27/09/2016
Clinton debate win sparks peso surge
Asian shares broadly closed up on Tuesday, as polls showed Hillary Clinton performed best in the first US presidential debate.
Democrat Hillary Clinton represents continuity for the markets, with investors largely reacting positively to her performance on TV last night. The presidential race has been neck and neck so fair, with the latest Reuters/Ipsos polling showing Clinton pulling into the lead by 4 percentage points.
Sean Callow, a senior currency analyst at Westpac in Sydney, commented:
“Markets started to call the debate for Hillary within the first 15 minutes or so, with the Mexican peso surging in what is probably its busiest Asian session in years.”
The Mexican peso rallied strongly on the debate, up 1.7 percent against the dollar after plunging to record lows at the prospect of a Trump presidency. Trump’s anti-Mexican rhetoric has raised concerns that his presidency would threaten Mexico’s exports to the United States, its single biggest market.
The Shanghai Composite is up 0.60 percent, with the Nikkei 225 up 0.84 percent. Hong Kong’s Hang Seng index rose 1.09 percent. The FTSE 100 also got off to a good start on Tuesday, rising 0.15 percent in early trade.
Thomas Cook shares spike as profits remain steady
Shares in British travel operator Thomas Cook spiked on Tuesday, after reiterating its profit guidance for 2016.
An attack on tourists in Istanbul in January and a failed coup in July led to a significant drop in demand for summer holidays to Turkey, with Thomas Cook warning in July of a quarterly loss and a lower profit guidance.
However, for the twelve months to September 30th Thomas Cook reiterated its operating profit of £300 million, helped by an 8 percent increase in bookings outside of Turkey.
Thomas Cook (LON:TCG) shares rose 4 percent on the news at market open, before dropping back down. They are currently trading up 0.14 percent at 70.10 (0918GMT).
Peter Fankhauser, Thomas Cook’s chief executive, commented:
“The summer season has progressed largely as expected. Customers’ desire to go abroad on holiday has remained strong with the exception of Turkey where demand continues to be volatile. To date, sales for the winter season are in line with last year while sales so far for summer 2017 suggest customers are booking early in an effort to secure their first-choice destination and hotel.”
Travel operators have had a tricky time of late, with terrorist attacks in Tunisia, Istanbul and across Europe impacting strongly on consumer demand. Thomas Cook’s largest competitor, TUI, have felt less of an impact from a drop in Turkish holiday demand after limiting their exposure to the region.
27/09/2016
German business assessment of current climate climbs to 2 year high
The IFO index on businesses assessment of the current business climate in Germany has risen to its highest level since June 2014, according to a report published by CESifoGroup on Monday.
IFO Business indices rise
The IFO current climate index came in at 109.5 for September, rising 3.2 points from the previous month. This measure beats estimates by 3.1 points. The index last recorded a figure this high more than two years ago, reaching 109.7 in June 2014. The IFO current assessment and future expectations indices also beat estimates, rising to 114.7 and 104.5 respectively.Recent data suggested adverse Brexit effect on Euro-Zone economies
Recently, data has been suggesting, that the Euro-Zone and Germany in particular have felt some adverse economic pressure since the UK’s decision to leave the European Union. After the latest ECB monetary policy decision, President Mario Draghi stated, that the Euro-Zone recovery seems to be on track, thanks to effective monetary policy. However, he admitted, that the recent Brexit vote has had some negative effects on European economies. Inflation has not been approaching the sought after two percent target, with business as well as investor sentiment has been falling slightly. Yesterday, data published by Markit economics indicated a reduction in growth in the services sector. The Markit PMI Services fell from 51.7, the previous month, to 50.6 in September. Last Tuesday, the ZEW Survey indicator for economic sentiment in Germany came in at 0.5. This measure missed expectations by two points and represented no improvement to August’s figure.Economists and entrepreneurs remain faithful
However, Mario Draghi and the ECB have been confident that the adverse impact of economic uncertainty following the UK’s Leave vote can be tackled. The latest data on German business sentiment seems to show that German entrepreneurs agree with this notion and are hopeful for the future.Katharina Fleiner 26/09/2016
Phoenix Place Luxury Student Development Investment – 9% Rental Yield
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34,000 students in need of accommodation
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“The city’s growing population of both domestic and international students means there is a continuing demand for new student property investments in Liverpool, and in particular high-quality student accommodation.”
