Innovative Finance ISAs: how do they differ from cash ISAs?

Safiya Bashir
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Innovative Finance ISAs: how do they differ from cash ISAs?
As the first Innovative Finance ISA sets out it terms, come April, investors will be able to earn returns approaching 6pc interest on up to £15,240. Innovative Finance ISAs have grown rapidly in recent years, with RateSetter set to launch its ISA on April 6th where it is expecting a rush of demand due to the higher tax-free returns found from cash ISAs. How do Innovative Finance ISAs differ from cash ISAs? The interest rates offered so far are double that of the equivalent cash ISA, so if the full £15,240 limit was put into a Innovative Finance ISA, returns could be £500 more than the traditional cash ISA. With figures like this, it is no wonder peer-to-peer ISAs are looking popular, with Rhydian Lewis, the chief executive of RateSetter commenting: “Given the potential for significantly better rates on offer, it’s no wonder that one in four cash Isa holders say they are considering opening an Innovative Finance Isa,” However whilst there might be potential bumper interest rates, there are higher risks involved. Unlike Cash ISAs, they will not be covered by the Financial Services Compensation Scheme. This means there is the potential to lose savings.

UberRUSH: Uber’s move onto deliveries

Safiya Bashir
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UberRUSH: Uber’s move onto deliveries
As well as dominating the taxi industry since 2009, Uber has now announced that it has plans to expand into the delivery service. Named UberRUSH, Uber will connect consumers with couriers rather than taxis, competing with Royal Mail (RMG.L), Deutsche Post (DPWGn.DE) and PostNL (PTNL.AS). European transport and logistics analyst at Jefferies, David Kerstens, has commented on this competition: “UberRUSH would be another potential competitor trying to take a slice of the pie, which would no doubt put further pressure on companies like Royal Mail when same day delivery grows in importance,” Whilst Uber currently has no plans to start the courier service in the UK, UberRUSH has been already been established in New York, San Francisco and Chicago, with analysts predicting that it is only a matter of time before the app reaches the UK given the rapid growth of the taxi service. According to a report by the delivery company ParcelHero, if UberRUSH were to capture 10% of the country’s courier market, it would provide £700 million. This would add to pressure felt by competitors, which are down 3-20% a year. Redmayne-Bentley investment manager David Battersby has commented: “The traditional postal companies will not disappear but with the competition coming in, I don’t see how they can maintain their iron-like grasp on the market,”  

European banks to ‘face challenges’

Safiya Bashir
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European banks to ‘face challenges’
EU banks are predicted to have a rocky future ahead after Mario Draghi, the head of the European Central Bank, warned that some of the regions banks will “face challenges”. These comments followed a violent week in the market, particularly at Societe Generale and Deutsche Bank. Following these warnings from the European Central Bank, what is the proof that we should expect another financial crisis?
  • Similarly to 2010-12, there is a growing interaction between banks and their sovereigns. For example, last week there was a similar pattern where bank share prices coincided with an increase in bond yields in the eurozone’s periphery.
  • The market predictions of future inflation has suffered a permanent shift, with the measure falling last week to an all time low at 1.4% telling us that markets no onger believe that it will be possible for the ECB to hit inflation targets of less than 2%
  • European banking stocks have lost almost 25% of their value since the beginning of 2016. The are also worries that banks will be hit by low interest rates, low commodity prices and tighter regulations.
Despite this warning for potential challenges, Draghi maintains that we are unlikely to enter another financial crisis due to the larger ‘capital buffers’ then were seen when the market was on the brink of collapse.   
Safiya Bashir on 16/02/2016
         

SoftBank reveal $4.4bn buyback

Safiya Bashir
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SoftBank reveal $4.4bn buyback
Shares in the Japanese Telecoms conglomerate SoftBank Group soared by 16% on Tuesday following the announcement of the biggest ever buyback, purchasing 500 billion yen ($4.4 billion) worth of its own shares. This buyback is an attempt to boost investor confidence, a move which has been welcomed. Analyst at SMBC Friend Research Center Ltd, Naoki Yokota, has said, “SoftBank shares have become so cheap now. For the company to say it’s buying back at this time will have an ‘announcement effect’,” SoftBank have said that it would fund this buyback through a combination of the proceeds of asset sales and cash-in-hand. Shares closed on Monday up 5.7%

FTSE up as oil prices rebound

Safiya Bashir
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FTSE up as oil prices rebound
In early trading, the FTSE 100 rose 27 points to 5,851 with BP rising the most with a 4.1% rise. Since the start of 2016, FTSE has been characterized by constant volatility over banking stocks, commodity prices and global growth, causing the FTSE 100 to have not yet managed to string together three straight days of gains. Whilst OPEC has so far resisted to reduce production in the saturated market, there have recently been fresh hopes of production cut, which have boosted oil companies. US light crude is up to $30.94 whilst Brent crude is up 5.5% to $35.22.

