Nova Financial Group positive on UK property post pandemic

Liam Roche
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Nova Financial Group positive on UK property post pandemic

Nova Financial Group advises thousands of property investors looking to build their portfolios across the UK. Nova sets itself apart in an industry which is typically equities focused by giving its clients control and flexibility of property and buy to let investments.

Strategy

“If you don’t know where you are and where you want to go then you are less likely to make progress,” said Paul Mahoney, managing director and founder, who presented at April’s UK Investor Magazine conference. Nova’s mission is to figure out a blueprint for people who want to invest money they’ve saved over a long period, but who may not have the expertise to do so. The company’s vast wealth of experience ensures its clients will avoid common mistakes and make savvy property investments.

Nova helps its clients to source specific properties, taking care of the research and due diligence that goes into the process. In addition, the firm has an in-house mortgage broker to it advises on and arranges the finances for the sale of properties across the UK. Finally, the company helps its clients to review their portfolios and re-invest as time goes on. The company does not sell its own stock of properties which allows it to better guarantee impartial advice, ensuring a “focus on the financial outcome for its clients”, said Mahoney.

Leveraged Property Investing

Nova makes the case that when it comes to property, it can be preferable to gain debt. “Some debt is good debt. It can help you utilise your funds and can make them go further,” Mahoney said. Nova only looks at properties that provide a net yield on funds applied of 5-10%. In addition, clients with Nova are able to grow the value of their portfolios through capital growth. Mahoney made the case that Nova can generate 20% growth on funds invested per annum as the value of a property rises. This means that clients could stand to earn a yearly return of between 25-30% when the yield and capital growth on funds invested is combined. Nova is able to achieve these returns consistently and with a low level of risk, Mahoney stated.

Nova will assist its clients in identifying market trends to allow them to make secure long-term investments. Young professionals, Mahoney says, are more focused on lifestyle as opposed to family. Therefore, they are more focused on living in the areas in which they are working rather than commuting i.e. city centres. Mahoney does not feel the trend of people moving away from city centres, as often reported by the media during the pandemic, is going to be permanent as things return to normal.

Low to middle income earners, generally young professionals, are also increasingly finding it difficult to live in London. “20 years ago London wages were relatively higher and the cost of living was much lower than it is now,” said Mahoney. “Wages haven’t grown a lot, especially for low to middle income earners,” he added. This is resulting in that demographic either staying in – or moving to – other major UK cities, including Liverpool, Bristol and Manchester.

Other major changes over the past five years in the buy-to-let market include a greater focus on yield, mortgage serviceability and stamp duty premiums. Lower value, high-yield properties are becoming more sought after, in-line with a transition way from London and the South East.

India Capital Growth Fund: positioning for India’s recovery

Liam Roche
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India Capital Growth Fund: positioning for India’s recovery

The India Capital Growth Fund (LON:IGC), which focuses on Indian mid-cap listed equities, is managed by Gaurav Narain, based in Mumbai, along with a team of seven analysts who work on a sector by sector basis. The trust is listed on the London Stock Exchange.

Covid-19 in India

Initially it looked as though India had avoided a second wave, however, that proved to not be the case. The situation on the ground, according to Narain, who spoke at April’s UK Investor Magazine conference, “is grim, as the peak of the current second wave is far exceeding the first peak which occurred in August 2020”. “It has caught many people by surprise,” Narain added. There are approximately 1.9m active cases in India with a mortality rate of 0.5%. The second comes as the vaccination roll-out is well under way with 8% of people – and 29% of the 45+ age group – receiving the first dose. “My sense is that the worry factor is not as much as it was in the first lockdown,” said Narain. “The central government is very clear that they’re not going to impose a strict lockdown, and the state governments have realised how damaging the lockdowns have been.” Despite the second wave the IMF is forecasting India to grow more than any other major economy in 2021 (11.5%) and 2022 (6.8%).

Disruptive Reforms

Since Modi came to power in 2014 the government has been trying to make India a better place to do business. The country introduced demonetisation, bankruptcy reform and changed the tax system. “These reforms were ultimately driven by digitisation,” said Narain and have led to a clean up of the banking sector in particular, an industry that emerged in good shape from the coronavirus-induced crisis.

The last five years in India have been about a structural overhaul, which caused an initial slowdown in India, but will prove beneficial for the country’s economy further down the road. This has created scepticism on the part of international investors, however, India Capital Growth Fund is of the view that growth is on the agenda moving forward.

