of a slowing economy and political division across many parts of Europe have been headwinds for property securities this year in Europe as it has lagged Asia and North America. The FTSE EPRA Nareit Developed Index (Europe) has delivered a local currency total return of -3.03% thru December 12th and a USD total return of -8.68%. This compares with the full FTSE EPRA Nareit Developed Index (Asia, Europe and North America) delivering a local currency total return of +1.61% and USD total return of -0.24%.
The views expressed in this update are as of the date of this blog entry. These views and any portfolio holdings discussed in the update are subject to change at any time based on market or other conditions. The adviser disclaims any duty to update these views, which may not be relied upon as investment advice. In addition, references to specific companies’ securities should not be regarded as investment recommendations or indicative of the Adelante products, strategies, or portfolios.