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“[Share] buyback activity in the UK market is close to record levels... Buyback programmes... this year have already reached £46.6bn [and] the total for the year is likely to come close to last year’s record of £58.2bn... The practice of reducing a company’s share capital by buying the stock [to raise the share price]... has always divided investment opinion... On the plus side, [buybacks] are... more tax efficient than dividends [and] much easier to cancel without anyone really noticing... [But] buyback activity tends to be at its greatest when share prices are at their peak, not... when prices are down in the dumps... As often as not, companies waste capital by overpaying for their shares, disadvantaging the shareholders left behind. Management confidence that the shares are cheaper than they should…

Marks & Spencer’s shares jumped by 9% on the news it is to pay a dividend for the first time since before Covid, say Oliver Ralph and Euan Healy in the Financial Times. The move comes as “bumper food sales” helped bring about a first-half result that exceeded expectations. Pretax profits hit £326m in the six months to 30 September, up by an annual 56%. The firm says its success was due to “favourable market conditions” and competitors’ exits from the market. The shares have risen by 90% since January, enabling it to rejoin the FTSE 100 index and making it the blue-chip index’s second-best performer after Rolls-Royce. Both the food and the clothing arms “look in their best shape for years”, says Alistair Osborne in the Times. Food, which…

India’s initial public offering (IPO) market is experiencing a boom, says The Economist – 194 companies had listed by the beginning of November 2023, compared with 144 for all of 2022. And while investors have hitherto typically flocked towards “sprawling conglomerates run by the country’s tycoons or... buzzy” technology companies, this year they have grown impatient with “anaemic” or non-existent profits at these firms. Now they are scooping up “ordinary” companies benefiting from “extraordinary” GDP growth. Recent successful listings have included Mankind Pharma, a maker of pregnancy tests and condoms, and pen maker Flair Writing Industries.…

● ”The tease continues at Flutter,” says Nils Pratley in The Guardian. The owner of the Paddy Power and Betfair gambling sites plans a secondary listing in New York and is dropping hints that London won’t be its primary home forever. Closer links to the US make sense – analysts forecast that America will account for £3.8bn of its £9.7bn revenues next year. More than 40% of its shareholders are US-based. Still, the loss of another FTSE 100 stock after BHP and Ferguson would be “morale-sapping” for London. Officials here should spend less time worrying about the dearth of “dreadful” new listings and more shouting about established successes. It would also be helpful to ditch stamp duty on shares – a 0.5% tax on every purchase, versus zero in the…

“The biggest normalisation of 2023 is that China emerged from Covid,” says Hao Hong, the outspoken strategist who left China’s Bank of Communications after a series of bearish reports last year, and now works at Shanghai-based wealth manager Grow Investment. While “an extended period of seclusion” caused by the pandemic has cast a shadow over prospects for the Chinese economy, the coming year should bring some improvements in China’s relationship with key foreign partners. One of the main factors weighing on Chinese stocks has been weakness in the renminbi. However, since the gap between interest rates in the US and China appears to have peaked, this weakness looks likely to abate in the coming months. Meanwhile, Chinese consumers’ confidence in the outlook for their incomes is improving, which bodes well…

bloomberg.com/opinion When an industry is chock full of young people with no particular interest in or talent for their work, but are merely there to earn big money and retire early, you know the end of the bubble is in sight, says Allison Schrager. Before 2008, that industry was finance. For now, it is tech. The tech industry was a productive place for students to take their talents. It is full of innovative companies claiming to make the world a better place, and some graduates will start their own businesses, creating jobs. But there is a limit to how many people an industry can “richly reward”, and those limits are being tested. People entering now are already too late – the big money comes from nascent firms getting lots of…

