Mortgage lending jumps in August, indicating further growth
U.K. mortgage lending jumped by nearly 3000 in August, the most since before the financial crisis, according to new data released by the Bank of England on Tuesday.
With a rate hike looming, customers hoping to take advantage of current interest rates have fuelled demand and mortgage approvals for house purchases totalled 71,030 in August, beating expectations and up on July’s figure of 69,010. Net lending on property rose by £3.4 billion.
This is the latest in a string of economic data suggesting that Britain’s housing market is hotting up. According to Rightmove, asking prices for U.K. homes hit national records in September; and although the market suffered a temporary dip last year when new government rules on mortgage lending came into force, it appears to have got back on track with mortgage approvals rising consistently for most of this year.
Corbynomics: Labour’s promises to crack down on corporate tax avoidance
Since Jeremy Corbyn was elected the leader of the British Labour Party, boasting almost 59.5% of first preference votes, every move by the Labour party has been heavily scrutinized from all sides. This includes the new economic policies that Corbyn now hopes to push for, or as they have been named; Corbynomics.
Corbyn’s approach to the economy has led to opponents heralding the Labour party as ‘unelectable’ but John McDonnell, the Labour Party’s newly appointed Shadow Chancellor, hopes to win support through his promise to find £20bn-£25bn of uncollected taxes and narrow the total £120bn tax gap between the taxes due and those that are collected. This will in turn replace policies such as the 1% pay freeze on public sector workers in the hopes to cut the deficit without austerity.
McDonnell specifically singled out corporations including Amazon, who last year only paid £4.2m in tax last year despite selling £4.3bn worth of goods due to loopholes McDonnell hopes to close down.
So will Corbyn’s new left-wing economic policies including the crack down on tax avoidance lift the burden from middle and low income earners as McDonnell promises, or are they as David Cameron claims; a threat to Britain’s economic security?
Safiya Bashir on 28/09/2015
Apple breaks records, selling 13 million of iPhone 6s & 6s Plus over launch weekend
With the design of Apple’s new iPhone 6s and 6s Plus models released only two weeks ago, Apple has exceeded high expectations; figures released earlier today revealed that the new iPhone has hit record sales over its first weekend on the market.
Tim Cooke, Apple’s chief executive, said earlier in a statement that the sales of the iPhone 6s and 6s Plus have been “phenomenal”, with more than 3 million more phones sold this year than the first weekend sales in 2014.
This increase has undoubtedly been supported by the inclusion of the Chinese market, which has recently overtaken Europe as Apple’s second biggest market, where the launch weekend last year was delayed due to regulatory issues.
New features that Apple has found that customers are “loving” include the 3D touch, sensing how deeply the display is touched, along with the new Live Photos.
After such a successful launch weekend for the new iPhone, sales will undoubtedly continue to grow; Apple are hoping to make the new iPhones available in 130 countries by the end of the year.
Safiya Bashir on 28/09/2015
Glencore tumbles 30%
Investec issued a note this morning saying that should commodity prices continue to decline, shares in commodity companies, in particular Glencore (LON:GLEN), would be worthless.
Investors haven’t hung around to see if there is any weight to Investec’s view; the FTSE 350 Mining sector was down 8% by midday with Glencore trading below 70p, down over 30%.
“If major commodity prices remain at current levels, our analysis implies that, in the absence of substantial restructuring, nearly all the equity value of both Glencore and Anglo American could evaporate,” analysts at Investec said in a note to clients.
The prices of commodities are approaching multiyear lows after a brief lull in selling. Many fear that if recent support levels are broken, the downward pressure on mining stocks could increase.
A Piece of London offers a slice of the property market
As the crowdfunding sector continues to grow, as does its inevitable expansion into property. With house prices rising year on year, especially in prime spots such as the City of London, property investment can be difficult to get into for the ordinary investor. However, property crowdfunding offers an opportunity to pool resources with others to buy into the market; a concept that is growing increasingly popular.
A Piece of London is one such property crowdfunding platform. They have just launched their first two projects, allowing investors to invest as little as £1000 in property in prime locations.
The process is simple. Using the online platform, investors choose a property, set up an account and invest the sum of their choice. Operating under FCA guidelines, A Piece of London will then do the hard work, putting the money together with that of other investors and creating a UK limited company that will then buy the property. A Piece of London then manages the property and divides the rent between the investors; in short, the model has the potential to make ‘buy to let’ a whole lot easier.
