Kaiser Partner Privatbank - Monthly Market Monitor April 2021 EN

Monthly Market Monitor

April 2021

Table of contents In a Nutshell Our view on the markets

Asset Allocation

Macro Radar

06

04

Notes from the Investment Committee

Theme in Focus

Satellite View

A sustainable (strategic) asset allocation

Geopolitical heat map

10

07 ESG - Sustainability Corner China’s climate ambitions

08

The Back Page

14

12

Kaiser Partner Privatbank AG | Monthly Market Monitor - April 2021

3

In a Nutshell

Our view on the markets

In rapid-fire succession Shortly after the passage of the USA’s third coronavirus relief package, the next megaproject – a USD 2.25 trillion infrastructure program – is already on the docket.

It is to be funded primarily through tax hikes and the closing of international tax loopholes. Economic growth on the far side of the Atlantic looks set to increase to a double-digit rate in the second quarter. In Europe, in contrast, a third coronavirus infection wave is delaying an upturn for at least two more months.

The Iran challenge Reviving the nuclear treaty with Iran ranks among the most important foreign policy issues for the new US president. One significant reason why is so that the Biden administration can redirect resources and attention farther eastward (toward China and vicinity) as quickly as possible. A time window for negotiating a face-saving deal for both sides is open until August.

Stock markets looking ahead to the future Financial markets are looking ahead to the future and are blocking out the stuttering progress of vaccination campaigns and latent geopolitical risks. A combination of a boom in economic activity, rising corporate earnings and sustained monetary policy accommodation gives reason to expect further price gains for risk as-

Chart of the Month Better late than never | Vaccination campaigns in Europe making slow headway Percentage of the population that has received at least one vaccine dose 70% Israel

60% 50%

United Kingdom

40% United States

30% 20%

Switzerland Germany

10%

02

1

21

Ap

ar M

r2

20

21 20 Fe b

Ja

n

20

21

0%

Sources: ourworldindata.org, Kaiser Partner Privatbank 4

Monthly Market Monitor - April 2021 | Kaiser Partner Privatbank AG

sets as the year advances. However, the path upward is likely to remain strewn with intermittent setbacks.

Commodities have no place (any longer) in portfolios In our extensive “Theme in Focus” article, we give a step-by-step description of our formula for regularly reviewing our investment strategy. We also explain the findings of this year’s strategy review, which resulted in some alterations including the deletion of commodities from the strategic asset allocation, not just because this asset class has generated a paltry return even over a ten-year time horizon, but mainly because of our aspiration to pursue a sustainable and responsible investment policy.

China’s climate ambitions China has the world’s largest CO2 footprint by far. Without the Middle Kingdom on board, little (or less than is needed) can be done in the fight against global climate change. But whoever has been waiting for China to take over a sustained leadership role in decarbonizing our planet will have to keep on waiting because the environmental goals in China’s 14th five-year plan are hardly ambitious.

On the heels of the upbeat vaccine news last autumn, hopes were running high that everything in terms of leisure activities, dining in restaurants and planning vacations would almost be back to normal in spring 2021. But while an efficient vaccination campaign has already given Israelis their “normal” life back, people in much of Europe had to observe Easter under severe restrictions for the second straight year. While sentiment is at rock bottom in many places on the old continent and impatience has started to boil over, renewed lockdowns and ongoing restrictions are also raising the macroeconomic costs. We, however, continue to expect that warmer weather and the gradually accelerating vaccination pace will cause the coronavirus to recede soon. We then will likely experience a small economic boom in Europe as well, largely on the back of high pent-up demand.

