Innehållsförteckning för 1215 från MoneyWeek

There is always someone worse off than you. After almost a decade of shunning our stockmarket and making fun of our politics, global investors seem to have decided that we are a comparative safe haven. Equities have hit a record high, with merger-and-acquisition activity rebounding strongly; the pound has risen to a two-year peak against the euro and looks set to reach a pre-referendum high of 80p against the single currency, according to Barclays. Hedging against weakness in sterling has dwindled to a seven-year low. The political backdrop looks appealing compared with other big economies. Investors have been pricing in a centrist Labour government with a large majority that is not beholden to its left wing, presaging a period of stability, at least. “A key problem is that decades of…

Shares in electric-vehicle (EV) maker Rivian Automotive jumped by a third last week following news of Volkswagen Group’s $5bn investment in the business. Rivian will form an equally controlled and owned joint venture with VW to “share electric-vehicle architecture and software that could eventually be used by the German carmaker’s brands”, which include VW as well as Audi and Porsche. It’s hoped the deal will allow both companies to cut vehicle costs by increasing scale and accelerating innovation. While the first cars to hit the road with the full Rivian stack of software and central computing won’t arrive until 2028, parts of the technology will appear in selected models earlier. The move comes at a critical time for both firms, says Arjun Neil Alim in the Financial Times. VW is…

Investors in the market for a cash-rich, defensive company should look no further than Spain’s Viscofan, says Wirtschaftswoche. It is the world’s biggest producer of artificial sausage casings, with 19 production sites worldwide in countries ranging from Belgium and Serbia to Brazil and Australia. The distribution network spans 100 countries. The factories are highly capital-intensive, which deters potential rivals, so the group looks secure in its niche. It recently expanded into plant-based sausage skins to cater for vegetarians. The balance sheet looks solid and the stock boasts a free cash flow yield of 7.5% for 2024, providing scope for juicy dividends and share buybacks. The shares currently yield 4%.…

After months of negotiations following an election that “sent shock waves through the Dutch political system”, the Netherlands swore in its first hard-right government this week, says Claire Moses in The New York Times. Previously seen as a “bastion of liberalism”, the Netherlands is now one of several European countries that have “experienced electoral swings to the right”. Geert Wilders (pictured) agreed to forgo becoming prime minister to increase the chances of forming a right-wing coalition, but his far-right party, which topped the polls, will still wield “significant influence” over the new cabinet. Indeed, it will get the biggest share of ministers and secretaries to the new cabinet, including the crucial position of minister of asylum and migration. The new government may end up giving the EU a “rough ride”,…

● It’s not been a good week for CEO Emma Walmsley (pictured) and her bid to “reboot “British pharmaceutical giant GSK, says Alex Brummer in the Daily Mail. GSK’s shares fell with a “wallop” after the NHS chose US rival Pfizer’s vaccine for the respiratory syncytial virus (RSV) over GSK’s “pricier and more efficacious jab”, while the US Centre for Disease Control has opted not to recommend GSK’s RSV vaccine for under-60s. Meanwhile, a court in the US state of Delaware is to rule on whether GSK’s ulcer drug Zantac may partly have caused some types of cancer. “Trying times.” ● “Things are hotting up” for electricals retailer Currys, says Alistair Osborne in The Times. CEO Alex Baldock hasn’t had the easiest tenure, with his turnaround interrupted by Covid, the cost-of-living…

Britons have concentrated on paying down debt since the global financial crisis, “putting on hold expenditure on big-spend items”, says Laura Foll, who co-manages several investment trusts at Janus Henderson, including the Law Debenture trust that is part of MoneyWeek’s investment-trust portfolio. So it’s no surprise that the economy has been “flatlining” recently. Since consumer spending accounts for about 60% of Britain’s GDP, growth will only pick up “when households finally lose patience with their saggy sofas and crazy-paving patios”, says Foll on Citywire. However, “while ‘squirrelling away’ acts as a drag on economic growth in the short term, it also builds the potential for a powerful ‘splurge and surge’ when people relax their spending habits”. Greater consumer confidence and job security could encourage cautious savers to start spending again,…

