Indholdsfortegnelse for Issue 954 i MoneyWeek

“Builders should focus more on quality and less on selling rubbish to desperate buyers” One of the joys of reading all the papers every week is that you pick up the little stories created by the big stories. My favourite this week is that of Guy Warren of Evergreen Homes. He is irritated. Very. Why? The (biggish) story about the super-keen Remainers who apparently recorded a row between Boris Johnson and his girlfriend through the wall of her flat offends him. Not because he is anti-nosy parkering, or even because he disapproves of the making of the private public (the neighbours gave the recording to the papers). It is because he worked on the flat in question and knows “that the level of insulation and the quality of materials we…

Three to buy DWF Group The Sunday Telegraph DWF became the latest law firm to “brave the public markets” in March, one of a steady trickle opting to trade “the protections of partnership for the chance to grow”. The largest division of the company is commercial services – the client list includes Barclays and Uber – while a “connected services arm” that offers legal software and consulting looks promising. A “people” business such as this always risks seeing key assets walk out of the door, but DWF has the scale and experience to prosper. It looks reasonably priced on 18 times forecast earnings. 119.75p Sirius Minerals The Times This FTSE-250 potash miner is developing a prospect deep under the North York Moors. In 2016 the group raised $1.2bn to fund…

• Shares in Costain have plunged after a warning from the infrastructure group that several projects “would not start on time”, says Elizabeth Burden in The Times. The contractor has suffered from the “tightening of purse strings” by local authorities and central government, while its struggling peers have also dented confidence. Carillion is no more; Interserve was seized by its creditors, and Kier has issued a “strong profit warning”. But is the gloom overdone? Broker Peel Hunt says Costain’s “strong balance sheet” makes it “sufficiently different” from its rivals. • Over the past few years, Nike has won “a lot of credit” from its “youthful customer base”, along with a “handsome dollar pay-off” for its attempts to position itself “as a champion of progressive social causes”, says James Moore in…

Earnings before interest, tax, depreciation and amortisation (Ebitda) is a way of measuring profit that can make it easier to compare the valuation of two companies. Ebitda may be helpful when it is difficult to compare firms using other profit measures – such as earnings per share (EPS) – because they have very different levels of debt, different tax rates, or different accounting policies on, for example, the depreciation of fixed assets. Ebitda measures a firm’s profitability before these factors are taken into account. The two businesses can then be compared on a like-for-like basis by taking their enterprise values (EV – the market value of all their shares in issue, plus net borrowing or less net cash) and comparing this with Ebitda. The lower the EV/Ebitda ratio, the cheaper…

• Gary Lineker (pictured) continues to top the list of earners at the BBC. In 2018-2019 the Match of the Day presenter was paid around £1.75m. Graham Norton earned £610,000 for a “range of programmes”, including Eurovision, but not his BBC One chat show. The top-earning female star was Claudia Winkleman who got £370,000 for her Radio 2 show and “various TV programmes”. • Canadian lobbying group Dickens & Madson is toasting a $6m deal to promote the interests of a “feared militia commander in Sudan”, reports the Financial Times. The Montreal-based firm will represent Lieutenant General Mohamed Hamdan Dagalo, who, with his fellow officers, seized power in April. Hamdan rose to prominence as head of a paramilitary group known as the Rapid Support Forces, whose members have been accused…

“Suddenly I See has generated more than 50% of my income. The 30 minutes I spent writing it was the best half an hour of my life.” Singer/songwriter KT Tunstall (pictured) on the long-term impact of her song being used in the hit 2006 film The Devil Wears Prada, quoted in The Sunday Telegraph “Silicon Valley is a bit like the Vatican: slightly insular, massively wealthy… and mostly run by men.” Lawyer Miriam Gonzalez Durante on life in California, where her husband Nick Clegg now works for Facebook, quoted in The Sunday Times “Get yourselves another history.” A Western economist in the 1990s telling Russians how they could become a thriving market economy, quoted in The Economist “If you want to know what God thinks about money, just look at…

econlib.org “With my perfect political betting record hanging in the balance, I follow Brexit to the point of obsession,” says Bryan Caplan. (The economist makes publicly declared bets with political opponents as a test of his judgement. He has so far won 19 bets with zero losses. In 2008, he bet that no current EU member with a population of more than ten million would officially withdraw from the EU before 1 January 2020.) Yet for all the twists in the plot, I have yet to hear anyone point to the simplest path to Brexit: let Britain buy its way out! If this were any normal business deal, this would be on the tip of every Brexiteer’s tongue. It’s the logic of any familiar property deal: “You won’t buy unless…