Kaiser Partner Privatbank AG | Monthly Market Monitor - April 2021

5

Macro Radar

Taking the pulse of economic activity

Spring fever | Mobility increases as temperatures warm up Google mobility report for Switzerland 0%

-20% -40%

-60% -80%

-100%

03 /2 02 04 0 /2 0 0 5 20 /2 02 06 0 /2 0 0 7 20 /2 02 08 0 /2 02 09 0 /2 0 1 0 20 /2 02 11 0 /2 0 1 2 20 /2 02 01 0 /2 02 02 1 /2 0 0 3 21 /2 02 1

The number of vaccine doses administered in the USA and the UK could already reach an order of magnitude equivalent to 70% of the population by the start of May. Similar levels on mainland Europe probably won’t be reached until months later. The differing economic outlooks reflect this disparity.

Sources: Google, Kaiser Partner Privatbank

Infrastructure program and higher taxes US President Joe Biden continues to think in trillions.

Shortly after the passage of the third coronavirus relief package (to the tune of USD 1.9 trillion), the next megaproject – a USD 2.25 trillion infrastructure program – is already on the docket. Since the proposed investment plan would extend over eight years, this would significantly reduce its economic stimulus impact. Nevertheless, the new infrastructure bill certainly sends a strong signal, also to the USA’s main economic rival, China.

Biden’s proposal is to be funded primarily through a hike in taxes particularly on corporations that heretofore have benefited from international tax loopholes.

Delayed rebound in Europe Economic growth in the USA looks set to accelerate to a double-digit rate in the second quarter on the back of unprecedented stimulus. In Europe, in contrast, a third coronavirus infection wave and attendant lockdowns are delaying an upturn for at least two more months.

Afterwards, though, a mini-boom should be observable on the old continent as well because pent-up consumer demand will likely be unleashed in the summer while exports, investment demand and government spending increase at the same time.

Interest expenses remain low Although the yield on benchmark 10-year German Bunds has risen by “only” a little less than 40 basis points year-to-date, the European Central Bank already expressed concern in March and expanded its bond purchases even though interest expenses for European

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Monthly Market Monitor - April 2021 | Kaiser Partner Privatbank AG

countries remain ultralow. Even Italy, the debt leader among the major EU member states, can obtain 10year financing at a current interest rate of 0.65%, which is much cheaper than the average for the years 2014 through 2019 (2.1%). The huge piles of debt are unlikely to pose a problem (yet) for quite a while.

Asia leading the economic cycle The massive fiscal stimulus in the USA and the unleashing of pent-up growth potential in Europe should cause industrialized countries to grow faster than emerging economies at mid-year for once. Emerging economies, at least in Asia, are already in a more advanced stage of the economic cycle, so the omens in China, for example, are now pointing more to a gradual return to fiscal consolidation, and monetary policy in South Korea and Taiwan could start to return to normal as early as in 2022.

Consensus estimates 2020

2021

2022

Switzerland

-3.2

3.3

2.9

Eurozone

-6.8

4.2

4.2

UK

-9.9

4.7

5.6

US

-3.5

5.7

4.0

2.3

8.5

5.5

-0.7

0.3

0.4

0.3

1.5

1.2

GDP growth (in %)

China Inflation (in %) Switzerland Eurozone UK

0.9

1.6

1.9

US

1.3

2.4

2.2

China

2.5

1.6

2.3

Kaiser Partner Privatbank interest rates view Last

3M

12M

Key interest rates (in %) Switzerland

-0.75

→

→

Eurozone

-0.50

→

→

UK

0.10

→

→

US

0.25

→

→

China

2.95

→

→

10-year yields (in %) Switzerland

-0.28

→

→

Eurozone

-0.31

→

→

UK

0.81

→

→

US

1.69

→

→

China

3.21

→

→

Sources: Bloomberg, Kaiser Partner Privatbank

Satellite View Geopolitical heat map

USA vs. China The first talks between US and Chinese diplomats under the Biden administration, which were held in mid-March in Alaska, took on an extremely icy tone.

Acrimonious disagreement about a “new normalcy” in relations between the two economic powers glaringly came to light. Options for potential cooperation indeed appear limited to just a few areas such as public health and climate change. Achieving strategic autarky from the opposing side stands at the fore for both countries.

Against this backdrop, the US government’s prospective infrastructure program also envisages investing USD 50 billion in the US semiconductor chip industry.

