Indholdsfortegnelse for 1061 i MoneyWeek

“Your national insurance does not pay for the NHS. Your road tax does not pay for roads.” Remember how Boris Johnson told us that with him as prime minister we were safe from income tax and national insurance (NI) rises? Turns out (surprise!) that he was wrong. It seems his government has decided that NI is to rise by one percentage point – from 12% to 13% (an 8.3% rise) for those earning from £9,568 to £50,270 a year, and to 3% for incomes above that (a 50% rise). This, if it works as planned, should raise around £6bn a year – £12bn if employers also get hit with the extra percentage point. The money is to be spent on trying to cut NHS waiting lists and then on capping…

Islamabad International Airport, which was built in 2018 at a cost of PKR105bn (£478m) by the Chinese state construction firm, China State Construction Engineering Corporation, was deluged this week after part of its false ceiling collapsed during a downpour. The water fell onto several counters, causing computers to malfunction. The Norwegian women’s beach handball team has been fined €1,500 (€150 per player) for wearing shorts rather than bikini bottoms at the European Beach Handball Championships. Shorts constituted “improper clothing”, argued the European Handball Federation. In response, Norway’s minister for culture and sports lambasted the “macho and conservative international world of sport”.…

It has been a dispiriting year so far for gold investors, but the yellow metal could be poised to glitter again. Gold prices started the year around $1,900/oz but fell back as investors piled into “risk-on” assets in anticipation of economic reopening. This year’s cryptocurrency mania has also stolen some of gold’s thunder as a hedge against currency debasement by central banks. By early March, the price had tumbled to $1,700/ oz. June was the metal’s worst month since 2016. Yet gold has perked up to trade around $1,820/oz this week. It has risen by 2.5% since the start of July in dollar terms. Why? Because of gold’s traditional role as an inflation hedge. Inflation surged to 5.4% last month in the US and also went over the central bank’s…

Move over copper, its tin’s time to shine. The price of the silvery-white metal has nearly doubled over the past 12 months to trade above $34,600 a tonne this week, surpassing its previous peak of around $33,000 in 2011. Soft and malleable, the metal is used in solder in circuit boards. It is benefiting from booming demand from the electronics industry. Other industrial metals have dipped recently, with copper still 13% off its May high, but tight supply has kept tin prices buoyant. Much of the world’s tin is mined in Asia, but flooding in China’s Yunnan province, political unrest in Myanmar and disruption from the Covid-19 Delta variant in big Southeast Asian producers is keeping a lid on supply.…

Food-delivery app Zomato launched a $1.3bn initial public offering (IPO) in Mumbai last week. It achieved a valuation of almost $8bn. The firm is the latest “unicorn” (a private company worth more than $1bn) India has produced, and the country’s first major digital start-up to float on the stockmarket. But analysts are wary of Zomato’s high valuation, especially as it has yet to make a profit. It is on an enterprise value-to-sales (EV/ sales – see page 14) ratio of 25,while most of its global peers are on a ratio of ten. The Indian bourse is preparing for more high-profile listings, including mobile-payments app Paytm and online-beauty retailer Nykaa.…

US tobacco giant Philip Morris International “wants you to think it’s a healthcare company now”, says Rich Duprey on The Motley Fool. In February, the Marlboro cigarette owner launched its “beyond nicotine” initiative, which plans to “generate over half of its total net revenue from smoke-free products by 2025”. Now it has agreed to pay £1bn for British inhaler specialist Vectura. The group’s devices have been used to help bring “13 inhaled medicines to market”. Philip Morris says it is evolving into “a broader healthcare and wellness company”, but critics spy “a wolf in sheep’s clothing”. No wonder, says Helen Thomas in the Financial Times. Transitioning into cigarette alternatives is one thing, but Vectura makes most of its money from treating smoking-related diseases. It is as if BP announced a…

