Indholdsfortegnelse for 1213 i MoneyWeek

“The enduring undervaluation of British companies has... been a catalyst in persuading boards [of the merits of] buyback programmes... It’s... less drastic than uprooting the company in search of deeper pools of capital elsewhere... [Buybacks have become so popular] that the Liberal Democrats have even proposed a 4% levy on FTSE 100 buybacks... In theory, investors can realise their own dividends from buybacks by selling shares from their new higher-value holding... since 2016, the top 20% of FTSE SmallCap companies by buyback yield – those spending the most on buybacks as a proportion of their market capitalisation – have delivered around twice the total return of the whole index... the UK’s listed [firms] need all the help they can get... and if buybacks are the easiest way of providing a…

BT’s shares hit a one-year high last week after Mexican billionaire Carlos Slim bought a 3% stake through his family holding company, says Leah Montebello in This is Money. Slim is the “latest high-profile investor”, alongside billionaire telecoms tycoon Patrick Drahi and Germany’s Deutsche Telekom. The backing from one of the world’s richest men may be seen “as a vote of confidence” in CEO Allison Kirkby, with BT’s value now 20% higher since her arrival in February. But Slim’s motives for buying are “unclear”. Kirkby’s “short-busting” strategy of upping BT’s dividend and making promises about its future free cash flow may have attracted Slim’s attention, says Lex in the Financial Times. Or he may be after “the stability of a utility’s cash flow”; it looks as if “group capital expenditure…

Swiss pharmaceutical giant Roche has received some good news, says Wirtschaftswoche. Its new lung-cancer drug Alecensa has been approved by the EU, having gained access to the American market earlier this year. It now looks likely to achieve sales of CHF1bn in 2024, making it the group’s 16th “blockbuster” (a treatment achieving annual sales of more than CHF1bn). There should be plenty more in future, as the pipeline contains 68 promising drugs close to approval or in the final stages of clinical trials. It also augurs well that the Swiss franc has fallen back from its highs, lowering costs. Net income should reach CHF13bn this year. The stock also yields 4%.…

Warnings from the Tories that a vote for Reform UK will lead to a Labour supermajority are “obviously self-serving”, but the fact remains that Labour will “utterly dominate parliament” within a few weeks, says The Independent. “Even without the presence of Nigel Farage, inside or outside parliament, the Conservatives seem set to embark on another civil war just as soon as the polls close” with a “much-denuded” Tory party looking for “fresh leadership” amongst their survivors. Whoever wins the crown and “finds favour with a tiny, hard-right membership” will then have to work out what to do with Farage. Speaking in South Wales this week, Farage said he hoped Reform would “become a real opposition” to a Labour government and that his party’s real hopes lie in the 2029 general…

With just over a fortnight to go at the time of writing before voting day in Britain’s general election, there has been no let up for the Conservatives on the betting markets. With £6.38m matched on Betfair, Labour is at 1.02 (98%) to get the most seats, while the Conservatives are at 65 (1.5%). In a similar vein, the odds on Labour to gain an overall majority have slightly shortened to 1.05 (95.3%) with no overall majority at 27 and the Conservatives at 110. The spreads are even more dire for the Conservatives than they were this time a week ago. Spreadex put Labour unchanged at 427-437, but has reduced the Conservatives by around 11 to 104-112. The Liberal Democrats seem to be the big winner from these movements –…

The prime minister played fast and loose with some Treasury forecasts of tax rises. The Labour Party has some imaginary numbers about “investing” in the NHS and creating “green jobs”. Meanwhile, the Lib Dems sail on with fun days out at Center Parcs and promising some minor giveaways. With only two weeks left until polling, all the major parties are arguing furiously about trivialities. And yet there is an ugly truth about this general election that no one wants to admit: the UK is far closer to bankruptcy than most voters realise. Taxes are already at a 70-year high, and yet we are nowhere close to balancing the books. Over the course of this year, we will add another £87bn of debt, according to the Office for Budget Responsibility (OBR),…