“The government has identified $1.5trn worth of infrastructure projects over the next five years which will accelerate growth,” says Narain. He also outlined the government’s willingness to let the private sector lead the way, which represents a shift in how private enterprise is viewed in India. This has coincided with the privatisation of a number of government entities.

India Capital Growth Fund Portfolio

There have been several structural changes made to the fund towards a more cyclical portfolio. The fund has also switched a lot of its exposure from staples to consumer discretionary businesses. Materials (20.1%), financials (18.1%), consumer staples (12.8%) and consumer discretionary (10.5%) are the industries that make up the largest proportion of its holdings. The fund is also diversified in terms of market capitalisation with small-caps making up 27.2%, mid-caps at 57.5% and large-caps at 13.8%. India Capital Growth invests mostly in small and mid-cap companies because it feels that is where the engine room for growth is in the Indian economy.

China vs India

A large number of companies are now moving their manufacturing bases from China to India. At present, India’s costs are one third of China’s, while in the 1980’s the countries were on a par. This has led to a number of company’s being incentivised to move their production facilities to India.

Apple is planning to shift 20% of its production capacity, while Samsung will double production in Noida factory to 120m units per annum. Amazon has also committed to exporting $10bn of made-in-India goods by 2025.

Emerson PLC: potash vital in feeding the world’s growing population

Liam Roche
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Emerson PLC: potash vital in feeding the world’s growing population

Emerson PLC’s (LON:EML) primary focus is on developing the Khemisset Potash Project located in Northern Morocco. Potash is a fertiliser used to increase crop yields and improve the quality of plants – it plays a central role in helping feed the world’s growing population. The importance of potash as a commodity within the world economy is set to increase further, representing an opportunity for investors, as outlined by Emerson PLC.

Demand for Potash is Growing

The world’s population is growing at a rapid rate which will significantly increase the demand for potash. In addition, the amount of available farmland to grow food is reducing. “By 2050, we have to produce 60% more food than today,” said Graham Clarke, CEO of Emmerson, who presented at April’s UK Investor Magazine conference. Therefore agricultural productivity per acre must keep improving in order to ensure sustainable food security. This requires the right use of fertilizers, using potash, in order to maximise crop production, Clarke argues. In addition, Emerson’s project is in Africa, which is where most of the world’s future arable land exists.

Potash Price Rising

The prices of cultivated grains are rising while potash continues to grow. Grains including wheat, soybeans and corn which are critical to feeding the world’s population and are reliant on potash for improved yields. “The price of these crops are an indication of the price of potash, and they are continually growing,” said Clarke. Potash demand is set to increase further over the coming decade.

Competitive Advantage

When comparing Emerson’s Khemisset Project to a typical Canadian project it becomes clear that Emerson boasts logistical advantages. By having zero port development costs, low infrastructure costs, and easy mine access, the Khemisset Project operates at an $80/t advantage over its Canadian competitors. This is a result of being in a location with developed infrastructure and advantageous geology. For example, at the Khemisset Project, the deposits are 500m below the surface, compared to approximately 1000m in Canadian projects, and there are no aquifers, making access far easier. The beneficial logistics produces costs of around $35m, whereas a typical Canadian project, with deep shafts going through an aquifer, can cost up to $1bn.

FirstGroup shares soar as it sells off US bus business in £3.3bn

Liam Roche
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FirstGroup shares soar as it sells off US bus business in £3.3bn

FirstGroup under pressure from its largest shareholder

FirstGroup (LON:FGP) are up by nearly 10% on Friday after the company confirmed its plans to sell US school bus business to investor EQT in a £3.3bn.

The FTSE 250 company has been coming into pressure from activist investors to sell its American business.

FirstGroup has been engaged in an ongoing battle with its largest shareholder, US investment company Coast Capital Management for some time now. The dispute previously led to the departure of former chairman Wolfhart Hauser in 2019.

FirstGroup chairman David Martin, formerly chief of rival transport group Arriva was drafted in to oversee the business’ break-up.

AJ Bell investment director Russ Mould commented on its decision to sell the US arm of its business:

“It’s another win for the activist investor community as FirstGroup strikes a deal to sell two US operations. Its biggest shareholder Coast Capital had been putting pressure on FirstGroup to do something about this part of the business, initially suggesting a demerger but the sale should go down well given the good price achieved,” said Mould.