When the developed world’s central banks resorted to quantitative easing (QE) after the 2008 global financial crisis, most of us were shocked. While QE was not entirely new, the idea of central banks printing money at scale to buy government bonds seemed an extraordinarily radical, not to mention risky step. Today, it’s just another part of the toolbox. QE has been used in various forms across most developed nations in the decade since the banking crisis, so when it was deployed in vast quantities during the pandemic, no one batted an eyelid. But a new report from the House of Lords’ Economic Affairs Committee suggests that this widespread complacency is a problem. In short, QE has become “a dangerous addiction”, to quote the report’s title, with a particular focus on…

Over the last month, South Africa has seen some of the worst rioting and looting since the end of the apartheid era. More than 200 people were killed, many towns started to run out of food as supplies were disrupted, and troops had to be deployed on the streets across the country to restore order. Turkey is looking more unstable by the day. In Cuba, there have been widespread protests against the government as the country’s economy has been battered by one of the worst outbreaks of Covid-19 in the Americas (see page 12). Worries have been starting to stack up in other countries too. Markets are getting jittery. The South African rand slumped. Cuba’s economy is under severe pressure. The effects are rippling out across the wider emerging markets,…

Scam victims need better protection James Coney The Sunday Times Few have heard of the Lending Standards Board (LSB), but it is “actually quite important”, says James Coney. It oversees a code of conduct on how banks deal with complaints about fraud; a code which recognises that scams can be sophisticated and states that “unless a customer has done something wrong they must get a refund”. The LSB is “packed with fair-minded, qualified people”, so why is it so “utterly, tragically useless”? Banks routinely refuse to refund innocent victims and warnings from the LSB are ignored. A 2020 report by the Payment Services Regulator found that the percentage of cases repaid by one bank was 2%. “The problem is the way the LSB was created” and funded – which was…

Engine No. 1, the activist investor that won three board seats at ExxonMobil and persuaded the driller to “disclose its political and climate-lobbying activity”, bought 367,500 shares in General Motors in the first quarter of 2021, says Bloomberg. However, it has “been pretty quiet on its plans” since then. Still, there is no doubt that GM is “the investor’s kind of target”. The car giant sided with former US president Donald Trump when it came to creating one national emissions standard for the US, a move that conflicted with California’s exemption in this field. What’s more, one third of its US sales comprise “thirsty pick up trucks”; electric vehicles make up just 1.5%.…

The vast majority of life insurance sold in the UK is term-life, which runs for a fixed period. In essence, you are betting the insurer that you will die before the end of the policy term; the insurer is betting that you won’t and that it will get to keep your premiums. Morbid as all of this is, term-life cover is a must if you have dependants. Whole-life policies, by contrast, last until you die. The bet is about when that happens. If you die younger than expected, then the insurer pays out much more than you paid in premiums (it loses the bet). If you live a long time it gets to keep collecting your premiums (it wins). Premiums are higher as the insurer is certain to pay out…

• Small businesses worldwide are on target to raise spending on cybersecurity by 60% over the next three years, the equivalent of more than $30bn, according to research from management consultant Analysys Mason. But experts warn that throwing money at the problem may not be very helpful. While the scale of the threat has risen over the past year, with Covid-19 increasing many companies’ vulnerability to attack, research suggests that too many small businesses are not getting the basics right. They are, for example, failing to update software and missing the opportunity to train staff on what to avoid. Closing these gaps may be more effective than large-scale spending. • Self-employed business owners have just over a week to settle their 2020-2021 tax bills with HM Revenue & Customs. For…

For the past 20 years we have been running our Sustainable Future (SF) funds. They are based on the belief that in a fast-changing world the companies likely to survive and thrive are those helping to create a cleaner, safer and healthier society. We combine negative and positive screening with identifying key structural growth trends that will shape the sustainable global economy of the future. We view the world through three megatrends: better resource efficiency (cleaner), improved health (healthier) and greater safety and resilience (safer) – and then identify 21 themes within these. Our strategy seeks to generate strong returns while benefiting society by identifying long-term transformative developments such as technological and medical advancements. We focus on well-run companies that capitalise on these changes. Making money from good work “Illumina…