A futures contract is an agreement to buy or sell an asset – such as oil, gold, currency or shares – at a prearranged price on a prearranged date (known as the delivery date). Futures may be physically delivered (which means that the seller must deliver the asset to the buyer), or cash settled (which means they exchange a payment based on the difference between the initial price and the price when the contract expires). Futures contracts for any asset are usually available with a range of delivery dates – this may be monthly, quarterly or less regular (for example, some delivery dates for crops may be aligned with harvest months). Each futures contract trades independently, with the price reflecting expected supply and demand on a given delivery date. For…

“I want to be a stockbroker because my dad is one.” Pop star Taylor Swift (pictured), aged six, writing in her high-school yearbook, quoted in The Sunday Times. A year later she wrote that she wanted to be a singer “Inflation is like alcoholism. In both cases, when you start drinking or when you start printing too much money, the good effects come first, the bad effects only come later.” US economist Milton Friedman, quoted on X “I’m embarrassed that I let this happen to me… everybody’s wondering what happened, and your wife is in the grocery line and she can’t pay because a cheque bounced. You’re in the most successful independent movie of all time, and you can’t take care of your loved ones.” US actor Michael Williams on…

time.com You take a holiday but are distracted by the thought of your inbox filling up. You try to rest, but your thoughts race. “If this sounds familiar, you are not alone,” says Jamie Ducharme. “Relaxing may sound like the easiest thing in the world, but for many people it’s anything but.” One psychology experiment found that people tasked with sitting still for a time were so uncomfortable they opted to give themselves small electric shocks instead. Doing nothing is harder than it seems. Often when people slow down, they just feel anxious about what they could or should be doing instead. Yet rest and relaxation are necessary for wellbeing. Chronic stress negatively affects nearly every aspect of mental and physical health and is a major contributing factor to chronic…

The popularity of any investment trust, and hence the discount or premium to net asset value (NAV) at which its shares trade, ought in theory to reflect its historic performance and its prospects for the future. Investors, however, are far from rational. A trust that has grown its NAV by 251% in ten years, doubling it in five, compared with the FTSE All-World index’s total return of 138%, ought to be a market darling. But the shares of HarbourVest Global Private Equity (LSE: HVPE) trade at a discount of over 40%. Doesn’t that suggest that its portfolio is massively overvalued? That argument might be plausible if stockmarkets had crashed, the world was facing recession, valuations were defying gravity and disposals had ground to a halt. But markets have been rising…

● Home insurance quotes have risen by 42% in a year, says Fran Ivens in The Telegraph – the highest annual increase since records began in 2014. The average premium is now between £150 and £199. “Every time there is a storm and payouts, some insurers put up their prices,” Mohammad Khan, head of general insurance at PwC, told the paper. “That is compounded by the fact that over the past two years the cost of repairing a house has gone up a lot.” There have been 11 storms this season, compared with just four between June 2022 and July 2023. ● Jaguar Land Rover is to invest more than £1m to help police tackle car thefts. The money will be used “to target theft hotspots” and top up police…

● While most surveys suggest that the confidence of small and medium-sized enterprises (SMEs) is improving, there is still a reluctance to borrow in order to invest. Data from the Bank of England suggests that SMEs have been repaying debt in greater numbers than borrowing, while other indicators show that many continue to sit on significant cash reserves. Such caution is understandable, but advisers are increasingly concerned that many businesses lack the firepower to capitalise on emerging opportunities as the economy recovers. ● Employees continue to be the weakest link in organisations’ defences against cyber attacks. There have already been reports, so far unconfirmed, that the cyber attack that recently forced the NHS to cancel operations began with a phishing email. The incident underlines the importance of ensuring that all…

The subject this week is nothing. Zero. The thing that isn’t a thing. If you have a little of it, you accept it for what it is. Like an empty wallet, you know it won’t take you very far. But what if you have a lot of it? Fifty trillion dollars’ worth, for example? Then, you must feel a little like Donald Trump when he was down on his luck in the early 1990s. He was reportedly in the hole by $100m. But he was proud of it. The banks would never lend so much to a poor guy. Only a very rich man could be that poor. America’s great wealth is a source of pride too. But much of its proud tower is rickety, hollow, or simply missing. Often,…

