Today US markets tumbled some more over fear of a tech wreck. 

PM Boris Johnson is threatening to withdraw from the European Union without a deal unless the UK gets concessions. This has hurt British shares and sterling. Our largest ADR holdings are British.

Tech

After South Korea's Samsung got a $6.65 billion Verizon order for 5G, Nokia was downgraded by Raymond James analysts to market perform from strong buy, at $4.24. VZ was upped to buy by Argus at $60. NOK fell 2.51% Monday to euros 3.63. SSNLF also is making chips for Qualcomm's cheap 5G phones.

Israeli chip-maker Tower Semiconductor will not be able to take business away from China's SMIC which may be barred from US business because it is close to the military, TSEM over weekend revealed that its systems suffered a cyber-attack and security breach and its Tel Aviv share fell 3%.

Schlumberger Ltd joins the green trend with a hybrid cloud deal with IBM and Red Hat giving access to data, regulatory compliance, analytics, and AI to oil and gas exploration and production firms. SLB also predicted slower growth, which is why its stock fell. It will earn 80% of revenue outside the US. It will cut debt and maintain a strong credit rating.

Deutsche Bank upped China's Nio buy with a TP of $24. GM paid $2 billion for 11% of Nikola Trucks.

Uber will help drivers switch to electric cars with $800 million in funding.

Australian BHP plans to use LNG-powered vessels to ship iron ore to China to cut down on carbon emissions.

Fanuc, the Japanese robotics maker, gained 2.6% today on Japan optimism.

Finance

BAE Systems is offering an anti-money laundering system via Amazon Web Services with no upfront charges which goes operational quickly. It is intended from financial institutions. British BAESY is moving away from providing tech only to the military.

Danske Bank upgraded Sampo Oij to buy from hold today.

Standard Life Aberdeen (SLFPY) was upgraded by Berenberg to buy from hold, up 2 notches.

Banco Santander fell back into the minus column today, down 2.54%.

Munich Re revealed that it faces claims of euros 100 million plus over the Beirut port explosion.

JP Morgan Bank is investigating misuse of up to $28 billion of stimulus funds this spring by clients and staff.

Drugs

Safety is the major consideration by 9 drug majors working on a vaccine against Covid-19. GSK, SNY, JNJ, PFE, Merck, Moderna, and Novavax agreed to cut Trump pressure to launch a vaccine too early.

Roche got FDA OK for using its authomated cobas 6800 and 8800 to find BK virus which interferes with transplants. RHHBY is facing more US FDA scrutiny over its triple negative metastatic breast cancer chemo plus immunotherapy combining Tecentric with paclitaxel from Bristol Myers.

Sanofi's Covid-19 jab which uses GlaxoSmithKline boosters, will cost under 10 euros per dose.

Compugen began phase I/II trials of its COM701 antibody, a PVRIG binder, with Bristol's Opdivo and TIGIT in solid tumors. Three checkpoints are better than one.

Fellow Israeli TEVA fell over the weekend. It will present results for Austedo in patients suffering Parkinson's or psychosis when treated for tardive dyskinesia or Huntington's chorea using lower doses.

Indian Dr Reddy's Lab launched generic Faslodex syringes to treat metastatic breast cancer in post-menopausal women with injections. The US market is worth $400 million/yr. RDY is challenging Astra-Zeneca, maker of Faslodex.

Japanese Takeda is selling its non-core prescription businesses to Germany's Cheplapharm for $562 million by the end of next Q1. It is selling cardio, metabolic, and anti-inflammatory drugs plus calcium.

Mexico

Bimbo will open a new plant in Mexico to serve its largest market in North America, the USA, which saw sales up 36.4% in the last year, according to Eduardo Garcia of sentidocomun.com.mex.

Cemex is selling and delisting its Latam Holdings (CLH) via its Spanish sub, starting with Colombia at 87 cents per share, nearly 16% higher than the prior price.

Fibra Uno fell 2.55% in European trading. FBASF is a REIT.

A Tale of Two Funds

In March, Legg Mason Western Assets Emerging Markets Debt Fund's directors voted to sell their fund (and others in the group) to Franklin Templeton whose Templeton Emerging Markets Income Fund we already own. This move made the following report possible, as I could compare the positions and strategies of the two different bond funds investing in developing countries.

The key difference between the two funds is that EMD used a scattershot approach to its investment system with about 60% of its holdings in sovereign bonds issued by governments, and another 19 percent in energy, financial, and materials producers. It did an immense amount of currency hedging. And in the first half of the fiscal year, to June 30, it lost 5.17% in net asset value and 9.41% in its US market price, which fell to $14.3 and $12.32 respectively. 

By scattershot I mean investing in developing or tiny countries: Angola, Armenia, Costa Rica, Croatia, Ecuador, Egypt, El Salvador, Georgia, Guatemala, Honduras, Hungary, Ivory Coast, Jordan, Kazakhstan, Nigeria, Oman, Panama, Paraguay, Peru, The Phillippines, Romania, Russia, South Africa, Sri Lanka, Turkey, and Ukraine. It was founded in 2003. In every one of these places it has more exposure than Templeton EMF founded during the lifetime of Sir John Templeton.

It invested 8.5% of its assets Israel (probably not an emerging market in fact) as well as in Jordan,and other non-emerging countries like Oman, Qatar, and United Arab Emirates to balance out the Arabs. It also invested in Ireland Hong Kong, South Korea, and Switzerland where some emerging market stocks or bonds traded, as well as in supranational borrowers. In all Western Assets had holdings in 50 countries. It also rather feebly tried to cover exchange risk with complex options. 

In contrast, the older and wiser Templeton EMF lost 11.18% in market price and 7.87% in net asset value, a reversal of the EMD losses, with the market price down more than the NAV. Offsetting this was a distribution of 3.155 cents per share in the half year.

It was 69.4% invested in foreign government securities, nearly 10% more than EMD and only 0.8 % in convertible corporate bonds or common stocks. EMD was 19% invested in corporate bonds or shares, with a special fondness for banks and real estate.

By region EMF focused on the Americas, at 38.1%, Asia-Pacific at 26%, Middle East and Africa 15.8%, and Europe 1.4%. It also was currency hedged across the board, which accounted for the NAV drop (unrealized losses of $5.753 million an unrealized gains of $2.040 million in the half.) In addition foreign taxes taken on its positions gave it money to offset against dividends paid in cash to its shareholders by 1.84 cents per share. Normally all dividends are paid in the form of new shares rather than distributed by EMF. It also agreed to outsource some of the costs incurred for hedging and said this would increase efficiency in the longer term.

Despite being part of a global chain of emerging markets debt funds, EMF did not invest anywhere as widely as EMD. Its holdings were miniscule in non-sovereign bonds. And it invested in far fewer countries: Argentina, Brazil, Chile, Colombia, Dominican Republic, El Salvador, Ethiopia, Ghana, India, Indonesia, Jamaica, Kenya, Mexico, Senegal, Serbia, South Korea, south Africa, and Thailand. It hedged currency risk religiously. It does hold some derivatives which restrict cash payouts.