■ India is to receive billions of dollars in foreign inflows now that JPMorgan is to include the country’s sovereign debt in its emerging-markets index, the first time that the bonds of the world’s fastest-growing economy have been part of a major benchmark, says the Financial Times. This is the result of years of market reforms by the Indian government; 28 government bonds worth over $400bn will give India a 10% share of the widely tracked measure. Around $11bn has already flowed into Indian bonds ahead of the inclusion, with $30bn expected to arrive over the next ten months. Given Russia’s ejection from JPMorgan’s index and China’s weakening economy, India could soon be added to other fixed-income benchmarks. Indian bonds will enter Bloomberg’s Emerging Market Local Currency Government indices from…

capx.co Probably incoming Labour chancellor Rachel Reeves has declared she’s going to deal with the gender pay gap, says Tim Worstall. Finally, a politician making a promise that not just can be, but definitely will be kept! For we don’t have a gender pay gap now. Reeves’s pledge is already “done and dusted”. There is a gap between the average pay of men and women. But as Nobel-prizewinning economist Claudia Goldin has shown, this is not because women are discriminated against – at least, not any more. What is happening is that people who make different life choices earn different amounts of money. Among young professionals in their early 20s, for example, there is no gender pay gap. A gap only opens at the likely age of first childbirth. Women…

Over the past two years, I have recommended a wide range of stocks on this page. Overall, I’ve been right more times than I’ve been wrong, which is always encouraging for investors. It is worth reviewing mistakes and successes to understand what we can learn. This is by no means a comprehensive list of the ideas I have outlined in this magazine, but a sample of the winners and the losers. Gushing dividends The first two companies I ever recommended in these pages were Rio Tinto and BHP. In April 2022, I argued that these businesses had the scope to return vast amounts of cash to investors over the following years. That’s just what happened. Rio returned 735p per share in 2022 and 2023 (14% of its share price at…

Planning on selling your business in the next few years? You might have to pay more tax on the proceeds than expected. The next government could very well decide capital gains tax (CGT) is a good way to raise revenues, given those commitments not to increase income tax, national insurance or VAT. This isn’t a party-political point. Yes, Labour has consistently refused to rule out changes to the CGT system. But the last government review of the CGT rules was ordered as recently as 2020 by the then-chancellor – one Rishi Sunak. Eventually, ministers backed away from reforms, not least because the priority was to deal with Covid, but the review was a warning shot. There’s no denying that business owners get a generous break from the current CGT regime.…

“Emerald Resources’ low-cost Cambodian gold mine offers growth potential” CQS Natural Resources is a £154m investment trust focused on global energy and mining equities. We pick the commodities we are most bullish on and the stocks we think are most attractively valued. In normal times valuations are reflective of a bullish commodity outlook, but we believe distortions in the market led by an increased focus on the environment have allowed us to find attractively priced stocks in commodities we expect to appreciate. This is driven by several factors. Institutions have sold fossil-fuel producers owing to constraints imposed by environmental, social and governance (ESG) criteria, while banks don’t want to lend to the sector, meaning the stocks are cheap and new supply remains constrained. Similarly, sentiment for precious-metals miners continues to…

Warren Buffett (pictured), the 93-year-old co-founder and boss of conglomerate Berkshire Hathaway, has put an end to the long-running speculation of what will happen to his fortune after his death, says Karen Langley in The Wall Street Journal. Buffett, who has already given away more than half his shares in Berkshire during his lifetime, retains around $130bn in stock. He will leave almost all that remains to a new charitable trust overseen by his three children and it will be up to them to decide unanimously how the money is spent. “I like to think I can think outside the box, but I’m not sure if I can think outside the box when it’s six feet below the surface and do a better job than three people who are on…

The UK housing market is “stabilising” following last year’s dip, says Reed Landberg on Bloomberg. Building society Nationwide reports that house prices rose 1.5% in the year to June, and ticked up 0.2% between May and June. Interest rates are still at a 16-year high, with the result that transactions involving a mortgage have fallen nearly a quarter on pre-Covid levels, while there’s been a 5% increase in those involving cash buyers. The total number of housing transactions is running at 15% below 2019 levels. Elevated mortgage rates have put a dampener on transaction activity, says Helen Crane for This is Money. The average five-year fixed mortgage rate for someone buying with a 20% deposit is now 5.09% – compared with 2.24% back in 2019. The typical UK house is…