Baillie Gifford’s (BG) extraordinary success has made many of its rivals envious, while those who have missed out on the stellar returns desperately want their scepticism vindicated. No fund in the BG stable represents their growth-focused style better than their £7.5bn flagship investment trust, Scottish Mortgage (LSE: SMT), and its supremely self-confident co-manager, James Anderson. SMT is no Woodford The last year has given BG’s critics some ammunition. The technology stocks that dominate the SMT portfolio faltered, resulting in last autumn’s share-price drop of more than 15%, and it has not fully recovered. The one-year performance has modestly lagged global indices. As exposure to unlisted equities has been built up to 17% of the portfolio, within sight of the 25% maximum, the initial public offering (IPO) market has disappointed, with…

Prime ministerial hopeful Boris Johnson wants to overhaul stamp duty. He has proposed axing it on properties worth less than £500,000 and lowering the rate on properties worth more than £925,000. Whether or not he sticks to this pledge, it’s worth knowing the stamp-duty exemptions that currently exist. One aspect of stamp duty that comes with several exemptions is the higher rate due on the purchase of second homes. This applies if, at the end of the day on which the transaction takes place, you own more than one property. “Some transactions incur commercial stamp duty rates” Importantly, however, it doesn’t apply if you own more than one property but the property you are buying is replacing your main residence, if that is being sold. Moreover, if you buy a…

A fortress with turrets, an orangery and a portcullis is on sale for £1.5m. Lincombe Keep, which is found on the Torquay coast in Devon, has been designed to look like a medieval castle, but was, in fact, finished in 1992. That may be off-putting to history buffs, but on the other hand the gardens and castle walls at the property date from the 1920s and are Grade-II listed. The half-acre grounds feature private terraces, a canal-style pond and a waterfall fountain. The property boasts a “commanding position above Ilsham Valley and Meadfoot Beach” and is in one of Torquay’s “most exclusive residential areas”, says estate agent Absolute. (For sale via OnTheMarket.)…

• What does your business do? What hotels.com does for hotels we do for online gambling. We operate around 50 different comparison sites to help online gambling consumers find the best websites to play casino games or bet on sports. • What’s been your greatest achievement? In a mature sector where we have a lot of talented competitors we have managed to grow faster than all of them over the past couple of years. This culminated in winning the most prestigious award for what we do last year, the Affiliate of the Year award presented by eGamingReview. • What has been your biggest challenge? We struggled out of the gate, as my business partner and I were just out of university with no practical experience. After five years, we had…

Polymetal International (LSE: POLY) is a precious metal miner that operates in Russia, Kazakhstan and Armenia. Bringing its new Kyzyl mine in Kazakhstan onstream lifted the company’s total gold production to a record 1,562,000 ounces in 2018, 9% up on the previous year. Revenue rose by 4% to $1.88bn, and earnings climbed by 5% to $780m. Polymetal hopes that shifting to higher-grade and lower-cost mines will produce savings, while the recent rise in the price of gold should bolster earnings too. The stock has gained 52% in the past year.…

Born in March 1800 in the Yorkshire village of Howsham, Hudson was forced to move to York after fathering a child out of wedlock. Apprenticed to a draper, he took over the shop after marrying his  employer’s daughter. An inheritance of £30,000 (£2.5m in today’s money) from a great-uncle allowed him to help set up what would become the York and North Midland Railway as well as the York Union Banking Company. By 1848 “The Railway King” ran several railways accounting for a third of the rail network. How did the scam work? Hudson’s frauds can be divided into two categories. Firstly, he embezzled an estimated £750,000 (£74m in 2018) from the companies that he was involved in. He pocketed money meant to repay landowners, sold land and raw materials…

Naim’s Uniti Atom is more sci-fi than hi-fi. It’s a beautiful black box that acts as a one-stop solution that will satisfy pretty much all of your musical desires. All you need to add is a pair of speakers – I chose a pair of Q Acoustics 3050i floorstanders, introduced one to the other with a set of QED Reference XT40 cables, stood back and listened… The sound that emerged from the Q’s precision drivers left me speechless. If you’re looking for a set-up that has the “wow” factor, look no further. “A compact multi-source music player that will seduce you with its amazing quality and outstanding feature set,” is how Naim puts it. Rob Boffard on themasterswitch.com calls it a “wonder box” that “far surpasses streamers that cost more.…