Bosses’ pay in the US is increasing at the fastest rate in at least 14 years, with median CEO remuneration at blue-chip S&P 500 companies rising by 12% in 2024, compared with a 4.1% increase in overall US wage growth, says Patrick Temple-West in the Financial Times. Ballooning reward packages, such as the $56bn stock-options package approved by shareholders of electric-car company Tesla for boss Elon Musk (pictured), conditional on ambitious targets being met – the biggest in US history – risk “exacerbating social inequality”. Some industry experts suggest escalating executive pay is driven by companies’ desires to retain CEOs and prevent rival companies from poaching them. Yet excessive pay packages are no guarantee of success. Peloton, Nikola, Lending Tree and Paycom Software are among a handful of big companies…

The Moscow exchange has been forced to suspend dollar and euro trading following new US financial sanctions, say Alexander Marrow and Mark Trevelyan for Reuters. The US Treasury says the sanctions are “targeting the architecture of Russia’s financial system” because of its role in directing capital to the Russian defence industry and acquiring “goods needed to further... aggression against Ukraine”. Russians seeking to secure dollars and euros now need to resort to costlier and more opaque deals on the inter-bank market, say Anastasia Stognei and Joseph Cotterill in the Financial Times. That raises the costs of importing and exporting in Russia. The currency trading suspension is like “a medieval town where the central market shuts down”, says Janis Kluge of the German Institute for International and Security Affairs. “There will…

The UK stockmarket has regained its title as the biggest in Europe. A luxury boom helped the Paris bourse eclipse London in 2022, but France’s blue-chip CAC 40 index has dropped by nearly 5% since Emmanuel Macron called early parliamentary elections for the end of this month (see page 11). Macron’s shock announcement wiped about $258bn off the value of French firms, says Sagarika Jaisinghani in Bloomberg. With an overall market capitalisation of $3.13trn, the French market is now slightly smaller than the $3.18trn valuation of Londonlisted stocks. Shares in the big French banks have slid by 10%; the banks have large holdings of public debt, which looks risky should free-spending populists come to power in Paris.…

Elon Musk has received a big boost in the fight to retain the biggest compensation package secured by an executive at a US-listed company. Tesla’s shareholders have approved a $45bn pay deal following a referendum, says Nick Robins-Early in The Guardian. The vote came after a decision by a Delaware court to strike down the payment on the grounds that Tesla’s board “could not be considered independent from Musk’s influence and reached that dollar figure through an illegitimate process”. Despite the opposition of “prominent shareholders” such as Norway’s sovereign wealth fund, most shareholders voted to endorse the pay package amid concerns that Musk “could turn away from the company if the package wasn’t approved”. When the deal was originally agreed in 2018, the idea of Musk making so much money…

Shares in Alef Education, Abu Dhabi’s first initial public offering (IPO) of the year, slumped on their first day of trading, says Bloomberg. This is rare in the Middle East, where flotations have generally produced near-guaranteed returns on their debut. The stock fell by as much as 19% from the offer price of 1.35 dirhams (29p) per share. The IPO was oversubscribed, with investors putting in $20bn in orders. It was priced at the top of the range, raising 1.89bn dirhams (£406m). The education technology company’s debut on the Abu Dhabi stock exchange is the worst since 2021. In the last three years, 14 firms have floated, with shares rising by 31% on average in the first session.…

● Athleisure retailer Lululemon is facing intensifying competition, says Andrea Felsted in Bloomberg. It has already cornered the North American womenswear market, so there is little scope for significant growth, and its sculpted leggings are not consistent with current trends for looser fits. Moreover, its “affluent but not uber-rich” customers appear to be cutting spending on luxury purchases owing to inflation and higher borrowing costs. Lululemon should provide a broad selection of colours, sizes, and styles and expand into accessories and international markets. As mid-market brands shrink, it could fill the gap. It could even hire a top-name designer. Although moving into the mainstream would bring more competition, “the risk is worth taking”, especially since the shares have dropped 40% from the start of the year. ● The London stockmarket’s…