When it comes to railway fiascos, massive overspending and costs spiralling out of control, we tend to think instantly of HS2. But arguably the bigger fiasco is our national inability to electrify our existing rail network properly. Only 38% of our railway network is electrified, a long way behind France at 55%, Germany at 61%, Spain at 64%, and Italy at 71%. The Swiss have reached 100%. Electrified railways are a good idea for many reasons, but one stands out. If Britain is to get its railways to net-zero by 2050, it will need to electrify more than 13,000km of track, equivalent to almost 500km of track every year for the next 27 years. According to Ben Hopkinson of Britain Remade, a campaign group promoting economic growth, last year we…

● There is a particularly strong case in this tax year for getting your tax return in before January. “Surging interest rates have pulled 1.2 million extra people into the tax net this year because of higher earnings brought on by better savings deals – and more are being dragged into higher tax bands due to wages inflating past frozen thresholds,” says Noah Eastwood in The Telegraph. Hundreds of thousands of people will be filling in tax returns for the first time. But HMRC isn’t equipped to deal with all the likely extra phone calls, warn experts. So get going now in case you need help from HMRC. ● Shoppers beware. Black Friday is approaching, and in the run-up to 24 November fraudsters will be out in force. Scammers will…

● Venture-capital trusts (VCTs) that have raised almost £3bn of new funding over the past three years are now looking for small businesses in which to invest the money. Experts say VCTs are increasingly competing for the best funding opportunities. There are strict rules that require them to deploy capital raised within a fixed timetable in order to retain the tax advantages they offer investors. The VCT rules allow funds to invest in business that are up to seven years old, and to invest as much as £5m in each business in any one tax year. ● Sole traders and small businesses thinking about their end-of-year tax returns and accounts need to consider whether they are affected by reforms to the base period rules, accountants warn. The reforms, which come…

“I knew from the age of five that I was born in the wrong body,” Anne Jakapong Jakrajutatip told Cosmopolitan’s Hannah Chub last month. Jakrajutatip (pictured) grew up as a boy named Andrew in a traditional family in Thailand, and undertook multiple surgeries and hormone therapies after turning 35 to “put myself first”. But even as a boy, “womanhood meant (and still does mean) so much to me… When I’d sit down to watch the Miss Universe competitions with my sister and mother, the delegates represented everything I wanted to be: a strong, powerful woman of the world.” In fact, she loved it so much she bought the company. In October 2022 , the JKN Global Group she founded in 2013, and which made its money from a mix of…

£23.80, toscanaccio.co.uk Perhaps it is a stretch of the imagination to think that one wine could change the fortunes of a grape variety or, indeed, a wine region. I have known about and enjoyed many dolcettos from Dogliani over the years. Situated in the province of Cuneo, a couple of kilometres due south of Barolo, this region is synonymous with this grape variety, but none have moved me as much as this one. The Vajra family, famous for making an outstanding portfolio of wines in Barolo, including those made from the dolcetto variety, has turned its attention to the once-famous region of Dogliani. Only 30 years ago, these wines were more sought after than the nebbiolos of Barolo and Barbaresco, but times have changed. In the right hands, the dolcetto…

Rachel Reeves Basic Books, £20 Books by politicians are usually either ghostwritten or poorly written – or both. It is now generally acknowledged that John F. Kennedy’s Profiles in Courage, which won the Pulitzer Prize in 1957 and helped speed him on his road to the presidency, was largely written by his speechwriter. Boris Johnson’s Churchill biography infamously claimed that Germany captured Stalingrad. The Women Who Made Modern Economics, by shadow chancellor Rachel Reeves, has already run into controversy for alleged plagiarism. This is a pity because it is a readable book that highlights interesting stories that even those who have studied economics or economic history may be unaware of. As the title suggests, Reeve’s book looks at major female economists and economic thinkers, most of whom have been neglected.…

Fans of US pop star Taylor Swift (pictured), known as Swifties, are rallying against Javier Milei, “a hard-right candidate with a rock star image” in the run-off to become Argentina’s next president, says Harriet Barber in The Sunday Times. They accuse Milei of planning to revoke access to abortion, shut the ministry for women and loosen gun laws. Fans put up posters reading “Swiftie no vota Milei” outside the Estadio Mâs Monumental, the stadium in the capital where Swift was playing earlier this month. And while the singer has not personally commented on the election, the Buenos Aires legislature voted to name her as a guest of honour last week. Only officials from Milei’s Freedom Advances party voted against the measure. Milei, a relative outsider, had galvanised support, particularly among…