“There are still some bits to tidy up with the remaining operations, such as the likely sale of its Greyhound business. That should then leave it focused on the UK bus and rail market.”

“The rise in working from home has put a question mark over the level of commuter demand going forward. It could be another year before there is more clarity on the new operating models for companies and how much flexibility is given to staff regarding their working location. However, FirstGroup is no doubt taking a long-term view that demand for public transport will remain robust.”

““On the rail side, the UK Government is moving to a more predictable contract model whereby operators such as FirstGroup will be paid a fixed management fee with performance incentives for delivery against specific punctuality and other operational targets.”

FTSE 100 quiet despite UK retail sales hitting a nine-month high

Liam Roche
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FTSE 100 quiet despite UK retail sales hitting a nine-month high

With the Dow Jones back under 34,000 after concerns out at the thought of a Biden tax hike, the European markets were slow out of the gates on Friday morning. As the flash manufacturing and services PMIs for April continue to roll out, the FTSE 100 barely moved, dipping 0.15% to 6,927.66 at mid-morning trading.

“Following a rough few sessions, the pound, on the other hand, tried to pick itself up. Against the dollar it rose 0.4%, pushing back towards $1.389 – remember, at one point this week, cable crossed $1.40. Sterling benefited from a far better than forecast UK retail sales figure, the number hitting a 9-month peak of 5.4%,” said Connor Campbell, financial analyst at Spreadex.

“The UK is hoping for improvements in both its manufacturing and services readings. The former is set to sneak 0.1 higher to 59.0, while the latter is expected to see a slightly more robust rise thanks to the country’s spring-time re-opening, from 56.3 to 58.9 month-on-month,” Campbell added.

The Eurozone indices echoed the slow start of the FTSE 100. With a rise in the German manufacturing PMI, but a dip in its services equivalent, the DAX was down 0.2%. The CAC, meanwhile, was flat, despite both French flash PMIs surpassing estimates.

“Looking to this afternoon and the Dow Jones is straining to get back to 33,900, though is set to fall short with a 0.2% increase. As for the US PMIs, the manufacturing reading is expected to jump from 59.1 to 60.9, with the services figure climbing from 60.4 to 61.6,” Campbell said.

FTSE 100 Top Movers

Evraz (1.19%), Glencore (1.15%) and Intertek (1.14%) are the top movers on the FTSE 100 on Friday morning having made modest gains so far.

The biggest fallers on the UK index are IAG (-2.11%), Next (-1.65%) and Land Securities Group (-1.40%).

UK Retail Sales

Retail sales continued moving up in March with a rise of 5.4% as Covid restrictions are increasingly being eased. The rise surpassed economists’ expectations of a monthly increase of 1.5%, according to data released by the ONS on Friday.

Sales were 1.6% higher than in February, before the pandemic impacted the UK economy.

Bitcoin plummets below $50,000

Liam Roche
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Bitcoin plummets below $50,000

Bitcoin down by 10% in 24 hours

The bitcoin price has tumbled in recent days soon after reaching a record high.

Since nearly getting to $65,000 on 14 April, following the Coinbase IPO, bitcoin is now down to $48,000. It represents a drop of 35% in the value of the pre-eminent crypto currency.

The news come in the wake of reports that Joe Biden will put forward a plan to raise taxes on America’s wealthiest people, including the largest-ever rise on taxes on investment gains.

Other reports have suggested the dramatic price move in recent days could be a consequence of a major power cut in China.

The price crash coincided with the largest daily drop in bitcoin’s hash rate in nearly four years, which could be attributed to power outages in the Chinese region of Xinjiang.

“We just saw the single largest one day drop in mining hash rate since November 2017,” said cryptocurrency analyst and forecaster Willy Woo. 

“The hash rate on the network essentially halved, causing mayhem in bitcoin’s price as it crashed.”

Analysts at JP Morgan have warned that if bitcoin’s price does not come back and get above $60,000 soon, its momentum signals could collapse.

“Over the past few days bitcoin futures markets experienced a steep liquidation in a similar fashion to the middle of last February, middle of last January or the end of last November,” JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note to clients that was first reported by Bloomberg. “Momentum signals will naturally decay from here for several months, given their still elevated level.”

Bitcoin has failed to hold its upward momentum following the Coinbase listing said according to Pankaj Balani, the chief executive of the Singapore-based Delta bitcoin and cryptocurrency. “Only a move above $60,000, which is a key resistance for any bull-trap rally, will help restore confidence that the bull trend is intact,” he added.

