Indholdsfortegnelse for Issue 1267 i MoneyWeek

“[People] who never lived under socialism adore it, while everyone who lived under it hates it,”says Garry Kasparov, the Russian former chess grandmaster. New York’s enthusiasm for “democratic socialism” (see page 27), and all the superficially appealing yet truly appalling ideas that are part of this package, notably rent controls and attacking the existence of billionaires, is unlikely to last long if Zohran Mamdani actually becomes mayor and implements his policies. It seems just the other day that everyone was gaga for Jeremy Corbyn, while leftist populism is rampant in Europe too (it is often as statist and utopian as far-right populism – there’s that horseshoe theory of politics in practice). Socialism keeps popping up, like measles. Given its record, you’d think we’d have herd immunity by now. “New Yorkers…

“China… has long lagged behind when it comes to… home-grown retail brands… This is now changing… the electric car gliding silently by is increasingly likely to be Chinese… Mixue, a purveyor of ice-cream and cold drinks, has dethroned McDonald’s as the world’s largest fast-food chain by number of outlets… Pop Mart, a Chinese toy maker, has created a buzz worthy of Disney around its strange grinning… dolls… In the past, Chinese firms [replicated] Western products cheaply… Now they are accumulating valuable intellectual property of their own. Investors… should welcome… the [trend]. Investing in Chinese technology companies has long been politically hard because of security worries… But handbags and hot drinks are harmless. Western firms will have to wake up and smell the bubble tea. Within China, the premium that foreign…

Associated British Foods (ABF) is in a “stand-off” with the UK government over the future of Britain’s largest bioethanol plant, says the Financial Times. With the trade pact between the US and UK threatening “to flood the market with tariff-free ethanol”, ABF has entered negotiations over the future of the Vivergo’s biofuel business. A “wind-down” of the facility is on the cards if the talks fail. If ABF does go through with threats to close the £450m Vivergo plant in September, it will be bad news for the 160 people that it employs and a further 5,000 jobs in downstream supply chains. ABF blames the closure on the fact that US firms get two lots of subsidies. ABF has a point in that importing ethanol from the US is less…

Spin-offs often do better than their previous owner, says WirtschaftsWoche. A case in point is likely to be Valterra Platinum, previously known as Anglo American Platinum and owned by Anglo American. Shares in the last have slipped by a tenth, while Valterra’s stock has gained 5%, and there should be further to go. Platinum has been overshadowed by gold for a decade. Over the long term it has traded at a 40% premium to the yellow metal, but is still on a 50% discount. The gap should close: the market is set for a third successive supply deficit this year as output from mines continues to disappoint. Stockpiles above ground, meanwhile, are at historically low levels.…

There are not that many people still working in investment who can remember a time when Japanese government bond (JGB) yields did not trend inexorably down. They peaked in 1990, just after the bubble began bursting, and declined through most of the following 35 years. For the entirety of my career, shorting JGBs has been known as the “widow-maker”. No matter how low yields went, they always found a way to fall further, wiping out anybody reckless enough to bet that the bottom had been reached. This may be why the big upward moves in longer-dated JGBs over the past year have not drawn as much attention as you would expect. Anyone who has been conditioned to expect JGB yields to be low forever will instinctively doubt that can last.…

Europe is vulnerable to US tech Jennifer JohnsonBreakingviews European businesses have a problem, says Jennifer Johnson. They rely heavily on US cloud-computing providers Amazon, Microsoft and Google. This is arguably “imprudent” given “testier” transatlantic relations. In theory, Washington could legally access European data for criminal investigations or on security grounds and potentially even insist cloud services are shut off. The tech giants’ data centres also help to power AI models, which may play a future role in national defence. The alternatives aren’t perfect. An industry coalition, EuroStack, is pushing for a “mass build out of strategic digital infrastructure”, but this could cost as much as €5trn and would take years. Other options include using US equipment, but switching to European-made cloud software hosted in European-owned data centres or choosing from…

newscientist.com The market for stolen smartphones is booming, says Matthew Sparkes. In London, 80,000 were snatched last year alone. As victims will know well, the loss “stings”, not just in terms of the value of the phone, but the “dreary administrative slog” you face replacing the device and securing your accounts and data. So why can’t we stop the thieves? It’s more difficult than it sounds because the crime pays and technology firms prioritise useability over security. The UK government, at least, recognises there is a problem. It launched a “crackdown” late last year, promising to pressurise smartphone makers to permanently disable stolen phones and pledging to conduct an investigation into who steals the phones and where they end up in order to stop the problem. An international agreement would…

