Indholdsfortegnelse for 1147 i MoneyWeek

The Fed raises interest rates until something breaks, says an old Wall Street adage. In the past few days dearer money has been the underlying cause of a nasty breakage in the banking sector. Bank failures are fairly common: there have been 564 in the US since 2001, but last week saw America’s second-biggest after Washington Mutual in 2008 when Silicon Valley Bank (SVB) collapsed (see page 16) with $209bn of overall assets and $175bn of deposits. That prompted a panic at Signature Bank, a key institution for the cryptocurrency sector, which rapidly become the third-largest failure. Herds of nerds Given that group-think is so prevalent in the technology sector, as MoneyWeek witnessed first-hand in the dotcom bubble (and chronicled in our “dotcom disaster of the week” column once it…

“The oil industry believes it is under-investing in future production capacity, creating the risk of future shortages and higher prices. Yet long-dated oil prices keep falling, sitting now at $65 a barrel… investors appear convinced that the future balance between supply and demand [will] not be as tight as the industry is warning. First, investment recovered significantly in 2022… Second, Russian oil production hasn’t collapsed as feared due to Western sanctions… Third, many investors believe that demand for oil will slow over the next two to three years… Yet, those factors alone don’t appear to fully justify the five-year forward for Brent trading at 20% discount to spot prices… [a] concentrated wave of hedging [by shale-oil companies] has pushed down prices, particularly for 2024 and 2025, depressing longer-dated prices even…

Shares in Credit Suisse fell by 5% on Tuesday, after it said that it had “found material weaknesses” in its financial reporting controls and that clients were still withdrawing cash, say Julia Kollewe and Graeme Wearden in the Guardian. The news came after the bank was obliged to delay the release of its annual report last week. However, Credit Suisse insists that the “technical” issue had “no impact on its financial results in any year, and all prudential ratios – including capital, leverage, liquidity and funding ratios – remained unchanged”. The findings may not involve any changes to earnings figures, but they come at a “difficult juncture” for Credit Suisse, which has “lurched from crisis to crisis in recent years”, says Owen Walker in the Financial Times. The stock has…

Shares in Latin American e-commerce giant Mercadolibre (the region’s Amazon) have bounced by 50% already this year, says Der Aktionär. But they remain a promising long-term bet. The briskly growing region – GDP rose by 6.8% in 2021 and 3.4% last year – is fuelling demand: sales jumped by 56% year-on-year to $3bn in the fourth quarter of 2022. Improving operating and net margins (the latter rose to 5.5% from the previous year’s -2%) shows the group keeps a close eye on costs. The company is gaining market share in e-commerce and its fintech division, Mercado Pago, is a major growth driver. It is a digital-payment platform that also offers online banking.…

“As Russian losses in Ukraine mount, Vladimir Putin continues to be a disruptive force in Europe’s periphery,” says Bethany Elliott in UnHerd. On Sunday, Moldovan police said they had foiled a Russianbacked plot to create “mass disorder” during demonstrations against the pro-EU president Maia Sandu. The nation has been in a “state of paranoia” since the invasion last March, says Cameron MacBride in New Eastern Europe. Both Moldovan and Ukrainian officials say they have “clear information” that Russia is planning a “violent coup” against the government. A more “Moscow-friendly” regime could potentially allow Russia to open up a new military front on Ukraine’s western border. Further south in “politically fragile” Bosnia and Herzegovina, Putin’s ally, the separatist leader of Republika Srpska, Milorad Dodik, has been stoking ethnic tensions in…

Almost immediately after Joe Biden entered the Oval Office in January 2021, people began debating whether he would seek a second term in office in 2024 given the fact that, at 77, he was the oldest person to win a presidential election. Indeed, at one point last July, when his approval ratings were at dismal levels, the betting markets were giving him a less than 10% chance of being re-elected, and pundits were suggesting that he should announce that he wasn’t going to stand for re-election. The relatively strong Democrat performance in the mid-term elections, and better approval ratings, have changed perceptions. With £2.85m matched on Betfair, Biden is currently the favourite to win the next presidential election, albeit at odds of 3.3 (30.3%). This raises the question of whether…

There were two surprising things about the failure of Silicon Valley Bank (SVB, see page 16). For an institution that very few people had ever heard of, it was huge, ranking as the 16th largest bank in the US, and even as a significant player in London, where it had close to £6.7bn in deposits. It was also extremely badly run, with appalling risk management, while the technology companies that formed its main customer base kept far too much cash on deposit at a single institution. Once the rumours started to swirl across the internet that it was in trouble, that was a recipe for disaster. The US Federal Reserve did not have much choice but to step in with a rescue. Quite rightly, it allowed the shareholders and bondholders…