“Copper is the new oil,” says Jeff Currie, the famously bullish commodities analyst who recently joined private-equity giant Carlyle after a long career at Goldman Sachs. “It is the most compelling trade I have ever seen in my 30-plus years of doing this,” he told Bloomberg last month. Demand for the metal is being driven by investment in green technologies to meet net-zero goals, such as electric cars and upgrading the power grid, as well as the AI boom that requires data centres with high energy needs. “Part of the reason why copper’s rallied recently [is that] China’s growth was over 100% in green [capital expenditure (capex)] last year, 30% this year. So everywhere you look in the world, we see environmental policy through green capex stimulating demand for commodities.”…

conservativehome.com Chancellor Jeremy Hunt has rejected the idea that the Tories should shift to the right to “woo back” voters from Reform UK, saying elections are always won from the centre ground, says Harry Phibbs. That is not true. Margaret Thatcher was not known for moderation. Edward Heath, who was, lost three out of four general elections fought under his leadership. The one victory he had was fought on a manifesto that was “strong and distinctively Conservative”. Party grandee Keith Joseph argued that Conservatives should seek, not the centre, but the “common ground”. The centre ground is a political compromise and where it is will be shaped by the extremists. Trying to claim it will mean “telling people what we think they want to hear”, rather than fighting the battle…

Shares in Rentokil jumped by 16% on the news that renowned activist investor Nelson Peltz’s fund Trian Partners had amassed a significant stake, says Bloomberg. Trian is now one of the ten biggest shareholders. The share-price gains gave the world’s largest pest-control company a market capitalisation of £11.8bn. Rentokil’s stock surged during the pandemic as people sought to kill viruses and bacteria; it also profited from the bed-bug outbreak once lockdown restrictions were eased. But it has struggled since then, losing more than a third of its value in a year. Trian said it had contacted Rentokil to “discuss ideas and initiatives to improve shareholder value”. The nature of Trian’s plans for Rentokil have not been disclosed.…

What would a Labour government mean for your finances? The manifesto includes a commitment not to increase income tax, national insurance or VAT. That’s a relief, but Labour will have to cut spending or raise taxes to meet fiscal targets, according to the Institute for Fiscal Studies (IFS). That means it is likely to target more of our money. Even if Labour doesn’t officially increase tax, we will pay more. “Labour says it will maintain the freeze on income-tax thresholds [until 2028], dragging millions more people into higher tax bands,” says Mattie Brignal in The Telegraph. This fiscal drag will see more of people’s earnings go in tax and many people pushed into higher tax bands. “The IFS estimates that it is the equivalent to putting up income tax by…

Small businesses struggling to get costs under control may have been relieved to see Ofgem’s announcement of lower energy prices earlier this month. However, the energy regulator’s price cap does not apply to gas and electricity contracts for businesses, where there is no maximum charging regime. While Ofgem’s move reflects falling energy prices on the wholesale market, which companies may benefit from, there is no automatic reduction in bills. Indeed, the vast majority of firms now get no protection at all from higher energy costs. The Energy Bills Discount Scheme, which provided some support for businesses, came to an end on 31 March 2024 and has not been replaced. That makes it imperative for small businesses to take action for themselves on energy costs – particularly amid predictions that prices…

PayPoint (LSE: PAY) is one of the UK’s most overlooked and undervalued businesses. In a world where fintech companies, even those racking up huge losses, can attract multi-billion-pound valuations, PayPoint is languishing at a market value of around £440m and trading at a forward price-to-earnings (p/e) multiple of 8.6. It seems the market is struggling to understand how PayPoint works and the vital role it plays. Filling a niche PayPoint fills an interesting gap in the market between fintech and the world of cash payments. As well as offering point-of-sale systems for retailers, it allows consumers to pay bills, such as water and gas, in convenience stores with cash. It also helps retailers and consumers process digital payments and, via its Love2shop arm, provides employee and customer rewards and pre-paid…

Klaus Schwab, the 86-year-old founder of the World Economic Forum (WEF), was arrested when the US military swooped on his home in Switzerland. Following a deadly firefight, Schwab (pictured) was found dead in bed connected to an adrenochrome infusion machine to reverse ageing. This is not true. But the story went viral earlier this year when it was reported by satirical websites and taken to be fact by credulous doomscrollers. Schwab is actually in good health and in post. But the story is of a piece with Schwab’s organisation, which has become the subject of many conspiracy theories. More true, if less exciting, is that he is to resign as executive chair of the WEF, says Sam Jones in the Financial Times. He has been at the helm since 1971,…

