Indholdsfortegnelse for Issue 971 i MoneyWeek

Global electricity demand is set to jump by 60% over the next 30 years as populations and economies grow, while solar energy is likely to make up 22% of the global energy mix in 2050, compared with just 2.5% today. That makes Norway’s Scatec Solar an appealing long-term bet, says Börse Online. It is a one-stop shop, encompassing planning and development of photovoltaic power stations (solar parks), construction and maintenance. Long-term power supply contracts with utilities mean revenues are secure and predictable. Scatec has branched out into emerging markets, notably Vietnam and South Africa, in recent years and now boasts total production capacity of 1.9 gigawatts in 13 countries.…

Luxury goods group LVMH has fired the “opening shot” in what could be a “protracted takeover battle” for American jeweller Tiffany, reports Adam Sage in The Times. At $14.5bn ($14.7bn counting debt), the acquisition “would be the most expensive to date for LVMH”, yet Tiffany’s board looked “likely to advise against accepting the bid in an attempt to ratchet up the sale price”. Indeed, immediately after the bid was announced, Tiffany’s share price shot up by more than 30% to $130, well above the $120 LVMH is offering, in expectation that a rival “will enter the fray to start a bidding war”. Buying Tiffany would be LVMH’s “biggest acquisition to date” and bring the 182-year-old jeweller into a “growing stable of luxury brands”, says Rupert Neate in The Guardian. However,…

The battle over who controls the People’s Vote (PV) campaign “escalated” this week after staff “taunted” their chairman, Roland Rudd, on Twitter, says Kate Devlin in The Times. The row “erupted” at the weekend when Rudd fired head of communications Tom Baldwin and campaign director James McGrory. On Monday there was a staff walkout in support of the pair and the following day employees made a motion of no confidence in Rudd and Patrick Heneghan, who was appointed acting CEO on Sunday, which was passed by 40 votes to three. Although PR guru Rudd, as chair of Open Britain, the largest of five organisations inside the PV campaign, “wields huge power”, opponents question whether Rudd has the power to sack key staff, says Jim Pickard in the FT. Rudd has…

Violent protests that erupted in Chile 12 days ago have now “swelled into mass demonstrations”, forcing the Chilean president, Sebastián Piñera, to bring “a string of new ministers into his government”, says Benedict Mander in the FT. The protests were originally a response to a rise in metro fares and have swelled to become the largest in Chile’s history – at least two million of the country’s 18 million population are estimated to have joined marches nationwide. Protestors are demanding that the government make Chile’s economy “more equal” without damaging economic growth. The riots in Santiago are just the latest in a “steady drumbeat of unrest” around the world, say Declan Walsh and Max Fisher in The New York Times. In Bolivia, Spain, Iraq and Russia, and before that the…

Investors are probably sick of hearing about equity income funds in the wake of the Neil Woodford debacle. But this week attention has turned to traditional equity income funds, rather than Woodford’s (which wasn’t really an equity income fund at all). The general point (and appeal) of an equity income fund is that it invests in companies that offer higher-than-average dividend yields, whereas Woodford’s fund eventually owned large numbers of unlisted stocks paying no dividends at all, propped up by a few mid-cap high-yielders. The good news is that most UK equity income funds you’re likely to own are nothing like that. The bad news, as Laura Suter of investment platform AJ Bell pointed out this week, is that many funds are currently invested in stocks that appear to be…

When HSBC announced its third-quarter results on Monday, they were worse than anyone expected. Pre-tax profits were down by 24%. Revenues fell by 3% to slightly over $13bn, well below what the market expected. Targets for return on equity were missed. The shares fell by close on 5% on the day, the biggest one-day fall in more than two years. They have fallen by 11% in the last six months. Given that growth in the UK is respectable and that HSBC is meant to be brilliantly positioned in the rapidly expanding Chinese and Asian markets, it was a deeply disappointing set of numbers. HSBC is meant to be growing along with its customer base. If it is shrinking, something is going wrong. So far Noel Quinn –who took over as…