The “risk premium” bolstering oil prices after Hamas attacked Israel on 7 October appears to be dissipating, says Edward Gardner of Capital Economics. Brent crude prices topped $90 a barrel in the wake of last month’s attack, but have since fallen to around $83 a barrel. They fell by 5% last week as weak credit demand in America and sluggish exports from China and Germany implied a weak outlook for global demand. Still, the oil market remains fairly tight and further price drops could push oil producers’ cartel Opec+ into another round of supply cuts. We thus forecast that Brent will end “both this year and next year at $85 per barrel”, says Gardner. European natural gas prices are similarly quiescent. “Unusually mild weather” and virtually full natural-gas storage in…

Shares in Japan’s investment company SoftBank Group slid by almost a tenth last week as it “sank deeper into the red” in the third quarter, says Megumi Fujikawa in The Wall Street Journal. Its technology investments “struggled”. The Vision Fund 1 made a small profit of £2.4bn. However, this was outweighed by losses from other Vision Fund vehicles and $1.6bn in losses related to its stake in and financial support for WeWork, one of its most high-profile investments, which has just filed for bankruptcy. The Vision Funds investment unit posted a $1.7bn loss, with SoftBank as a whole losing $6.2bn. The loss on WeWork shouldn’t “have been a surprise” given that the office-rental company’s problems have already been well documented for many years now, says Breakingviews. What did raise eyebrows…

Five to buy BT Group Investors’ Chronicle Burnt in recent years by higher commodity prices, which raised the cost of laying new fibre-optic cable, BT is now profiting from inflation-linked price rises in contracts, allowing it to “squeeze more profit” out of customers. The Openreach network added a record 860,000 premises last quarter, although that hasn’t stopped BT customers from switching to rivals where they are offering full-fibre broadband ahead of BT. Still, costs are falling and Openreach is turning into a cash cow. Buy the shares for the 7% forward dividend yield. 120p Eni The TelegraphEven by the standards of the lowly rated oil and gas sector, shares in this Italian energy giant are inexpensive. On 6.6 times expected profits over the next year, the firm is cheaper than…

Following weeks of “tortuous negotiations”, Pedro Sánchez (pictured) has outlined a deal that will have him staying on as Spain’s prime minister in return for an agreement to pardon thousands involved in Catalonia’s illegal independence referendum in 2017, says The Economist. The deal will see five regional separatist parties fall behind Sánchez’s Socialists and their coalition partners in return for an amnesty that will allow Carles Puigdemont, who organised the referendum, to return from exile, and others to escape the threat of prosecution. The deal has already been denounced by many on the right as “grubby” and illegitimate, and triggered protests throughout Spain. Those who accuse Sánchez of a coup go too far, but opponents of the deal have a point, says María Ramírez in The Guardian. For one thing,…

In recent updates, I’ve looked at the role of government bonds in the MoneyWeek exchange traded fund (ETF) portfolio. From next week, I’ll move on to review our equity positions. But first, let’s talk briefly about corporate bonds. These aren’t a core part of the strategy, because they don’t generally add much. Conventional government bonds offer a safe haven. Inflationlinked ones promise a guaranteed real return. Both reduce risks. Corporate bonds add credit risk: they pay higher yields than government bonds, but you lose part of that if some default. Over the past 50 years, US corporate bonds have beaten ten-year Treasuries by around 1.2 percentage points per year. Equities have done a lot better. So we’d rather take our risks in equities. Of course, if corporate bonds were unusually…

