Indholdsfortegnelse for 1221 i MoneyWeek

“A successful Olympic Games is the equivalent, for the host country, of a global advertising campaign for its economy, its businesses and its tourism. The Paris Stock Exchange could do with some help. It is lagging behind other international markets, with the CAC 40 index down 4% this year amid political uncertainty, while the Frankfurt and London markets have climbed about 6%. The CAC is 12% off its 15 May record high. But the Paris bourse might benefit from Olympic optimism. Tim Hayes and London Stockton of Ned Davis Research find that, for Olympics between 1988 and 2024, the stockmarket of the host country usually loses ground in the three months preceding the sporting event, but then rebounds in the six months following the end of the competition to outperform…

No firm in the world did as well from the pandemic as Pfizer, says WirtschaftsWoche. In 2022 it made sales of $56.7bn from Covid treatments and vaccines. The stock has dipped as the virus has receded, but therein lies opportunity. There are plenty of other promising drugs in the portfolio. Sales in the oncology division rose by 22% in the latest quarter, and Vyndaquel, a new treatment for heart problems, is doing extremely well. Eight drugs could achieve sales of $1bn this year. Meanwhile, Nurtec is a promising new treatment for migraines being advertised by pop star Lady Gaga. Less glamorous, but more useful is the stock’s 5.5% dividend yield.…

The news was enough to send BT’s share price sharply upwards. On Monday, it was announced that the French dealmaker Patrick Drahi was selling the 24% stake he has acquired in BT over the last few years to India’s Bharti Global. Run by the billionaire Sunil Bharti Mittal, Bharti Global is one of India’s largest conglomerates, with interests in telecoms, media, space and other sectors, and has started pushing out aggressively into the rest of the world. BT’s shares were up by 6% on Monday morning as the stake was announced and are now up by 33% over the last six months, partly as a result of the turnaround plan put in place by new chief executive Allison Kirkby, and partly due to speculation that there may eventually be a…

Duration is a measure of risk that is typically applied to bonds. It describes how sensitive a given bond is to movements in interest rates. Think of the relationship between bond prices and interest rates as being like a see-saw: when one side goes up, the other goes down. Modified duration (which can be found in the fact sheet of most bond funds) tells you the likely percentage change in a bond’s price in response to a one percentage point (100 basis points) change in interest rates. The higher the duration, the higher the “interest-rate risk” of the bond – that is, the larger the change in price for any given change in interest rates. So if a bond has a duration of ten, it indicates that a single percentage…

“I never played for money, I played because I loved the sport… So my tax guy, he would be like: ‘You didn’t get your money?’ And I’d be like: ‘Oh, I didn’t get that one in Zurich. Oh, I forgot that one in Moscow.’ I was just playing to win.” US tennis ace Serena Williams (pictured) on her prize money, quoted in the Daily Mail “I was the victim of a scam. I lost a lot of money. Scammers are very sophisticated, but I still struggle with it. I feel like I’m an idiot and say to myself: ‘How the f*** did you manage to do that? You’re so stupid.’ But it’s like someone physically robbing you: you can’t do anything about it.” Actor Jason Watkins, quoted in The Times “Modern capitalism…

project-syndicate.org Thirty years ago, the wealth of all the billionaires in the world added up to less than 3% of global GDP, says Gabriel Zucman. Today that proportion is more than four times as big: just 3,000 people have amassed $14.4 trn in wealth: 13% of global GDP. The world’s “ultra-rich” are richer than ever, yet they typically pay much less tax, as a share of income, than ordinary workers. That matters, not just because governments need money for services, but because “fiscal equity underpins democracy” and stable societies. Late last month in Rio, the G20 group of the world’s largest economies committed – for the first time – to cooperating to fix the global system that undertaxes the super-rich. It won’t happen quickly. When it came to tackling tax…

■ Chrysalis Investments has written down its stake in Wefox by 54% and invested €20.5m to help the embattled insurance start-up return to profitability, says CityWire. The fund had already adjusted the value downwards by £62m earlier this year. The latest investment in Wefox was funded by the sale of Chrysalis’s stake in British chipmaker Graphcore to SoftBank. Wefox’s value was cut from £126.5m to £60.5m owing to uncertainty over funding, contributing to a 1.5% decline in Chrysalis’s second-quarter net asset value to 145.25p. On the other hand, challenger bank Starling, Chrysalis’s largest holding, saw its valuation grow by 25% to £258.9m in the second quarter, while fintech group Smart Pension’s increased by 19% to £125.4m. Payments firm Klarna’s valuation rose to £100.3m, and with a possible US initial public…