Populism in Europe The risk posed by populist parties in Europe in recent years tended to be overrated. The coronavirus crisis whipped up a massive headwind for them in many countries – like it did for the AfD in Germany, for example – and put a tailwind behind traditional establishment parties. Former European Central Bank President Mario Draghi’s move to integrate all major parties into Italy’s new government has averted the threat from the left and the right in that country as well for now.

In France, however, President Emmanuel Macron’s approval rating is languishing at a low level while rightwing populist Marine Le Pen is making a comeback, a development that we will continue to monitor.

Geopolitical developments do not stop at the gates of the financial markets.

On the contrary, they have become an increasingly important influencing variable in recent years. Our Satellite View takes a look at the major hotspots at the moment.

The Iran challenge Reviving the nuclear treaty with Iran ranks among the most important foreign policy matters for the new US president. One significant reason why is so that the Biden administration can redirect resources and attention farther eastward (toward China and vicinity) as quickly as possible. A time window for striking a deal that would allow both sides to save face is open until August, when lame-duck Iranian President Hassan Rouhani’s term in office expires. After that time window closes, much longer negotiations would be needed because the upcoming elections in Iran will probably strengthen the conservative camp, which takes a very hard-line stance on the nuclear issue.

Kaiser Partner Privatbank AG | Monthly Market Monitor - April 2021

7

Asset Allocation

Notes from the Investment Committee

Financial markets are looking ahead to the future and are blocking out the stuttering progress of vaccination campaigns and latent geopolitical risks. A combination of a boom in economic activity, rising corporate earnings and sustained monetary policy accommodation gives reason to expect further price gains for risk assets as the year advances. However, the path upward is likely to remain strewn with intermittent setbacks.

Asset allocation monitor -

+

-

Cash

Equities

Fixed Income

Global

Sovereign bonds

Switzerland

Corporate bonds

03/2021

Microfinance

Europe UK

Inflation-linked bonds High-yield bonds

US 03/2021

Emerging Markets

Emerging markets bonds

Alternative assets

Insurance-linked bonds

Gold Real estate

Convertible bonds

+

Duration

Hedge funds

Currencies US dollar

Structured products Private equity

Swiss franc Euro British pound

Equities: Stock markets looking ahead to the future Scorecard • Equity markets in recent weeks have once again + proven that they look ahead to the future and price Macro in the developments of tomorrow today. This is the Monetary/fiscal policy only apparent reason why benchmark indices in Corporate earnings Germany and the USA have recently been soaring Valuation from one new high to the next and why even the Trend SMI is on the verge of hitting a new all-time high. Investor sentiment The still-limping economy at the moment (in Europe at least) and the slow vaccination progress would try to weigh near-term opportunities against mediumin any case suggest a different market trajectory. to long-term ones when tactically positioning our But even though the present situation is still disilportfolios. Against the current backdrop, a balanced lusioning, the situation in the near future appears mix of sectors and investment styles appears the destined to be shaped by a combination of boommost sensible tactical approach to us at the moment. ing economic activity, rising corporate earnings and sustained monetary policy accommodation. This set Fixed income: High-yield bonds don’t provide much of propitious circumstances should enable further of a buffer anymore share-price gains as the year advances.

• Just as economic activity is moving at very different • However, temporary consolidations are also part of speeds on opposite sides of the Atlantic, there are an optimistic stock-market scenario and are actually also big differences in the tones coming from ceneven probable in the near term in the wake of the retral banks. Whereas the US Federal Reserve is taking cent significant share-price gains. But as has been the some pleasure in the unabated rise in US bond yields, case in recent weeks, consolidations are likely to play the yield normalization in March already went too out mainly below the surface in the form of an onfar for the European Central Bank. Although yields in going sector rotation. There are enough drivers for a the Eurozone rose much less sharply than they did in sector rotation at the moment. While prospective tax the USA, the ECB expanded its bond-buying volume hikes in the USA, for example, would adversely affect to nip a further increase in yield levels in the bud. It mainly the technology sector and growth stocks in remains to be seen whether the ECB can lastingly ingeneral, rising market interest rate levels and steepenfluence the government-bond market in this manner. ing yield curves benefit value and cyclical stocks. We The fundamentals indicate that yields really ought to 8