Why the Brexit row turned crazy Lionel Shriver The Spectator While speaking on a recent panel in the US, I was unsurprised by “lefty New Yorkers’ uniform hostility to Brexit”, says Lionel Shriver. “But only up to a point.” I can understand that they see the EU as a great achievement of liberal democracy and thus “emblematic of their world view”. However, the fact is Americans would never vote to “join a supranational behemoth whose laws would override their own”. Anyway, why do they care? Back in the UK, watching Remainer protestors surge towards Parliament Square and “purple-faced women” screeching “Scumbag!” at their own representatives, I’m even more mystified. While I can understand a preference for remaining in the EU, I “genuinely do not grasp why so many Britons are…

blogs.spectator.co.uk Japan faces “daunting challenges”, says Michael Auslin. It has never recovered fully from the popping of its asset bubble in the 1980s. The demographic outlook is “grim”. It is struggling to compete. North Korea’s nukes are within range. Yet despite these and many other challenges, Japan remains politically stable. It continues to top the rankings in global health measures and educational achievement and remains wealthy. Its politics are not “poisoned by Twitter” and it remains “astonishingly crime-free”. Its citizens retain a powerful sense of communal responsibility. What explains such social stability? From March of this year through April 2020, 52 separate rituals will seal Emperor Naruhito’s accession to the throne. On Tuesday last week the Emperor informed the Japanese gods of his accession and next month will personally offer…

What if Boris Johnson wins the general election in December – and we get a Brexit deal? There are many hurdles still to clear (see page 8). But among the dozens of institutional investors I’ve seen in the last few weeks, I’d estimate that the odds of the “triple-B” scenario –the “Boris Brexit bounce” – have risen from well below 25% to between 25% and 50%. So it’s far from certain –but not beyond the realms of possibility. And if it does happen, the argument goes, then after years of negative sentiment towards UK equities, investors have to be prepared for a rebound. Preparing for “the triple-B” What would drive this rally? The obvious catalyst will be that businesses (and investors) who have delayed decision making amid political uncertainty will…

The spark that sets off a riot or a revolution is often not the real reason why people take to the streets. The start of the French Revolution, for example, is usually said to be the storming of the Bastille prison on 14 July 1789, which was triggered by Louis XVI firing his comparatively popular finance minister three days earlier. In practice, that was just the breaking point in a prolonged political and economic crisis that would eventually have erupted into violence whether the king took that decision or not. In the same way, the increasingly violent protests that have been shaking Hong Kong for the last seven months are not solely about democracy or freedom of speech. Instead, they are driven by a much broader set of frustrations that…

When it comes to personal finance, loyalty rarely pays. Stick with the same energy provider, broadband company or insurer for the long run, and you’ll end up paying far more than a new customer. And the same goes for mortgages. “Some of Britain’s biggest banks are exploiting their customers’ loyalty by saving the best rates to tempt new borrowers,” says Adam Williams in The Daily Telegraph. The newspaper has found that many banks are tempting existing customers to stay put to avoid the hassle of remortgaging – but aren’t then offering them their most competitive deals. Make sure you avoid payment shock Figures from UK Finance, the banking industry trade body, show a marked rise in product transfers (where a homeowner moves to another product with the same lender), to…

Traders often pay close attention to economic data based on the theory that a strong economy boosts profits and thus the stockmarket, while a weakening economy will hit share prices. This makes sense. Virtually every US recession since 1871 saw the market fall, and in 20 out of 29 cases the S&P 500 had failed to recover its lost ground even by the time the recession had finished. Trouble is, most economic data is backward looking (and also frequently revised). What traders really want is an indicator that can reveal not simply where the economy has just been, but where it’s likely to go in the future. Consumer sentiment surveys are an attempt at one such indicator. One of the best known is the monthly series from the University of…

Time is running out to prepare for new tax rules that could cause freelancers and contractors real problems when securing work – and give many companies a headache too. While there have been calls to postpone changes to the “IR35” regime across the private sector, the government is refusing to budge from the April 2020 start date. The aim of the reforms is to stamp out what ministers believe is widespread tax avoidance through “disguised employment”. This is where a business hires a freelancer or a contractor set up as alimited company to do work, rather than taking on an employee. Such astructure has tax advantages for both sides, but the business then simply treats the freelancer or contractor in the same way as an employee. Currently, contractors are responsible…

