This month’s Top 10 financial talking points for advisers:
1) Gold continued its worldwide plunge, as the prospect of an end to quantitative easing in the United States raised expectations that interest rates would soon rise. Prices per ounce dropped into the $1,250 range, down from $1,700 in January.
2) Fund managers’ pay packages escaped a move from the European Parliament that would have limited them in the same way as the existing EU bonus cap for bankers. The proposal, which would have limited the proportion of fund managers’ performance pay as a proportion of their salary, was voted down by a narrow majority of just seven votes. The decision came as a relief to the UK, which had opposed the move.
3) Oil prices rose on fears that unrest in Egypt might spread throughout the Middle East region. West Texas Intermediate, the benchmark US grade, passed $102 per barrel for the first time in a year, while Brent crude hit $106. That was a long way down from February’s $118, but still high by mid-year standards.
4) Online debit card use outweighed credit cards last year for the first time ever, according to new figures from the UK Cards Association. £35 billion was spent online via debit cards, compared with £34 billion on credit cards. The trend was attributed to a growing wariness about the consequences of so-called revolving credit arrrangements. 91% of adults have a debit card, and 61% own a credit card.
5) Turkey’s strongly Islamist leadership successfully quelled the Taksim Square rebellion in Istanbul that had been prompted by prime Minister Recep Tayyip Erdogan’s plans to demolish the Ataturk cultural centre and build two Islam-oriented buildings in its place. But, under pressure from the president, he agreed to hold a consultation on the development plans. Dissent continues.
6) UK house prices rose by 3.7% in the year to the March-June quarter, the Halifax reported. And the average home now costs £167,984. Halifax’s chief economist Martin Ellis attributed the increase to improved confidence in both the housing market and the economy, together with a shortage of properties available for sale,
7) Rising tension in Egypt hit the region’s stock markets, as the armed forces deposed and arrested President Mohammed Morsi after a series of street confrontations over his political style. Morsi had been narrowly elected in 2012 after the fall of Hosni Mubarak, but had been accused of pursuing openly Islamist policies while neglecting the economy..
8) Barclays, Deutsche Bank and Credit Suisse suffered credit downgrades from ratings agency Standard & Poor’s, as doubts grew in the United States about the health of the European banking system. S&P reduced all three banks from A plus to A, quoting global market volatility, the eurozone crisis and the “uncertain implications of the unwinding of quantitative easing measures. Moody’s had already downgraded them all.
9) Germany discussed a controversial proposal to impose a lump sum levy on investors in certain alternative investment funds, in an effort to curb tax evasion. Berlin had been worried that certain types of alternative funds, such as hedge funds, private equity funds or infrastructure funds were being used as tax deferral vehicles. The move broadly echoes Britain’s EIS clampdown.
10) Drawdown is being increasingly seen by pensioners as an alternative to annuities, according to planning services provider Selectapension, which reports that some 40% more advisers and financial planners have been using income drawdown calculators since March. The increase probably reflects the loosening of controls that effectively restored the income level to 120% of the GAD rate, compared with 100% previously. That and the pathetic rate of annuities, of course.