2018 Close Encounters, Châteauneuf-du-Pape, Famille Perrin, Southern Rhône, France £20, in 400 Co-op stores nationwide This wine is absolutely delicious, it is only £20, it isa Châteauneufdu-Pape made by the Perrin family – owners of the most famous CHNF (my time-saving abbreviation) of all, Château de Beaucastel – and it is available nationwide. My notes could, and probably should, end here because this is surely enough to get your vinous juices flowing. But there is a little more to the story. This wine is an homage to an homage. The label refers to a genuine CHNF by-law that prohibits UFOs (or cigare volant, literally “flying cigar” in French) from landing in their vineyards. Back in 1984 Californian wine legend Randall Grahm, owner of Bonny Doon Vineyard, launched a red wine…

A small item in an English farming magazine tells us that a used County 1474 tractor (an example is pictured) has sold for £196,000 – “a record breaker”, apparently. The “County” is a “Ford conversion” tractor sold in England. The tractor in question was built in 1983 and sold, new, for £20,597. Now, it is a “classic”. What to make of this? Why would a used tractor be worth so much? Can you protect yourself from inflation with tractors? The news brought us hope. We have several old tractors, still labouring in the fields after years of service. Maybe one of them is worth something? We don’t know, but prices are on the rise everywhere. “You buy Tesla when you should have bought a Massey Ferguson...” In England, inflation is…

The US is bracing itself for a wedding boom, say Misyrlena Egkolfopoulou and Sophie Alexander on Bloomberg. Last year the number of marriages fell by 40% to around 1.27 million, according to market researchers The Wedding Report. This year should see a rebound to 1.93 million, while in 2022, 2.5 million weddings are expected ascouples who were forced to postpone their ceremony during the pandemic tie the knot. That will be the highest annual total since 1984 – and the cost will probably break records too. The average spend on a wedding in the US next year (bearing in mind that the median American income is around $31,000) is expected to hit $24,300. It’s a huge cost for guests too. Asurvey by online lending marketplace Lending Tree reveals that a…

“There is now a feeling that the UK could be staring at a fresh Autumn lockdown,” says Susannah Streeter of Hargreaves Lansdown. “Far from giving investors a jolt of confidence, Freedom Day has seen it evaporate, as sharply rising infection rates disrupt businesses.” The pandemic strikes again Global markets plunged on Monday as investors feared the Delta variant could derail the recovery. The FTSE 100 fell by 2.3% to close below 7,000. The FTSE 250 dropped by 2.2%. Aviation and leisure stocks were among the worst hit. The pan-European Stoxx 600 had its worst day of the year so far. America’s S&P 500 retreated by 1.6%. The US ten-year Treasury bond yield fell to 1.18% as prices rose, the lowest level in five months. Japan’s Nikkei 225 index hit a…

“The [US second-quarter] earnings season [is upon us]... companies in aggregate are expected to reveal the largest increase in profits since the bounce-back from the Great Recession of 2008-2009... Optimism about earnings has driven share prices higher in the past year... But financial markets are relentlessly forward-looking... with bumper earnings already in the bag, they now have less to look forward to... investors are worried about aprofits squeeze in 2022... growth could be slowing... Global retail sales surged in March, but have gone sideways since. The evident slowdown in China’s economy may be a portent... costs are rising... A variety of bottlenecks have pushed up the prices of key inputs, such as semiconductors... The recovery is barely a year old, but there is already evidence of a tight labour market...…

Six to buy Equals Group Shares Equals Group, the global payment-services company (products range from international payment facilities to multi-currency cards) posted year-on-year sales growth of more than 20% for the first six months of 2021. The positive figures came “even without a meaningful recovery in travel-related foreign-exchange revenues”, which made up under 5% of group turnover compared with 30% historically. This shows how much the firm has diversified since the start of Covid-19. Growth was mostly driven by the Equals Money division, a payments and expense-management system for corporate customers. 48p HydrogenOne Capital This is Money Hydrogen is quickly turning into one of the strong players in the clean-energy game. Clean hydrogen, which is produced from water, is expected to comprise 10% of global energy in the long term,…