An investor in a bond (or loan) faces two main risks. The first is that the market value of the bond drops; the second is that the borrower goes bust. A credit default swap (CDS) is in theory intended to deal with the second problem. However, in practice it provides a way for traders to bet on the probability that any borrower will default. A CDS is a swap agreement – a type of derivative – between a protection buyer and a protection seller, linked to a “reference entity” – usually a company or a government – that has issued some debt (the reference entity is not a party to the contract). The buyer makes payments to the seller, quoted as basis points of the face value of the debt…

“It was on a Monday, the day after I’d had my third Tony nomination in a row and my accountant called up and said, ‘You have, literally, zero money’. So I put an alert out on Facebook asking if anyone needed a babysitter.” American actress Martha Plimpton (pictured) on her life in 2010, when her screen career had dwindled and she had become a struggling stage actress, quoted in The Times “They are all libertarians until they are hit by higher interest rates.” Financial writer Nassim Nicholas “Dr Doom” Taleb’s Twitter comment on calls for state support of SVB bank by supposedly avid free-marketeers “Middle age is an expensive time. One is old enough to have taste and still young enough to have appetite.” Author Simon Raven, quoted in The…

econlib.org The sizeable contribution of tourism to aggregate measures of economic activity is well known, says Mikayla Novak. But the value of tourism goes deeper than that. There is, of course, the joy and pleasure enjoyed by the travellers themselves. But the tourism industry itself is “shaped by constantly energetic acts of entrepreneurship” that benefit the whole society. As well as building all the critical infrastructure, such as hotels and airlines, entrepreneurs must also develop a talent for “interpreting the sociocultural meanings” valued by potential customers and expand their offerings to appeal to all budgets. Tourism, in short, “encapsulates the inherent marvel of the market as a process”. But beyond such commercial considerations is the general broadening of the mind and development of tolerance for others that is a value…

7-Eleven’s owner Seven & I is closing a quarter of stores in its Ito-Yokado chain in response to pressure from an activist investor, says Bloomberg. ValueAct Capital, which holds a 4.4% stake, wants Tokyo-listed Seven & I to focus on 7-Eleven, the US-founded chain of convenience stores that the original Ito-Yokado firm acquired in 1991. 7-Eleven accounts for most of Seven & I’s 83,000 global stores and ValueAct argues that concentrating on these would improve profitability and more than double its market value. In November, Seven & I said that it would sell its Sogo & Seibu department store for ¥250bn (£1.6bn), but ValueAct wants it to go further, with a full spin-off of Ito-Yokado, disposals of other “non-core” brands and a corporate governance overhaul.…

The ways the cloud can be used in our day-to-day lives is unlimited, as these examples help to illustrate. Within entertainment, whether it’s Disney+ or Netflix, the television shows and films we watch are stored in the cloud so that millions can simultaneously access the high-quality content. Using the cloud means the streamers can add more subscribers and content by scaling up with their cloud providers rather than having to build their own additional infrastructure. The increasing take-up of smart devices is also underpinned by the cloud. Connecting home gadgets such as security cameras, thermostats, lights and even your car means you can control your home remotely for security or comfort. The cloud lets you monitor from your desk, phone or even your watch from the other side of the…

Does your company have a business broadband contract? If it occupies business premises, the chances are that you’ve had to opt for a business broadband deal, rather than a consumer contract. But most people running a business from home, or employing people who work at home some or all of the time, tend to rely on home broadband set-ups. That’s not necessarily a bad thing. Business broadband deals typically cost more each month, and there’s no point racking up cost for the sake of it. But you do get more for your money, and for many firms the benefits of a business contract are worth paying for. Above all, many business broadband contracts offer guaranteed levels of service. That doesn’t mean the connection will never fail, but there should be…

Shareholder activism in Japan is on the rise. Japan registered the second-highest number of activist events in 2022, surpassed only by the US. Prominent examples of shareholders’ successful engagement with management include Toshiba, which is on the path to privatisation, and Fujitec, which recently saw a majority of its outside directors removed after a shareholder vote. Japan is a particularly attractive market owing to its abundance of high-quality, undervalued companies. Our team typically focuses on small-cap companies, where we can amass larger stakes and work collaboratively with management to address underperformance. An auspicious shift upmarket With 95% of TSI Holdings’ (Tokyo: 3608) market value consisting of net cash and investment securities, and an estimated additional 29% in surplus real estate, the clothing manufacturer is clearly undervalued. While for many years…