The performance of the UK’s listed infrastructure funds continues to be dismal. The average dividend yield of the renewable energy sector is 8.9%, having spiked to an all-time high of 10.6% on 7 April, according to the Association of Investment Companies (AIC). The average yield of the infrastructure sector is 6.1%, having reached a record 6.8%. Weighted average discounts to net asset value (NAV) are 24% and 17.5% respectively. Surely these are the sort of companies that investors should be buying as the market rotates away from growth to value investing, and from the US to the rest of the world? “Analysts believe that the pessimism is overdone,” said Annabel Brodie-Smith of the AIC. “There has been some corporate activity, shares are being bought back and assets realised.” Her view…

There has been a jump in takeover activity in the real-estate investment trust (Reit) sector over the past six months. Last week, Tritax Big Box Reit (LSE: BBOX) announced a £485m takeover of Warehouse Reit (LSE: WHR), outbidding private-equity giant Blackstone. Under the terms of the deal, Warehouse’s shareholders will receive 0.4236 new Tritax shares and 47.2p in cash per share, plus upcoming Warehouse dividends due in July and October. The deal will create a £7bn giant and one of the largest single owners of warehouses in the UK. The deal followed what seems to be the final instalment of the battle between private-equity giant KKR and Primary Health Properties (LSE: PHP) over the latter’s peer Assura (LSE: AGR). After months of negotiation, Assura has agreed to merge with PHP…

● Emma Jones, the founder of Enterprise Nation, is to be the new Small Business Commissioner, the government has announced. Jones will oversee the activities of the agency, which has powers to intervene in disputes between small companies and larger organisations. However, while Jones is widely respected in the SME sector, she will have her work cut out to make a tangible impact on the late-payments problem, with data suggesting unpaid invoices are becoming more common rather than less. ● SMEs need to be ready for more inquiries and investigations from HM Revenue & Customs, tax experts warn. New HMRC data suggests small businesses now account for 60% of the UK’s £5.3bn tax gap – the difference between the amount collected from taxpayers and what they theoretically owe. The fact…

Silicon Valley has been abuzz for weeks about Meta’s CEO Mark Zuckerberg (pictured) poaching top AI engineers and researchers with pay packages worth up to $100m, says Lauren Aratani in The Guardian. The owner of social-media platforms Facebook, Instagram and WhatsApp is hoping to gain an edge in the AI arms race. It recently paid $14bn for a stake in start-up Scale AI and put its 28-year-old founder, Alexandr Wang, in charge of its “superintelligence team” to develop a hypothetical AI system that is smarter than humans. Zuckerberg has personally contacted candidates, including graduates from leading PhD programmes and those currently working for competitors such as OpenAI, whose boss Sam Altman criticised the large signing bonuses as “crazy”. Yet, Zuckerberg isn’t alone. Anthropic, an AI company set up by former…

“Tragedy plus time is the formula for comedy, but on Wall Street it equals opportunity,” says Jeffrey Goldfarb for Reuters. With time even the “costliest failures” will be forgotten. Look no further than the rush of listings by special purpose acquisition companies (Spacs) – prompted by ultra-low Covid-era interest rates. Unlike a normal initial public offering (IPO), in which an existing business sells itself to investors, Spacs invert the process, first raising money from investors and then using it to go shopping for a suitable business. It is a risky manoeuvre, with investors needing to trust that the Spac sponsors can secure an attractive deal, typically within a two-year deadline. US Spacs raised $250bn in 2020 and 2021, but roughly half ultimately failed to find a suitable acquisition and had…