Why China is losing the AI race Nina Xiang Nikkei Asia China is not becoming the artificial intelligence (AI) superpower that many feared, says Nina Xiang. Despite China’s stated goal of being the AI leader by 2030, Chinese tech firms are “struggling to catch up” with US rivals. Why? Innovation in AI is not a “linear process”. The impact of ChatGPT has been greater than that of thousands of Chinese AI startups. Additionally, Xi’s crackdown on private tech firms hinders free expression and entrepreneurial spirit. State approval would be needed to even test ChatGPT alternatives on the public. Moreover, in the current environment, it is hard for Chinese firms to “make long-term plans and investments, attract and retain talent, and comply with erratic regulation”. The rise of Chinese tech firms…

project-syndicate.org The world seems to be entering a “new era of economic nationalism”, as many countries prioritise their domestic social, economic and environmental agendas over free trade, says Dani Rodrik. Economic liberals worry that we are seeing a 1930s-style return to protectionism and autarky. But the truth is that economic nationalism comes in many different forms, not all of which are harmful. When “applied judiciously in pursuit of legitimate domestic goals”, it can be beneficial without harming other countries. Indeed, focusing on the national economy can be “perfectly benign” as it is compatible with significant openness to international trade and finance; a country that pursues autarky will “foresake the benefits of specialisation, miss out on frontier technologies and lose access to foreign capital”. The history of the rise of the…

Small businesses struggling to navigate the UK’s apprenticeship system are failing to hire trainees. The Department for Education reveals that the number of apprenticeship starts at organisations outside the Apprenticeship Levy regime – at the UK’s smallest employers, in other words – fell by more than 13% over the 2022-2023 financial year. That is likely to reflect frustration at the bureaucracy in the system, with groups such as the Association of Employment and Learning Providers repeatedly warning that small employers are put off by red tape. An array of benefits If so, that’s unfortunate. Research shows businesses that take on apprentices reap a number of benefits. For example, more than nine in ten trainees stay on at the employer after their apprenticeship is completed, saving firms money on hiring and…

“If history is any guide, we could be on the verge of a UK small-cap supercycle” Since 1955, quoted British smaller companies (small caps) have massively outperformed their large-cap counterparts, even through very unsettled economic conditions – maybe especially through unsettled economic conditions. During globalisation, UK small caps outperformed UK large caps, as expected. But no one cared. Why? Because nearly everything outperformed UK large caps – especially US technology stocks, whose returns were boosted by ever lower interest rates. But now everything has changed. Inflation and geopolitical tensions have emerged, while the prospect of global recession is also rattling markets. In these circumstances, companies paying appealing and growing dividends have all the advantages. Over the last three years, as the globalisation trend has faded, UK large caps have outperformed.…

An oasis of calm San Pedro de Atacama is “an oasis amid the Atacama Desert of northern Chile”, says Mark Johanson for Bloomberg Pursuits. Here, visitors will find “glittering salt flats, sky-poking volcanoes, teal lagoons painted pink with flamingos” and the resort town’s most recent hotel opening – the 51-room Our Habitas Atacama, which opened in September. The hotel makes a virtue out of allowing guests to explore the desert by themselves, whether on horseback or by quad bike, and it is well worth it. “By night, the Atacama sky – studied by astronomers the world over due to its almost complete lack of cloud cover, moisture or light pollution – offers a priceless spectacle.” The hotel has been designed so that guests feel like they are “entering a traditional…

It has been three years since Pfizer and BioNTech announced they had developed a vaccine for Covid, sending global markets soaring, says Russ Mould of AJ Bell. Since then, the pair have received “precious little gratitude” from investors, with their shares “languishing”. Instead commodities have been the big winners in the three years since “Pfizer Monday”. The S&P GSCI index, which tracks 24 major raw materials, has climbed by 66% since the start of November 2020, compared with a 37% gain over the same period for America’s S&P 500 stock index, and big losses for bonds (see below). Commodities and equities take turns as market leaders, notes Mould. The Bloomberg Commodity index outran the FTSE All-World benchmark in the 2000s, but then lagged stocks in the 2010s. So far, “raw…