Source – This Is Money
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Bahamas off-shore leak exposes key politicians
Several high profile politicians have come under fire following the leak of 1.3 internal files from a off-shore register located in the Bahamas.
The Home Secretary, Amber Rudd, is one of the key individuals to have been uncovered as involved by the compromising findings. According to investigations conducted by The Guardian, Ms Rudd has been revealed to have connections to a fund in which a director was convicted for propagating misleading statements to prospective and existing investors.
Similarly, former EU commissioner Neelie Kroes has also been exposed in the leak, and was forced to issue a subsequent apology for breaching the code of conduct. Kroes is culpable of failing to disclose her directorship position in an offshore company, whilst simultaneously investigating multinationals. Kroes issued a formal statement through her lawyer, who stated “My client agrees that formally she should have declared this directorship … Mrs Kroes will inform the president of the European commission of this oversight and will take full responsibility for it.”
This revelation comes just months after the Panama Papers scandal, which revealed off-shore activities of former Prime Minister David Cameron, amongst others. Cameron has recently abdicated from his MP position for Witney, following a tumultuous summer in which the Brexit vote saw the demise of his premiership.
However, various legislation remains in place which has meant that any attempt to initiate investigations into any holdings in the Bahamas remains a difficult endeavour. Unlike other offshore locations such as the Cayman Islands, registry details in the Bahamas are harder to ascertain and there is no concrete legal requirement to disclose directorships to the authorities.
The ICIJ director, Gerard Ryle, said of this obstacle, “We believe this kind of basic information, the names of people who are linked to what companies, is something that should be openly available – just as the former prime minister David Cameron himself once indicated,”
“We are publishing this information as a public service”, he added.
The Bahamas harbours around $223 billion (£172bn) in off-shore funds, 26 times its own national GDP.
Lloyd’s of London remain cautious over Brexit
Lloyd’s of London have reiterated concerns over Brexit, referring to it as a “major issue” despite promising profit figures.
Pre-tax profits were recorded at £1.46 billion in the first months of 2016, which is up 22pc from the previous year. Despite posting record profits today, the London-based insurance market has issued stark warnings over Brexit and concerns over the future of passport rights. Lloyd’s’ strong performance has been attributed to the strong Dollar in the wake of Brexit and similarly, a slight increase in investment returns.
However, in a joint statement, Lloyd’s chief executive and John Nelson the market’s chairman, remained tentative. In their statement, these factors were dismissed, stressing that they did not “represent sustainable profitability”
Ms Beale stated that, “The UK’s referendum on its EU membership is a major issue for us to deal with”.
“We are now focusing our attention on having in place the plans that will ensure Lloyd’s continues trading across Europe”, she continued.
Earlier this week, Bundesbank President, Jens Wiedmann warned of the serious consequences that revoking said EU passporting rights would have upon the financial industry and the city.
It has been suggested that up to 5,000 UK financial institutions will be affected by these developments. Of these, more than 2,700 are insurance brokers, and 200 are insurers. The insurance mediation directive is one the more popular type of passports that regulates brokers and is potentially jeopardized by Brexit.
Nonetheless, Lloyd’s emphasised that, “It is important to be clear that the referendum result has no immediate impact on the UK’s ability to keep trading with the EU,” Moreover, Ms Beale and Mr Nelson maintained that, “We continue to trade under the current passporting regime.”
Citibank donates £200,000 towards London food waste campaign
Global banking group Citi has been the first bank to contribute towards The Felix Project, donating a generous £200,000.