Novacene The Coming Age of Hyperintelligence By James Lovelock Allen Lane (£14.99) Scientist James Lovelock is best known for his Gaia hypothesis, which controversially claims that the global ecosystem functions “in the manner of a vast self-regulating organism”, says Tim Radford in Nature. Lovelock’s latest book, Novacene: The Coming Age of Hyperintelligence, deals with the likely impact of artificial intelligence on society and on nature. Lovelock follows many experts in believing that this “rise of the robots” is inevitable, but he sees this as a good thing, at least for the planet, since “increasingly self-engineering cyborgs with massive intellectual prowess and a telepathically shared consciousness will recognise that they, like organisms”, are as much prey to climate change as we are. If that sounds mad to you, “perhaps it shouldn’t”,…

• “It’s hard not to feel sickened by the fact that Faryal Makhdoom and her boxer husband Amir Khan (pictured) spent £75,000 on their daughter’s first birthday party,” says Karren Brady in The Sun on Sunday. The parents held the Amazonian-themed bash earlier this month at the University of Bolton Stadium in Greater Manchester – the same place where the couple had their £150,000 engagement party and their eldest daughter’s £100,000 second birthday party. “Where has their perspective gone?” Their daughter won’t even remember the event. “Wouldn’t it have been better… to have held just a small celebration and put all that money they spent... into a bank account so that their daughter could eventually put it toward her own flat, or setting up a business when older?” • Full…

Arthur Scargill, the former leader of the National Union of Mineworkers (NUM), could be facing a £300,000 legal bill after a 30-year battle over the repayment of a loan. The judge ordered the International Energy and Miners Organisation (IEMO) – which was set up by Scargill around the time of the 1984-1985 miners’ strike, when the NUM was subject to a sequestration order – to repay a £100,000 loan made by the NUM to cover the IEMO’s legal costs in action it took against Scargill’s former deputy. The IEMO – which, The Times says, “in effect consists of Mr Scargill and his French colleague, Alain Simon” – will also be liable for the NUM’s legal costs, which could amount to as much as £200,000. Good week for: More than three…

“You would have thought that, given they are embroiled in the biggest investment scandal in recent years, fund managers would be prepared for scrutiny. Their fees, their holdings, their unquoted assets, their governance — everything has been under the spotlight… But no. ‘Why do you want to know this?’ was the response when we asked for confirmation of the unquoted assets held in one fund… we’ve had to show investment companies where their own fund accounts are published on their websites — and even point out errors in one firm’s annual report… when we asked companies last week for the percentages of unquoted holdings in their funds, one told us that the numbers were difficult to get hold of because nobody ever asks about them... The Woodford scandal was all…

Freedom Foods has nothing to do with the spat between America and France over freedom fries, says Finanz und Wirtschaft. The Australian company specialises in food that is free from preservatives and artificial ingredients. A health-food pioneer, it started off in the 1990s with soy and rice milk; it has gradually expanded its range to include gluten-free cereals and protein supplements. It has distribution contracts with major supermarkets and is growing rapidly in China. Investments in production capacity will help it make more of its own brands, which are higher-margin than the food it makes for others. Deutsche Bank expects sales to grow by 30% in three years.…

With the departure of design guru Jony Ive Apple is “getting a taste of luxury’s less lustrous side”, says Tom Buerkle on Breakingviews. Ive and his “sleek” designs have “defined the marriage of style and function” at Apple, starting with his iconic design for the Apple iMac in 1998, which was credited with helping turning around the company’s fortunes. Ive then “repeated the trick” with the iPhone, which “ushered in the smartphone age and enabled Apple to charge ever-higher premium prices, much like a Paris fashion label”. However, just as many fashion houses have struggled after losing their chief designer, replacing Ive might be a “painful process”. Apple’s chief executive Tim Cook has only himself to blame for the loss of the company’s main creative force, says Tripp Mickle in…

North Korean state media have hailed President Donald Trump’s “impromptu visit” to the country on Sunday as an “amazing event”, reports the BBC. Trump, who became the first sitting US president to set foot in the country, travelled to South Korea following the G20 summit in Japan, and on Saturday tweeted a message to North Korean leader Kim Jong-un, suggesting a meeting at the border. Kim accepted. As Trump “revelled” in his “historic” stroll, administration officials were “at odds” over what demands to make of Kim Jong-un as they prepared to restart negotiations on a nuclear deal, says Edward Wong in The New York Times. National security adviser, John Bolton, a “prominent hawk”, “reacted angrily” to a report about the possibility of an incremental approach, which would initially just ask…