Have you ignored your cash individual savings account (Isa) for the past few years? You’re not alone, but it is now time to return to these tax-efficient savings vehicles. Cash Isas have fallen out of favour in recent years – historically low interest rates meant that many of us haven’t needed to worry about paying tax on our interest in normal savings accounts, while the pitiful rates offered on cash Isas have failed to woo us. The latest statistics from HMRC show that the amount paid into cash Isas in the 2020-2021 tax year was £12bn lower than in the previous year. It was also the second-worst year for cash Isas being opened since the tax-free accounts were introduced in 1999. The reason so few of us have been bothering…

The founders of the crowdfunding industry had some lofty ideas. Why should people in need of cash – from individuals seeking loans to businesses raising money – be stuck with conservative institutions such as banks? And why should people prepared to provide that cash not be able to do so directly? Using technology, crowdfunding platforms connected these two groups, cutting out the middlemen in financial services. The government was keen to support this innovation. In 2016, it launched the innovative finance (IF) individual savings account (Isa), a special type of tax-efficient individual savings account that enables people to use their annual allowance to put money into these peer-to-peer loans and investments. As with other types of Isa, there is no tax to pay on the returns they earn, in this…

Online price-comparison tool Money To The Masses regularly runs a slide rule over the Sipps market. Its current recommendations include: ● Vanguard – very low fees and straightforward pricing, but limited choice of investments. ● AJ Bell – very low fees and a broader range of investment options than Vanguard. ● Interactive Investor – good value, particularly for Sipps worth more than £50,000, a wide range of investments, and comprehensive resources and support. ● Hargreaves Lansdown – praised for its tools and functionality. ● Nutmeg – a good option for beginners, with competitive charges and investments chosen on your behalf.…

For a supposedly “transitory” phenomenon, inflation has proved depressingly resilient in the major economies over the past year. In August 2021, the Bank of England said price rises were likely to peak at an annual rate of 4%; instead, they soared to a 42-year high of 11.1% in late 2022. Inflation has also reached its highest levels in four decades in the US and the eurozone. “Markets were caught off-guard by the return of inflation just as badly as central bankers,” says The Economist. “The danger now is that they underestimate its persistence.” More than a decade of money printing, along with strong fiscal stimuli and broken supply chains during the pandemic, caused the initial surge. In Britain consumer price inflation has now edged downwards, but the strongest pay growth…

If you are looking for a cash junior Isa, the best rate you will find is 4% from both the Skipton and Coventry Building Societies. The latter’s account can be opened and managed in person or by post or telephone; the Skipton BS does not offer the phone option. If you want an account that can be operated online, you can get 3.75% from The Cumberland or Monmouthshire Building Society. All these accounts allow transfers from existing cash junior Isas. The rates are far better than those seen in recent years, so check what your child’s existing cash junior Isa is earning and consider moving it. When it comes to an investment junior Isa, all the major investment firms offer junior Isa accounts, so which one is right for you…

In 2012, we had been telling investors what to do with their money for 12 years, and readers suggested that it was high time we put our money where our mouth was. So we did. We found six British investment trusts to give readers a global portfolio comprising a wide array of assets and investment styles. We have always preferred investment trusts to unit trusts as they tend to be cheaper and perform better over longer periods. What’s more, the closed-ended structure ensures that you can sell your shares on the stockmarket without any trouble if the underlying assets are illiquid and hit turbulence – witness the recent turmoil at unit trusts that made poor investments in commercial property. There have been a couple of substitutions over the years, (the…

Egypt has lowered the price of its passport. Wealthy foreigners can buy citizenship by paying $500,000 directly into a bank, reduced from $750,000 – or alternatively by buying $300,000 of state-owned property or investing $350,000 in projects, alongside a $100,000 deposit in the state treasury. The initiative to attract foreign capital is in line with reforms demanded by the International Monetary Fund in return for a $3bn bailout, says Abbie Cheeseman in The Times. Egypt is also suffering from an acute currency crisis. The central bank has been burning through its foreign currency reserves in its bid to buttress the plummeting Egyptian pound. Across the Levant, however, Turkey, a leading “golden passport” destination, has raised the cost of citizenship through property investment from $250,000 to $400,000, says Louise Callaghan in…