Landlords have faced a tough few years, with large mortgage interest bills and low rental yields. And the outlook is gloomy, says Moira O’Neill in the Financial Times. Estate agent Hamptons has found that just 10% of homes sold across the country in the first six months of the year were acquired by landlords – the lowest level since records began in 2010. Meanwhile, the number of new buy-to-let mortgages granted by lenders has fallen by more than 50% in just over a year, notes Rupert Jones in The Guardian. “The upward march of rental incomes seems relentless,” says O’Neill. “On the face of it, that spells opportunity.” But the reality is that landlords are selling more properties than they are buying, which is reducing overall rental stock. The average…

The number of companies in the UK with the increasingly coveted “B Corporation” status has now broken through the 2,000 mark, data from Better Society reveals, with the total having more than doubled in 18 months. B Corps are companies that meet high standards of social and environmental performance, transparency and accountability. The certification is awarded by B Lab, a global organisation that assesses applications for B Corp status according to a set of standardised criteria. The value of the B Corp brand has grown significantly since the initiative was launched in 2006, with more than 8,500 companies worldwide now having achieved the certification. As public awareness of sustainability and environmental issues grows, the standard has obvious marketing value, but B Lab also points to other benefits of working towards…

“Why does Madonna need to go to Pompeii? Is there not a more beautiful beach she could use?” asks Michele Campisi, general secretary of the Italia Nostra heritage association, responding to rumours the Queen of Pop was planning to throw her 66th birthday bash for 500 guests at the Large Theatre in the famous ancient Roman town. The “absurd” price paid – reportedly €30,000 – is equally controversial, reports James Imam in The Times. “It’s like giving Pompeii away,” says Campisi. He accuses prime minister Giorgia Meloni of cashing in on Italy’s culture, but the mayor of Pompeii says he’s “ready to welcome the singer”. In June, celebrity beautician Cristina Fogazzi also made headlines when she reportedly paid €80,000 to host a private dinner at the Braidense library, part of…

House prices are perking up. Halifax reports that the average UK home was worth £291,268 last month, a 0.8% rise in a month and a 2.3% advance on a year before. This month’s Bank of England interest-rate cut – the first in four and a half years – will keep activity humming, says Jack Simpson in The Guardian. Major lenders have been cutting mortgage rates, with Nationwide offering a “sub-4% deal for some new buyers”. After a pandemic-era property “frenzy”, the past couple of years have been “something of a damp squib” for UK housing, says Josh Kirby in The Telegraph. Now bricks and mortar is back. Property company Savills thinks prices will rise about 5% annually over the next three years, taking the average property value to £340,600 by…

Wall Street’s “fear index” hit the highest level since the pandemic at the height of last week’s sell-off. The CBOE Volatility index (Vix) reflects S&P 500 option pricing, with higher numbers showing greater expected volatility over the next 30 days. The Vix usually hovers around 20, but on 5 August it briefly topped 65, a level previously associated with major disasters such as the global financial crisis. That level implies investors expect the S&P 500 to swing an average of 4% a day over the next month, much more than in normal trading, says the Financial Times. The index has dropped back to the low 20s this week, but it shows that after an unusually calm period for markets, “volatility is back”, says Patrick Murphy of GTS.…

Ola Electric Mobility’s shares surged on their first day of trading in Mumbai, fuelled by optimism about the prospects of India’s biggest e-scooter maker and growing demand for electric vehicles in the country, says Bloomberg. The stock closed 20% higher than the initial public offering (IPO) price. Ola raised $733m in India’s largest IPO since state-run Life Insurance in 2022. It was also the first major vehicle manufacturer to list since 2003. At the listing Ola was valued at $4bn, but this marked a large discount to the $7bn valuation it hoped to achieve. Ola has suffered losses and negative cash flow since its inception in 2017, but hopes to break even in the next two years.…

“I am delicate... charismatic, sensitive... irresistible, clean,” begins the advertisement for Dolce & Gabbana’s latest new fragrance, against footage of finely groomed dogs. “‘Cause I’m not just a dog, I’m Fefé.” The luxury Italian fashion house has identified a new market. For €99 a 100ml bottle, owners can spray their hounds with Fefé, a new alcohol-free mist named after the dog of the brand’s co-founder, say Philip Willan and Jack Malvern in The Times. The perfume, which comes with a 24-carat, gold-plated paw design on the bottle and a dog collar, has a blend of ylang-ylang flowers, musk, and sandalwood. Although D&G claims it to be an “olfactory masterpiece”, some vets say it’s a “waste of money” and it could even annoy dogs. The RSPCA warned that it could interfere…