Investors have struggled for several years to find opportunities offering good returns. And now a new threat is looming over the investment landscape: climate change, which is starting to pose a tangible and significant risk to businesses across industries. Meanwhile, the pace of technological innovation has never been faster, with whole industries changing the way they function – voluntarily or not. By their nature, these risks are difficult to quantify and evaluate. Investors should therefore seek to own businesses that are both environmentally sustainable and boast durable competitive advantages that should serve to shield them from evolving risks in a rapidly changing world. Dominating the internet “Alphabet was the largest corporate buyer of renewable energy in 2017” In our view, one such business is Alphabet (Nasdaq: GOOGL). The group occupies…

There’s an easy way to take in the Deep South (and more), says Teresa Machan in The Times. Just do it by land, sea, rail and river. “Tap into the musical history” of Memphis, Tennessee and visit Graceland, the home of Elvis Presley. Then take atrain to New Orleans and see the Mississippi River by paddle steamer. From the Big Easy, set sail on aseven-night cruise with Norwegian Cruise Line, calling at Cozumel in Mexico, Belize City, the Honduran island of Roatán and Costa Maya, Mexico (ncl.com). A 13-night trip, offered by Bon Voyage (bon-voyage.co.uk), costs from £2,295, including flights. Departures from November to April.…

Quinta da Fonte Souto is a new acquisition by the Symington family, owners of the heroic Port brands Graham’s, Dow’s, Warre’s, Cockburn’s and Quinta do Vesuvio. Unlike their epic Douro properties, this incredible property is situated in Portalegre, in the Alentejo region, due east of Lisbon, on the Spanish border. The area has a unique climate, thanks to its 500 metre altitude on the slopes of the São Mamede range, and I visited the property in the summer while on holiday in Portugal. My sneak preview of the portfolio of wines was an eye-opener and this inexpensive red, with its chic packaging and knockout flavour, is the pick of the bunch. With a decent 40,000 bottles made, every MoneyWeek reader can get involved this week, and this is the UK…

Going… A Keith Haring mural that was excavated from a stairwell in Manhattan is heading to auction with Bonhams in New York on 13 November. The painting had been created by the pop artist on the inside walls of Grace House, a Catholic youth centre, in a single evening in around 1983. With nothing more than a thick brush and a tin of black paint, Haring began by painting the “radiant baby”, one of his most iconic symbols, on the ground floor, working his way up the stairs, painting a dozen more dancing figures. The church next door is now selling the building it had leased to the now-closed centre. It spent $900,000 extracting the mural figure by figure. The mural in 16 parts is expected to fetch $3m to…

• Crisps-maker Walkers is paying American singer Mariah Carey £9m to appear in its Christmas advertisements this year. “I’m wondering how many packets of cheese and onion they’d have to shift to recoup that,” says Carole Malone in the Daily Express. Carey (pictured) is “the prima donna who employs an assistant to walk backwards in front of her to catch her if she falls, who refuses to be seen in fluorescent lighting without sunglasses, who demands white roses and stuffed toy lambs in her trailer, who has to have 20 humidifiers around her when she sleeps and who demands flunkies place her on and off seats in case she wrinkles her dress… Why on earth would Walkers think she isa good advertisement for their crisps?” Unless Walkers is planning to…

Neil Woodford is perhaps the highest-profile fund manager to have lost a lot of money for his clients in recent years. But he’s not the only one, says Kate Palmer in The Sunday Times. Four others have lost even more money for their clients than Woodford (judged by current asset value at least) and yet “are still reaping huge rewards”. Rod Oscroft at Legal & General charges 1.53% for his Alpha trust, which aims to beat the FTSE All-Share index. It has returned a loss to investors of 17.3% since June 2014 – when Woodford launched his Equity Income Fund – against the index’s rise of 34%. John Dodd of Artemis charged 0.75% for his Global Energy Fund (since sold to Guinness Asset Management) and lost 23%. Tom Nelson runs…