India is one of the few countries to have outperformed the US’s all-conquering stockmarket, says Jacky Wong in The Wall Street Journal. The MSCI India index is up more than 110% since late 2019, beating the Nasdaq’s 99% climb. India’s spurt comes even as stocks in a neighbouring Asian giant hit the skids – the MSCI China has dropped about a fifth over the past five years in dollar terms. Strong Indian growth is driving a corporate earnings boom, with net profit for listed Indian companies rising 17% year over year for the quarter ended in March. Indian stocks now command a 60% premium to other markets in the Asia-Pacific (excluding Japan) region. India deserves a premium rating, but “higher multiples... are prone to overshoot” during a rally.…

Nike’s shares slumped by a fifth last week after the world’s largest sportswear group reported unexpectedly weak quarterly sales and scaled back its outlook for the year ahead, say Sara Germano and Jaren Kerr in the Financial Times. Nike now expects sales to fall by a mid-single digit percentage amid a slowdown in demand. This earnings miss follows a prolonged restructuring started by management in December, when it also suffered a big fall in the stock after warning of softening demand from consumers. While the company insists it is taking “aggressive” action to reorganise inventory at Nike-owned stores, some analysts are beginning to wonder whether “the company’s best days [are] behind it”. Only two years ago Nike was “riding high”, thanks to the “seemingly never-ending clamour for its Air Force…

London Tunnels, which plans to transform an abandoned network of tunnels in Holborn into a tourist attraction with two million visitors annually, has ditched plans to float on the London Stock Exchange, says The Guardian. It intends to raise £30m by listing on Euronext Amsterdam, saying it hopes this choice will allow it to exploit fully the size and scale of the European equity and capital markets. Several high-profile companies have chosen to list in Europe and the US rather than London. The tunnels were built to provide shelter during the Blitz, but were never actually used for this purpose. The site is supposed to open in 2027.…

The odds on the US presidential election are swinging around after last week’s debate (see left), with Joe Biden out to 8 (12.5%) on Betfair at the time of writing. What’s more, virtually all the markets related to the UK election will be settled by the time you read this. So let’s take a look at the controversy surrounding political betting that has come up in the past few weeks, especially in relation to people allegedly acting on inside information about the election date (as well as betting on other candidates to win). Like any form of gambling, political betting relies on the understanding that all parties act with a basic degree of integrity and common sense. Indeed, over the past few years I decided not to lay bets myself…

What’s happened? French voters go to the polls this weekend in the second round of France’s snap legislative elections, with its centrist president, Emmanuel Macron, facing disaster and humiliation – and France facing months of political stasis and economic turbulence. Following the resounding victory for the hard-right National Rally (Rassemblement National, or RN) of Marine Le Pen in the European Parliament elections, less than a month ago, Macron stunned allies and opponents alike by announcing an immediate general election. Macron wanted to seize the moment and take the battle to the far right, with the aim of uniting the centrist bloc, dividing the left, and isolating the RN. Rather than a bold tactical manoeuvre, it has proved more of a reckless gamble. Macron is facing his Waterloo. What were the…

Last week, we looked at the stories that defined different stockmarket eras over the last 75 years and produced exceptional returns. A few obvious lessons stand out for investors who are now searching for the big theme of the 2020s. One is that big, multi-year bull markets tend to centre around positive ideas, such as exciting new technology or rising consumer wealth. There are exceptions such as the 1970s, where inflation and supply shocks favoured energy, commodities and gold, but these are in the minority. Another is that a boom normally turns into a bubble and then a bust. To profit from big trends, you need to find a compelling story, be willing to let your winners run, but avoid becoming a true believer who can’t sell when the end…

Investors often forget that North America is not synonymous with the United States. Above it lies Canada, with an eighth of the population, but a larger land mass. Much of it is virtually uninhabitable, but it means that Canada is rich in natural resources while still having a population around the size of California’s. In investment terms, Canada is no laggard. Canadian General Investments (LSE: CGI), a £757m investment trust listed in London as well as Toronto, can boast a return of 192% over the last ten years and 85% over five (11.4% and 13.1% per annum). These figures are respectively a little behind and comfortably ahead of the MSCI All Country World index. Over 25 years, it is one of the best-performing funds in the investment-trust sector. The trust’s…