Monthly Market Monitor - April 2021 | Kaiser Partner Privatbank AG

demand in the future. Finally, in the retailing property be much higher in the medium to longer term. segment, the pandemic is bound to accelerate trends • The risk/return profile for government bonds remains that were already observable prior to the outbreak of unattractive in spite of the more or less sharp corCOVID-19. One such trend is the increasing comperection in recent weeks. The same goes for investtition from online retailing, which could continue to ment-grade corporate bonds, which now offer only put pressure on bricks-and-mortar retailing (and the marginal credit spreads and accordingly no longer associated buildings) in the quarters ahead. provide much of a buffer against further rises in market interest rates. Credit spreads even on high-yield bonds have recently compressed to multiyear lows. Currencies: US dollar bears capitulate Nevertheless, junk bonds look poised to outperform • EUR/USD: At the start of this year, the majority of currency analysts were in agreement that the value investment-grade issues. Our most positive stance reof the US dollar would drift downward this year. But mains on inflation-linked bonds, which have already after the first quarter, it turns out that the consensus significantly outperformed nominal bonds year-toview was once again wrong. A combination of strondate. ger economic growth, widening interest-rate differentials and rapid vaccination progress put a powerAlternative assets: Differentiation required in real ful tailwind behind the greenback. Short-covering by estate investments traders whose currency forecasts proved erroneous • Swiss real estate funds continued to be a sensible gave the US dollar an additional boost. In the wake of component of a balanced portfolio even in the year the greenback’s recent rally, we now see a balanced of the coronavirus, but more in regard to their solid risk/reward tradeoff in the EUR/USD cross. performance and less in terms of their diversification properties. After all, “concrete gold” also came under • GBP/USD: The British pound suffered a setback in March after a lengthy rally. Market participants are heavy pressure at the height of the crisis. But for incoming to the realization that the UK cannot decoustitutional investors, solid payout yields continue to ple from economic activity on the European mainmake real estate assets an attractive alternative to land, and they are becoming aware that although Swiss government bonds, which guarantee a negathe Bank of England looks set to raise interest rates tive yield. Consequently, a whopping net CHF 4 bilsooner that the ECB, from today’s perspective it aplion of capital flowed into this asset class last year. pears likely to pursue a much slower rate-hiking cycle Another reflection of the sustained high investor inthan the Fed will. This could further extend the reterest is the lofty premium to net asset value, which cent consolidation phase. stood at around 35% at the end of March. But even if investments in Swiss real estate are relatively attrac- • EUR/CHF: The Swiss National Bank’s monetary policy assessment in March can unquestionably be called tive, 2021 is likely to put a lid on their absolute perfora non-event. The SNB continues to insist that the mance. Moreover, differentiation is imperative. HighSwiss franc is “highly valued.” Despite this assertion, quality residential real estate has proven resistant in the franc’s recent slippage against the euro indicates the face of the coronavirus shock and continues to little reason to expect interventions on the currency exhibit sound fundamentals. However, a lasting inmarket in the near future. Oscillation around the CHF crease in remote work from home could cause uncer1.10 level is likelier than a sustained directional trend tainty in the office real estate segment, though prime in the weeks ahead. locations in core urban centers are likely to stay in

Chart in the Spotlight Not risk-free | Long-term bonds post double-digit losses iShares 20+ Year Treasury Bond ETF and relative strength indicator

Sources: Bloomberg, Kaiser Partner Privatbank

The 1-percentage-point yield increase on 10-year US Treasury notes observable since last summer and the 1.2-percentage-point rise in the 30-year Treasury yield over the same period may not seem like much in nominal terms.