Biden to put forward tax hike on the wealthy’s investment gains

Liam Roche
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Biden to put forward tax hike on the wealthy’s investment gains

Biden move is part of an overhaul of the US tax system

President Joe Biden will put forward a plan to raise taxes on America’s wealthiest people, including the largest-ever rise on taxes on investment gains.

The proposal is aimed at funding $1trn in childcare, universal pre-kindergarten education and paid leave for workers, Reuters reported.

The move is a part of a wider overhaul on the US tax system, aimed at getting more tax revenues out of the country’s wealthiest people and largest companies.

Reporters reported that the proposal is calling for the top marginal income tax rate to be increased to 39.6% from 37%. In addition, the plan would double taxes on capital gains to 39.6% for those earning in excess of $1m.

It would be the highest rate of tax on investment gains since the 1920s. Since the aftermath of World War Two, the rate has not gone above 33.8%.

Stocks on Wall Street retreated on Thursday as reports emerged that Biden would propose hiking taxes on the wealthy, including capital gains taxes.

Such a policy will need to pass through Congress, where Biden’s Democrats have narrow majorities, and could struggle to get support from the Republicans.

“If it had a chance of passing, we’d be down 2,000 points,” said Thomas Hayes, chairman and managing member at hedge fund Great Hill Capital LLC, referring to stock market indexes.

Further information is expected to be announced next week ahead of Biden addressing Congress on Wednesday.

White House press secretary Jen Psaki said the president would discuss his “American Families Plan” during his speech to Congress but declined to comment on any details.

“His view is that that should be on the backs … of the wealthiest Americans who can afford it and corporations and businesses who can afford it,” Psaki said.

Retail sales surge as UK reopens

Liam Roche
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Retail sales surge as UK reopens

The rise has surpassed economists’ expectations

Retail sales continued moving up in March with a rise of 5.4% as Covid restrictions are increasingly being eased.

The rise surpassed economists’ expectations of a monthly increase of 1.5%, according to data released by the ONS on Friday.

Sales were 1.6% higher than in February, before the pandemic impacted the UK economy.

The ONS said the data reflected “the effect of the easing of coronavirus restrictions on consumer spending.”

Additional figures released by the ons revealed that the UK government borrowed in excess of £303.1bnover the last financial year. That represents an increase in £246bn compared to the previous year.

UK borrowing came in at 14.5% of GDP, the highest since 1946, when it was at 15.2%.

The figures are a result of the increase in public spending, as well as tax cuts, aimed at managing the negative impact of the pandemic.

Commenting on the new ONS data, Jon Hudson, fund manager of the Premier Miton UK Growth Fund, said: “Despite the country being in lockdown during March, the 5.4 per cent growth in retail sales volumes were surprisingly strong. 

“Clothing stores in particular saw an impressive jump of 17.5 per cent as consumers spent their forced savings accumulated over the past year and readied their wardrobes for a more normal summer.”

New AIM admission: musicMagpie

Andrew Hore
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New AIM admission: musicMagpie

Mobile phone and technology recycler and reseller musicMagpie has built up a substantial UK market position in the sale of pre-used goods. This is a market estimated to be growing at 10% a year. There is still a lot more to go for in the US, which is an underdeveloped market.
Management believes it can do a lot more with the customer data musicMagpie has collected and it has launched new initiatives to enhance growth. The new smartphone rental operation could reduce short-term revenues but the recurring revenues over the term of the contract will be more profitable.
The new financial year has ...

Kingswood Group CEO David Lawrence: bullish on post-pandemic wealth management

UK Investor Magazine
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Kingswood Group CEO David Lawrence: bullish on post-pandemic wealth management

The UK Investor Magazine was delighted to be joined by David Lawrence, CEO of AIM-Listed Wealth Manager Kingswood Group (LON:KWG).

Kingswood Group have made a number of acquisitions in the past twelve months as the company seeks to expand in the UK Wealth Management and Financial Advice sector. More recently, Kingswood have made an exciting acquisition in the United States as they set out to target a new market that has regulatory and cultural similarities.

We discuss with David the landscape for financial advice in the UK and highlight some of the problems Kingswood see as opportunities for further growth. In particular, we touch on the digitalisation of wealth management of the financial advice gap that still exists here in the UK.

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