The proles prepare for power John Harris The Guardian The significance of wealth, privilege, and private education among British politicians is often overlooked, says John Harris. Research shows that only 7% of Rishi Sunak’s senior Tory colleagues come from working-class families, but with Keir Starmer’s team, the figure is put at 46%. Some 13% of Labour’s shadow ministers were privately educated, compared with about 65% in the Tory cabinet. The Tories’ collapse is partially due to the return of leaders from privileged backgrounds disconnected from the lives of ordinary people, despite the party’s efforts to present a more relatable image. This is evident in Boris Johnson’s insouciant misrule and Sunak’s insensitive decisions regarding universal credit and disability benefits. Labour may well end up adopting similar policies “couched in slightly different…

iea.org.uk Free-market liberals were divided over Brexit, says Kristian Niemietz. Those in favour looked forward to a day when Britain was free of the EU’s centralising tendencies, protectionism and corporatism. Sceptics argued Britain’s “home-grown statism would be every bit as bad as anything the EU could come up with”, and Brexit would just make it harder to trade with our neighbours. The Brexit-sceptics have probably won the day. But the main reason Brexit has hurt free-market liberalism is not policy but that it has radically changed the “debate culture and climate of opinion” – for the worse. One of the main social consequences of the Brexit vote has been the radicalisation of “The Sensibles”, a political tribe that bases its politics on “whatever is considered respectable, reasonable, grown up and…

We have one of the most complex tax systems in the world. The tax code is 21,000 pages long, 12 times longer than the complete works of Shakespeare. So it is not surprising it regularly causes confusion. One especially dense thicket of rules, regulations and allowances is inheritance tax (IHT). If you are worried about a future inheritance-tax bill, here’s everything you need to know about the rules surrounding gifts. Let’s start with the IHT threshold. Only estates worth more than £325,000 are subject to IHT. On top of that we each have a residence nil-rate band of £175,000. This means up to £175,000 of your primary property can be passed to your children and grandchildren without attracting IHT. If you are married or in a civil partnership you can…

Thousands of small businesses struggling to repay loans taken out during Covid are hoping they may get more time. Groups including the Federation of Small Businesses (FSB) are pushing for a change in the rules of the pandemic loan schemes amid growing concern that the cost of repayments could push some firms into bankruptcy. Already, almost one in five loans taken out under the Bounce Back scheme have seen defaults. The scheme enabled small firms to borrow up to £50,000 to get through the pandemic, with the state committing to repay banks if firms were unable to. A “pay as you grow” arrangement on Bounce Back loans does allow businesses to take payment holidays and to extend the term of their loans, but many firms still appear to be finding…

We’re often told to find a purpose in life as we transition from adolescence to adulthood, says James Fossdyke in The Sunday Times Driving. “Some find it quickly, setting their sights on a career early and never wavering, while others take a little longer to work out where they fit in the grand scheme of things.” If the new Porsche Cayenne GTS were a person, it would fit into the latter camp. Porsche would say its purpose is as a car for driving enthusiasts. But it’s not easy to market a “massive, 2.2-tonne luxury SUV… [for] people who wear racing booties without a hint of irony”. Then again, the Gran Turismo Sport (GTS) variants of Porsches have often come to represent “a kind of sweet spot in the range” –…

“Global growth is tepid, but commodity prices remain high,” say Carlos Arteta, Philip Kenworthy and Ayhan Kose in a World Bank blog. Energy, food and base metals prices are predicted to stay close to 40% above 2015-2019 levels over the coming year. Why? For one thing, oil supplies are tight. As of late June, members of the Opec+ cartel were holding back more than six million barrels of oil a day-nearly 7% of global demand. Secondly, geopolitical shocks are multiplying – much of the current commodity tension dates from the destabilisation of energy and grain markets caused by Russia’s 2022 invasion of Ukraine. Thirdly, despite trouble in the local property market, demand from China – the world’s largest consumer of metals and energy – has been stronger than expected. Infrastructure…

“Since the start of 2009, the US S&P 500 has seen returns of 14.5% per year. Trees don’t grow to the sky. Above-average returns are followed by below-average returns, and vice versa. That’s how averages work. Mean reversion will rear its ugly head eventually. Look back at the historical... record of the US stockmarket: there are clear cycles of above-average and below-average performance. The hard part about investing is that no one really knows what the difference between a cyclical and secular bull market is in real time. Investors thought we were going into a depression when the 1987 Black Monday crash hit. No one could have known the bull market still had another dozen years or so to run at that time. It’s much easier to define secular markets…