But given the low level from which it started, the yield increase had a considerable impact on the prices of bonds, causing appreciable to massive price drawdowns depending on the length of the term to maturity. The iShares 20+ Year Treasury Bond ETF, which particularly focuses on long-dated bonds, has come under very heavy pressure over the past several months due to its high sensitivity to changes in market interest rates and has lost more than 20% of its value since August 2020. US bonds, by a simple definition, are thus now in a bear market. From both a fundamental and technical analysis perspective, the upward impetus of long-term yields (and the downward trend in bond prices) is now likely in an end stage for the time being.

Kaiser Partner Privatbank AG | Monthly Market Monitor - April 2021

9

Theme in Focus

A sustainable (strategic) asset allocation

In the last issue of Monthly Market Monitor, we came to the conclusion that alternative fixed-income assets are called for today.

But that’s not the only conclusion reached in this year’s review of our strategic asset allocation. The following article outlines our strategic asset allocation review process and briefly summarizes our findings.

Step by step – the formula for revising an investment strategy Reviewing the near-term tactical positioning of our portfolios is a continuous process and part of our and our investment committees’ daily work. Once a year, however, we go well beyond our daily business. Once a year we also review the longer-term strategic positioning of the portfolios in our various discretionary mandates and adjust the weightings of the different asset classes if need be. The aim of this process conducted at regular intervals is to ensure that the client assets under our management are constantly invested in line with a forward-looking (and sustainable) strategic asset allocation (SAA) that is in step with the times. Our annual SAA review process follows the steps outlined below: 1) Determination of the relevant asset classes and the time horizon for the SAA: To begin with, we examine whether certain asset classes should be added to or excluded from the strategic allocation. We then determine the time horizon for which return expectations are to be formulated. We focus here on a medium- to long-term period of five years. This time frame is long enough to take longer-term valuation anomalies into account and at the same time is short enough to incorporate current micro- and macroeconomic trends into the formation of expectations.

2) Modeling for each (sub-)asset class: A sound model is worked up (or the model used in the previous year is validated) for each asset class and sub-category to derive five-year return expectations. Stability of the estimated parameters is a crucial cornerstone for later mean-variance optimization. We therefore use a combination of multiple models wherever possible to derive return estimates in order to obtain results that are as broad-based as possible.

3) Formulation of capital market expectations: Return, volatility and correlation expectations are formed for the various (sub-)asset classes on the basis of the models.

4) Mean-variance analysis: Back in the 1950s, Harry Markowitz, the co-founder of modern portfolio theory, described how to shrewdly combine risky assets to construct a portfolio that minimizes risk for a given level of expected return by means of the diversification effect created by uncorrelated assets. The

10

Monthly Market Monitor - April 2021 | Kaiser Partner Privatbank AG

process used to calculate an “optimal” portfolio that maximizes the return for a given level of risk is called mean-variance optimization. Its input factors are the expected returns on the different portfolio components, their risk as measured by their variances, and the correlations between the different asset classes.

Mean-variance optimizations typically lead to highly concentrated portfolios (consisting of assets with the best risk/return profile). To counter the problem of excessive concentration, our portfolio optimization approach sets minimum and maximum values for each sub-asset class.

5) Qualitative review of the results and adjustment of the SAA if need be: Although mean-variance analysis is lauded in academic literature and its basic tenets are universally accepted, its results cannot be adopted unqualifiedly in real-world practice mainly due to their sensitivity to the input assumptions applied in addition to the problem of extreme portfolio weights described above. Subtle alterations in assumptions can cause some big shifts in portfolio weights that are often difficult to comprehend. The main problem with mean-variance optimization is that the mathematical optimization algorithm’s degree of soundness is much higher than the degree of information in the input parameter estimates (due to uncertainty about future return distributions). That’s why investors who rigidly use mean-variance analysis to optimize their portfolios have been somewhat provocatively called “estimation-error maximizers” in portfolio management literature. In full awareness of this problem, our investment committee analyzes the pure model results of the mean-variance optimization and supplements them with qualitative aspects. A combination of quantitative modeling, qualitative appraisals and a pinch of pragmatism is ultimately used to define new strategic weights for asset classes for different portfolio risk profiles (or to reaffirm the weights from the previous year).