Hong Kong’s chief executive, Carrie Lam, may have suspended implementation of the territory’s unpopular extradition law. But she has not withdrawn it and “did not even meet representatives of those who marched” says Louisa Lim in The New York Times. So it is no wonder that “in an act of desperation” protestors stormed the legislative assembly, spray-painting over symbols of Chinese authority. It was “a collective roar of rage” against the government. The Chinese government is likely to use the latest incidents “to portray the whole movement as one of thugs and hooligans”, says Richard Lloyd Parry in the Times. While “it will not succeed”, it doesn’t really matter. This is because having “shrugged their shoulders and turned away”, the international community has effectively given the Chinese a green light…

Nouriel Roubini, described by Bloomberg as a “renowned doomsayer”, is concerned that we are heading for a global recession next year. The New York University economics professor is perhaps best known for his warnings about the precarious state of the US housing market prior to the financial crisis of 2008. Now he is worried that the trade war between the US and China, combined with a potential spike in oil prices (due to geopolitical tensions between the US and Iran), is set to derail the bull market. In short, “it’s a scary time for the global economy”, he tells Bloomberg TV. While there has been a temporary truce in the trade war, the underlying tensions between China and the US mean it’s only a matter of time before the problem…

The Ministry of Defence spent £222m on travel and hotels for its top brass in 2014-2015, says The Times, after a Freedom of Information Act enquiry. The biggest bill was £8,880 for 20 nights on board a five-star “yacht hotel” in Gibraltar. A total of £35,600 was spent on hotels in London, where “there are a number of military barracks”. Four nights in five-star suites at The Taj 51 Buckingham Gate, with its Michelin-starred restaurant and butler service, came to £3,200. Yet the Taj is “a one-minute walk from the army’s Wellington barracks”. A total of £1,696 went to the Royal Horseguards Hotel directly opposite the Ministry of Defence building in Whitehall. And a night for one member of staff at the Park Lane Hotel in Mayfair cost £312, despite…

fee.org Since the end of the 19th century, there has been a push to try to turn economics into a science like physics, says Luka Nikolic. It turned away from philosophy, law and history, which “are far more important for our understanding of how the world works”, and towards “quantifying phenomena and explaining it through graphs”. The trouble is, it is impossible to quantify human action. Economists try to capture it in various ways, but there can be no catch-all formula. The pretence that there is leads to a belief that governments should manage what has been measured, rather than “ensure the property rights of that good are clearly defined”. Monetary policy suffers the worst. Today, central banks manipulate interest rates to stimulate the economy due to a false belief…

Dan Loeb’s Third Point will oppose United Technologies’ (UT) plan to merge its aerospace business with defence contractor Raytheon, says Al Root in Barron’s. Loeb said he would prefer the conglomerate to focus on commercial aerospace instead of moving into defence as well. “Raytheon brings very little applicable technology to UT’s aerospace offerings,” said Loeb. “The benefits of Raytheon’s cyber and data analysis capabilities are not quantifiable and could be replicated through commercial collaborations or supply agreements.” Third Point’s opposition is “noteworthy”, says Root. “But on its own, it isn’t enough to derail the transaction”, as the fund owns less than 1% of UT’s outstanding stock.…

Set in the wooded hills below the Castle of Vivo d’Orcia, this property offers the opportunity to create a family home with wide-ranging views across the surrounding countryside. The property comprises a collection of stone buildings that were once part of the Grand Duke of Tuscany’s paper mill. It comes with a 250sq m stone house, an intact granary, and the ruins of the paper mill. Both buildings need complete renovation, with power and water available on the 2.47 acre site. But can you guess the asking price? Answer on the side of this box.…

■ Some of the victims of collapsed investment group London Capital & Finance (LCF) may be due compensation, says Philip Georgiadis in the Financial Times. LCF sold unregulated “mini-bonds” to investors, marketing its products as “fixed-rate Isas” and promising interest rates of up to 8%. Around 115,000 people lost their money when the company went bust in January 2019. Although LCF was authorised by the City regulator, the Financial Conduct Authority, the “mini-bonds” it sold were not. So investors were previously told that they would have no recourse to the Financial Services Compensation Scheme (FSCS). But the FSCS has now said that it believes a company called Surge Financial, which acted on behalf of LCF, provided a number of the latter’s clients with misleading advice. “As this is a regulated…