The Felix Project was founded by Evening Standard Chairman Justin Byam Shaw and his wife, Jane, following the death of their 14-year old son in 2014. It aims to help to alleviate hunger and food waste in the capital. The project collects fresh produce and delivers it, without cost, to various charities across London. Some of the suppliers involved include Sainsbury’s, Waitrose, Daylesford and Costco. Around 23 charities are currently being provided with groceries.
Citi’s UK boss, James Bardrick, spoke to the newspaper about their involvement with the cause. He commented, “Food poverty and food waste are serious issues facing London, with negative impacts on the health and wellbeing of residents as well as on the environment.”
Justin Byam Shaw and his wife have also pledged to match any donation to the foundation up the value of £750,000.
Donations from Citigroup have thus far totalled £500,000, which highlights their continual commitment to helping to eradicate food waste and hunger. The Evening Standard announced yesterday the generous donation, and revealed how they are planning to ensure the funds are maximised. The organisation aims to divide the sum, and spend the respective amounts to develop different areas within the foundation.
The first £100,000 is to be used to employ up to five deputy managers, who will be paid the current London Living Wage (£9.40). The Felix Project aims to recruit young Londoners struggling to find employment or those from low-income backgrounds for the role. The second half of the funds are to be used for staff and volunteer training purposes, to ensure staff are equipped to help run the continually expanding campaign.
Global initatives
France became the first country to introduce legislation to ban supermarkets from disposing of unsold groceries. Instead, under the law, supermarkets are now required to donate unused food produce to charities. If they fail to do so, they are subject to Government fines of up to €75,000. The initiative has increasingly picked up momentum across Europe, with Italy also following suit. Similarly, earlier in July, The Global Green Health Forum in Copenhagen approved the first global food loss and waste standard. This is a sure signal that the international community are continuing to make great strides on combatting the issue.Global stocks in positive territory on Fed decision
The US Federal Reserve announced their decision to hold interest rates at current levels, pushing global stock markets into positive territory.
As expected by many analysts, Fed Chair Janet Yellen kept rates on hold, saying: “The economy has a little more room to run than might have been previously thought. That’s good news….We don’t see the economy is overheating now.”
However, the Fed are running out of excuses not to raise rates and it seems increasingly likely the majority of policymakers will vote for a rise at their December meeting.
The DOW Jones rose to a 10-day high after the announcement on Wednesday, with the S&P 500 up almost 1 percent.
The FTSE 100 opened into positive territory on Thursday, currently up 52.17 points to 6886.88 (1015GMT). Asian shares also reacted positively, sending the Shanghai Composite up 0.54 percent and the Nikkei 225 up 1.91 percent.
22/09/2016
Small business confidence plunges post-Brexit
Small business confidence has fallen for the third quarter in a row, as economic concerns weigh in the wake of Brexit.
The survey, conducted by the Federation of Small Businesses, shows the second largest fall in confidence in the figures’ history. It is the first survey since the Brexit result and took into account the opinions of 1,035 small firms between July and August.
FSB national chairman Mike Cherry said, “the political shock of the Brexit result has taken place at a time of weakening business confidence.”
“Small firms are resilient and will survive the current fragile economic outlook, but to avoid an economic slowdown this data should be a wake-up call for our elected politicians.
“We look to the party conferences and upcoming Autumn Statement to green-light infrastructure projects at local and national level, to simplify the tax system and to help reduce the costs of doing business,” he added.
However, the number of small businesses hoping to grow over the next year rose to 55 percent, the highest level recorded in nearly a year.
22/09/2016
10 market proverbs every investor should know
“AN INVESTMENT IN KNOWLEDGE PAYS THE BEST INTEREST.” – BENJAMIN FRANKLIN
As said by Albert Einstein, “once you stop learning, you start dying”. In light of this, when investing, the value of educating oneself must not be underestimated. Achieving and maintaining success will necessitate frequently carrying out necessary research, study and analysis.