Since I started writing this column in 2006, I have worked with the same MoneyWeek picture editor, Natasha, every week. As you would expect, she has a perfect eye, but I can assure you that nothing could prepare her for this week’s challenge. In order to source the image that accompanies this article, I contacted the estate, and they sent me a generic, albeit high-resolution, shot. The problem is that the image looks like a bright pink rosé, and the astonishing thing about the astonishingly delicious 2023 vintage of Pique Roque is that it barely carries a pink gene in its DNA. So, Natasha’s job is nigh-on impossible this week, and for that, I apologise. The fact that this is the palest vintage of this wine I have ever tasted…

“The new Modi government looks a lot like the old one,” says The Economist. Indian voters recently stripped prime minister Narendra Modi’s governing BJP party of its parliamentary majority for the first time in a decade, leaving it to rely on smaller parties to stay in power. Concern that a shaky coalition could undermine growth saw Indian markets plunge 6%, wiping $400bn off stocks in a single day earlier this month. However, Modi has assembled a coalition that is broadly “sympathetic to his pro-business” agenda, with many of the key ministers from the last term remaining in place. The result? The BSE Sensex index “clawed back all its losses” within a week and is up 7% since the start of the year. Modi has already achieved much since coming to…

Five to buy Diploma The Telegraph Diploma’s shares have soared by 68% in 18 months, outperforming the FTSE 100. The supplier of specialist technical products such as gaskets, wiring and seals is growing strongly, justifying its high price/earnings (p/e) ratio. Diploma’s sound financial position allows it to buy high-quality firms. Given the group’s “sizeable competitive advantage and impressive long-term growth potential”, the shares are worth buying. 4,094p Pets at Home The Sunday Times Pets at Home has lost a quarter of its value since the Competition and Markets Authority (CMA) began sniffing around the vet industry last September. The regulator is concerned that corporate consolidation has weakened competition. Although a recovery in the share price may not come this year, the grooming business remains profitable, the vet arm operates with…

Russia and North Korea signed a “breakthrough” new deal agreed during Russian president Vladimir Putin’s trip this week to the “reclusive state”, says Simone McCarthy for CNN. The strategic partnership replaces previous deals signed in 1961, 2000 and 2001, and most ominously includes “the provision of mutual assistance in the event of aggression against one of the parties to this agreement”. The visit comes as tensions “remain elevated” on the peninsula, where North Korean president Kim Jong Un has in recent months “ramped up” the bellicose rhetoric and scrapped a long-standing policy of seeking peaceful reunification with the south. The visit and deal are very much a “diplomatic two fingers” to the West, says Ivor Bennett on Sky News. It is a result of “Russia’s isolation from the West” and…

Is immigration currently high? Yes. Last year about 1.2 million people moved to the UK, almost certainly the highest number in history. “Net migration” (the term widely used to mean net inward migration, that is immigration minus emigration) was 764,000 in 2022 and 685,000 in 2023 – about triple the level at the last general election in 2019. That’s a far cry from the “tens of thousands” promised by the Conservatives at both the 2015 and 2017 election. Overall, since 2010, when the Conservatives came to power (initially in coalition with the Lib Dems), ten million people have moved to the UK, and 6.3 million have left, meaning net migration of 3.7 million. As the authors of a recent Centre for Policy Studies paper arguing for far greater controls on…

Commodities spent much of the past decade in the doldrums, as the excitement about “supercycles” faded into a familiar boom-and-bust. In the aftermath of the pandemic, that’s changed: investors are getting far more involved in metals markets, as James McKeigue explains on page 24. Meanwhile, long-term commodity bulls are getting a favourable hearing as they set out a case for rising demand and tight supply caused by the electrification of the energy system. Bulls can get carried away by this in the short term: copper is actually down by $2,000 per tonne since Jeff Currie was interviewed by Bloomberg (see right). The dynamics look very complex right now. Chinese end-user demand is soft due to the weak economy (especially in real estate – construction uses a lot of copper). Yet…

