Monday, January 11, 2021
Platinum Seasonality Analysis
By Century Financial in 'Investment Insights'
*This performance is only observed with historical backtests and not traded by the company.
First quarter outperformance on the horizon
Below is a seasonality comparison of Platinum over the last 29 years across each quarter. As can be seen, the first quarter performance has been positive 22 times while only 7 times the first quarter has seen negative returns.
As shown in the table below, every year, the first quarter has exceptionally performed well for platinum, with a 29-year average return of 5.54%. Over the same period, the maximum return has been 33.96%, and the maximum loss has been 25.35%. Moreover, after every negative performing year, platinum has given a rebound with positive returns.
Heat Map for Platinum (Quarterly returns over the last 29 Years)
Approximately 40% of platinum demand arises from the automotive sector, 20% from industrial usage, while jewellery accounts for 30% of the global platinum demand. China is the largest market for platinum jewellery followed by India and the US. Platinum is a preferred choice for engagement rings. With both the global wedding season and new year festivities in the first quarter of each year, demand tends to rise during this time.
Likewise, strong Chinese demand emerges in January, ahead of the Chinese New Year and the lunar festival. The mass rollout of vaccination, unprecedented fiscal stimulus by governments, and an anticipated “V” shaped economic recovery across the world would result in more industrial output, higher car sales, and elevated consumer spending. Thus, there are is a high probability of outperformance for platinum in the following quarters of 2021.
It is important to understand that the seasonal patterns and pricing tendencies described here can be affected by other fundamentals, and that past patterns may not always hold true in the future.
Past performance is not indicative of and does not guarantee future results. Trading in markets may involve loss of capital.
Risks & Assumptions
Data Source: Bloomberg
Arun Leslie John
Chief Market Analyst
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