“I WILL TELL YOU HOW TO BECOME RICH. CLOSE THE DOORS. BE FEARFUL WHEN OTHERS ARE GREEDY. BE GREEDY WHEN OTHERS ARE FEARFUL.” – WARREN BUFFET
Significant gains will only come from stepping out of your comfort zone. Thus, as recognised by Mr Buffet, don’t be fearful of investing in a down market and exiting in a soaring market.
“THE STOCK MARKET IS FILLED WITH INDIVIDUALS WHO KNOW THE PRICE OF EVERYTHING, BUT THE VALUE OF NOTHING.” – PHILLIP FISHER
Essentially, investing without prior education and research will fundamentally lead to regrettable investment decisions. Valuable research necessitates much more than solely listening to popular opinion.
“IN INVESTING, WHAT IS COMFORTABLE IS RARELY PROFITABLE.” – ROBERT ARNOTT
Realizing significant gains will necessitate stepping out of your comfort zone. Fundamentally you must establish the boundaries of your comfort zone and familiarise yourself with stepping out of it in small doses. Although you need to know the market, knowing yourself too is essential.
“HOW MANY MILLIONAIRES DO YOU KNOW WHO HAVE BECOME WEALTHY BY INVESTING IN SAVINGS ACCOUNTS? I REST MY CASE.” – ROBERT G. ALLEN
Whilst its generally good practice to keep three to six months’ cash flow in a savings account, constrained by the presence of low interest rates, scope for gains is minimal. As such, in order to improve the chances of increasing your wealth faster than inflation, investment opportunities must be sought elsewhere.
“IT’S NOT HOW MUCH MONEY YOU MAKE, BUT HOW MUCH MONEY YOU KEEP, HOW HARD IT WORKS FOR YOU, AND HOW MANY GENERATIONS YOU KEEP IT FOR.” – ROBERT KIYOSAKI
Growing and protecting one’s investment portfolio is of paramount importance. While you could be a millionaire by the age of 30, if quickly blown this would result in a zero gain. Thus preserving money for the benefit of future generations will necessitate prudent diversification of one’s investment portfolio.
“KNOW WHAT YOU OWN, AND KNOW WHY YOU OWN IT.” – PETER LYNCH
Key to success is realising and acting upon the fact that there is no guarantee a wise holding today will remain a wise holding in the future. Carry out necessary research prior to making any investment decision, and do not underestimate the value of re- evaluating your portfolio on a timely basis.
“FINANCIAL PEACE ISN’T THE ACQUISITION OF STUFF. IT’S LEARNING TO LIVE ON LESS THAN YOU MAKE, SO YOU CAN GIVE MONEY BACK AND HAVE MONEY TO INVEST. YOU CAN’T WIN UNTIL YOU DO THIS.” – DAVE RAMSEY
Cash flow is king. Anybody who spends more money than they make will be forever chasing their tail and never attain the financial peace Mr Ramsey speaks of.
“INVESTING SHOULD BE MORE LIKE WATCHING PAINT DRY OR WATCHING GRASS GROW. IF YOU WANT EXCITEMENT, TAKE $800 AND GO TO LAS VEGAS.” – PAUL SAMUELSON
Noted by Gartman “Proper patience is needed throughout the lifecycle of the trade, at entry, while holding and exit” and thus, to remark that investing is gambling would be a misinterpretation. Investment gains over time will only be attained through planning and patience.
“YOU GET RECESSIONS; YOU HAVE STOCK MARKET DECLINES. IF YOU DON’T UNDERSTAND THAT’S GOINGTO HAPPEN, THEN YOU’RE NOT READY, YOU WON’T DO WELL IN THE MARKETS.” – PETER LYNCH
Regardless of a recession or decline, sticking to the course is of paramount importance. Undeniably economies are cyclical, however, the markets have shown that they will recover. Ultimately, you must endeavour to stay in to make sure you are part of those recoveries.
Video and article produced by Daisy Neall