Argentina elected left-winger Alberto Fernández as president on Sunday, with the Peronist triumphing over centre-right incumbent Mauricio Macri. Macri’s term was dogged by an inflation crisis, which ended in a $56bn International Monetary Fund (IMF) bailout. Macri’s “business-friendly” presidency ended in disaster, says The Economist, but the Peronists who preceded him had an “equally calamitous” record. Cristina Fernández de Kirchner, Argentina’s deeply divisive, economically illiterate former leader, is the new vice-president. It remains to be seen how much influence she wields. The new president inherits a government “saddled with more than $100bn in foreign debt”, say Santiago Pérez and Ryan Dube in The Wall Street Journal. The IMF rescue deal is conditional on the austerity measures that “Fernández campaigned against”. Fernández has promised to end the crisis but has no…

The Swedish central bank, the Riksbank, “pioneered” the use of negative interest rates after the financial crisis, charging banks for keeping excess reserves with it from as early as 2009. In early 2015, it cut its main policy rate, which eventually sunk as low as–0.5%. The bank’s goal was to prevent the Swedish krona from becoming too strong, thus hurting growth. But its drastic action also fuelled a housing bubble, which has driven private debt in Sweden to extraordinary heights, as the chart shows. As a result, the bank is changing course – rates are now at –0.25% and it hopes to raise them to 0% in December. “Investors should take note,” says Nick Andrews of Gavekal. “The Swedish canary may be signalling a shift in attitudes to negative rates.”…

Australia is enduring its toughest year for initial public offerings (IPO) since 2010, reports Bloomberg. Last week, Singapore-based real estate classifieds business PropertyGuru became the latest to shelve its IPO plans. The private equity-backed group had hoped to raise as much as $260m, but scrapped its listing “due to uncertainty in the IPO market”. Earlier in the month, consumer lender Latitude Financial Group abandoned what would’ve been Australia’s biggest IPO of the year. It had aimed to raise around $700m, but withdrew due to concerns that weak demand from investors would see the share price falter after its debut. So far this year $1.4bn-worth of share sales has been cancelled.…

Last week brought some good news for shareholders in electric car maker Tesla – finally, says Antony Currie for Breakingviews. The company made “an unexpected, if small, profit of $143m” in its third quarter, driven by a fall in both general costs and those related to sales. The good news was also accompanied by reports of an “all-round improvement” at the “troubled” SolarCity solar-panel franchise. The results led many traders to bet that chief executive Elon Musk (pictured) “is finally getting on track” – Tesla’s share price surged 20% on the news. Tesla bulls have “much to celebrate”, says Jamie Powell in the Financial Times. As well as the profits, the firm is demonstrating “impressive cost control” and may bring forward the launch of its Model Y car. However, “Tesla…

The passage of legislation ensuring an election on 12 December means that my advice to bet on an election happening in either October or November proved unfounded. However, my earlier tip, made back in August 2017, that there would be a general election in 2019, 2020 or 2021, has paid out. The news looks good for the bookies and betting exchanges too – £1.27m has been matched on Betfair alone on which party will get most seats. Given the Conservatives’ lead in the polls, it’s no surprise that they are the firm favourites to get most seats, with Betfair putting their odds at 1.18 (84.7%). Ladbrokes is also offering 1/6 (85.7%) on them being the largest party. In contrast, Labour’s odds are 8.4 (11.9%). Punters on Betfair still think that…

“Duration” is a measure of risk that usually relates 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 seesaw: when one side (interest rates) goes up, the other (in this case, bond prices) goes down. Duration (the value of which can be found in the fact sheet of most bond funds) tells you the expected 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 bond’s “interest-rate risk” – that is, the larger the change in price for any given change in rates. This is also known as “modified” duration. Duration can also…

• TV and radio presenter Samira Ahmed is taking the BBC to court alleging sex discrimination, says The Guardian. Ahmed (pictured) was paid £440 an episode for presenting Newswatch, a 15-minute viewer-feedback programme, between 2012 and 2015, while Jeremy Vine was paid £3,000 for presenting Points of View, a similar offering. The BBC claims the two programmes are not equivalent, as Points of View is a high-profile “entertainment” programme, while Newswatch is merely “news”. But the National Union of Journalists says Points of View has just 800,000 viewers; Newswatch has 1.9 million. • Neil Woodford and business partner Craig Newman have taken dividends of almost £20m from Woodford Investment Management in the last year, the Financial Times estimates. The FT calculates the sum based on an average fee of 0.5%…

