Weekend press review: Positive thinking

by | May 14, 2018

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Express Money finds positive sentiment on bitcoin from strategist Robert Sluymer of Fundstrat Global Advisors who it reports as saying that bitcoin will go “higher from here” after the cryptocurrency suffered a turbulent few months as governments faced increased pressure to regulate digital currencies. New York City is holding Blockchain Week’s annual event for the first time since May 11, which Mr Sluymer said was another reason why bitcoin had surged following the price crash. Apparently, according to the article, cryptocurrency prices have risen following this event in previous years. The Express reminds readers that the bitcoin price dropped to $8,531.57 by Friday afternoon, having seen its highest value before Christmas when it reached the monumental price of just under $20,000. It’s a see-saw ride for sure – and clearly not one for the faint hearted.

Writing in the Telegraph Money, James Conington highlights that the only times British shares have been cheaper than they are now was during the two world wars, as global investors have withdrawn from the UK in droves, according to new analysis from Citigroup.

It’s research points out that the yield gap between British shares and gilts has been increasing since 2013 and is currently at 2.2 percentage points, after a peak of 2.4 points in 2017. The only other years on record in which it has been higher than this were during the First World War, two of the interwar years and during the Second World War.

 
 

According to Citigroup, the current 4pc yield implies that annualised returns from British shares over the next 10 years will be more than 10pc. Citi suggested a number of British companies to consider. Its “top six” larger companies, all rated a “buy” by the firm, are pharmaceutical giant AstraZeneca, insurer Aviva, building materials company Ferguson, miner Rio Tinto, bank Standard Chartered and advertising firm WPP.

The domestically focused businesses it singled out were car advertising group Auto Trader, housebuilder Bellway, takeaway app Just Eat, insurer Legal & General, the London Stock Exchange, National Grid, online grocer Ocado, wealth manager St James’s Place and fund manager Standard Life Aberdeen.

Other companies highlighted included electronics retailer Dixons Carphone, fund manager Man Group, gambling firm William Hill and theme park operator Merlin.

 
 

Jeff Prestridge has got his campaigning boots on again in the Financial Mail on Sunday, launching a new campaign– and this one is certainly very positive in nature.  The MoS Keep Our Communities Open For Business campaign kicked off with a three page special focus this week.  The gist of it is that with the banks closing branches in so many towns and villages across the country, he’s looking to highlight the good work that other financial institutions – like local building societies for example – are doing to keep communities vibrant. He’s looking for ideas and input from readers.  It’s a nice idea to highlight the positives for once rather than more traditional approach we see all too often of criticising the banks for shutting their doors.

There’s also some positive spin on the MoS fund focus this week, the JP Morgan American Investment Trust – which was first launched way back in 1881. Manager Garrett Fish is based in Midtown Manhattan and as the article explains, he believes the £1 billion fund will only survive if it ‘remains relevant’ to investors. He has whittled down exposure to unquoted, micro and small companies to just 5% since taking over in 2002 and now  the trust’s main emphasis is directed towards investing in S&P 500 companies.   The MoS points out that in October 2017 the charge was reduced from 0.52% annually to 0.33% on the trust’s first £1 billion of assets – reducing to 0.25% on any amount above that figure. Once other fees are added the annual total is 0.55%. Although the article says that Fish accepts that at some stage there will be a market correction, he says his modus operandi will not change and that he will continue to ‘look for the most attractive investment opportunities’. He predicts: ‘The United States will remain a fertile ground for growth companies.’

The Sunday Times Money section leads with a really inspiring report from Ruth Emery about how four teenagers from a comprehensive school in Yorkshire have won an investing competition for schools – the Student Investor Challenge – run by the London Institute of Banking and Finance.  The fact that they beat 8,300 other teams just shows the level of engagement across the country.  The winning team delivered a return of 19.7% on their hypothetical portfolio of £100,000 over a three month period until late January.  The FTSE rose just 1.97% over that time. It’s not just about the result though. The article highlights all the hard work the team had put in, and how they learned about researching companies and markets, working as a team and how to communicate effectively. A career in finance beckons for all four – and it is clear from reading the article that their experience in this competition will have provided some inspiration as well as a strong foundation for their future careers.

 
 

In his Personal Account column, Ian Cowie is being nice and positive too – about the “suspiciously cheap” prices of UK shares. He’s looking at CAPE – cyclically adjusted price-earnings- which indicates that the UK market is trading on a ratio of just over 15, compared with Cape ratios of 20 in Germany, 27 in Japan and 30 in America. He also points out that the global average for emerging markets is 17. He quotes M&G fund manager Ritu Vohora  who calculates using the measurement of dividend income compared to gilts, that UK shares are now the cheapest they have been since WW2.  Cowie proceeds to highlight some of the individual UK shares he has been adding to his portfolio of late.  He suggests that contrarian investors might see the appeal of UK shares which are “unloved and undervalued”.

We can’t resist a little mention of the lead story on the business section, which reports that Peter Hargreaves has joined the space race.  Well, he has invested £24m in Goonhilly Earth Station – a satellite tracking station – in Cornwall.  Hargreaves is quoted as saying “I was pretty sceptical to start with. It was only when I met all the people, and when I saw what was going on, that I thought: this is the future.” Watch this space eh! ( groan!).

Of course the dominant story in the Sunday Times – and it featured across other media too – is the publication of the latest Sunday Times Rich List. Not on it again this year? Sadly, neither are we. However, it did highlight that Britain’s wealthiest saw their combined fortunes rise by £65.4 billion, or 10.2%, last year to £725.5 billion. Very nice too – and it confirms that there are plenty of individuals who will undoubtedly be needing the service of a sound financial adviser to help them to manage their affairs most effectively!

Finally, all this positivity couldn’t last! We end on a negative from the Sunday Telegraph. “Britain’s biggest pension firms forcing widows into tax hit.” That’s the not at all positive title of the Sunday Telegraph Money article which reports that some of Britain’s biggest insurers are forcing widows to cash in inherited pension savings, dramatically increasing their tax liability.

As part of the pension freedom reforms, the “death tax” on pensions was abolished in April 2015, meaning that unspent pensions could be inherited, and perhaps passed on again to succeeding generations, in a highly tax-efficient manner.

According to the Telegraph, some pension companies, including Aviva and ReAssure, will pay the pension of certain deceased savers only as a cash lump sum, meaning that the money leaves the tax-advantaged pension “wrapper”. If you want more details, then we refer you directly to the article.

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