Cobalt prices have hit a 32-month low as production surges, says the Financial Times. Output of the metal – which is a key component of many batteries – rose 23% last year, helped by a ramp-up at Mutanda, the largest mine in the Democratic Republic of Congo (DRC), and the arrival of Indonesia as a major producer. In the longer term, cobalt demand is expected to quadruple by 2030. However, short-term demand was hit by weaker sales of electronics such as smartphones, lockdowns in China and a shift in the Chinese EV market towards shorter-range batteries that don’t use cobalt. Production has been slow to fall in response to lower prices, partly because cobalt is often a by-product of copper and nickel mining and demand for these metals has remained…

Harbour Energy, the largest oil producer in the North Sea, has warned that it will have to reduce staff and investment because its profits “were all but wiped out by Rishi Sunak’s windfall tax”, says Rachel Millard in The Telegraph. While Harbour Energy made pretax profits of $2.5bn (£2.1bn) during 2022, as oil and gas prices jumped and production rose, it reported post-tax profits of a mere $8m once the impact of higher tax rates in the UK were factored in. Hundreds of people are set to lose their jobs after a review of the business later this year. It may be strange for Harbour Energy to be “screaming blue murder”, given that it is still “splashing out $200m on a share buyback on top of an annual dividend of…

Guangzhou WeRide Technology Co, known as WeRide, has reportedly filed for an initial public offering (IPO) in the US in order to raise $500m. The group specialises in autonomous driving technology, and is testing its robotaxis, minibuses and street sweepers in 25 cities worldwide. Its last funding round in March 2022 valued it at around $4.4bn. The news suggests that the “wave of US-bound China IPOs is slowly resuming”, says TechCrunch. The trend was interrupted over the past two years by US scrutiny of the accounting practices of US-listed Chinese companies, while Beijing cracked down on firms with data that could pose national-security risks floating abroad.…

New York Pfizer goes shopping: Pharmaceuticals giant Pfizer has agreed to pay $43bn for Seagen and the biotech firm’s pioneering class of cancer drugs. That is a “lofty valuation”, says David Wainer in The Wall Street Journal. Rival Amgen baulked at paying so much for Seagen last year. And at 5.5 times Seagen’s projected 2030 sales, it trumps the 4.5 multiple that Amgen paid for Horizon Therapeutics in December in a similar deal that investors had perceived as pricey. But Pfizer is facing a “steep sales cliff”. Expiring patents on top-selling drugs this decade puts at risk roughly $17bn in revenue. Pfizer is not alone in that – $200bn in sales are going off-patent later this decade. “Ultimately… every Big Pharma in the US is on the prowl for… [mergers…

● When the insurers Commercial Union and General Accident merged in 1998, the deal quickly became known as “Commercial Accident”, says Simon English in the Evening Standard. Adding on Norwich Union to form Commercial GNU in 2000 made the business an even more “oddly shaped animal”. Two years later, it rebranded to Aviva – “a name that worked equally well in all time zones since it meant nothing to anyone”. But now a “tediously functional” business is emerging from this mess. CEO Amanda Blanc (pictured) has sold eight non-core business for £8bn and returned most of it to investors. “In a tough period for insurers, especially those with just a UK focus, Aviva looks like top dog.” ● In The Style claims to be a “disruptive and inclusive digital womenswear…

Mark Mobius, founder, Mobius Capital Partners “I would be very, very careful investing in China” because of the government’s tightening grip and the risk of capital controls to stop investors taking money out again, reckons Mark Mobius, the veteran emerging-market investor, who says he is experiencing delays repatriating money held in Shanghai. “I can’t take my money out. The government is restricting flow of money out of the country,” he tells Fox Business. “I can’t get an explanation of why they’re doing this… They’re putting all kinds of barriers. They don’t say: ‘No, you can’t get your money out’. But they say: ‘Give us all the records from 20 years of how you made this money’.” Mobius has been a longstanding optimist about the prospects of emerging economies and he…

vittles.substack.com When Leonard Beaumont joined Sainsbury’s as a design consultant in the 1950s, “what came first was the problem of the egg”, says Ruby Tandoh. Until then, if you wanted to buy an egg, a Sainsbury’s worker would pick one from a wicker basket behind the counter and place it in a paper bag for you. Grocery shopping before the rise of the supermarket was all about “ceremony”: “being a housewife was a full-time project and shopping was a daily, carefully choreographed, often arduous routine”, taking you from one queue, one shop counter, to another. The exigencies of war prompted a shift to a self-service model to free up labour for a workforce depleted by conflict. Most food was then laid out on shelves that you could browse and choose…

catholicherald.co.uk Jordan Peterson, “the world’s most popular psychologist”, took to Twitter recently to challenge the Pope’s understanding of Christianity, says Gavin Ashenden. The Pope had tweeted that “social justice demands we fight against the causes of poverty”; Peterson replied: “There is nothing Christian about social justice. Redemptive salvation is a matter of the individual soul.” Cue much hilarity from people sceptical that Peterson’s credentials extend to deciding whether or not the Pope is in fact Catholic. But Peterson has a point. Jesus was not a socialist or a social-justice warrior. You don’t see “you will always have the poor with you” on the banners of many social-justice marches. And the Pope’s predecessors denounced socialism as being incompatible with the faith and “utterly foreign to Christian truth”, as pope Pius XI…