● “Even an estate agent would struggle to sell you this: that, just a month after Labour came to power, the housing market is already on sturdier foundations,” says Alistair Osborne in The Times. But the “vibe” has certainly improved. The PMI index tracking construction activity is at a two-year high. And Persimmon says the market is now “quite exciting”. However, CEO Dean Finch thinks Labour’s plans to build 370,000 new homes a year are “ambitious”, as companies can only build what they can sell. Demand is perking up, but only “incrementally”, and this year’s completions will be below their 2018 peak. Finch isn’t advocating another Help To Buy scheme, but he says Labour should consider stimulus to help first-time buyers and make housebuilders pay a fee for it. ●…

Anatole Kaletsky, co-founder, Gavekal Investors are “mispricing” the dangers of long-term structural inflation, says economist Anatole Kaletsky. “One month of benign inflation data has convinced many analysts that the US Federal Reserve, the European Central Bank, and even the Bank of England are close to delivering ‘price stability’ and will soon pivot decisively in favour of stimulating employment and economic growth,” he writes on Citywire. However, while inflation rates in the UK, US, and Europe have moderated, the risks will remain high over the medium to long term, even if upcoming inflation releases show lower readings compared to earlier in the year. “The global economy is now at the beginning of a long-term inflation uptrend,” driven by “deglobalisation, demographics, politics, war, environmentalism, and technology,” says Kaletsky. Despite these “blindingly obvious”…

newstatesman.com There’s nothing new about speculative booms and busts, says Will Dunn. And sometimes even the canniest investors get caught out badly. Isaac Newton famously lost a fortune equivalent to millions of pounds in the South Sea Bubble of 1720. In the 1920s it was radio stocks that burnt investors; 2000 saw the dotcom bust. Another dotcom boom Since the launch of ChatGPT in November 2022, a familiar story has played out. Between then and July 2024 the share price of Nvidia, for example, which makes chips used to run the large-language models that underpin generative artificial intelligence (AI), surged almost tenfold. The firm’s market value leapt by $2.5trn – more than the value of the whole FTSE-100. Intelligent people lined up to reassure each other that this time really…

aei.org There are “lots of good things happening in the American economy”, says James Pethokoukis. There have been strong gains in labour productivity. Non-farm productivity (output per worker-hour) has shown “robust growth” of 2.7% over the past year. That’s faster than the postwar average of 2.2%, and vastly better than the average of 1.5% seen during between 2005 and 2019. It’s an impressive post-Covid jump of which European countries are envious. What’s going on? According to recent IMF analysis, the driving forces are superior productivity growth in high-skill and IT-intensive industries, and those with higher levels of investment in digital technologies, plus increased “labour-market dynamism” (more job-switching post-pandemic). The IMF paper expects productivity gains to slow now, unless they can be boosted by new technologies (such as AI) and continued…

Over the past fortnight, investment trusts’ discounts have started to narrow as investors have tentatively moved back into the sector. In fact, the entire UK equity market has benefited from a positive shift as investors have re-evaluated the landscape following Labour’s landslide win. However, it would be wrong to interpret the recent shift as a sign that investment trusts are back in favour. Over the past two years, the average investment trust has languished at a discount to net asset value (NAV) of 18%. This has fallen to 14% at the time of writing, although there are some major disparities across sectors. Positive movers Scottish Mortgage Investment Trust (LSE: SMT), the UK’s largest trust aside from 3i (LSE: III), has seen its discount to NAV decline from around 20% this…

I’ve been researching companies poised to benefit from the new government. In my last column, I highlighted Mercia Asset Management, the fund manager charged with allocating billions to UK small and medium-sized businesses, as an interesting, undervalued play on Labour’s investment plans. Two other companies worth a look are Assura (LSE: AGR) and Primary Health Properties (LSE: PHP). These real-estate investment trusts (REITs) specialise in building, managing, and leasing healthcare facilities such as GP practices and hospitals. The demand for these facilities is expanding owing to the country’s ageing population. The locations are largely rented out to the NHS, which is, of course, backed by the UK government. Despite setting out to be a pro-growth government, within weeks of walking into number 11, the chancellor, Rachel Reeves, announced she was…

● “The great British downsize has finally begun,” says Ruth Bloomfield in The Telegraph. The number of homes being sold by people aged over 66 is up 13% on last year, according to property firm TwentyCi. Some will be moving because they can no longer manage a big house as they age; others want to be closer to their families. But the figures could also be a result of the cost-of-living crisis, given the rise in bills and interest payments in recent years. ● “Pensioners who were widowed before they retired have been urged to check for errors calculating the amount of state pension they could inherit from their former spouse,” says Claer Barrett in the Financial Times. Surviving spouses and civil partners could inherit at least 50% of certain…