Percentage gain since 1 January 2025 Hong Kong is poised to regain its crown as the world’s premier listings venue, says Sherry Qin in The Wall Street Journal. The city has hosted 41 public offerings valued at $13.66bn already this year, surpassing the Nasdaq and New York Stock Exchange figures once blank cheque offerings are excluded (see column). Enthusiasm about Chinese technology stocks and secondary listings from the mainland are powering the local Hang Seng index, which is substantially outperforming the New York and mainland Chinese markets this year. Newly listed shares in the city have returned an average of 35% recently, says Lex in the Financial Times. On just ten times forward earnings the Hang Seng is still cheap. So much for talk of Hong Kong’s “financial decline”.…

Online card seller Moonpig has suffered a nasty writedown in its experiences division (comprising gifts ranging from spa breaks to adventures). The impairment caused its reported pre-tax profits to plummet from £46.4m to just £3m last year. While the company has announced its first dividend as well as a share buyback programme, this good news was also overshadowed by the fact that CEO Nickyl Raithatha, who has been in charge since 2018, will be standing down after seven “transformative years in charge”. Raithatha has overseen Moonpig’s expansion, especially during the pandemic, culminating in its 2021 flotation. However, trading has slowed significantly since lockdown curbs ended and people returned to purchasing cards on the high street. Rising inflation has also dampened consumers’ spending. You can see why investors are cautious,says eToro’s…

Visma has chosen London over Amsterdam for its initial public offering (IPO) next year, giving a rare boost to Britain’s struggling stockmarket following an exodus of big names, says the Financial Times. The €19bn Norwegian group, which offers accounting and payroll software to small businesses, has been owned by British private-equity firm Hg since 2006, after it was taken private for £380m. Hg owns 70% of Visma, with other shareholders including Singapore’s sovereign wealth fund GIC and US buyout firm TPG. The London listing is contingent on reforms promised by the government and the bourse, such as allowing firms with a euro share price into FTSE indices.…

At last week’s Nato summit in The Hague, all but one of the 32 leaders agreed to raise their defence spending to 5% of GDP as Donald Trump has been demanding, says Jim Lawley in The Spectator. The exception was Spain’s Pedro Sánchez, who “enraged” Trump by insisting that 2.1% was sufficient. Trump described the overall result as “tremendous”, but threatened tariffs to make Spain “pay twice as much”. The rise means that Nato’s spending will leap from $1.5trn last year (more than half of global military spending) to a total of $13.4trn by 2030, says Nick Buxton on Al Jazeera. This “spree” will come mostly at the expense of social and environmental spending at a time when climate scientists warn that we have two years left to keep temperature…

BP’s days as a stand-alone company seem numbered. Shell has had discussions about a takeover of its rival, The Wall Street Journal reported last week. This won’t happen immediately – Shell has denied it is about to launch a bid, which means it is now not allowed to make an offer for at least six months. But the blunt truth is that BP has been in decline for a long time. Rewind a quarter of a century to when the shift into green energy began, and BP and Shell were roughly equal. The two heavyweights of the European oil and gas industry had been slugging it out for a century without either ever coming out decisively on top. In the last decade, however, Shell has pulled ahead. With a market…

Duration is a measure of risk that is typically applied to bonds. It describes how sensitive a given bond is to movements in interest rates. Think of the relationship between bond prices and interest rates as being like a see-saw: when one side goes up, the other goes down. Modified duration (which can be found in the fact sheet of most bond funds) tells you the likely percentage change in a bond’s price in response to a one percentage point (100 basis points) change in interest rates. The higher the duration, the higher the “interest-rate risk” of the bond – that is, the larger the change in price for any given change in interest rates. So if a bond has a duration of ten, it indicates that a single percentage…