“I always get excited about returning to the chat show. Each time there’s a slight sense of, ‘Ooh, can I still do this?’ But then you see the people on the sofa and the 600 people in the audience all geed up and you think, ‘Actually, I don’t suck at this job. There’s a reason I’ve been doing it so long’. It’s good to remind yourself of that occasionally.” TV personality Graham Norton, 56, quoted in The Observer “The biggest thing I’ve bought in the last five years is a tennis court, but it was built ever so slightly wonky to the angle of the house, which annoys me. I got it because I wanted to take more exercise, but the minute the thing was installed I stopped playing.” Photographer…

collaborativefund.com/blog Interest in psychological and behavioural biases that affect your performance as an investor exploded after the financial crisis, says Morgan Housel. They describe how flaws in our thinking or human nature lead us to make predictable errors of judgement. “But not all biases are bad” – some can “even be lifesavers”. Here are a few of them. 1. An allergy to nonsense. “Scepticism up to the point of cynicism” is not always helpful, but it will protect you in the world of finance where “everyone is in sales”. 2. The enjoyment bias. An inefficient investing strategy that you enjoy and can stick with will outperform an efficient one that feels like work. 3. Reasonable ignorance. Everything is more complicated than it looks and if you keep digging for ever…

AT&T has reached a deal with activist shareholder Elliott Management, reports CNN’s David Goldman. The telecoms giant has agreed to athreeyear plan that splits the roles of CEO and chairman, calls a halt to large acquisitions and allows Elliott to appoint two new directors. The call to rein in big deals comes after AT&T’s huge merger with Time Warner and its purchase of satellite TV group DirecTV. “The substantial changes will avoid a high-stakes fight with one of the world’s most successful activist shareholders,” says Goldman. Elliott acquired a $3.8bn stake (about 1%) in AT&T in September. As part of the new deal, AT&T aims to hit an earnings per share (EPS) target of $4.50 to $4.80 by 2022. Next year EPS is forecast at $3.60 to $3.70.…

Investing in Hong Kong is a brave decision at the moment. The benchmark Hang Seng index is down by 12% since the beginning of April, even after a recent bounce. Many smaller stocks have fallen far further. There should be opportunities if you can look through the effect the protests are having on the economy and take a medium-term view on what these companies’ prospects may be when things quieten down. However, that assumes that things don’t get worse before they get better. Anybody who is confident about what happens now is deluding themselves. News reports suggest that China is planning to remove Carrie Lam as chief executive in the next few months and replace her with a new face who may be better placed to bring about some sort…

■ The number of IT failures at banks and finance firms is unacceptable, according to MPs. “With bank branches and cash machines disappearing, customers are increasingly reliant on online banking services, but these have been severely disrupted by IT failures at firms including TSB, Visa, Barclays and Royal Bank of Scotland,” says Julia Kollewe in The Guardian. The Treasury committee wants to see “faster action in resolving complaints and awarding compensation, along with more decisive regulatory action”. The report highlighted TSB’s “IT meltdown”, which began in April 2018 and meant that up to 1.9 million customers were locked out of their accounts for weeks. “The current level and frequency of disruption and consumer harm is unacceptable.” ■ The co-founder of MoneySuperMarket has accused “cash-strapped energy companies of letting their customers…

As you’d expect, given the strong performance of the stockmarket on both sides of the Atlantic, over the last fortnight my long tips have done well –five of the six have made gains. JD Sports has risen from 769p to 772p, Safestore is up from 692p to 698p, and Bausch Health Companies has gone up from $20.91 to $23.75. Volkswagen has also risen from €163 to €176 while British Airways owner, International Consolidated Airlines Group, has risen from 502p to 520p. The only share that went down was Bellway, which fell from 3,291p to 3,236p. Sadly, the rising tide that lifted my long tips has also lifted my short tips, with only one out of the six declining in the last fortnight. Weis Markets went up from $36.01 to $37.13,…