● HM Revenue & Customs has launched a nationwide campaign to crack down on SMEs that are not complying with the national minimum-wage regulation, advisers warn. Research suggest that SMEs are disproportionately likely not to pay all staff the national minimum wage to which they are entitled. Businesses targeted will receive an HMRC letter providing a list of common areas where it sees non-compliance, with some of these firms then offered a free HMRC “health check”. Failure to take up this offer will result in HMRC opening up a formal enquiry. ● Three-quarters of SMEs are not prepared for new laws on recycling that come into force next March, research shows. The Simpler Recycling reforms will require firms to recycle a wide range of core materials, including paper and cardboard,…

The story of Wildberries and its founder Tatyana Bakalchuk (pictured) “had all the hallmarks of a feel-good Hollywood flick”, says The Bell. An English teacher from Moscow, she built Russia’s biggest online marketplace from scratch out of nothing but hard work and became the country’s richest woman, with an $8.1bn fortune according to Bloomberg. Online shopping, after a slow start, has become a major industry across Russia and Wildberries notched up a turnover of $27.5bn last year. At least, that’s the story the company likes to promote, says The Bell. The reality is that Tatyana’s husband, Vladislav, was already an experienced entrepreneur when she launched the firm, and it was his powerful connections that gave the firm a leg-up. Then, in June, Wildberries announced a “peculiar deal”, personally approved by…

2023 Azevedo, Vinho Verde Loureiro/Alvarinho, Minho, Portugal £9.95, thewinesociety.com; £10.99, imperialwine.co.uk Every year, in May, I head to Portugal for a quick break. During my trip, I charge around the most prolific supermarkets, scooping up all the new 2023 whites and reds to compile a list of the finest possible, eminently affordable wines for my readers to buy during their summer holidays. I published my mini report on MatthewJukes.com on the 5 June, and it elicited a massive response: we Brits love Portugal! I was given a preview of three stunningly priced wines a couple of weeks ago, which I must add to this list. Quinta de Azevedo, which features its historic tower on all its labels, dates back to the 12th century, and this property, situated near the River…

Japanese prime minister Fumio Kishida has given up. Beset by public anger about cost-of-living pressures and a party corruption scandal, Kishida has announced that he will not seek re-election as leader of the country’s governing party. He is expected to step down next month (see page 11). Change at the top of Japanese politics comes as the local stock-market recovers from last week’s bruising sell-off, which saw the Nikkei fall 12.4%, its biggest one-day drop since 1987. Japanese shares suffered their worst two-day drop since the 1950s, says River Akira Davis in The New York Times. The plunge could mark the end of one of the country’s “most enduring stock rallies” in decades. The benchmark Topix index has gained 36% since the start of last year amid excitement about corporate…

Five to buy BHP The Telegraph BHP is focused on future-facing commodities such as iron ore and copper, which are essential for renewable-energy infrastructure. Its Canadian Jansen potash mine should allow BHP to become a major potash producer by 2030. The Australian miner is well placed to benefit from an improving global economic outlook and looser monetary policy. Lower interest rates could support higher demand for commodities and infrastructure projects. BHP has solid finances, a diverse range of operations, and can make acquisitions. Miners’ volatility shouldn’t put off long-term investors. 2,087p Coats Group The Times Coats provides threads for brands such as H&M, Nike, and Adidas. The world’s largest thread and sewing materials company is the market leader in recycled thread products. New CEO David Paja is expected to focus…

The new chancellor sent Parliament off into its summer recess with a reminder that sandcastles don’t last forever. Once MPs return, she has warned them that their bucket and spades will need to be repurposed for filling up the blackest of black holes in the public finances. The Budget might not be until 30 October, but she has started as she means to go on. Her address to Parliament on 29 July was a statement of intent. She is prepared to take unpopular measures, such as cancelling winter fuel payments for pensioners not in receipt of pension credit, in order to dole out some gifts, such as accepting the above-inflation public-sector pay rises recommended by the independent pay review bodies. She would like you to take away the message that…

Beauty has been a popular sector among investors who like high-quality companies. These brands were seen as relatively defensive: even in a recession, customers were likely to keep buying their favourite products as an affordable luxury. And there was good potential for growth since customers in emerging markets would buy more cosmetics and high-end skincare from desirable foreign brands as they became wealthier. So a slump last week in the shares of Japan’s Shiseido and South Korea’s Amorepacific is worth noting. Shiseido is off almost 24% after disappointing results that showed continued weak demand in China. As a one-off, this might not be a complete shock: the company had also reported weak full-year results for 2023 driven by China and had already announced plans to cut costs and improve profitability.…