There is no alternative to alternative assets… |…if you want to continue earning an attractive return Expected five-year returns in US dollars

Emerging markets equities Hedge funds (market neutral) World equities US equities High-yield bonds Insurance-linked bonds Convertible bonds Emerging markets bonds Real Estate Micro�nance Gold In�ation-linked bonds Bonds global US corporate bonds US treasury bonds 0

1%

2%

Fixed Income

3%

4%

Equities

5%

6%

7%

8%

Alternatives

Source: Kaiser Partner Privatbank

Commodities have no place (any longer) in portfolios What were the main outcomes of our SAA review this year? As we described in the last issue of Monthly Market Monitor, the sky most likely is no longer the limit for the traditional equity and fixed-income asset classes for the next five years, or in other words, the expected returns going forward are a bit (stocks) to considerably (bonds) lower than the returns earned over the last ten years. Consequently, we have significantly reduced the allocation to bonds in our balanced mandates.

However, since government bonds usually exhibit an inverse correlation to stocks during turbulent market periods, they remain a component of the strategic asset allocation with a weight of 2.5% (down from 5% previously). Corporate bonds, in contrast, do not have a comparable characteristic damping effect on portfolio volatility and have become a proverbial interest-free risk these days. We therefore have reduced the weight of this asset category to zero (from 15% previously).

Meanwhile, we have appreciably raised the weights of high-yield, microfinance and insurance-linked bonds in the SAA. Within the equity asset class, emergingmarket stocks will be assigned a heavier weighting in the future in view of their significantly higher aggregate expected return. The same goes in the alternative assets sector for the weightings of gold and real estate because both are real assets that benefit in a climate of rising inflation rates. Finally, we will soon also make more space in our portfolios for market-neutral hedge fund strategies in view of their good risk/return profile.

However, another “classic” – commodities – no longer has a place in our revised strategic asset allocation not just because this asset class has generated a paltry return even over a long ten-year time horizon, but mainly because of our aspiration to uphold a sustainable and responsible investment policy. Commodityrelated investment opportunities will likely continue to exist in the future, but a better way to play them is to take the indirect route of investing, for example, in shares of companies that are actively playing a part in the transition to a CO2-neutral economy or are actively contributing to the attainment of UN sustainable development goals (e.g. combating hunger).

Kaiser Partner Privatbank AG | Monthly Market Monitor - April 2021

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Monthly Market Monitor - April 2021 | Kaiser Partner Privatbank AG

ESG- Sustainability Corner China’s climate ambitions

The 14th five-year plan is not yet truly “green” Twice each decade, the government of China sets economic, societal and environmental goals for the coming five years. In the wake of President Xi Jinping’s announcement last autumn that China intends to reduce its carbon dioxide emissions to net-zero by 2060, international observers eagerly awaited the release of more specific details on how this (ambitious) target is to be reached. But whoever had been hoping to see sweeping measures put into place in China’s 14th five-year plan (for 2021 through 2025) presented in early March was let down. The environmental protection goals set

by China’s government are similar to or only marginally tighter than the ones in the previous five-year plan from 2016. For example, CO2 emissions per unit of economic output are to be lowered by only 18%. However, since China’s economy looks set to continue expanding at an average annual growth rate of around 5% over the next five years, this target actually implies a sustained aggregate increase in CO2 emissions by around 1% per annum until 2025. China’s stated goal of boosting the share of renewable energy from 15% to 20% of the country’s energy mix is also on the conservative side considering that China doubled its installed wind and solar power capacity last year.