BP’s CEO Murray Auchincloss says the group has stopped bidding on new offshore wind projects in order to simplify operations and reduce costs, says Emma Powell in The Times. At the same time, BP will spend more on new oil and gas assets, particularly in the Gulf of Mexico and the US Permian basin, where it already has a large presence. The moves hint at a further retreat from the “pivot towards greener forms of energy” embarked upon by former CEO Bernard Looney, especially since the energy-transition strategy has caused “disquiet” among investors and drawn criticism from activist investor Bluebell Capital. That BP will be “scaling down its renewable-energy ambitions” is no surprise, says Gaurav Sharma in Forbes. Its attempt to build an offshore wind portfolio has “often seen the…

Five to buy IMI The Telegraph Shares in engineering company IMI (active in sectors ranging from industrial automation to life sciences) have risen by 77% since March 2019. Despite mixed operating conditions, the company’s revenue rose by 4% in the first quarter, with a restructuring programme set to generate £15m of benefits. IMI’s strong financial position, competitive edge and solid balance sheet make it well-placed to profit from potential improvements in the global economy. Despite “less scope for capital gains”, with a price/earnings (p/e) ratio of 15.2, IMI offers “long-term investment appeal”. 1,780p Babcock The Times Babcock International, one of the biggest contractors to the Ministry of Defence, has undergone a remarkable turnaround, which has coincided with increased defence-sector spending. It has restructured and reduced debt. Babcock’s future looks promising…

The posters will have been taken down, the advertising campaigns completed, the removal vans rolling into Downing Street. By the time this column is published (Friday), Keir Starmer will almost certainly be putting together his government. There will be lots of talk about examining the books and sorting out the mess the Tories have left behind. But there is a flaw in Labour’s plan. Labour has made a whole series of promises to improve the NHS, fund government services properly and strengthen workers’ rights. It has said very little about how it plans to pay for it all. But whatever its plans are, it will have to rely on the tax collectors to find the money. There is the problem. HMRC is becoming less and less functional with every year…

Tracker funds (also known as index funds or passive funds) aim to track the performance of a particular index, such as the FTSE 100 or S&P 500. The funds may hold all, or a representative sample, of the stocks in the underlying index (physical replication), or replicate the performance of the index via buying derivatives (synthetic replication). The aim is to have as low a tracking difference (the gap between the performance of the index and the fund) as possible. Since the goal of a tracker is to match the index, significant outperformance is as concerning as significant underperformance (even if it might not feel like that to an investor), because it suggests problems with the way the fund is being run. Tracker funds can be traditional open-ended funds (unit…

Activist investor Engine Capital has acquired a 5% stake in C&C Group, and is pushing the producer of Magners Irish Cider to launch a strategic review and sell itself, says Bloomberg. The US hedge fund believes Dublin-based and UK-listed C&C could be an attractive target for industry players or private-equity firms and that its stock is trading at a discount compared with private-market transactions. C&C’s shares fell by 13% in June after it booked a €150m charge and its CEO departed owing to previously disclosed accounting adjustments. The British and Irish alcoholic-drinks industry has seen increased consolidation. Engine sees potential in C&C’s assets, including Italian sparkling winemaker Ferrari Trento and Scottish brewer Tennent’s.…

“I’m not very good with money because I lived so much of my life not having any. The phrase ‘look after the pennies and the pounds will look after themselves’ – that’s all well and good for someone who isn’t scared to open their post. I have a huge block when it comes to my finances. It’s causing me anxiety just talking about it. I recently found out I was paying for a mobile phone I didn’t have. The company was surprisingly sympathetic and reimbursed me for it.” Comedian Shaparak Khorsandi (pictured), in The Sunday Times “It was the biggest pay cheque of my life… no disrespect to people who like to cook, but watching meringue dry and being told how many different kinds there are, I honestly thought I…

collabfund.com/blog “Nature is not in a hurry, yet everything is accomplished,” wrote Chinese philosopher Lao Tzu. Giant sequoias, complex organisms, towering mountains – nature builds impressively, but silently, slowly, almost invisibly. This is the way to make money too, says Morgan Housel. Just like in nature, it’s the power of “quiet compounding” that gives the most impressive results. Every few years we read in the news about an ordinary Joe with no education and a low-wage job who nevertheless managed to accumulate a fortune through the power of compounding – saving or reinvesting the interest so you earn interest on the interest. They never “bragged or flaunted” or compared how they were doing with others – they just quietly compounded and grew rich. There are two ways to use money.…