■ Last week’s merger of real-estate investment trusts (Reits) Shaftesbury and Capco leaves management “with a full in-tray and a lot to prove to investors”, says Shares. Both Reits specialised in prime property in London’s West End and the tie-up has created a single group that owns 2.9 million square feet of space across the Carnaby Street, Chinatown, Covent Garden, Fitzrovia, Seven Dials and Soho areas. The combined portfolio, valued at £4.9bn, is split roughly one-third retail, one-third hospitality and one-third office and residential. To justify the merger, management has said it will deliver £12m of recurring cost savings, as well as new opportunities to grow revenues. The all-share deal leaves the original Capco as the surviving entity, but renames it Shaftesbury Capital. Capco’s CEO Ian Hawksworth and Shaftesbury’s chair…

The nature of the investable cloud computing universe is such that we prefer to take a broad approach. There are smaller operators providing support services but they are narrowly-focused and thus more risky. We believe healthy returns are possible from the slightly more conservative approach of investing in the larger, more diverse technology stocks building the cloud or by buying a “basket” of operators via a lower-cost fund tracking a range of cloud-focused businesses. This means you can profit from long-term growth without taking on too much risk. Having said that, cloud and technology investing generally is far from risk-free. Last year saw significant declines in the prices of some cloud equities. On the other hand, taking a long-term view of a positive and widely supported investment theme that is…

With the tax year about to end, you may be thinking about topping up your stocks and shares Isas. You should also be thinking about minimising fees, which can seriously erode your long-term returns. Every platform has its own set of charges, which may depend on the size of your portfolio and how often you trade (and what you trade). Some charge initial fees, annual fees and/or exit fees. Most investment platforms charge an annual fee expressed as a percentage of the investor’s portfolio. Some have a tiered scale, so the percentage fee drops the more money you have in your account. It may also vary depending on what you invest in. Some platforms, however, levy flat fees. We asked the consultancy The Lang Cat to compare the costs of…

Small businesses could face huge disruption as banks implement their legal responsibilities to prevent financial fraud and money laundering. Several companies report being locked out of their bank accounts after falling foul of “know your customer” checks. The UK’s money-laundering laws require banks to check their customers are who they say they are. This is why customers must provide a range of documents to verify their identities when opening their accounts, but there are also periodic checks on existing customers. These can cause problems for firms that don’t provide the information asked for, or don’t respond to requests from their bank. In extreme cases, the bank may lock the customer’s account, preventing them accessing cash or making payments until the issue is resolved. The Financial Ombudsman is currently considering a…

If you want to be able to withdraw your money whenever you like, then the best rate on an easy-access Isa is 3.01% from Shawbrook Bank’s Easy Access Cash Isa – Issue 23. This account allows you to transfer money in from other Isas and has a minimum deposit of £1,000. If you don’t need instant access to your money you can do better with a fixed-rate bond. Lock your money away for a year and Virgin Money will pay you 4.25% on its One Year Fixed Rate Cash Isa Exclusive Issue 5. There is no minimum deposit and Isa transfers are allowed. The drawback is that you can open it online, but only manage it in person or by post. If you want online access, then Shawbrook Bank has…

If you’re interested in doing good with your cash – not just doing well – an IF Isa could be a way to explore the idea. Several providers connect investors who want to back sustainability and community projects with borrowers seeking to get such initiatives off the ground. Abundance, for example, offers access to a broad range of environmental projects: renewable energy infrastructure, for example, and net-zero initiatives, typically set up in local areas rather than by large companies. Triodos Bank offers investment opportunities to lend to organisations aiming for environmental, cultural or social impact. You will need to treat the investments offered by these platforms with the same wariness as other IF Isa holdings. But they can provide a good opportunity to provide direct support to projects you believe…