What does your business do? Tickr is the first app solely focused on impact investing. People can choose to invest in specific companies spanning three separate themes –climate change, equality, disruptive tech – or a mix of the three. What’s been your company’s greatest achievement so far? The team we’ve built. Our young and motivated team is bound together by what we stand for as a business. We started in January 2019 from scratch. We’ve now raised £2.5m in external funding and have grown from being just three of us to becoming a team of 14, with offices in London and Liverpool. What has been your biggest challenge? When my co-founder Matt Latham and I started working on the idea in 2016, we had to do it on the sides…

Hotel Chocolat (LSE: HOTC) produces higher-end confectionery, which it sells online and in its shops; it has 116 outlets in the UK and 14 abroad. It owns a cocoa plantation in St Lucia, where it also operates a boutique hotel. It has had a strong year, with revenue up by 14% to £132.5m and pre-tax profit increasing by 11% to £14.1m. Hotel Chocolat started out asa digital operator, but it is defying the gloom that has descended on the rest of the retail sector. It has continued to expand, opening 14 new shops in the UK and Ireland and two in the US last year. The stock is up 66% in 12 months.…

Byrraju Ramalinga Raju was born in Bhimavaram in southeast India and received a degree in commerce before going on to do an MBA at Ohio University. He then went back to India and started various industrial, real-estate and  construction firms, with mixed results. In 1987 he set up Satyam Computer Services, one of India’s first outsourcing firms, taking it public in 1992. By the start of 2009 Satyam was India’s fourth-largest IT firm and was providing IT and accounting services for more than 600 large companies, including international conglomerates General Electric, Nestlé, and BP. What was the scam? From 2001, in order to boost Satyam’s share price, Raju began working with key executives, including those within the company’s internal audit team, to systematically inflate profits, cash flows and assets. Raju…

In one of the first books on investing written by a woman for women, the author, Elizabeth Frazer, cautions against making naive speculative investments on the recommendations of unscrupulous financiers. Instead, she urges her readers to educate themselves on how best to allocate their money. (MoneyWeek readers know all about that.) By the time Frazer’s book, A Woman and Her Money, was published in 1926, women had been active in finance for a while. Her book is one of the highlights in the latest catalogue, called Money & Markets, from London-based rare-book sellers Peter Harrington (peterharrington.co.uk). Soothsayer to broker Tennessee “Tennie” Claflin also knew a thing or two about unscrupulous types. Born in Ohio in the mid-1840s, her con-artist father touted Tennie and her sister, Victoria Claflin Woodhull, as clairvoyants…

An early Islamic gold coin attracted worldwide interest when it went up for auction with Morton & Eden in London. The 4.27g gold Umayyad dinar (pictured) dates from the First Dynasty of Islam in 723AD and bears the line (in Arabic): “Ma‘din Amir al-Mu’minin bi’l-Hijaz.” That translates as: “Mine of the commander of the faithful in the Hijaz.” As such, it is one of the first Islamic coins to mention a location within present-day Saudi Arabia. The mine, Ma’din Bani Sulaim, is located northwest of the holy city of Mecca, and the site is still worked, Stephen Lloyd, an Islamic-coin specialist at the auction house, tells The Times. “This coin is amazing. Not only is it preserved beautifully [which] rarely happens, but it is also an important historical document.” The…

The Nobel Committee announced its winners for the prize in economics last month. It gave the prize to three professors, Abhijit Banerjee and Esther Duflo, both at the Massachusetts Institute of Technology, and Michael Kremer of Harvard, for their work on alleviating poverty. An examination of their work is a disturbing look into the dark heart of academia. In the economics department, the professors are bound and determined to stop the natural ebb and flow of markets and economies. For them, a market sell-off is a problem to be avoided by adroit government policies. As for a recession, they have a solution. And when that one causes further, graver problems, they’ll come up with another solution. “The results of this scientific study have been less than edifying” Like Paul Samuelson,…

