Indholdsfortegnelse for 1202 i MoneyWeek

Better too late than never. Other major stockmarkets have raced to new record peaks in recent years while our blue chips have lagged. This week the FTSE 100 crept past its all-time high set in February 2023. But the longer-term picture is hardly encouraging. The index finished the 1990s at 6,930. Since then it has gained just 15%. America’s technology-heavy Nasdaq Composite index has quadrupled over the same period. The blue-chip S&P 500 index is up from 1,500 to 5,200. France’s CAC-40 has climbed by a third. Germany’s DAX index has more than doubled. Don’t forget dividends The DAX, unlike most other major indices, is a total-return index, measuring reinvested dividends in addition to capital appreciation, rather than just the former. Still, if we compare total returns in sterling terms…

“London’s stockmarket is struggling… There are even whispers that a corporate giant on the scale of Shell could leave the capital, which would transform a torpor into a full-blown crisis. It is not difficult to see why. Over the past five years, the FTSE 100 has climbed 7%. Over the same period, the US Dow Jones is up 54%… The total ownership of UK-quoted equities by insurance and pension funds has fallen dramatically, from 45.7% in 1997 to 4.2% in 2022… If our institutions, not least pension funds, will not invest in Britain, why should anyone else? The government is aware of the problem and the British Isa [individual savings account], offering retail investors a higher tax-free allowance, is an attempt to address it. But ministers know this is window-dressing.…

Investors seeking a more reasonably priced technology stock than any of America’s Magnificent Seven should go for Mercado Libre, says Barron’s. The Uruguay-based group is Latin America’s Amazon, a dominant online retailer that has managed to fend off rivals over the past five years. Earnings per share more than doubled last year and are set to jump by 80% in 2024. There should be years of growth ahead, as Latin America’s e-commerce penetration is only about 10%, well below the figure in developed countries. The group also boasts a thriving financial technology (fintech) business worth almost 50% of sales. The forward earnings multiple of 44 is the stock’s lowest in six years.…

Politics & economics Turkey’s opposition has dealt a major blow to president Recep Tayyip Erdogan, says CNN. Erdogan’s AKP party lost in key cities to the CHP party at local elections last weekend. The AKP lost the national popular vote for the first time since 2002, ceding control of regions that were once party strongholds. A second successive defeat in Istanbul, “a strategic and personal crown jewel” for the president, who was mayor of the city in the 1990s, was stinging. Ahead of last year’s presidential election, Erdogan loosened the purse strings to bring voters onside, says Ben Hubbard in The New York Times. But since then, he has pivoted towards austerity, allowing the central bank to hike interest rates to 50% to tackle inflation that hit 68.5% in…

The last few years have been tough for small businesses. The pandemic closed many of them down for more than six months. Corporation tax rates have risen by almost a third, and those in the crucial services sector can rarely claim any of the deductions for investment designed to compensate for that punishing increase. Business rates have started going up again, often very steeply as councils struggle to fill holes in their budgets. And the economy is in recession and shows little sign of growing significantly anytime soon. But there is nothing like kicking someone when they are already down. So this week, businesses of all sizes will be hit with another round of mandated pay rises and yet more extensions of employees’ rights. Pubs pushed to the brink On…

Market timing refers to any strategy that involves trying to predict future price movements and shifting between different investments to take advantage of them. To take a simple example, if you believe that shares are likely to fall and bonds to rise over the next month, you would buy bonds and sell shares. You would only intend to hold these positions for as long as you think bonds will keep beating shares: as soon as you think the trend will reverse, you would buy shares and sell bonds. These predictions and trading decisions may be based on economic data: in the example above, you might believe that GDP growth will be much worse than expected and investors will dump shares because they fear a recession is coming. They could be…

“Money is not my forte. I don’t see the point of penny-pinching and saving, which is not good. I enjoy spending. I hope it doesn’t bite me on the ass eventually.” Composer and singer Rufus Wainwright (pictured), quoted in The Times “First come the innovators, who see opportunities that others do not. Then come the imitators, who copy what the innovators have done. And then come the idiots, whose avarice undoes the very innovations they are trying to use to get rich.” Warren Buffett, quoted in The Telegraph “The major reason why I like [Star Trek: The Next Generation] is because it’s a post-capitalist, socialist world. There’s no money. There’s no profit… There is a fantastic dialogue between Captain Picard and a businessman from the 1990s who demands to see…