Russia’s booming economy Editorial The Economist Despite economic woes in many parts of the world, Russia is growing. “It turns out that bacchanalian spending, at a time of war, really juices an economy,” says The Economist. Russia’s GDP is expected to grow 3% this year, unemployment is low, and the rouble is “doing fine”. Inflation is high at 8.6%, but Russians’ purchasing power is growing. This contrasts with the economic struggles of the 2010s, marked by sanctions, slow growth, stagnant wages, tax rises and spending cuts. The turnaround is owed to the government abandoning austerity and boosting spending, particularly on the war in Ukraine, which has put money in people’s pockets. Government cash has been lavished on everything from welfare to infrastructure, even a scheme for children to holiday in…

capx.co Foreign aid donated to developing nations by rich countries such as the UK has a “paltry level of success” when it comes to actually boosting long-term economic growth, says Alexander Jelloian. Indeed, critics of the whole development-aid model have “repeatedly argued that aid can often do more harm than good, enabling corrupt actors to stay in power while very little assistance reaches those in need”. There’s no chance that the UK’s foreign aid will stop flowing: whatever the new Labour government’s precise approach turns out to be, £10bn-£13bn in official assistance will continue to be dispersed. How best to deploy those funds? The traditional model is for aid agencies and development experts to identify particular development challenges, formulate plans to solve them, and then implement them using Western money.…

Activist investor Starboard Value, which has a $500m stake in Autodesk, believes that the leadership has failed to meet financial targets. It says the provider of software-design products for architects, builders, and engineers has lagged the market for years. Starboard said Autodesk’s board should “objectively assess” if CEO Andrew Anagnost, who has been in the post for seven years, was the best choice. Starboard recently lost a bid to appoint nominees to Autodesk’s board and accused Autodesk of misleading investors after it launched an internal probe of its accounting practices. To meet free cash-flow targets, Autodesk kept entering into multi-year upfront contracts with customers in 2023, despite shifting to annual billings a year earlier.…

The average cost of a wedding was £21,000 in 2023, according to wedding-planning app Bridebook, but that rose to £36,000 if you got married in London. So where can you cut back? “Ditch the wedding favours,” says Elizabeth Anderson in The Times; “these simply get left on the tables or thrown away. Extras such as flip-flops and blankets for sitting outside are also unlikely to be used.” Some couples are also foregoing a cake. With a multi-tier, professionally baked cake costing more than £1,600, it is an easy way to save money. Either opt for a store-bought cake you – or a talented family member or friend – decorate, or have no cake at all. When you are setting the date consider that “going out of season can lead to…

There is good news and bad for small and medium-sized enterprises (SMEs) when it comes to bidding for public-sector work. On the positive side, new government data shows that SMEs won £39.7bn worth of such contracts last year; less happily, the proportion of public-sector work awarded to smaller businesses has remained stuck at around 20% for the past five years. The new Labour government says it wants SMEs to get more public-sector work, but its predecessor said the same thing. And while both the national government and councils have made efforts to encourage SMEs, the reality is that the onus remains on businesses themselves to go out and win these contracts. In practice, this means getting to grips with the way that public-sector procurement works. One advantage of focusing on…

“Brazil is a leader in clean energy, generating 91% of its electricity from it in 2023” Copper mining has been a standout sector in 2024, bolstered by the copper spot price nearing all-time highs. We believe copper’s growing use as a critical material for surging global energy demand has triggered the next copper supercycle. The proliferation of data centres needed to support artificial-intelligence (AI) applications, and the recent increase in their substantive power requirements (and, therefore, their copper requirements) have created a demand shock for the red metal. The growing energy needs of electricity grids, emerging economies, and the copper-intensive energy transition have also given miners a major fillip. Yet the supply of copper has fallen below expanding demand, which may result in escalating copper deficits in years to come.…

Our Future is Biotech A Plain English Guide to How a Tech Revolution is Changing our Lives and Our Health for the Better Andrew Craig Nicholas Brealey Publishing, £24.99 Investors’ attention has been focused in recent times on advances in artificial intelligence (AI). Machine learning and increased computing power are indeed important, but their most important use will be to accelerate advances in biotechnology, argues Andrew Craig. Indeed, the application of AI in this field has already started to result in tangible treatments and techniques that will have big implications for medicine and healthcare and for human life in general. Craig’s Our Future is Biotech is a guide to help ordinary investors understand this coming revolution. It is divided into three sections. The opening three chapters give a broad overview…