It won’t work without China If the international community is serious about meeting the goals of the Paris climate agreement and limiting global warming by 2030 to 2 degrees Celsius, it really needs to take swift action. The United Nations calculates that to reach that target, global greenhouse gas emissions would have to be cut 45% below 2010 levels by 2030. The only way to accomplish that is for China to commit to taking more ambitious (and faster) steps because China, which accounts for 30% of global emissions, has the world’s biggest CO2 footprint by far.

China’s actions also have indirect repercussions. If China’s net-zero target by 2060 is not credible, this lowers the pressure on other emerging economies like India and on raw-material exporters like Australia to likewise “green” their energy mix and rethink their economic structure. But why aren’t China’s climate targets more ambitious? After all, the Middle Kingdom could ecologically and economically benefit from an energy revolution orchestrated by the state. Studies assert that it would be technologically feasible to top out CO2 emissions by as early as 2025, and while prices for wind and solar energy are falling, more than 40% of China’s coal-

fired power plants are operating at a loss. The main answer to the question above is coal. China remains heavily dependent on coal, which continues to be the country’s most important source of energy, accounting for over 60% of its energy supply. Last year alone, 73 gigawatts of new coal-fired power plant capacity was put into operation throughout China, three times more than in the rest of the world combined. Many provinces of China, particularly those in the country’s central and western regions, are energy-dependent on coal and economically dependent on “dirty” industries such as steel, cement and aluminum.

Waiting for the “climate plan” Even though the 14th five-year plan was a letdown for now from a global climate standpoint and brought home the fact that China is not an express train in the fight against climate change, we nonetheless should stay objective (and optimistic), because once the giant stirs into motion, it is hard to stop it. The next opportunity to give fuller expression to its climate ambitions and to flesh them out with technical details will come in the second half of this year when China unveils its first five-year plan for climate change. Stricter measures such as a cap on CO2 emissions or a moratorium on new coal-fired power plants may then be on the agenda for the first time. Unless further efforts are made, it will likely be hard for China to reach its self-set interim goal of peaking its carbon dioxide emissions by 2030.

China has the world’s largest CO2 footprint by far. Without the Middle Kingdom on board, little (or less than is needed) can be done in the fight against global climate change. But whoever has been waiting for China to take over a sustained leadership role in decarbonizing our planet will have to keep on waiting because the environmental goals in China’s 14th five-year plan are hardly ambitious.

Dependent on coal | China continues to invest in dirty energy Net change in global coal-fired power plant capacity, in gigawatts 120 100 80 60 40

20 0 -20 -40 -60 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

new coal power plants (China)

new coal power plants (World ex China)

turned off coal power plants (World ex China)

Net Change

turned off coal power plants (China) Net Change ex China

Sources: Global Energy Monitor, Kaiser Partner Privatbank Kaiser Partner Privatbank AG | Monthly Market Monitor - April 2021