It’s the beginning of a new financial year, which will mean several changes to your finances. Let’s start with your taxes. National Insurance is being cut from 10% to 8% from 6 April. This will save £450 a year for an employee on the average salary of £35,000. If you are self-employed, your National Insurance bill will fall from 8% to 6%, saving £350 a year for someone on the average self-employed wage of £28,200. However, the allowance for capital gains tax (CGT) is being halved in 2024-2025. From 6 April you can only make £3,000 a year in profit from selling assets before CGT is due. The dividend tax allowance is also being cut, from £1,000 to £500. Road tax is being hiked from 6 April, and will be…

How would your business respond if it suffered a cyber attack? Chances are that you don’t know. New research suggests that just one in five small firms have a clear plan in place for dealing with an attack, even though more than 40% of businesses suffered some sort of incident last year. Having cyber insurance in place is critical. Computer systems can be locked out for days on end, and the damage to reputation can be irreversible. In a worst-case scenario, cyber attacks can – and do – lead to business failures. Help from a good insurer can help you get back up and running quickly and minimise the PR fallout. Next, a robust cyber incident response plan can make a huge difference as you scramble to get your business…

One of the biggest ways in which the world wide web is changing our lives is the Internet of Things (IoT). It’s about connecting all manner of devices, or “things” – such as sensors, gauges, household appliances and cameras – across the internet to our computers, mobile phones and other technology platforms. By digitising the physical world, we can control and monitor everything around us from the palm of our hand. Take, for example, thermostats in your home connected online to your mobile phone. Whether you’re at home, work or even overseas, you can see the real-time temperature in any room and change it remotely. Information from the physical world has been digitised across the internet for your benefit – you can warm-up your home before heading home on a…

The flotation of Trump Media & Technology Group through a merger with Digital World Acquisition Corp shows how special purpose acquisition companies (Spacs) can be a path to a public listing. Usually, a firm keen to enter the stockmarket will offer shares to the public in an initial public offering (IPO). But this can be a protracted and costly process involving the disclosure of detailed financial information. As a result, in 2020 and 2021 there was a sudden surge in the number of firms going public by doing deals with Spacs. Also known as “blank cheque companies”, Spacs are shell firms floated on the exchange. They have no underlying business; they are set up to buy other companies (although they must do so within two years or return money to…

Sam Bankman-Fried (pictured), often referred to as SBF, has been sentenced to a quarter of a century behind bars for committing one of the biggest financial frauds in US history, say Julie Zauzmer Weil and Shayna Jacobs in The Washington Post. US district judge Lewis Kaplan criticised his lack of remorse and ordered SBF to pay back $11bn. The 32-year-old founder of failed cryptocurrency exchange FTX was found guilty in November of stealing $1.7bn from investors, $1.3bn from lenders to his hedge fund Alameda Research and $8bn from FTX customers. He spent the money on luxury property, risky investments, and political donations. At its height, FTX was valued at $32bn. “What we don’t want to do… is say [to would-be fraudsters] ‘Oh, you just pay a big fine and do…

If Easter eggs were expensive this year, blame “the climate crisis and exploitation”, says Eve Livingston in The Observer. Soaring cocoa costs have sent UK chocolate prices up 12.6% in the past year. The spike has its roots in production problems in west Africa. Harvests in Ghana and the Ivory Coast, the top suppliers, have been hit by extreme weather events and disease, exacerbated by poor conditions in cocoa farming that make it hard to earn a reliable living from the crop. Cocoa future prices in London have more than doubled since the start of the year, hitting a new high of more than $10,000 a tonne just before Easter. Prior to this rally, futures “had largely remained below $3,500 since the 1980s”, says Ilena Peng on Bloomberg. But while…

China’s internet giant Alibaba, whose offerings range from e-commerce to cloud computing, has opted not to launch an initial public offering (IPO) of its Cainiao smart logistics division that would have raised more than $1bn, says Bloomberg. The uncertain economic and regulatory backdrop in Hong Kong militated against a successful listing. Alibaba is now buying the 36.3% of the logistics arm it doesn’t yet own in a transaction valuing it at about $10.3bn. The plan is to absorb Cainiao into the broader e-commerce operation and sell off non-core firms, an about-turn from the original restructuring plan of dividing the overall company into six standalone divisions.…