• Posh-mixers maker Fever-Tree reported that its like-for-like sales during the six months to June “rose by a third to £137m”, says Lex in the Financial Times. But the shares slid by 6% on the news. Rocketing transport costs are weighing on margins: “Sea freight rates to the US... have almost trebled since the start of the year.” The group’s expansion into the US won’t be derailed – it is ramping up production locally. Still, “on a price/ earnings ratio of almost 60, shares in this drinks maker look too frothy”. • Hedge-fund billionaire Bill Ackman has been “too clever for his own good”, says Chris Bryant on Bloomberg. Not “content” just to raise $4bn to fund the largest special purpose acquisition company (Spac) ever, he also plotted “the most…

The easiest way to measure the value of a company is to use its market capitalisation – the value of all its outstanding shares. However, this may not reflect all the claims that different groups of investors have on a firm. For example, a company may be heavily funded with debt rather than equity. Or it may have a lot of cash on its balance sheet offsetting some of that debt. It might also have issued preferred stock (securities that rank above ordinary shares, but below debt) or some of its subsidiaries may be part-owned by other investors (known as minority interests). Unlike market cap, enterprise value (EV) combines all these sources of funding. Take a £5bn market cap company. It also has £3bn in debt; £1bn cash; £500m in…

• Argentinian football star Lionel Messi has agreed a new deal that keeps him at his club, Barcelona, to 2026 – but he will only be paid half the wages he was on before his contract expired, says BBC Sport. Messi (pictured) was being paid a reported £123m a season, and has been at Barcelona since joining its academy in 2000, says the Daily Mail. FC Barcelona must reduce the amount it pays some of its players so as not to fall foul of the footballing authorities’ “fair play” rules. • Ian McAulay, CEO of Southern Water, has been handed a bonus of £550,900, despite the company being fined a record £90m for “deliberately dumping billions of litres of sewage” into the sea between 2010 and 2015, reports BBC News.…

“To buy a house for my mum. I promised her that and I did it when I had my first contract.” Patrice Evra (pictured), former captain of the French national football team and Manchester United, on his childhood ambition, quoted in the Financial Times “Anyone judging this government by its policies alone would think it’s a Ukip-Corbyn coalition. Yes, we left the EU. But what then? We’re not becoming a smaller-state, lower-tax country – we’re ending up like a Corbynite theme park, with the state presenting itself as the answer to every problem.” An anonymous Tory MP, quoted in The Spectator “In years to come, when people say, ‘What on earth did Andrew Lloyd Webber do with all his money?’ This is where it is.” Lloyd Webber’s wife Madeleine on…

■ This year has been positive for stocks, says Laith Khalaf on AJ Bell. The standout winner so far has been the UK smaller companies market, which has hit new record highs and is now 20% above its pre-pandemic level. Its success “is partly a vote of confidence in the UK economy” because the FTSE Small Cap index offers “greater exposure to domestic revenues” than bigger indexes. So small-cap funds feature prominently in the top-ten list of British funds for the first half of 2021; at the other end of the performance table sit gold funds, as economic recovery and rising yields dent demand for the precious metal. The CCM Intelligent Wealth fund tops the charts for the first half of the year, with a return of 33.1%, followed by…

Pensana (LSE: PRE) is a rare-earth metals miner. Growing demand for electric vehicles, combined with the US and Europe’s desire to reduce their reliance on Chinese processing plants have propelled the share price to around 100p, a fourfold gain over the last 12 months, says Stockopedia. Meanwhile, companies in the sector are under pressure to reduce their global carbon footprint; Pensana has opted to build a plant to purify the metals in Britain using the government’s Automotiva Transformation Fund, which gives grants to companies working towards a net-zero vehicle-supply chain.…

Maria Michaela, now 42, came to the United Kingdom from Mauritius on a student visa in 2001 and overstayed. While here she took to posing as a wealthy South African heiress worth £250m and used fake documents to win loans, build a portfolio of luxury London properties, and con her way to a fortune. What was the scam? Michaela created more than a dozen fake identities to con £13m from high-street banks. Between August 2007 and April 2008, Michaela persuaded Halifax Bank of Scotland to give her four separate loans together worth £10.5m to buy eight properties in London. She repeated the con at Royal Bank of Scotland and was given a further £2.5m for five properties. The banks that lent her the money thought they were going to get…