“I’d have merch with their names on the back so they’d make money, the tournament makes money, everybody makes money. We’re losing out on millions and millions because of that. Numbers are really important! Kids love numbers and they can retire numbers – like a Federer. It’s so obvious. Take what other sports are doing and what people like from other sports.” Tennis legend Billie-Jean King (pictured) thinks players should be assigned numbers and have names on their kit, quoted in The Telegraph “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” Microsoft’s co-founder Bill Gates, quoted in American Lawyer “They’d have to pay me a lot of money because I didn’t get paid what…

spectator.co.uk In Otford, a commuter village outside Sevenoaks, a “colossal” pedestrian footbridge was recently built, replacing a pedestrian crossing in the same spot, says Rory Sutherland. It must have cost well over £1m, and went ahead in the face of local opposition. This is a “textbook case of what happens when a large bureaucratic entity meets local knowledge”. The bureaucracy is only interested in its own narrow remit, “usually blame-avoidance through slavish adherence to established procedure”. Local opinion is alert to “second-order effects” – in this case, that the bridge is no safer than the old crossing and would lead people to ditch the safe shortcut and walk down a busy road. The bridge went ahead anyway. Or it did after eight years of delays and costly appeals, anyway. What…

Dalton Investments – which runs the UK-listed Nippon Active Value Fund, among other vehicles – has failed in an attempt to replace the board of Fuji Media, “despite investors’ anger over the Japanese media company’s damaged brand and profitability from a sex-assault scandal that spooked advertisers”, says Bloomberg. Dalton and other investors had proposed 12 new candidates for the board, but shareholders instead backed the slate of directors recommended by Fuji Media in a meeting punctuated by “angry calls for change”. Dalton said Fuji Media had still made “significant progress over the last six months” and said it would continue to engage “actively and constructively”, including pushing for a spin-off of Fuji Media’s real-estate business.…

Britain’s SMEs are struggling to raise equity funding, with investment falling back across the country. Data from the British Business Bank shows that 15% fewer small UK businesses raised money from equity investors last year – with total investment falling back 2.5% to £10.8bn. The British Business Bank also warned that the number of deals in the first quarter of 2025 remained at historic lows. Business angels have continued to hold back from new equity investments, while funding from the Enterprise Investment Scheme has also dwindled. The data suggests that increased anxiety about the prospects for the UK economy – part of a broader story of global volatility – has taken its toll on investors’ appetite to put money into small businesses. Just 2,048 firms in the UK completed successful…

The Prince Charles Cinema (PCC) is “one of the best things about central London”, says India Block in the Evening Standard. It has long been a “stalwart of independent cinema”, the place to go to catch the “latest horror film, a hard-to-find overseas release, or a Lord of the Rings marathon”. The “much-loved institution” dates from the 1960s and is a “London success story”, selling more than 250,000 tickets to 858 films in 2024 alone, at a time when cinemas are struggling and closing up. But the PCC is under threat from “another London institution: landlordism”. At the end of January this year, the company that owns the cinema’s freehold, run by billionaire Asif Aziz (pictured), sought to hike rents and introduce a six-month break clause in the lease, which…

2024 Mar de Frades, Albariño Atlántico, Rías Baixas, Galicia, Spain £17.50, Tesco and tesco.com Winemaker Paula Fandiño has shaped the future of Mar de Frades over her 18-year tenure at this pioneering winery. The albariño grape is one of the most enchanting and intriguing. While many examples appear soapy and simple, Paula’s sensitive handling and innovative winemaking have made hers one of the most delicious expressions of this grape. With roughly 2,250 hours of sun per year and 1,500mm of rainfall, the Rìas Baixas region is a complicated place to make wine. Humidity is a constant enemy, so the vines are trained high on pergolas to maximise air circulation and prevent disease. However, it is the Atlantic breezes and the airborne salinity that are also the signature of great albariño…