Toronto HSBC sells Canadian arm: HSBC, Europe’s largest lender, has sold its Canadian banking business to the Royal Bank of Canada (RBC) for $10.1bn, says Ben Martin in The Times. The deal will boost HSBC’s first-quarter results by $4.9bn on 30 April and fund an expected special dividend worth $4bn. This would be on top of the proposed interim dividend expected in June. The sale was first agreed in 2022, but the Canadian government only backed the deal last December despite criticism that it could hamper competition. To placate regulators, Canada’s biggest lender by assets promised to provide $7bn to build and renovate affordable housing, donate 1% of its domestic pre-tax net income every year, and build a global banking hub in Vancouver. HSBC is listed in London but it…

● “Pascal Soriot [pictured] would have been forgiven for waving a big ‘I told you so’ sign, says Lex in the Financial Times. The AstraZeneca CEO set a target of reaching $45bn in annual sales by 2023 when he fended off a takeover from Pfizer a decade ago. That once seemed out of reach, but in February, the firm hit it. Now Soriot has a new challenge to persuade “investors that AstraZeneca’s best days are not behind it”. The pipeline is much stronger than it was a decade ago, with 178 prospects at various stages of development. Yet the shares trades at a similar multiple to European peers. “Another long-term revenue target might help crystallise what he thinks AstraZeneca is capable of.” ● International Paper “appears to have boxed itself…

The world faces a mounting “retirement crisis”, says Larry Fink, the chief executive and co-founder of BlackRock, the world’s largest asset manager. As people live longer with the help of medical advances, providing them with a “secure, well-earned retirement” will be a “harder proposition than it was 30 years ago. And it’ll be a much harder proposition 30 years from now.” Revolutionary new weight-loss drugs such as Ozempic and Wegovy don’t just help tackle obesity – they may also help to extend healthy life, says Fink in his annual letter to investors. “These drugs are breakthroughs. But they underscore a frustrating irony: as a society, we focus a tremendous amount of energy on helping people live longer lives. But not even a fraction of that effort is spent helping people…

If you thought you were alone in struggling with your smart meter, don’t worry. Millions of people are dealing with erroneous meter readings. New official data has revealed that nearly four million smart meters in homes and businesses are faulty, so millions of customers could be being overcharged for their gas and electricity bills and “has prompted the government to write to the industry regulator, Ofgem, urging action against energy providers who are not supporting customers and meeting legal obligations”, says Jack Simpson in The Guardian. When smart meters aren’t working properly, energy firms use estimated readings to calculate bills, which can leave customers paying for energy they haven’t used. If your meter isn’t working correctly avoid this problem by sending in manual readings until your supplier fixes your meter.…

Watch out for further changes to the IR35 tax system, which come into effect on 6 April, the first day of the 2024-2025 tax year. The goal is to simplify the IR35 regime, which aims to prevent contractors and freelancers claiming they are self-employed when they’re effectively operating as employees, but the reforms could lead to some people losing out. Under the current rules, where HM Revenue & Customs successfully challenges a contractor who has been claiming they are self-employed, the organisation deemed to be their employer must then pay all income tax and national insurance contributions that should have been due. To prevent double taxation, the contractor is then allowed to claim back any tax paid as a self-employed worker. Under the new system, employers will be allowed to…

It has been a very positive fortnight for my nine long tips, with seven rising. US construction-supplier Builders FirstSource increased from $195 to $208; kitchen-supplier Howden Joinery rose from 849p to 906p; and recruiter SThree went from 414p to 430p. General Motors powered ahead from $40.82 to $45.35, budget airline easyJet climbed from 528p to 570p, and SSP, which operates food and drink concessions in airports and train stations, advanced from 214p to 219p. Rolls-Royce Holdings appreciated from 390p to 428p. The only exceptions to the uptrend were Moonpig and IG Group. Moonpig, which sells greeting cards and gifts online, stayed at 169p, while investment and share-trading platform IG Group fell from 732p to 730p. Overall, my long tips are making profits of £2,178. My short tips delivered a more…

When Julia Donaldson set out to write a children’s book featuring a mouse who would venture through “the deep dark wood” fending off a series of predators with wit and cunning, she little expected to spark a global phenomenon, says The Economist. Yet 25 years on, The Gruffalo has become “one of the most lucrative monsters in children’s publishing”. With the help of illustrator Axel Scheffler, Donaldson, 75, created an enduring classic that, to date, has sold 11.6 million copies worldwide and been translated into 107 languages. “Whereas some books cause grownups to groan inwardly when a child selects them at bedtime”, this fable, written in rhyming couplets, “is almost as fun to read aloud as it is to listen to”. Many fans think its sequel, The Gruffalo’s Child, is…