It is no exaggeration to say that Mario Draghi rescued the euro “in its darkest hour”, writes Simon French in The Times. The outgoing president of the European Central Bank (ECB) handed over the reins to former International Monetary Fund chief Christine Lagarde this week after a tumultuous eight years in the job. “Whatever it takes” In July 2012, borrowing costs for Greece, Italy and Spain were spiking and the single currency was on the verge of being ripped apart. Draghi vowed to do “whatever it takes” to defend the euro. Cowed by the ECB’s display of resolve, markets backed off. That burnished Draghi’s reputation as “the most effective monetary policymaker of his generation”, says French. Since 2013, unemployment in the eurozone has fallen by 11 million to a ten-year…

“After we’d sold [the Woodford Equity Income Fund], we had a policy here to say absolutely nothing about why we had sold it... we were really very worried that there would be a run on the fund. We realised that if there was a run on the fund bad things would happen and that is exactly what has happened and we didn’t want anything to do with that... We had lost confidence with what was happening with the fund. When we had started there were six unquoteds in the fund and by the time we’d sold there were 45... You effectively had a situation there where someone was effectively and certainly by the end... pushing [the rules] to the absolute limit... Ithink it would be fair to say that if…

Three to buy Fidelity Japan Trust The Mail on Sunday There are roughly 3,500 listed companies in Japan, about double the number in London and more even than the NYSE. As a result, many smaller firms are under-researched by analysts – meaning opportunity for those willing to do the work. The Fidelity Japan Trust invests in 82 firms, including piano maker Yamaha. It trades on a 10% discount to net asset value and offers agood way to buy into Japan’s brightening prospects. 155p Pennon Investors Chronicle Listed water companies, with their “predictable regulated returns”, have long been favoured by income investors. Tougher oversight and the spectre of nationalisation now haunt the sector. But Pennon, owner of South West Water, is not just a standard utility: waste-management unit Viridor is emerging…

• The battle for Just Eat “was always likely to turn nasty” after Prosus, an investment group, launched a £4.9bn cash offer, trumping an all-share agreed offer from Dutch rival Takeaway.com, says Karen Kwok for Breakingviews. But the bidders risk becoming distracted by a “disorderly sideshow” – Just Eat shareholder Cat Rock Capital has accused Prosus’s boss of undermining Takeaway’s bid by getting Delivery Hero, which Prosus part-owns, to sell Takeaway’s shares “in a bizarre and uneconomic fashion”, in order to make Takeaway’s offer less attractive. Although “it’s easy to be suspicious” of the timing of Delivery Hero’s sale, it was announced in April, well before Takeaway launched its bid. With investors “clearly expecting a better price” than either bid, both Takeaway and Prosus should focus on “wooing Just Eat’s…

“I don’t think current conditions in the US call for negative interest rates. But that doesn’t rule them out,” warns distressed debt investor and author Howard Marks in his latest letter to investors. The US has better growth prospects and a stronger economy (for now) than areas of the world where negative rates (where savers are charged for investing in “safe assets” such as government bonds) have become prevalent (the eurozone and Japan). Yet there’s no guarantee that it won’t happen in the US. For example, even if the Federal Reserve is reluctant to do so, it might have to cut interest rates in order to prevent the dollar from growing any stronger and so keep the cost of US exports from rising too much. Or perhaps the slowdown in…

Northern Ireland has had no functioning government since the Stormont assembly collapsed in January 2017. But that hasn’t stopped assembly members getting wages totalling £14.9m since then, reports the BBC. Each assembly member was paid their full salary of £49,500 until November 2018, when it was reduced to £35,888 after an independent review. Speaker Robin Newton, however, still gets an extra £20,000 a year, despite having performed no duties as speaker from dissolution until last week, when the assembly met for 51 minutes in an attempt by the DUP party to block reform of the province’s abortion law. On top of their wages, members have incurred travel expenses of around £275,000 a year, plus office expenses of £6m ayear. The secretary of state for Northern Ireland, Julian Smith, said the…

glineq.blogspot.com There has been an avalanche of articles and books in recent years predicting the demise of capitalism, says Branko Milanovic. It’s a strange argument given that capitalism is stronger than it’s ever been. Capitalism is now the dominant (or only) mode of production all over the world. Even in China, the capitalistically organised private sector produces 80% of the value added. In countries where capitalism was already well established, it has expanded – creating new markets for things that were previously not for sale, including personal data, renting out your own home or car, taking care of the elderly or pets, the cooking and delivery of food and so on. But if capitalism isin such rude health, why all the news of its demise? Firstly, because the gains of…