Re-educated How I Changed My Job, My Home, My Husband &My Hair Lucy Kellaway Ebury, £16.99 Six years ago, Lucy Kellaway had a comfortable existence, says Rosie Kinchen in The Sunday Times. She lived in a big house in north London with her husband and made a living as a columnist for the Financial Times. Then, at the age of 57, and over the course of two years, she “tore the whole thing up”. She left her husband, moved to ahouse in Hackney and retrained as a teacher, launching a charity, Now Teach, that encourages others to do the same. Her book tells the story of her journey “from well-paid, high-status journalist to overworked, underpaid maths teacher at an inner city school”. It is a “funny and engaging account” of…

• Richard Branson (pictured), Jeff Bezos and Elon Musk seem to love confined spaces, says Craig Brown in the Daily Mail. Their sports cars are “horribly cramped”. And why else pay a fortune to crouch in Scottish brambles on the off-chance of shooting a deer, or dig deep under a Kensington mansion to create a joyless gym? Why else own “luxury” yachts, which are really just squat maisonettes surrounded by water? And why else build space rockets? On his return to terra firma last week, Branson vowed to devote the rest of his life to saving the planet. For starters how about not sending “six-seater, gas-guzzling rocket planes into space” so that rich people, at £180,000 a pop, can gaze at the view for a minute? • “Yes, we’re a…

£7,800 How much richer middle-income families became during the Covid-19 pandemic due to rising house prices and fewer opportunities to spend, according to the Resolution Foundation think tank. The wealthiest 10% added £50,000; the poorest 30% gained just £86 per adult. $488.5bn The value of inflows into exchange-traded funds in the US so far this year, which is within striking distance of the record $497bn US ETFs attracted in the whole of 2020, the highest amount for any calendar year, says Bloomberg. €4.55m The sum the French government paid to acquire the manuscript of the Marquis de Sade’s The 120 Days of Sodom. The aristocrat wrote the erotic tale on a 12-metre-long scroll while imprisoned in the Bastille in 1785. ¥177bn The value in Chinese currency (£19.8bn) of the cosmetic…

Warner Bros has eclipsed rival studio Marvel at the US box office with Space Jam: A New Legacy. The live-action/animated basketball film sequel, starring Bugs Bunny and LeBron James (pictured), took $31.6m during its opening weekend despite poor reviews, while Marvel’s superhero film Black Widow, starring Scarlett Johansson, made $26.3m in its second weekend, an unusually steep drop-off from its $80m opening weekend. Listed British companies issued the fewest profit warnings on record in the second quarter, according to EY-Parthenon. Only 32 companies warned that their earnings would be worse than originally forecast, compared with a record peak of 301 in the first three months of 2020.…

The stars are aligning for Germany’s K+S, as Wirtschaftswoche points out. Europe’s largest producer of potash, used in fertiliser, is profiting from the turn in the commodities cycle, with higher crop prices bolstering demand for fertilisers and potash. The structural-growth outlook is also encouraging, with the expanding global population set to bolster long-term demand for fertilisers. The group recently sold its de-icing salt division to an American company, yielding €2.5bn to pay down debt. What’s more, its rivals have struggled recently – Belaruskali has been hampered by EU sanctions against Belarus, while one of US producer Mosaic’s mines has been beset by production difficulties.…

The Delta variant of the virus is “ripping” through Britain, with more than 40,000 new cases being reported daily (roughly two-thirds of the January peak), says The Economist. But daily hospital admissions have fallen to around 750, a sixth of the peak, patients are younger (60% aren’t vaccinated), treatments are better, and hospital stays are shorter. Scientific advisers stress that vaccines have weakened, not “severed”, the link with serious illness and death, says The Guardian, and around 40 people are still dying of Covid-19 every day. But this is a fraction of the 1,800 peak in January and the majority of deaths are actually now among the vaccinated, says The Conversation. Why? Because a vaccinated 70-year-old is still at greater risk from Covid-19 than an unvaccinated 35-year-old. In Israel, where…

