What were the Sunday papers’ money sections saying?

Here’s our weekly summary of the content in some of the leading National Media’s Money Sections this weekend. It’s a great way to catch up with what content your clients are likely to be reading in the money pages and which may underpin some questions they have at your next review meeting with them. 

The Sunday Times Money section leads with a look at the problems facing savers with Wellesley Finance. Ali Hussein reports that following problems within the business this year, savers look to lose up to 99p for every £1 they invested in mini-bonds. The products were not afforded FSCS protection. It’s unlikely to be something on advisers’ radar and so we’ll give it a wide berth this week.

Elsewhere in  ST Money, a question far more likely to be on advisers’ minds is asked by James Coney who pleads with Chancellor Sunak to outline what his tax plans will be to pay for the hug expenditure on COVID related matters. This is on the back of an IFS estimate that the UK government would need to raise a whopping £40billion a year to pay for the pandemic bill as it is now. As Coney says “I’d bet that is not the half of it”.  He also asks Mr Sunak to “please scrap this ludicrous stamp duty holiday”.

With a far more positive forward looking view, Mark Atherton asks “Is this the best time in 40 years to be buying British shares?” He points to research from Columbia Threadneedle which suggests that the FTSE 100 is at its lowest valuation since 1988, with shares at a 42% discount to other global markets. He goes on to report various opinions which cover the diverse prospects for the constituent parts of the index and summarises “the big hope for the UK is for a strong global recovery, driven by the discovery of a Covid-19 vaccine and a workable trade deal with the EU”. We can but hope!

Over at the Financial Mail on Sunday, the potential for negative interest rates is on Jeff Prestridge’s mind and the impact which such a move might have for savers and borrowers. We’ll give you the short version here. In his main article Prestridge describes the chances of savers being charged for holding deposit accounts is “unlikely” at the moment but it is clear that savings providers are looking at their systems and considering their options. As for borrowers, again Prestridge seeks opinions from experts Ray Boulger and David Hollingworth who both warn borrowers not to get excited and that the prospect of negative mortgage rates is unlikely for a number of reasons including the fact that most existing tracker mortgages have a “collar” and also the current distortion to mortgage rates as a result of the boost in demand caused by the temporary removal of stamp duty.  However, there’s a notably different tone in his comment piece in which Prestridge reiterates his long-standing mistrust of bankers. He warns MoS readers to take any indications from banks that they won’t apply charges for savers “with a pinch of salt”.  Probably sound advice!

The Sunday Telegraph Money section was reporting on four stocks to buy as we head back into lockdown with a focus on whether those that did well first time round might do the same again. Below is a summary:

Asos – the online clothing company, whose shares have risen fourfold since March.  In financial results last week, it announced 19pc sales growth for the year to Aug 31 and profits before tax of £140m, four times higher than last year. Joe Healey of The Share Centre, a stockbroker, said Asos continued to defy the gloomy retail environment, highlighting the strength of its online-only business model through the pandemic. By way of contrast analysts at BoA said the firm had failed to meet expectations and rivals were growing more quickly.

Ocado As shoppers prepare to book slots from home once more the impact on home delivery services will be keen. Oliver Brown of RC Brown Investment Management was quoted as saying that Ocado’s appeal lies in its potential to sell “virtual supermarket” software to other companies. “Ocado is expensive but it has been winning big contracts with other supermarkets that are well behind in their own delivery ambitions. If you want an American style tech giant with lots of potential, Ocado is the British company to buy. But if it disappoints the shares could fall, as expectations are high” he is reported as saying.

Just Eat – the delivery giant, has grown into a 15bn company, linking restaurants to customers and as the Telegraph reports it is having a good year. Its financial results last week showed that orders rose by 46pc in the three months to september 30 compared to the same period last year. But as with Ocado, investors have to pay a high price for so much growth, and if the firm fails to meet expectations, shares could fall sharply.

Kooth  –  less of a household name than the others, Kooth is the NHS’s provider of digital mental health support to children and young people and it joined Aim last month. Ken Wotton, a fund manager at Gresham House, said it had grown its sales by 38pc annually over the past three years and had seen more demand as a result of lockdown. Wotton said that it “addresses an increasingly recognised clinical need and a priority area for the NHS spending”, adding “with scope to expand into adult support, corporate well-being and the overseas markets, it is seen as having potential to deliver long-term growth and leadership in the area of mental health”.

Meanwhile, the Weekend FT reported on how the pandemic is taking its toll on UK retirement plans of over-50s.  According to the FT, hundreds of thousands of people facing prospect of working longer or tapping pension savings early.  Recent analysis by the Institute for Fiscal Studies, found one in eight (13 per cent) of older workers had changed their retirement plans as a result of the pandemic, with 8 per cent planning to retire later and 5 per cent planning to retire earlier.

Last month, the government announced its £2bn Kickstart scheme to help young people on universal credit, the main welfare benefit, back into work. But there was no similar intervention for over-50s.

Also highlighted by the Weekend FT was that Europe’s economy is sliding towards a double-dip recession, with economists warning that rising coronavirus infections and fresh government restrictions on people’s movement are likely to cut short the region’s recent recovery.

The shape of the virus resurgence and ensuing business lockdowns and confidence shocks make a double-dip recession the central scenario,” said Lena Komileva, chief economist at G+ Economics, adding that Brexit disruption would “further amplify” the economic downturn

On a brighter note, the same survey found activity had improved in the manufacturing sector — boosted by a rebound in global trade, particularly in exports to China. In another upbeat sign, German factory orders outstripped expectations by rising 4.5 per cent in August.

And finally from the FT, is news that an ‘unprecedented’ number of UK businesses seek business rate cut. According to Colliers International, the property consultancy, some 170,000 businesses have taken the first step towards appealing against their rates since the pandemic began in the UK in March. That is more than the total number in the three previous years, during which 159,000 queried their rates.   In the last tax year, local authorities collected £25.6bn in business rates.

Office occupiers, retailers and hoteliers complain that coronavirus has destroyed the previous basis for assessing rateable values. Non-essential retailers have faced extended closures and heavy reductions in footfall; hotels have seen guest numbers plummet; and offices have been largely empty for the last seven months.   Those businesses argue that the pandemic has meant a material change in circumstances, an argument the VOA will now weigh up.   The VOA said: “The coronavirus pandemic has led to an unprecedented increase in ratepayers seeking reductions in their rateable values.” The agency added that it had cleared a number of cases at the “check” stage and was now seeing a “higher than usual numbers of challenges”.





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