Last week shares in online broker Robinhood fell by 15% after it reported a decline in trading volumes, says Tanaya Macheel on CNBC. Although overall third-quarter revenue rose by 29% to $467m, it failed to reach the $480m analysts had expected, while transaction-based revenue fell by 11%. There was a 13% drop in third-quarter transaction revenue related to equity trading, while crypto trading dropped by 55% year on year. Robinhood has said that it hopes that new “industry-leading products” will help it find new sources of revenue, while it will also soon launch its brokerage in the UK and allow EU customers to trade crypto. It’s hard to deny that some of Robinhood’s new ideas are starting to show promise, says Telis Demos in the Wall Street Journal. For example,…

Copart is “an under-the-radar growth story”, says Barron’s. The world’s top auctioneer of salvaged vehicles – ranging from crashed cars with usable parts to vehicles that are uneconomical to fix but still serviceable – has almost tripled earnings per share in five years and is set to expand them by another 14% in the year to 31 July 2024. The firm is part of a duopoly in the market and resistant to recessions as accidents occur in relation to the number of miles driven. The market is also enjoying structural growth as vehicles are getting older and the increased use of technology in cars makes even simple repairs costlier. Copart has invested in technology to ensure it leads the field in online auctions.…

Politics & economics The Israeli military “forged ahead” with its raid on Gaza’s largest hospital on Wednesday, a step that is “expected to shape the pace and extent of its war with Hamas”, says The New York Times. Israel says that Hamas has built a military command centre underneath the Al-Shifa hospital and is holding hostages there, a claim corroborated by US intelligence, but which Hamas and the hospital deny. For “Israel’s critics”, the focus on the hospital, where thousands of civilians have taken shelter alongside seriously ill patients, pregnant women and premature babies, “embodies what they see as Israel’s disregard for Palestinian life”. Israeli strikes on Gaza since 7 October have killed more than 11,000 people including more than 4,600 children, according to Gaza health officials. The results…

Having focused on Britain and the US over the past few weeks, it’s time to shift this column’s attention to Australian politics. One active market that looks interesting is the result of the next federal election. With £22,627 matched on Betfair, Labor is currently strong favourite to win re-election (as defined by providing the prime minister) at 1.69 (59.9%), compared with 2.36 (42.3%) for the Liberal-National Coalition. Given that the election can take place as late as May 2025, which is 18 months away, betting on this may seem a tad premature. Still, the polls show that Labor’s lead over the Coalition, when you take second preferences into account, has been narrowing since the summer. So while it was around ten points as late as July, it is now very…

It has become as much a part of the festive season as trees, turkey and family arguments. Led by John Lewis, companies started producing landmark Christmas advertisements, to be released every November. As much a mini-motion picture as anything else, they spin out into hit songs, provoke discussion on social media, and, in theory at least, get everyone in the mood to spend lots of money over the holiday season. There have been some memorable hits over the past few years. John Lewis’s “Monty the Penguin” from 2014 is one of the all-time classics, as is the Sainsbury’s offering from the same year, when it teamed up with the Royal British Legion to mark the 100th anniversary of World War I. Money down the drain In many ways, the Christmas…

When a company, government or other organisation wants to borrow money by issuing bonds, their bonds will usually be assigned a credit rating. This gives the investor an idea of how likely they are to get their money back on time and in full. These ratings are issued by credit-rating agencies such as Standard & Poor’s, Moody’s and Fitch. When determining a rating, the agency will look at several factors that may influence the likelihood of the bond being repaid. These include the profitability of the issuer, its past credit record and any assets the debt might be secured against (if a debt is secured against property that can be seized and sold, then it’s likely to be safer than a debt with no collateral). For bonds issued by countries,…