Fintech is enabling crime Geoff White The Economist “Cutting-edge financial technology is fast becoming the handmaiden of organised crime”, and the situation will only get worse unless governments and the tech industry can “find common ground,” says Geoff White. While digitisation means financial transactions are increasingly logged, computer hackers have long experience in making “stolen funds vanish”, assisted by crypto, which offers “near-anonymous” payments and largely escapes the eye of regulators. The problem is that the same three things that crooks want – a “financial environment with febrile activity and fluid asset prices”, a global financial system and “non-existent or minimal regulation” – are the very things that also help start-ups to thrive. Calls for regulation lead to accusations of state overreach or that “trad-fi” wants to stymie competition. It…

samdumitriu.com Britain’s film industry is a “national success story”, says Sam Dumitriu, and demand for studio space is fast outstripping supply. Britain will need an estimated 2.6 million square feet of studio space to keep up with demand. Yet planning permission has been refused for a scheme to build a new £750m film studio on the site of an old quarry next to the A404. This story “illustrates what’s fundamentally wrong with Britain’s economy”. Policymakers “constantly fret” about why investment levels in the UK are so low and why fast-growing firms are selling up to US competitors. Yet the answers usually advanced, involving tweaks to the tax and saving regimes, all “seem a bit peripheral” when a three-quarter-of-a-billion-pound investment into one of our strongest industries is refused planning permission to…

■ Invesco is closing its UK equities team, which used to be led by star manager Neil Woodford, says The Telegraph. The US asset manager is to merge the London desk to create a “Pan European Equity Team” to encourage “collaboration” between staff. The news marks another blow to Britain’s equity funds, which have suffered outflows as clients have withdrawn money amid “antipathy” towards British shares in recent years and the increasing popularity of low-cost index trackers. British firms have been quitting London to list in New York to secure higher valuations. The money in Invesco’s UK Equity Income and High-Income funds has declined to £6.86bn, compared with £33bn when Woodford oversaw them at asset manager Perpetual, which was bought by Invesco in 2001. Woodford is being investigated by the…

Current-account switching bonuses are back. Several banks are offering incentives to entice you to change your account. “The deals include up to £200, free gifts and cashback on spending,” says Rosie Murray-West in The Sun. New customers at Nationwide can bag £200, while First Direct, Lloyds and Santander are all offering £175. TSB is paying £100 for switches. “But there are lots of other offers too.” Several banks now offer cashback on current-account spending, along with top easy-access savings rates. Santander is offering its Edge account customers 1% cashback on bills paid by direct debit and 1% cashback on grocery and travel spending. This is capped at £10 a month each, so you could earn £240 cashback a year. It also has a linked easy-access savings account paying 7% on…

The UK’s business-rates regime looks set for an overhaul following the election, with both the main parties now promising reforms – albeit with little detail available. The Conservatives are promising measures to reduce costs for high-street shops in particular. Labour says it is keen to level the playing field between high-street retailers and their online rivals. Indeed, much of the focus has been on the retail sector, even though every business with physical premises is covered by the business-rates system. That includes offices, pubs, warehouses, factories and leisure facilities as well as high-street shops. One positive change to help a wider group of firms would be simplification. A patchwork quilt of exemptions and reliefs, largely introduced over the past few years to help businesses deal with Covid, leaves many businesses…

Sustainable investing is a long-term, multi-stakeholder approach to value creation. It has a clear focus on positive, real-world, social and environmental outcomes. These are delivered and quantified in an effective, accurate and repeatable way. Our strategy is one of the few available to give investors pure emerging-market equity exposure with a focus on sustainability. We invest in a diversified portfolio of companies in developing or emerging nations, focusing on firms with good or improving sustainability criteria as defined by our proprietary environmental and social governance (ESG) rating methodology. One of the main investment opportunities we have identified is closing the funding gap. The Organisation for Economic Co-operation and Development (OECD) estimates that the gulf between the annual financing requirement for emerging markets to meet the United Nations’ sustainable-investment goals by…

Confessions of a Teenage Fraudster Available on the BBC iPlayer The rise of two-factor authentication and other online security measures makes carrying out even the most basic digital transaction seem as full of checks and balances as launching a nuclear missile. Despite this, credit-card fraud has hit record levels and continues to rise. This is partly down to the rising number of transactions, but fraudsters such as Elliott Castro are also to blame. This three-part BBC mini-series recounts how the Scottish teenager managed to steal £2.5m by demanding fake card charges over five years, before finally being caught. Castro’s spree was partly enabled by the unique conditions of the late 1990s, when online commerce was still in its infancy, and people thought nothing of giving security details over the…