13

The Back Page Asset classes & agenda

Performance as of 31 March 2021 Asset class

year-to-date

Cash

-0.18% -0.18% -0.18% -0.13% -0.13% -0.13%

Cash CHF Cash EUR

0.05% 0.05% 0.05%

Cash USD Fixed Income Sovereign bonds Corporate bonds

-2.82% -2.82% -2.82% -4.33% -4.33% -4.33% 0.97% 0.97% 0.97%

Microfinance

-2.61% -2.61% -2.61%

Inflation-linked bonds High-yield bonds Emerging markets bonds

0.68% 0.68% 0.68% -5.28% -5.28% -5.28% 0.67% 0.67% 0.67% 1.30% 1.30% 1.30%

Insurance-linked bonds Convertible bonds Equities

6.14% 6.14% 6.14%

Global 4.35% 4.35% 4.35%

Switzerland

8.96% 8.96% 8.96%

Europe 5.21% 5.21% 5.21% 5.37% 5.37% 5.37%

UK USA 1.95% 1.95% 1.95%

Emerging markets

1 month

1 year

3 years

-0.07%

-0.63%

-2.03%

-0.05%

-0.45%

-1.20%

0.02%

0.29%

5.02%

-0.35%

-1.42%

7.76%

-1.78%

11.76%

14.44%

0.24%

1.56%

10.43%

0.84%

6.40%

15.94%

0.39%

19.74%

20.27%

-1.07%

16.08%

12.56%

0.65%

6.60%

12.38%

-2.89%

60.55%

54.75% 45.27%

4.21%

50.74%

6.49%

20.30%

35.21%

6.59%

43.96%

21.54%

4.12%

20.02%

4.50%

3.72%

58.55%

59.31%

-1.70%

55.13%

12.43%

-1.52%

8.28%

28.84%

2.43%

15.25%

29.55%

-0.06%

16.15%

10.75%

-2.86%

6.34%

-4.82%

0.90%

4.39%

-5.82%

-1.08%

10.97%

-1.66%

Alternative assets Gold

-10.04% -10.04% -10.04% 0.43% 0.43% 0.43% 1.29% 1.29% 1.29%

Real estate Switzerland Hedge funds Currencies EUR/USD EUR/CHF GBP/USD

-3.98% -3.98% -3.98% 2.38% 2.38% 2.38% 0.83% 0.83% 0.83%

On our Agenda April 22: International Mother Earth Day Loss of biodiversity, desertification, climate change and the disruption of natural cycles are part of the price to be paid for disregarding nature and harming the integrity of its ecosystems. Earth Day serves to remind us to live in harmony with nature if we want it to continue nurturing us.

April 23: World Book and Copyright Day In the midst of the seemingly never-ending COVID-19 pandemic, we can use the power of books to combat isolation, strengthen human ties and broaden our horizons. This uplifting message should be shared with as many people as possible (#StayAtHome, #WorldBookDay).

May 5: Swiss inflation data A stop at the gas station didn’t used to be so expensive for motorists in Switzerland. The inflation figures for April likewise look set to point upward due to the price of petroleum. We do not foresee a sustained pickup in inflation in Europe, but the expected April uptick is perhaps reason enough to start thinking about buying an electric vehicle.

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Monthly Market Monitor - April 2021 | Kaiser Partner Privatbank AG

Kaiser Partner Privatbank AG | Monthly Market Monitor - April 2021

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Dieses Dokument stellt keine Finanzanalyse oder Werbung dar, sondern dient lediglich zu Informationszwecken. Die darin enthaltenen Informationen begründen kein Angebot oder eine Empfehlung seitens der Kaiser Partner Privatbank AG zum Kauf oder Verkauf eines Finanzinstrumentes oder zu anderen Handlungen bezogen auf diese, und stellen auch keine Anlageberatung dar. Allfällige Hinweise auf die frühere Performance garantieren keine positiven Entwicklungen in der Zukunft. Kaiser Partner Privatbank AG haftet weder dafür, dass die enthaltenen Informationen vollständig, richtig und aktuell sind, noch für allfällige Verluste oder Schäden, die durch den Gebrauch dieser Informationen verursacht werden. Der gesamte Inhalt dieses Dokumentes ist immaterialgüterrechtlich, insbesondere urheberrechtlich, geschützt. Die vollständige oder teilweise Verwendung, unabhängig ihrer Art und Mittel, für öffentliche oder kommerzielle Zwecke, ist ohne vorgängige schriftliche Zustimmung seitens Kaiser Partner Privatbank AG untersagt.

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Monthly Market Monitor - April 2021 | Kaiser Partner Privatbank AG

Herausgeberin: Kaiser Partner Privatbank AG Herrengasse 23, Postfach 725 FL-9490 Vaduz, Liechtenstein HR-Nr. FL-0001.018.213-7 T: +423 237 80 00, F: +423 237 80 01 E: bank@kaiserpartner.com Redaktion: Oliver Hackel, Senior Investment Strategist Roman Pfranger, Head Private Banking & Investment Solutions Cornelia Kopf, Marketing Specialist, 21iLAB Design & Druck:

21iLAB AG, Vaduz, Liechtenstein

DE210312

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