■ Growing fears of a recession have prompted giant US asset manager Pimco to “steer clear” of US corporate bonds, say Jennifer Ablan and Colby Smith in the Financial Times. Pimco is one of the world’s largest bond managers, with more than $1.8trn in assets under management. Even though the corporate-debt sector has been “well behaved” recently – so far this year, the Bloomberg Barclays US Corporate index has returned 13%, following a 2.5% loss in 2018 – Pimco’s chief investment officer Dan Ivascyn believes it’s the section of the bond market most vulnerable to underperformance if serious fears of a recession arise. As a result, he is “willing to give up a little yield” in order to protect his clients. Officials in the US have flagged a slowdown in…

A year ago Isuggested that you should short social media “microblogging” site Twitter. I made the call based on its valuation, especially when set against its mediocre long-term prospects, and the growing backlash against the industry in general. In the event, the trade didn’t do much, and I eventually suggested that you close your position at a small profit. Fast forward to today, and in the past week, the company’s shares have plunged by around 20% – from just under $40 to barely more than $30, after its latest earnings and revenue figures came in far below expectations. However, I think the share price could fall still further. The reason for Twitter’s big earnings and revenues disappointment is that the social network is finding it harder to strike a balance…

More companies than ever before are claiming tax relief on their research and development (R&D) spending, HM Revenue & Customs data shows. Some 1,120 companies in the UK claimed £993m of relief under the Patent Box intellectual property scheme during the 2017-2018 tax year. Claims are expected to be up 9% on the previous year once all the data is in. Meanwhile, claims for R&D tax credits were up 22% during the same period, with the average small or medium-sized firms securing a payment of around £54,000. Yet large numbers of businesses eligible for these schemes are still failing to make a claim – often because they don’t realise they qualify. The R&D tax credits scheme, for example, offers support for innovation that helps firms to work more efficiently, as…

J Sainsbury (LSE: SBRY) is Britain’s second-largest supermarket chain, with more than 600 supermarkets and 800 convenience stores. It was established in 1869 in London and also owns the Argos and Habitat brands. It has been suffering from competition from discount supermarkets. A £7bn attempt to merge with Asda was vetoed by the Competition and Markets Authority in the summer. It is now attempting to cut costs by closing many of its convenience stores and its standalone Argos stores, integrating them into its supermarkets. The shares have lost 29% in a year.…

The latest iteration of the Apple Watch, the Series 5, continues its domination of the smartwatch market, says Samuel Gibbs in The Guardian. It only works if paired with an iPhone 6s or a more recent model, but that doesn’t take away from the extraordinary qualities of this watch – it’s expected to outsell all Swiss watchmakers this year. The most important change is that the screen now stays on all the time, a welcome change that won’t affect the 18-hour battery life. “Simply put, the Apple Watch is the best smartwatch you can buy right now.” The watch boasts a bigger display screen than older versions and it’s available in sizes of 40mm or 44mm, and models made of aluminium (starting at £399), stainless steel (£699), titanium (£799), ceramic…

€63,000 The cost to the Spanish taxpayer of exhuming the body of General Francisco Franco from the Valley of the Fallen, a mausoleum that critics argue glorified the dictator’s rule. 100,000 The sum in Russian roubles (£1,223) raised by volunteer researchers at the Wild Animal Rehabilitation Centre in Novosibirsk, Russia, on social media last week. They had appealed for help to pay off a huge mobile-phone bill after their eagles, fitted with SMS transmitters that sent back data on their locations, flew much further than expected. £275m The amount of cash Britain’s ten biggest armed-forces charities are sitting on, prompting concerns that some may be “hoarding” money, says The Times. Their combined assets are worth £1.4bn. The Royal British Legion has the biggest reserves, at £70m. That is worth about…