Venture capital trusts (VCTs) are more popular than ever. Figures published recently by HMRC reveal that investors put £1.122bn into tax-efficient VCTs during the 2021-2022 tax year – marking a 68% increase on the previous year. Part of the appeal is the theory that from “small acorns grow mighty oaks”. VCTs are professionally managed funds that invest in portfolios of small, early-stage companies; these have the potential to deliver outsized returns if the manager picks the right ones. VCT-backed businesses that started small and grew large include Gousto, Zoopla, the UK business of Five Guys and Everyman Cinemas. However, it’s the tax environment that has really sent VCT sales soaring in recent times. The £20,000 individual savings account (Isa) allowance is reasonable but hasn’t been raised for years. Private pension…

Last autumn the government abolished the Health and Social Care Levy, which imposed a small additional tax on dividends. However, chancellor Jeremy Hunt’s (pictured) decision to cut both the tax-free allowance on capital gains and the dividend allowance (which will fall to £3,000 and £500 respectively from April 2024) demonstrates that the broader trend is towards a rise in taxes on investment, to say nothing of the growing clamour for a wealth tax. There has therefore never been a better time to put money in an individual savings account (Isa): any investments inside the wrapper are free of taxes on capital gains, dividends or (unlike with pensions) withdrawals. However, while Isas are exempt from income and capital gains taxes, they aren’t exempt from inheritance tax (IHT). So your estate could…

A lifetime individual savings account (Isa), or Lisa, can be a valuable tool for first-time buyers struggling to muster a deposit on a house. These niche savings products can also be used for retirement savings. But they are very different to other Isas, so you need a sound grasp of the benefits and drawbacks before you start ploughing money into one. Lisas are the most generous Isa product available. Whatever you deposit – up to the annual limit of £4,000 – the government will add 25% to that sum. That means you could secure £1,000 a year in free cash. You can pay into a Lisa from when you are 18 until you turn 50, so there is scope to receive £32,000 in government top-ups. If you are saving for…

Hide away in the capital Family-friendly hotels in London are rare, says Alexandra Zagalsky in The Week. Happily, the new Treehouse Hotel in Marylebone fits the bill. Rooms “convey a sense of playfulness and exploration, decorated like secret hideaways and perched, as the name suggests, high above the clouds”. (The hotel occupies the top floors next to BBC Broadcasting House and each room offers views of the capital.) “Those who appreciate a sense of the unique and the irreverent have it made… [it] is all about enjoying the adventure of being away from home.” Rooms resemble log cabins, clad in wood and furnished with cosy handwoven textiles. “The idea is that this is a place to unwind and spark the imagination the old-fashioned way, nicely tucked away in a hidden…

WANdisco, a British software company, has asked for its shares to be suspended from Aim, says Joanna Partridge in The Guardian. The firm said its bosses had uncovered “significant, sophisticated and potentially fraudulent irregularities with regard to received purchase orders and related revenue and bookings, as represented by one senior sales employee”. WANdisco now has “no confidence in its previously announced revenue forecasts for the past year”. Sales in 2022 could have been as low as $9m (£7.6m), compared with a previously forecast $24m. The news and consequent investigation come shortly after WANdisco became the latest UK firm to announce plans to seek a US listing, say Ian Johnston and Maxine Kelly in the Financial Times. A dual listing has been a “long-stated” ambition. The Anglo-American company, a specialist in…

Five to buy On The Beach Investors’ Chronicle Online travel agent On The Beach (OTB) has navigated a tricky pandemic period. It had to raise £26m in July 2021 to refund customers for cancelled flights after initially saying it wouldn’t, and it is still paying back a loan to the German government. However, consumers are keen to go on holiday again, despite the cost-of-living crisis, and OTB – traditionally considered a “value” retailer – is increasingly going upmarket. Sales of five-star holidays on its platform rose by 82% in the 12 months to September 2022, compared with 2019, while the average booking value (ABV) grew by a third. Further gains in this less price-sensitive premium segment of the market look likely. 170p Ashtead The Times FTSE 100 construction and industrial-equipment…

The two great oil-producing rivals in the Middle East, Iran and Saudi Arabia, have agreed a Chinesebrokered deal to restore ties and reopen embassies seven years after relations were severed, says Patrick Wintour in The Guardian. The conflict between the two countries has dominated Middle East politics in recent years and spread into Syria, Iraq, Lebanon and Yemen. The deal will have implications for the civil war in Yemen, where the two sides are locked in a proxy war, and for the deal with the West that limits Iran’s nuclear ambitions. Indeed, Israel is worried that the “surprise” agreement marks a “significant blow” to its goal of “creating a regional alliance built around isolating Iran” in order to stop it building nuclear weapons, say Shayndi Raice and Aaron Boxerman in…