2021 Syrah, Stefano Amerighi, Cortona, Tuscany, Italy £42, swig.co.uk Every so often, I issue a call to arms on this page, and this week is the most urgent I can remember. I tasted a host of new Italian discoveries from the imperious Swig wine company the other day, and I found several outstanding and unmissable wines. My featured syrah arrives in the UK next week, and you are only allowed three bottles per order, so you must reserve your stock today. This is the finest northern hemisphere syrah I have tasted this year, including every bottle I have uncorked from the northern Rhône! Amerighi manages to coax the most incredible accuracy and excitement from his biodynamically farmed syrah grapes, and up against the great Cornas or St-Joseph opposition, this wine…

Going… A sale of costumes, jewellery and furniture that belonged to the actress Raquel Welch, who died last year, aged 82, is heading for auction with California-based Julien’s on 12 April. A suede and faux-fur bikini in the style of the doe-skin two-piece Welch wore in the 1966 prehistoric epic One Million Years B.C. is among the highlights of the Bombshell: Raquel Welch auction, says the New York Post. Welch donned the replica garment on stage and for her 1974 television special Really, Raquel. It is expected to fetch up to $700. Other lots in the sale include Welch’s 2018 Mercedes SL 550 convertible, which has a $100,000 top estimate. Gone… The floating wood panel upon which Rose (played by Kate Winslet) promises Jack (Leonardo DiCaprio – who is in…

Never mind talk of “hard or soft landings”, the “US economy is picking up altitude again”, says John Authers on Bloomberg. From the labour market to manufacturing, recent data coming out of the world’s biggest economy has been “relentlessly strong”. While that is good news, it carries the risk that inflation and interest rates could both stay higher than expected. At the start of 2024 markets were betting that the US Federal Reserve would deliver six interest rate cuts by the year’s end. That has since fallen to just two or three. The prospect of less monetary loosening ahead should weigh on stocks, but the S&P 500 index has still gained 9.5% so far this year. For now, strong corporate profits and excitement about artificial intelligence (AI) are keeping the…

Five to buy Heineken The Telegraph The beer giant has struggled to deliver investors much gezelligheid, the Dutch word for “good times”, in recent years. But this could be a good entry point into a globally diversified “brand powerhouse”. Input cost pressures, which forced price rises and a drop in volume sales, have started to ease. Greater spending on marketing and digital incentives should also start to bear fruit as the world’s second biggest beer business taps into the “premiumisation” trend in drinks. €89.34 International Consolidated Airlines Group Shares Resilient travel demand is fuelling a post-Covid bounce at IAG, owner of British Airways. Operating profits have surpassed 2019 levels, while management has restored 95.7% of 2019 capacity. While demand for business travel is patchy, BA and stablemates Iberia and Aer…

Investors need to be willing to change their mind, so this week I am going to make a U-turn. In the last issue, I looked at some choices to replace the UK small caps in our exchange-traded fund (ETF) portfolio, but ruled them out and said I was leaning towards specialised factor ETFs. Yet the more I looked at this, the less convinced I was that targeting value or momentum or yield would add anything useful for our strategy. I couldn’t duck the conclusion that I was trying to be too clever. Instead, the best option seems to be an energy sector ETF – one of the options I dismissed before. Energy was in the portfolio until December, when we dropped it because the inflation protection it offered no longer…

A licence to commit fraud Aditya Chakrabortty The Guardian Sam Bankman-Fried has been declared one of America’s biggest swindlers, says Aditya Chakrabortty. But the “same groups who today come to bury the boy billionaire yesterday praised him without qualification”. US politicians Joe Biden, Mitt Romney, Cory Booker, Paul Ryan and Nancy Pelosi accepted substantial sums from him; celebrities such as Larry David, Gisele Bündchen and Naomi Osaka were paid to endorse his trading exchange, FTX. Tony Blair and Bill Clinton attended his conference, and he dined with Jeff Bezos and Leonardo DiCaprio. Despite his wealthy lifestyle, Bankman-Fried portrayed himself as an eccentric genius with humble habits as he graced the covers of business magazines and appeared on television. His philosophy, dubbed “effective altruism”, was found to be a dud as…