The UK’s smallest businesses are missing out on valuable business or wasting time chasing customers for payment because they don’t accept debit- or credit-card payments. New research from payments company Square suggests 40% of micro businesses – firms with fewer than ten employees – don’t have the facilities they need to accept card payments. Thankfully, fierce competition in the payments sector means there is plenty of affordable choice. In practice, the right option for your business will depend on several factors. You typically pay an upfront charge for the equipment you need, such as a card reader, plus a transaction charge, which could be a fixed cost or a percentage. This means the cheapest deal will depend on how many transactions you process and how much they are for. In…

AO World (LSE: AO) is an online seller of home appliances, with 6.5 million customers in the UK and almost 800,000 in Germany and The Netherlands. UK performance in the year to 31 March was encouraging: sales rose by 10% to £749.3m and operating profit climbed to £14.9m despite what founder and chief executive John Roberts called a “tough trading environment”. But it was a different story in Europe, where lower margins and tougher regulations on German delivery drivers’ hours increased losses to €31.3m. The shares have fallen by more than 50% in 12 months.…

I have a number of guilty pleasures to admit to – wines that are supposedly a little lowbrow, often rather too affordable, usually early-drinking, but, to me, utterly delicious and unique. Don’t laugh at my vinous confessional. Perhaps by standing up and being honest, others might feel free to express their deepest, everyday-drinking wine desires out loud. Asti, Vinho Verde, Beaujolais, Muscadet, Picpoul, Verdicchio, Soave and so on – these are wines I adore and, I must be honest, buy and drink by the gallon. They are wines that my friends also enjoy and if you find tiptop examples they only cost a few quid more than the dreary, run-of-the-mill versions that made these styles rather unfashionable in the first place. With this in mind, I cannot think of a…

How Sweden Works and What We Can Learn From It By David Crouch Published by Blink Publishing (£14.99) on 8 August Departing prime minister Theresa May recently made headlines with leaked plans to expand paid paternity leave. She may have been inspired by the example of Sweden, where three months of parental leave are explicitly reserved for fathers. Journalist David Crouch argues that we can learn a lot from how Sweden does things. He claims its success is based on a system where firms agree to pay generous (and rising) wages in exchange for wage restraint in certain areas, high productivity and an acceptance of painful changes, buttressed by a generous welfare state. A system of dual-class share ownership also ensures that companies focus on the longterm rather than being…

President Donald Trump has said that the US should have Mario Draghi, president of the European Central Bank, at the helm of its monetary policy. He then had a dig at the current Fed chief Jerome Powell – “he’s not doing a good job” – and criticised the Fed for raising rates last year and failing to cut them this. Policy makers “blew it” on 19 June when they kept the benchmark overnight rate unchanged, Trump tweeted. Powell? Draghi? We say “inflation”, you say “inflazione”. Greenspan, Bernanke, Yellen, Powell, Draghi… The characters move on, the costumes change, the drama evolves, but it is the same clownish show – inflate or die. “It’s nutty. A firm that buys back its own stocks is a zombie” When consumer prices rise, at first,…

6 The percentage of prime London properties bought by Americans this year – double last year’s figure, according to estate agent Knight Frank. The Chinese are still the most prolific buyers, however, snapping up one in every ten prime properties on the London market. 47p How much in every £1 of student debt incurred this year will end up being met by taxpayers. This is equaivalent to a £7.4bn subsidy to universities, and a 2p increase on 2018, the government-commissioned Augar review has found. £50,000 How much, per minute, delays of car parts at the border resulting from a no-deal Brexit will cost British carmakers, according to the Society of Motor Manufacturers and Traders (SMMT). Car manufacturers rely on sourcing parts from abroad. $1.1m How much two municipalities in Florida…

The Trump-Xi rapprochement may have grabbed the headlines (see page 5) but last weekend also brought good trade news for Asia’s other Communist dynamo. The European Union signed a trade deal with Hanoi on Sunday that looks set to eliminate 99% of tariffs on goods and services between the two sides. That means that Vietnam’s exporters are enjoying new opportunities in both America, the world’s largest economy, and the EU, the world’s largest single market. As for the dispute between the US and China, Vietnam “has emerged as the biggest winner”, say Gareth Leather and Alex Holmes for Capital Economics. Exports to the US have jumped by 50% since last summer as Trump’s tariffs on Beijing prompt American importers to look for other suppliers. Trans-Pacific trade tensions have boosted Vietnam’s…

