Sector commentary

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Oil & Gas

08/08/2017
Oil & gas macro outlook
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The oil sector is firmly in a new cycle, with a dramatically lower cost profile across the industry. Inventories in the US remain at elevated levels (only just below last year’s record levels). Although demand growth is steady, the production growth from the US shales alone is seen to be enough to provide for this growth from (Q217-Q218), with OPEC playing a role as the swing producer to cover seasonal variation. The market agrees, and the forward curve has progressively lowered and flattened over the last 18 months. We lower our long-term oil price assumption to $70/bbl in 2022 (equivalent to c $60/bbl real in 2016).

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Pharmaceutical & healthcare

21/06/2017
ASCO 2017
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Edison attended the 2017 American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago, US, on 2-6 June. This year the main focus was chimeric antigen receptor (CAR) T Cell therapies, in particular CARTs targeting BCMA from Bluebird Bio and Nanjing Legend; and immuno-oncology (IO) combinations such as IDO1/PD-1 inhibitors and new targets like LAG3 and GITR. Targeted therapies also took centre stage, particularly Loxo’s larotrectinib and AstraZeneca’s Lynparza, along with Roche’s APHINITY data. Finally, we also present data from companies under our coverage: Hutchison China MediTech, MorphoSys, PharmaMar, Prima Biomed and Viralytics.

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Technology

29/03/2017
Reality Bytes
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Voice is where much excitement and hype is to be found. Every ecosystem is developing a voice controlled digital assistant with which it hopes to enrich Digital Life and control the homes of its users. However, we find that voice suffers from significant limitations meaning that the user experience and functionality that it can offer is inferior to what can be achieved using a visual device. This combined with the fact that the intelligence of voice based systems remains rudimentary at best means that voice is unlikely to replace screens any time soon.

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Mobile ecosystems

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Technology

24/02/2017
Mobile ecosystems
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The difference between men and boys will be the brains of their toys. Artificial intelligence (AI) promises to substantially improve the Digital Life services offered by the ecosystems that has underpinned a period of feverish investment. Despite this activity, developments are at a very early stage with none of the big challenges of AI being close to being solved. It is the search engines that are ahead in AI followed by Apple, Microsoft and Amazon. AI remains the Achilles’ heel of Facebook.

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Technology

08/02/2017
Mobile ecosystems
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Low to zero device growth means that revenue is becoming increasingly critical to the ecosystem. Edison’s new monetisation model benchmarks ecosystems that monetise via advertising and subscription and facilitates the comparison with those that monetise through hardware. Although Google has benefited from iOS’s recent strength, there are real cracks appearing in its ecosystem that need to be addressed urgently. Elsewhere, Twitter remains gridlocked, while Yahoo fails to execute. Facebook has the most potential.

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Oil & Gas

14/12/2016
Oil & gas macro outlook - Accelerated rebalance
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On 30 November 2016, OPEC and select non-OPEC oil exporters agreed to cut output by a combined 1.76mmb/d in 2017, prompting us to review our short-term oil price assumptions. OPEC views this as a necessary catalysis of the rebalancing process to secure medium-term oil supply and the role of crude oil within the global energy mix. Assuming OPEC’s 14 members (OPEC-14) and Russia comply with >70% of pledged output reductions in early 2017, we expect global inventories to fall in Q217, reaching the top of their five-year range by the end of 2017. We estimate that OPEC compliance will accelerate crude oil inventory draws by around six months from earlier IEA forecasts (November 2016 oil market report). We maintain oil price assumptions in line with the EIA at $51.7/bbl in 2017, rising to $70/bbl (real) long term – minor adjustments from our forecasts in June 2016.

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Investment Companies

22/09/2016
Listed Private Equity - The opportunities and challenges for investors
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In the first part of a series of reports on listed private equity (LPE), we examine the key opportunities and issues for investors.

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Show companies...3i Group, Aberdeen Private Equity Fund, Altamir SCA, Candover Investments, Deutsche Beteiligungs, Electra Private Equity, F&C Private Equity Trust, GIMV NV, HarbourVest Global Private Equity, HBM Healthcare Investments, HBM Healthcare Investments, ICG Enterprise Trust, ICG Enterprise Trust, NB Private Equity Partners, Oakley Capital Investments, Pantheon International, Princess Private Equity Holding, Scottish Mortgage Investment Trust, Standard Life European Private Equity Trust, SVG Capital, Woodford Patient Capital Trust

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Oil & Gas

09/06/2016
Oil & gas macro outlook - Tightening market buffered by abundant inventories
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Oil price volatility remains high, with Brent crude having risen $17/bbl or 51% since our last macro outlook in January 2016. Since then we have seen supply affected by a 1.2mmbpd reduction in Canadian output due to wildfires, combined with underinvestment and instability-driven supply interruptions across OPEC members Venezuela, Libya and Nigeria. Some of these temporary supply effects will reverse over the coming months; nonetheless, we expect the oil market to tighten over 2016. Although record levels of inventory and uncertainty over the sustainability of emerging market demand growth may limit near-term price gains, longer term, we expect prices to rise to c $70/bbl in line with levels required to incentivise non-OPEC supply expansion. Our short-term oil price assumptions remain aligned to EIA STEO forecasts at $43/bbl Brent in 2016 and $52/bbl in 2017.

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