“Generals are always prepared to fight the last war,” goes the old saying. Investors often make the same error when they face a new crisis. The frantic way that markets have reacted to the ructions in the US banking sector over the past week shows that many of us still see events through the framework of 2007-2009. Take the sell-off in European banking stocks on Wednesday that saw trading temporarily halted in BNP Paribas, Credit Suisse, Monte dei Paschi, Societe Generale, and UniCredit, and also brought a nostalgic return to that late 2000s/early 2010s sport of watching bank credit default swaps (CDS) as Credit Suisse traded “points upfront” (see below). It is striking that the failure of three idiosyncratic banks in the US (see page 16) and yet more headlines…

Firms that go woke go broke Mike Edleson and Andy Puzder The Wall Street Journal Proponents of “woke capitalism” claim that firms can do well financially by doing “good” politically, say Mike Edleson and Andy Puzder. Our analysis, based on data from 2ndVote Analytics, which scores US large- and mid-cap companies on their social and political engagement, suggests they don’t. Over the period for which scores were available (the last half of 2021 to early 2023) the market was down overall by 1.8% for the S&P 500 and 3.2% for the Russell 1000. ESG firms (woke capitalism “makes its way into financial markets through an ill-defined concept known as environmental, social and governance investing”) scored worst, with most losing 2.5%-6.3%. A simple index composed only of neutral companies gained 2.9%.…

branko2f7.substack.com The rise of the robots is seen as a novel threat that could upend our whole way of life, says Branko Milanovic. In reality, this is nothing new. The introduction of machinery to replace repetitive or even creative labour has been applied on a significant scale since the industrial revolution. Robots are no different from any other machine. But they do force us to “face squarely three fallacies”. The first is the “lump of labour” fallacy, which assumes that workers displaced by machines will remain jobless forever. Two centuries of technological progress show that this fear is never justified because new technologies end up creating enough, and actually more and better, new jobs to replace those lost. The second fallacy is that there is a similar “lump” of limited…

The announcement that both Simon Edelsten and Alex Illingworth, managers of Mid Wynd International Investment Trust (LSE: MWY), are leaving Artemis at the end of September is unwelcome news. They have managed the £480m trust since 2014, when they wrested the mandate from Baillie Gifford. Over that time, they have generated returns of 184% – significantly better than the 141% total return from the MSCI All Countries World index – through a growth-oriented global investment strategy based on investment themes such as “digital finance,” “healthcare costs” and “low-carbon world”. There are nine such themes, “materials” having been added recently, and around 60 holdings. While Edelsten and Illingworth focus on long-term prospects rather than short-term trading, there is also a “disciplined approach to valuation” that enables them to respond pragmatically to…

You have an extra three months to boost your state-pension income now that the government has extended the deadline to fill in missing years of national insurance contributions, says Lily Russell-Jones in The Sunday Times. To receive the full state pension of £185.15 a week you need to have 35 years of national insurance contributions. You require at least a decade of contributions to receive any state pension at all. Buying a week of national insurance contributions generally costs £15.85, so for £824.20 you can add a year to your national insurance record. “Filling in one year of missed contributions could boost your state pension income by up to £275 a year... filling in ten... could get you an additional £2,750 a year.” Usually, you can only fill missed contributions…

● Good news for small businesses hoping to raise money from venture-capital funds in the coming months. The latest crop of venture capital trusts (VCTs) has so far raised around £780m, with many of the best-selling funds close to selling out in the run-up to the end of the tax year on 5 April. VCTs are funds that put money into small, early stage businesses. To secure cash from a VCT, a company must have no more than £15m in assets and no more than 250 employees; it must also be less than seven years old. This makes the funds relatively risky, but VCTs offer a range of tax breaks, including 30% income-tax relief on purchases of new shares – VCT managers therefore launch new share issues each year to…

The interest rate on UK government debt fell dramatically to only 3% by the early 1820s thanks to the end of the political uncertainty and military spending brought about by the Napoleonic wars. This was good for the British treasury, but bad for investors. Frustrated by poor returns, many turned to debt issued by the countries in Latin America that had won independence from their former colonial masters, such as Venezuela, as they offered much higher interest rates of around 6%. What was the trade? In 1821 Gregor MacGregor, a former officer in the British Army who had been forced to resign after a row with a superior, and who had later served in the Venezuelan army, appeared in London. On the basis of a deed to land on the…