Only in the dotcom frenzy did we see a greater percentage of initial public offerings (IPOs) from unprofitable technology firms, as Shawn Tully points out in Fortune (the chart was compiled with profit or loss figures of the 12 months before flotation). But there is a stark difference between the early 2000s and today. Then, burning cash was associated with “failures” such as Webvan or eToys.com. Today’s tech heroes Tesla, Uber, Lyft and Snap have jointly burnt $23.9bn, outspending Google, Amazon, Apple and Facebook’s collective spending total by a factor of 20. And in contrast to the more established “Fab Four”, today’s big recent IPOs do not appear to be anywhere close to making sustained profits.…

Finally, a fast-growing company coming to market that isn’t in the technology sector. Late last week shares in RealReal, the leader in online consignment sales of second-hand luxury goods, bounced by more than 40% as it made its debut in New York. The group’s shares were priced at $20 and it raised $300m, implying a valuation of $1.65bn. RealReal’s sales jumped by 49% to $69m in the year to April but it made a loss of $23.2m. The company’s prospects look promising as it benefits not only from thrift but a growing feeling among Millennials and Generation Z that second-hand shopping is environmentally responsible, notes Marketwatch.…

Deutsche Bank is planning a “global cull” of 20,000 staff, more than a fifth of those currently employed, reports Jim Armitage in the Evening Standard. Departments expected to bear the brunt of the cuts are investment banking and equities, including hundreds of workers in London. Chief executive Christian Sewing (pictured) also plans a major board shake-up. This “drastic” action has been prompted by the failure of merger talks with rival Commerzbank. It might be hard to pay attention to these proposals since “public unveiling” of turnaround plans has become “an almost-annual rite for Deutsche Bank”, say David Enrich and Kate Kelly in The New York Times. Over the past seven years the bank “has cycled through five chief executives, with each taking at least one stab — and often more…

Despite the various controversies surrounding Boris Johnson, his status as the presumptive leader of the Conservative party seems undimmed. With a total of £12.7m wagered on Betfair alone, his odds have tightened to 1.14 (87.7%) while those of Jeremy Hunt have drifted out to 8.6 (11.6%). Interestingly, given that betting exchanges are generally more generous than the bookies, the best odds you can get on Boris anywhere come from Ladbrokes, which is offering 1/6 (85.7%) on him being the next prime minister. Ladbrokes are also offering odds on the next Chancellor. Sajid Javid (pictured) is the favourite, with odds of 4/5 (55.5%). Tied for second place are Liz Truss and Matt Hancock, who are each on 4/1 (20%). Jacob Rees-Mogg and Andrea Leadsom are also in contention at 8/1 (11.1%)…

Investors in the Woodford Equity Income Fund learned this week that they’re going to be stuck with the fund for a while longer. It was gated (closed to investors withdrawing – or depositing – money) a little more than a month ago, as concerns over poor performance and breaches of rules on the level of illiquid assets the portfolio can hold threatened to turn into a run on the fund. Manager Neil Woodford updated the market this week – long story short, the fund is still shut. “Investors in Woodford’s fund are stuck there for now” Woodford’s plan is to sell his illiquid holdings and invest in more liquid (ie, easier to buy and sell) FTSE 100 and FTSE 250 stocks. He knows that his only hope of retaining any…

It is hard to think of a worse time for Britain’s battered retailers. Whole chains are closing down, and even where they remain alive branches are getting pruned. Rents are being forced down with threats of bankruptcy if the chains are not allowed to pay less. Philip Green’s Arcadia empire, which includes Topshop, is the latest case in point. With every week that passes, the outlook gets bleaker for anyone who runs a shop, and understandably investors are getting very nervous about the fate of the companies that own all that space. After all, a lot of high streets are already virtually dead, and out-of-town shopping centres are increasingly heading in the same direction. Take Intu Group, which owns shopping centres in Manchester, Lakeside in Essex, as well as in…