“A latter-day Rip Van Winkle… napping since the start of the year, might think not much had changed” over the past six months in financial markets, says Randall Forsyth in Barron’s. The S&P 500 index ended the first half of 2025 at a new record high, having climbed a steady but “unremarkable” 5% in the first six months of the year. Little would old Rip know that US stocks had plunged 19% to the brink of a bear market in April following Donald Trump’s tariff shock, only for a 90-day pause and détente with China to trigger an equally powerful V-shaped rebound. The S&P 500 has soared by almost a quarter since its April low. The tech-focused Nasdaq has leapt a third over the same period as tech stocks come…

Five to buy OSB The Telegraph There could be further dividends and capital gains to come from challenger bank OSB. It is on a similar valuation to rivals Metro and TSB, yet the challenger provides a higher return on tangible equity than both, and Metro will have to work hard over the next few years to match OSB’s 35% cost-to-income ratio. Although it faces risks tied to Britain’s property sector, OSB boasts a higher net-interest margin, stronger regulatory capital ratios and a forecast 7% dividend yield. 499p Bunzl The Times Bunzl issued a profit warning after Donald Trump’s tariff announcement, and its shares remain stuck at a four-year low, but jitters over its slow recovery are overdone. Shares in the distributor of loo roll, cleaning products and disposable cutlery are…

Spanish prime minister Pedro Sánchez is “fighting for political survival” amid mounting allegations of corruption, says Isambard Wilkinson in The Times. According to a police report, his two successive right-hand men, José Luis Ábalos and Santos Cerdán, took kickbacks on state contracts. Both deny the allegations. Other scandals are threatening his leadership, which the Socialist-led government attributes to a “smear campaign” by the right-wing opposition, media and judges. Sánchez is also “on the defensive internationally after refusing to agree to a new Nato spending target last week”, says Barney Jopson in the Financial Times (see box). Public outrage could lead to a snap election, however, says Guy Hedgecoe in Politico. With his conservative People’s Party “comfortably ahead in the polls” (34% compared with Sánchez’s party’s 27%), Alberto Núñez Feijóo has…

Edinburgh TSB sold: Spanish banking group Sabadell is selling its British arm, Edinburgh-based TSB, to fellow Spanish bank Santander for £2.65bn. That will make Santander Britain’s third-largest bank by personal current-account balances and the fourth-largest by mortgages. It will also add £35bn in customer deposits to Santander, with the combined bank serving nearly 28 million customers in Britain. The transaction, subject to regulatory and shareholder approval, is expected to generate cost synergies of at least £400m, or 13% of the combined lender’s cost base, potentially at the expense of jobs and branches. Sabadell is itself battling an €11bn hostile takeover by Spanish rival BBVA. The latter’s chairman, Carlos Torres Vila, plans to continue his pursuit of the smaller lender despite the Spanish government’s insistence the banks remain legally separate for…

● “WH Smith has a strong survival instinct,” says Alex Brummer in the Daily Mail. “Executives have a fear of backing away from heritage enterprises because of concern about a consumer and government backlash.” However, with retailers coming under pressure from surging costs, WH Smith made the “bold” and “contentious” decision to sell its 230-year-old high street chain to Hobbycraft’s owner Modella Capital for £52m. Modella has now negotiated a lower price of £40m to reflect weaker sales volumes in town centres, but this still leaves WH Smith free to focus on its faster-growing chain of 1,200 global travel outlets. Meanwhile, “the bargain price doesn’t augur well for the new TGJones” – the brand that Modella has chosen for the high-street stores it is buying. ● When CEO Bill Winters…

“[A] Sword of Damocles still hangs heavy over Western markets – yet most investors seem oblivious to this risk,” says Albert Edwards, the veteran – and famously bearish – strategist at Société Générale. Volatility in Japanese government bonds (JGBs) has been extreme enough to force the Bank of Japan (BoJ) to delay its tapering of quantitative easing (QE) until April 2026. This development has received “little attention”, but is “possibly the most important” moving part in global markets. “Investors underestimate the importance of policy shifts in Japan at their peril,” says Edwards. “Supercrazy” Japanese monetary policy – including interest rates at zero and “outsized” quantitative easing – was a feature of global markets for decades. Investors believed that this was justified by the country’s chronic deflation. However, this drove “a…