A stocks and shares individual savings account (Isa), also known as an investment Isa, is an excellent way to grow your savings. Eligible assets include bonds, property in the form of real-estate investment trusts (Reits), shares, investment trusts, open-ended funds (Oeics) and exchange-traded funds (ETFs). The last can be used to track stockmarket indices, such as the FTSE 100, as well as commodities including oil, gold, silver and platinum, and currencies – in fact, most things that you can think of, provided the ETFs are marketed for purchase by UK investors. Many are domiciled in Ireland. Look for the letters UCITS, which stands for “undertakings for the collective investment in transferable securities” and means the funds are properly regulated. Whichever investments you choose, everything is sheltered from the taxman. The…

Don’t overlook your pension options as you focus on using your individual savings account (Isa) allowance in the run-up to the end of the tax year. Private pensions offer an array of tax breaks arguably more valuable than those available from Isas – and a self-invested personal pension (Sipp) could help you make full use of these reliefs. As the name suggests, Sipps give you control over how you save and invest for later in life, with a wide range of assets to choose from. How much control you want will influence your choice of Sipp provider, but the bottom line is that you’re in charge. Why consider a Sipp? Well, if you can join a private pension scheme at work, doing so is usually a good idea because your…

The Enterprise Investment Scheme (EIS) is the government’s second flagship scheme for encouraging investors to put cash into early-stage businesses. You’ll get the same 30% upfront tax relief as in a VCT, and you can put up to £1m into the EIS each year. EIS investments grow free of any tax on profits, though any income is taxable. Losses can be offset against your tax bill (unlike in a VCT). If this appeals, one option is to invest directly in companies with EIS status. Many businesses raising money on crowdfunding platforms, for example, are eligible and this can be a good place to look. Still, you’ll need to be confident and skilled enough to weigh up the merits of each potential investment. The alternative is to invest in a portfolio…

“Almost one million accounts were opened in the 2020-2021 tax year” Parents have been using junior individual savings accounts (Isas) to save for their children’s future for over a decade. But most of them are making a mistake that could cost them thousands of pounds. Since their introduction, in 2011, junior Isas have grown ever more popular. In the 2020-2021 tax year almost one million junior Isas were opened, according to HMRC. A similar number had been opened in the previous three years too, illustrating the enduring appeal of these tax-free accounts. The attraction of a junior Isa is that the money is tucked away for the long-term: it can’t be accessed – unless circumstances are exceptional – until the child turns 18. And it can grow tax-free. The latter…

The highest interest rate available on a lifetime Isa is 3.5% from Moneybox, but this includes a 0.75% bonus for the first 12 months. After a year, shop around to see if you can transfer to get a better rate elsewhere. This account is opened and managed on an app, with interest added monthly. If you don’t want to use app-based banking, then the Bath Building Society has a Lisa paying 3.19%. It can be opened online or at a branch. The Moneybox account accepts transfers from other Lisas and Isas; the Bath BS one doesn’t. If you are going to hold money in your Lisa for five years or more, then an investment account is likely to give you better returns than cash. Nutmeg offers a ready-made Lisa portfolio…

2020 Pellegrino, Isesi Zibibbo, Pantelleria, Italy (approximately £19.99, signorellis.co.uk, albionwineshippers.co.uk, tannico.co.uk) I attended the Fells Annual Portfolio Tasting the other day, and it was a cracker. This elite wine importer is responsible for bringing world-famous estates such as Hugel, Guigal, Torres, Yalumba, Torbreck and Tyrrell’s, among hosts of others, as well as a suite of epic fortifieds – including Barbadillo, Blandy’s, Graham’s, Dow’s, Warre’s and Cockburn’s – into the UK. New signings include Chateau Lebanon’s Musar and our very own Wiston. Despite all this obvious stardust, my eye was inextricably drawn to 19th-century Italian Marsala pioneers Pellegrino. My featured “dry and unfortified” zibibbo was an earth-shattering discovery, with mandarin peel, jasmine and green tea notes over a cool, slippery, invigorating fruit core. It is unlike any other white wine I…

Homelands A Personal History of Europe Timothy Garton Ash Bodley Head, £22 The journalist and historian Timothy Garton Ash has over the past 40 years “both watched from the stands and played on the pitch in the arena of European change”, says Boyd Tonkin in the Financial Times. In his youth, he reported on the events that would later lead to the fall of the Soviet empire. Later, he became a respected “VIP Pundit”, his opinions being sought after by world leaders and the business elite. However, recent events, from Brexit to the Russian invasion of Ukraine, have not been kind to the view of liberal internationalists that they “knew which way history was going”. In Homelands, Garton Ash “casts a panoramic eye” over the history of Europe.…