US gobbles up our top techies Lionel Laurent Bloomberg A group of Britain’s best-known quantum computing scientists have moved quietly to Silicon Valley to found a startup called PsiQ, having received funding from American VC firm Playground, says Lionel Laurent. Given that two of Playground’s successes were sold to Amazon, it’s quite possible that PsiQ may end up in “Big Tech’s trophy collection”. This is part of a worrying trend. Britain’s DeepMind, France’s Moodstocks and Germany’s Fayteq were all bought by Google. Between 2012 and 2016, some 562 European startups were bought by US firms – 44% of the total. A big motivation for this is the ability to “poach” all of a firm’s engineers in one go. The international talent pool for artificial intelligence (AI) – the “defining technology…

stumblingandmumbling.typepad.com In a famous paper claiming that half of American jobs could be replaced by computers, economists Carl Frey and Michael Osborne said that chief executives and line managers would be spared the cull. From the perspective of neoclassical economics, that is a weird claim, says Chris Dillow. From that point of view, the job of a boss, given a production function and prices of inputs, is to maximise profits. This is a “constrained optimisation problem” which could easily be done by a computer. If you believe policy making is essentially technocratic, politicians should be able to be easily replaced too. The fact that bosses and politicians are not about to lose their jobs tells us something about their real role. First, it is to exercise power. Resistance to technological…

■ The amount of cash held in global bond exchange-traded funds (ETFs) surpassed $1trn last month, says Asjylyn Loder in The Wall Street Journal. Yet just 20 years ago these products, which allow you to buy and sell funds on an exchange, didn’t even exist. The bond market was then a “largely sleepy enterprise that had long resisted the high-tech upheaval that transformed the way stocks are bought and sold”. Nowadays, all types of investors, from pension funds to insurers to retirees, trade in bonds daily. The increasing popularity of ETFs has “added much-needed speed to the sluggish business of bond trading”, say their proponents. However, sceptics suggest that bond ETFs are “a dangerous combination”. Buying and selling in this way “could accelerate a sell-off if fleeing investors flood the…

After dancing around the subject for a few years, the government has now confirmed that it will ban the sale of new houses on a leasehold basis. This is an attempt to prevent future homeowners from ending up “trapped in exploitative arrangements” demanding unscrupulous charges from homeowners, says Communities Secretary James Brokenshire. The government has instructed Homes England (the body that funds new affordable housing in England) to renegotiate Help to Buy contracts to “explicitly rule out the selling of new leasehold houses”. And where buyers are incorrectly sold a leasehold home, they should be able to acquire their freehold outright at no extra cost. The government will also go ahead with its original plan to reduce ground rents on future leases to zero, as opposed to a previously suggested…

Late-paying big businesses could be fined for persistently failing to settle small contractors’ invoices on time. But while the government says it is determined to beef up the powers of the Small Business Commissioner, which can intervene in late-payment disputes, small businesses are also being urged to take a tougher line themselves. In particular, small businesses have a legal right to charge penalties when customers pay their bills late. While that may feel uncomfortably confrontational, and certainly shouldn’t be a default option, hitting late payers in the pocket can be a powerful way to concentrate minds. “You have the right to charge penalties when a customer is late” The law is very clear on small businesses’ rights. You can claim both interest charges and debt recovery costs if a firm…

We seek out companies that are overlooked, unloved or ignored by mainstream investors. These stocks have been marked down as a result of particular circumstances that we think are unlikely to persist. Asset Value Investors (AVI) has a global focus but we have a very strong belief in Japan. Last year we launched a dedicated Japan fund, AVI Japan Opportunity Trust (AJOT). Japanese companies have an abundance of cash, driven by strong profit growth and historically low payout ratios. However, the culture of locking cash away and ignoring shareholders has been changing since the introduction of the Corporate Governance Code in 2015. Companies are unwinding cross-shareholdings, buying back record numbers of shares and raising dividends. Yet, despite the clear progress, valuations are still depressed. There are many opportunities in high-quality,…

When rumours surfaced last autumn that a Czech billionaire named Daniel Kretinsky had taken a stake in Le Monde, “the news sent a tremor through the newsroom of that august national publication”, says The New York Times. Journalists noted that he’d built his fortune on power plants and coal mines, while he also owns part of a pipeline bringing Russian gas to the West. Why, they wondered, “would an international energy magnate be interested in an anti-Kremlin newspaper that had invested heavily in covering climate change?” By muscling in on such “a pillar of the French establishment”, Kretinsky became an object of suspicion, says the Financial Times. Concerns about links to Russian president Vladimir Putin – apparently ungrounded – forced one of his friends to deny that he was “a…