“All that money and he’s still got hair like a… dinner lady.” Boy George on Elton John (pictured), quoted in the Evening Standard “When people say that money doesn’t matter they have never been poor. It’s one of the most idiotic things people say. On the other hand, huge amounts of money doesn’t make people happy. But having enough to feed your family and pay your bills does. Having zero money is s***.” Actress Caroline Quentin, in The Sunday Times “For us, solo diners are some of the best diners we have. They tend to spend more… I’m not saying this happens every time, but a month ago we had a diner spend £10,000 on his own.” Chef Michel Roux Jr on his two-Michelin star London restaurant Le Gavroche, quoted…

unherd.com Rishi Sunak’s proposal to ban smoking is the completion of an agenda that began long ago, says Alwyn Turner. When an episode of Yes, Prime Minister back in 1986 featured a politician proposing a complete ban on all tobacco sponsorship and advertising, and a ban on smoking in all public places, the studio audience laughed. By 2006 they were public policy. Even then, the impulse was not new. The state first got fully involved at the start of the Boer War, when as many as three in ten potential recruits were too feeble or ill to serve, thought in the main part to be due to smoking. The war against it then continued down to the present day. Like our modern culture wars, the divide has not been between…

Wind isn’t working. Or so it seems. New developments are on hold both in the UK and in the US (where one of the world’s biggest companies, Ørsted, has just abandoned two big projects); the UK’s offshore auction earlier this year attracted not a single bid. The problem here, says Barry Norris of Argonaut, is that wind is just “ too expensive to be commercially viable, even with inflation-adjusted price guarantees which protect suppliers against intermittency and supply chain problems”. This is partly about the rapidly rising cost of initial production: “cheap” wind was to some extent a function of low interest rates, low labour costs and low commodity prices. But it is also a question of ongoing costs – offshore turbines may last more like ten years than 25…

Winter has arrived. So as your heating comes on, it’s time to think about your energy bills. After the eye-watering bills of last winter, is now the time to fix – or should you focus on cutting your energy use to reduce your payments? When the energy crisis began, energy deals with fixed-price tariffs disappeared from the market. Now they are slowly returning. But don’t assume fixing your energy bills will automatically leave you better off. If you are not on a fixed deal, how much you pay depends on the energy-price cap. This dropped by 7% in October to £1,834 for the typical household paying by direct debit. However, it is expected to rise again in January by about 4.9%, according to energy research group Cornwall Insight. The upshot…

Has your business embraced the software-as-a-service (SaaS) revolution yet? Research suggests that 53% of businesses in the UK now rely on SaaS solutions, with 80% expected to move to this approach by 2025. For small businesses, the benefits could be particularly significant. SaaS is a model where you buy software and other technology services on a pay-as-you-go basis, accessing what you need through cloud computing, rather than buying packages and installing them on your on-premise computer systems. This can be a more affordable way to keep your technology up-to-date, with no need to make large one-off investments. Other advantages include the fact that your software provider will be responsible for setting up and maintaining your apps, potentially reducing your ongoing IT costs. SaaS can also ensure your staff have access…

The new 82’ Diva, from Italian shipyard Riva (part of the Ferretti Group), made its international debut at the Cannes Yachting Festival in September, where it showed off its “revolutionary approach to the use of space”, says Katia Damborsky for Boat International. Outdoor areas have been maximised and indoor spaces “thoughtfully designed according to their function”. The first boat in the series was launched in La Spezia, Liguria, in July. “The launch of a new Riva is always a moment to savour”, and the 82-footer with a 20-foot beam “does not disappoint”, says Motor Boat & Yachting magazine. The styling is “elegant” and the detailing “exquisite”, but it is indeed the layout of the vessel that is so impressive. For example, rather than the saloon being all on one level,…

Going Infinite The Rise and Fall of a New Tycoon Michael Lewis Allen Lane, £25 In Timon of Athens by Shakespeare, a seemingly rich person lavishes gifts on all and sundry until it turns out that he has being doing so with borrowed money. Unable to get any more credit, he invites his friends to a dinner, where, instead of the expected banquet, he serves them a dinner of water and rocks. Recently convicted fraudster Sam Bankman-Fried (pictured) may have hated the Bard – famously, he claimed that the “odds” of Shakespeare being a genius were small, basing his reasoning on population sizes – but he was a modern-day Timon, splurging countless millions in political donations and gifts, until large sums of money were discovered missing from the accounts of…