‘Reshoring’: why manufacturers are moving back home

Safiya Bashir
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‘Reshoring’: why manufacturers are moving back home
Since the late 1970s, manufacturing production was commonly offshored from developed nations to countries including China and India. At the time, these cost-saving decisions proved controversial and tough on the UK work force, with Burberry moving 300 jobs to China from their Rotherham factory despite their ‘Made in Britain’ ethos. This movement was seen all over the UK due to it’s immense economic benefits. Moving work to low-cost countries has created many jobs and raised the standard of living, whilst companies have found higher profits and consumers are able to enjoy goods at much lower prices. This move was not beneficial to all however, with huge losses of jobs in developed countries leading to 86% of American’s polling that they believed offshoring jobs were the main cause for their country’s economic problems. However in recent years, we have seen a significant reverse in offshoring with a return of manufacturing jobs to the West. This ‘reshoring’ of jobs back to the countries of origin appear to be due to rising wages and costs in countries such as China, where wages have been increasing 10-20% a year for the past decade. This was felt by Coventry-based automotive component supplier, with chairman David Keene commenting; “We went there because it was going to be cheap, but cheap has turned into ever-increasing prices because wages and other costs are rising rapidly… The automotive companies are getting faster and faster in their cycle of delivering products. There is also a lot of personalisation going on. If you have got a supply chain that takes months to bring stuff in, you can’t be flexible.” With shipping costs doubling over the past 18 months and a steady increase in wages, it is no surprise that there has been an 11% increase of manufacturers moving back to the UK. These impacts have been felt by large UK retailer John Lewis, who now aims to increase the sales of UK made jobs by 15% in the next two years. Whilst countries like Vietnam, Indonesia and The Philippines still offer low wages, they lack China’s efficiency, scale and supply chains hence the rush to return back home.   
Safiya Bashir on 16/02/2016
   

FTSE 250 Property Stock Focused on Residential Property

UK Investor Magazine
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FTSE 250 Property Stock Focused on Residential Property

Find out why this property stock is an interesting investment in the UK private renting market.

Could this company be the perfect stock to add to your portfolio on the recent stock market dip?

Many property companies listed in the UK focus on either commercial real estate and the yielded rental income or on residential house builders who sell the properties once completed.

This report presents this company’s business model of holding onto residential properties and achieving significant yields and digs down into their fundamentals:

  • Strong Growth Areas

  • Cost Cutting Exercises

  • Rental Growth Rates

  • Tax Considerations

  • Residential Property Market Dynamics

 

Download this report now for free for a limited time.

A copy will be emailed to you immediately.

Copyright Fat Prophets® is a registered trade mark/trading name of Mint Financial (UK) Limited, which is authorised and regulated by the Financial Conduct Authority, Number 220591, registered in England and Wales, Number 04255908, with a registered office at 100 Fenchurch Street, London, EC3M 5JD. (www.fatprophets.co.uk)
DISCLAIMER The views and opinions expressed herein are for information purposes only. They are subject to change without notice, and do not take into account the specific investment objectives, financial situation or individual needs of any particular person. They should not be viewed as recommendations, independent research, or advice of any kind. The views accurately reflect the personal views of the author. They are not personal recommendations and should not be regarded as solicitations or offers to buy or sell any of the securities or instruments mentioned. The views are based on public information that we considers reliable but does not represent that the information contained herein is accurate or complete. With investment comes risk. The price and value of investments mentioned and income arising from them may fluctuate. Past performance is not an indicator of future results, and future returns are not guaranteed. We acknowledge an individual’s tax situation is unique and tax legislation may be subject to change in the future

Cameron’s final push for a deal to keep Britain in the EU

Safiya Bashir
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Cameron’s final push for a deal to keep Britain in the EU
The prime minster is back in Brussels, hoping to gain support for his EU reform demands ahead of a two day summit of EU leaders, beginning on Thursday. The EU Council President said on Monday that he believed the future of the EU is at risk of major change;
“This is a critical moment. It is high time we started listening to each other’s arguments more than to our own. It is natural in negotiations that positions harden, as we get closer to crunch time but the risk of break-up is real because this process is indeed very fragile. Handle with care. What is broken cannot be mended.” Cameron and the president of the European council, Martin Schulz, are in talks this morning hoping to shape the UK’s deals before European leaders meet to discuss later this week. The prime minister has promised a referendum by the end of 2017.  
 

Oil surges on hopes of Saudi-Russian meeting

Miranda Wadham
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Oil surges on hopes of Saudi-Russian meeting
Oil prices surged 6 percent this morning on hopes of a meeting between OPEC oil ministers, which may end the global supply glut that has had an unprecedented effect on commodities. Venezuela’s Oil Minister Eulogio Del Pino has in recent weeks been visiting major oil producers to gather support for a meeting to freeze production levels, enabling demand to catch up with supply in the market. Oil prices have jumped in recent weeks as rumours of a positive outcome have emerged. Today it was announced that Saudi Arabian oil minister Ali al-Naimi is in talks with Russia’s Alexander Novakin Doha, according to a Qatar Energy Ministry adviser. The closed-door meeting started in Doha, the results of which will be released to the press on Monday. Brent crude was up $1.87 at $35.26 a barrel by 0824 GMT, extending its 11-percent rally from the past two days. U.S. crude was up $1.49 at $30.93. 
16/02/2016

Anglo American to sell iron unit after unprecedented yearly loss

Miranda Wadham
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Anglo American to sell iron unit after unprecedented yearly loss

Mining giant Anglo American has been hit by falling commodity prices, seeing a pre-tax loss of $5.5 billion for 2015.

This was double the amount reported in 2014, alongside a 55 percent drop in underlying core profit. Anglo American had been expected by analysts to post annual earnings before interest and tax of $1.5 billion.

In a statement, CEO Mark Cutifani acknowledged the effect the economy has had on commodity prices recently, saying that they have presented “significant challenges” to the group. In order to keep its head above water, the company have announced plans to sell its iron ore unit, Kumba Iron Ore, of which it owns 70 percent. “The company has initiated a review to consider options to exit from KIO at the appropriate time, including a potential spin-out,” the company said in statement. Anglo American (LON:AAL) are currently trading down 0.03 percent at 392.30, after a rocky morning (0952GMT). 
16/02/2016
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