The past two years have been a struggle for investment trusts. Yet since Foreign & Colonial was established in 1868, trusts have had many ups and downs. Each time the sector has responded with rationalisation, improved governance and innovation, and the subsequent recovery has more than made up lost ground. Is it really different this time? At the end of 2021, the sector was riding the crest of a wave. The FTSE Equity Investment Instruments had, in 2020, outperformed both the All Share index and the MSCI World index by record amounts. By the end of 2021, the sector’s assets had hit an all-time high of £277bn, fundraising from existing companies was running at record levels (£11bn in 2021), there had been 16 new issues raising a further £3.8bn and…

This stock is a highly speculative opportunity in the hydrogen sector. This may seem a waste of time. After all, hydrogen is still in its infancy and remains far more expensive than fossil fuels. And that’s the angle from which I have approached this idea. The returns could be tremendous if it secures even a sliver of the market. At this stage, hydrogen is not an economical or efficient alternative to fossil fuels owing to the energy required to produce the element. We are still a decade or more away from efficient green hydrogen. There are two main types of hydrogen: green hydrogen, which is produced using renewable energy, and blue hydrogen, made using fossil fuels such as natural gas. In a perfect world, green hydrogen would be produced when…

● If your passport is due for renewal soon, it’s worth applying now. From 11 April the cost of applying for a passport will rise by 7% on average. An online adult application will climb from £82.50 to £88.50. A child’s will increase by £4 to £57.50. It is also worth checking the age of your passport. If your passport is more than ten years old, you could be refused entry to the EU. Post-Brexit, EU countries will not accept passports issued more than ten years ago. Passports issued after 2018 are valid for exactly ten years. Prior to that you could carry over up to nine unused months from a previous passport so your passport could be valid for up to ten years and nine months. “As a result,…

● New rules aimed at boosting small firms’ use of apprenticeships came into effect this week. The government will now absorb the full cost of funding apprenticeships in small businesses – those not covered by the Apprenticeship Levy scheme – whereas previously the firm was expected to make a 5% contribution. The new system also makes it easier for large companies to transfer some of their apprenticeship funding to small firms, potentially providing additional help with apprenticeship funding. ● Poor connectivity is costing small businesses hundreds of millions of pounds a year, new research shows. Lack of access to 5G services is causing problems such as reduced staff productivity as workers struggle to get online or complete work effectively, as well as limiting innovation and investment. Telecoms company Vodafone claims…

Imagine that you are asked to invest in a company. The CEO is a former career politician who has never run a major business. The founder and chairman, the real driving force behind the company, has a record of multiple bankruptcies in sectors ranging from airlines to casinos, and is facing several criminal charges. The founder’s son is one of the four main directors. The founder himself is facing a cash crunch that means he may dump his large stake in the company after six months. Oh, and one more thing: he will be spending the next seven months seeking another job. No wonder then that I think Trump Media & Technology Group (Nasdaq: DJT), which has just floated on the stockmarket through a merger with a special-purpose acquisition company…

The JPMorgan European Growth & Income trust seeks to invest in quality businesses at attractive valuations. By this, we mean well-run companies that produce strong and sustainable returns on invested capital, where earnings per share translate to tangible cash flow, and also those with management teams making sensible decisions with their capital. One of the most important attributes we look for in companies is improving operational momentum. One way to assess this is by tracking management guidance and earnings-per-share expectations to see whether they are being upgraded or downgraded over time. In this regard, Europe provides a rich opportunity, thanks to extreme valuation discounts relative to US peers, the much-improved quality of the firms in our index and the strengthening macroeconomic backdrop. Below are three long-standing holdings in the trust,…

Valuations for everything from art to whisky have shot up over the past decade. Some of the shine came off last year, although there is still money to be made by those who know where to look, reckons the latest Wealth Report from estate agency Knight Frank. For only the second time, the Knight Frank Luxury Investment index (FKLII) – a composite index tracking various “passion plays” – ended the year in negative territory – “albeit only by a fraction of a percent”, says Knight Frank’s Andrew Shirley. Rare whisky, which has appreciated 280% over ten years, was the biggest casualty, with the value of a dram dropping 9% in 2023. The worst-performing 50 bottles in the Knight Frank Luxury Whisky index lost 26% of their combined value, but…