Jeff Gundlach, founder & CEO, DoubleLine Capital Federal Reserve chair Jerome Powell (pictured below) “is still wishing, hoping, praying that this goes away”, says Jeff Gundlach, founder and chief executive officer of DoubleLine Capital, noting the dilemma facing the US central bank over rising inflation. The bank’s claims that rising prices would be “transitory” already ring hollow, Gundlach tells CNBC. Initially the Fed defined this as a few months, but “now transitory is six to nine months”. Yet despite rising concerns about inflation, bond yields on government debt remain stubbornly low, and have even slipped in recent months. The ten-year US Treasury yielded around 1.7% in May, but has seen its yield drop back towards the 1.3% area. Typically, rising inflation is bad news for bonds as the fixed income…

The three top executives at the Financial Conduct Authority, the City regulator, were paid almost £640,000 last year, says Investment Week. FCA chief executive Nikhil Rathi was paid £228,000, but only took up his post in October 2020 – he has agreed a full annual salary of £455,000. Executive director Christopher Woolard – who acted asinterim CEO – was paid £239,000 and chair Charles Randell got £170,000. Former FCA chief executive Andrew Bailey, who left in March 2020 to take up his current post as governor of the Bank of England, was due to be paid a bonus of £68,000. He received £27,000 in March 2019 with the remainder to be paid in April last year, but he declined to accept the remaining £40,800. Among the other financial regulators, Mark…

James Henderson’s 31 years as manager of Lowland Investment Co. (LSE: LWI) make him the longest-serving investment-trust manager in the market. For most of that time, his record has been one of the best in the whole sector, although the UK-focused fund has struggled in the past few years. Flat returns in 2018 and 2019 were followed by a fall of 13% in 2020, even though the team was strengthened by the appointment of Laura Foll as co-manager five years ago. In mid 2020, though, performance turned around and the recovery has continued this year. A 12-month return of 40%, nearly double that of the All-Share index, is one of the best in the UK sector. There is every sign that this will continue, helped by the trust’s ability to…

This week’s relaxation of the Covid-19 restrictions means employers must now use their judgement rather than follow clear rules. The government hopes businesses will welcome more staff back into workplaces, for example, but it’s up to employers. Masks are no longer mandatory in most settings but firms may still want to require staff to wear them. Making these decisions requires employers to make difficult judgements about risk as well as what is reasonable – and legally enforceable. And the easing of restrictions does not countermand your legal health and safety obligations. That means you will need to keep carrying out risk assessments to gauge what is needed to prevent the virus spreading in the workplace. It may be both legal and reasonable to require staff to keep working from home…

India is a large and diverse stockmarket – large enough that it’s possible to run a single-country fund without having to bulk the fund out with sub-standard stocks, unlike many smaller emerging markets. In general, I favour closed-end funds (ie, investment trusts), simply because when investors sour on emerging markets, they tend to pull their money out quickly. In that scenario, managers of open-end funds (ie, unit trusts and open-end investment companies (Oeics)) may have to dump assets at unfavourable prices to raise cash for redemptions. India has enough large liquid stocks that this risk isn’t as great as in some markets: any large-cap open-end fund should be able to cope with outflows. However, given that the investment case for India is based on its long-term prospects and managers should…

Shares in oil and gas explorer Harbour Energy (LSE: HBR) have been hit by oil-price volatility, which flared up after the most recent round of oil cartel Opec’s supply talks collapsed, says Kelvin Ong on IG. But Harbour’s “woes” started before that. The company’s shares have fallen by 11.5% since it was admitted to the London Stock Exchange’s main market in April 2021 after a merger with Chrysaor and Premier Oil. What was meant to be “the largest UK listed independent oil and gas company” has so far “failed to live up to the hype”. Shares have fallen by 61% over the past year.…