Keir Starmer’s suited and rebooted Labour Party looks set to sweep to power and says it is ready for business. But Labour will also inherit an economy suffering from a chronic lack of growth, a housing crisis, and failing public services. Nothing seems to be working properly and productivity has stagnated. Can Labour get the economy moving again? One point in Labour’s favour is simply the chance to make a fresh start. Investors crave political stability and a centrist government with a large majority should deliver that. Indeed, UK bonds, equities and the pound are already starting to benefit as “safe havens” from the electoral risks in other European countries, notably France and the US. The UK might now have a prime minister, a chancellor, and even a housing minister…

Under a new voluntary code of conduct, private car parks will allow drivers an extra ten minutes of parking time before issuing a ticket. Firms will also have to display clearly the rules of the car park and have a clear process for appeals against tickets. The new set-up covers members of the International Parking Community (IPC) and the British Parking Association (BPA) and comes into effect from 1 October. But motoring groups say the new rules fall short of government promises, and companies have until December 2026 to comply fully with them. If you receive a fine you think is unfair from a private parking firm – usually called a Parking Charge Notice – don’t pay it. “Usually, paying is seen as admitting the ticket was right – so…

● The UK’s problems with low levels of productivity are well documented. But small businesses seem to have a particular problem in this area. Consultant McKinsey warns the typical small company is only 84% as productive as the average larger one. Small companies are missing out on thousands of pounds worth of value per employee. That’s bad for the business, but also for the broader UK economy – McKinsey says closing the productivity gap would add 2.1% to GDP. Common solutions include increased use of technology, more collaboration with partners such as suppliers, and expansion into new markets. ● Is your business in a position to install electric-vehicle charging points – in a staff car park or garage, perhaps? If so, you may be able to claim back 75% of…

Margot Robbie “defines any attempts at lazy categorisation”, says Roisin Kelly in The Times. “Blonde Aussie bombshell and global pin-up? Yes, of course. But she has also become a mogul”: a producer, investor, and, as of last month, “now a liquor baron too” – she has started her own gin brand, Papa Salt. Robbie (pictured), 34, is perhaps best known for her starring role in the hit film Barbie, which brought in $1.4bn, and was produced by a company she founded, Lucky Chap, which has racked up 25 Academy Award nominations, 18 Bafta nominations, and raked in billions in box-office takings worldwide. Robbie first won fame playing Jordan Belfort’s wife in The Wolf of Wall Street and for her Academy Award-winning role as figure skater Tonya Harding in I, Tonya.…

NV Simpsons, Chalklands Classic Cuvée, England £29, simpsonswine.com I expect everyone will need a big drink after yesterday’s high drama. I type this column a week before election day, so I have no way of predicting the results, but in the spirit of fair play, I have chosen a wine, well, actually three, today that are all celebratory and calming so all parties and their supporters can drink from the same cup with a degree of confidence for the future. Chalklands is a superbly refreshing, English sparkling wine with no raw edges, just scintillatingly clean fruit. It is adorable, seamless and generously fruity with strawberry and green apple notes perfectly interwoven and topped with an ice-pick fresh finish. The latest release of this fabulous fizz is the best to date.…

Italy Reborn From Fascism to Democracy Martin Gilbert Allen Lane, £35 Britain’s leaders may think they’ve got a hard task ahead of them, but as Martin Gilbert makes clear in this book, the challenges they face pale in comparison with those of Italy’s leaders in the aftermath of World War II. Their country had been devastated by years of fighting, and Benito Mussolini’s last ditch attempt to cling on to power in the north turned the battle between Germany and the Allies into a civil war. Throw in the occupation of Trieste, and a sizable Communist (PCI) party, and it’s easy to see why as late as 1949 American analysts were still predicting that Italy would end up an economically backward dictatorship. That it instead prospered, becoming an important member…