theconversation.com At the last general election, the two main parties, Labour and the Tories, together won fewer than three in five of all votes cast, says John Curtice. That’s the first time that’s happened since 1922, when Labour replaced the Liberal party as the Tories’ main competitor. Is a similar upheaval on the cards? New research as part of the British Social Attitudes report shows it might be. The “traditional anchor” of Tory and Labour support – social class – has been “cast adrift”. The battle between left and right over basic economic issues has been replaced by a division between social conservatives and social liberals. This division is drawing the former to Reform and the latter to the Greens. Low levels of trust and confidence in how we are…

● Tritax Big Box has made a cash-and-shares bid for fellow logistics investor Warehouse Reit, trumping a reduced bid from US private-equity firm Blackstone. The offer, which has been recommended by Warehouse Reit’s board, would see investors receive 0.4236 new Tritax shares and 47.2p in cash, plus forthcoming dividends. That represents 111p per share based on Wednesday’s prices – a premium to Blackstone’s bid of 110.6p (including dividends), which had been cut from 115p due to a valuation dispute, but still a discount to latest reported NAV of 128p. ● Alexander Darwall’s Devon Equity Management – which runs the struggling European Opportunities Trust (EOT) – is to be taken over by River Global in a deal worth up to £2.46m. Darwall will co-lead European equities at River Global, which was…

A month hasn’t gone by this year without the experts forecasting disaster for markets. First we heard that the “bubble” in the stockmarket following Donald Trump’s election was about to burst. US disillusionment with Ukraine and its withdrawal from the defence of Europe would lead to a Russian blitzkrieg on Europe. Then, tariffs were a catastrophe that would lead to at least a US, if not a global, recession. Next, rising budget deficits in the US, UK, Europe and Japan would lead to a funding crisis and a crash in the bond market. With the launch of DeepSeek, Chinese technology was set to torpedo the “Magnificent Seven” US stocks. Finally, Israel’s pre-emptive strike on Iran, followed by the US, would send energy prices sky-high, triggering inflation. And yet the FTSE…

Small businesses are in danger of missing out on the AI revolution: the British Chambers of Commerce finds that just 25% of small and medium-sized enterprises (SMEs) have started to use AI. Yet research by Microsoft claims that AI adoption by SMEs could boost the UK economy by £78bn. What explains the slow take-up rate? Many SMEs feel intimidated by the hype around AI. They worry that complicated and sophisticated technology will cost them a fortune. They fear lack of technical expertise will leave them unable to exploit AI’s potential. And they’re concerned by warnings about ethical issues and inaccuracies. The key to overcoming those anxieties is to start slowly and carefully. There’s lots of talk about the transformative impacts of huge AI implementations, but there are also many individual…

Our investment process focuses on companies that are growing revenue, margins and earnings. When you find these three factors accelerating at the same time, there is a good chance you have a stock that’s going to perform well. We often find that companies with these characteristics are at the beginning of a new product cycle, and much of our stock analysis is concentrated on finding those companies. We marry our fundamental work with macroeconomic analysis, which helps us identify where we are in the business cycle. This informs our risk appetite: aggressive in bull markets, defensive in bear markets. Finally, we use technical analysis to time our buys and sells. Our style is active and we like to find stocks exhibiting strong share price momentum, showing that the market validates…

Grenfell: Uncovered Directed by Olaide Sadiq Available on Netflix In the past few years there have been several dramas in the theatres about the 2017 Grenfell Tower fire, including Grenfell: Value Engineering and Grenfell: System Failure by Richard Norton-Taylor and Nicholas Kent, and Grenfell: In the Words of Survivors by Gillan Slovo. Now Netflix has released its own full-length television documentary about the tragedy, which led to the death of 72 people when flammable cladding caused what should have been a routine and easily containable domestic fire to spread rapidly through the London tower block. Using a mix of interviews and news footage, the documentary tells the story of what happened, both on the night in question, and in the years that led up to the disaster. Mistakes were…