Unusually, A Piece of London operate a profit share model, meaning that they only make money from an investment if their investors do. According to them, this “completely aligns their interests with their investors”.
The company’s founder is Fintech entrepreneur Shailash Sanghrajka, who has spent the last 18 years atinvestment banks and hedge funds. He says:
“We want to open up the London property market and make it accessible to ordinary investors wanting to make smaller investments.
“Investors should have control over their investment choice, confidence of exactly what they are buying into and have their own sense of property ownership without the need for huge deposits, mortgages or the hassle of investing on their own.”
Projects include the famous development of Battersea Power Station and new property in Tooting Broadway, which is already nearly 50 percent funding. With estate agent Savills predicting that house prices will rise by 25% over the next five years, this could be an interesting opportunity to get a foot on the ladder.
For more information, visit apieceoflondon.co.uk
Miranda Wadham on 28/09/2015
Aldi UK to make the move online
Discount supermarket Aldi has announced plans to launch an online operation in the UK, offering home delivery and third party collection points from 2016.
The chain will initially begin selling crates of wine online, expanding to “special buys” in the spring. The privately-owned supermarket has continually beaten the performance of British supermarkets such as Sainsbury’s and Tesco, and the company believes moving online is the next logical step.
“This will enable us to introduce the Aldi brand and some of our best-selling, best-quality and best-value products to thousands more customers across the UK,” said Aldi Chief Executive Matthew Barnes.
“As the grocery market continues to evolve, our unique model, operational efficiency, private ownership and financial strength mean we’re able to keep investing in our business – from people and presence to products and prices.”
Aldi is now Britain’s seventh largest grocer with a 5.6 percent share according to market researcher Kantar Worldpanel. The company disclosed a 31% rise in sales to £6.9bn in the 12 months to 31 December; however, it noted that increased investments “in prices and people” saw operating profits fall to £260.3m from £271.4m.
Asian shares mixed on investor caution
Asian shares suffered another disappointing day on Monday, continuing from Wall Street’s uninspiring performance on Friday.
It was announced that the US economy grew faster than previously estimated in the second quarter of the year, as official figures were revised upwards from 3.7 percent to 3.9 percent. However, performance was lacklustre as investors remained cautious ahead of US jobs data due to be released later this week.
Asian shares had a mixed day on Monday, with Tokyo’s Nikkei index down 0.7%. Upcoming announcements, including industrial production data from Japan on Wednesday, and Thursday’s China Caixin Purchasing Managers’ Index (PMI) are likely to influence the markets throughout the week. Mainland Chinese shares followed the trend, opening lower after the latest in a string of disappointing economic data showed that industrial profits continued to decline in August. Industrial profits fell 8.8% from a year ago, a big increase on the 2.9% fall disclosed in July. The Shanghai Composite was down 0.2% to 3,085.86 in early trade.Bank of England says it sees further rise in house prices and notes EM risks.
The Bank of England has joined the Federal Reserve in noting risks from emerging markets such as China as a possible cause for further market volatility in the coming weeks.
Although the BoE pointed to possible risks from EM volatility, they said they had not yet seen any impact on the real economy.
In the Financial Policy Committee statement released this morning, the committee noted that China was in transition to a consumer-driven economy and they could be some teething problems during the shift and said there were a number of UK asset managers with significant holdings in Emerging Markets that could be impacted.
Later in the statement the release covered the resilience of the UK financial system and noted a rise in the average core capital ratios of UK banks, increasing their ability to weather any shocks.
The BoE also said that banks had increased overall lending by 3% in the year to Q1 2015, a positive sign for the UK economy.
In further optimism for the UK economy, the Bank of England said that it saw further house price inflation and limited risks to the overall economy if there was to be fall in house prices. In regards to the Buy-to-let market the BoE said; “Any increase in buy-to-let activity in an upswing could add further pressure to house prices.”
FTSE soars in broad based rally after Yellen comments
Markets cheered Janet Yellen’s press conference this morning after she clarified the Federal Reserve’s outlook on the economy and eased fears over a rate hike.
The key aspect of Yellen’s speech was her reduction in uncertainty of whether the Federal Reserve was going to raise rates whilst the economy faltered.
She reaffirmed the view that the Federal Reserve would only hike rates when the economy was strong enough to withstand a tightening in monetary policy.
Expectations of inflation and market volatility were also noted as the reason why the Fed held off raising rates last week, alleviating market fears that the Fed hadn’t hiked because they saw a softer US economy.
Whilst Yellen painted the picture of a Fed who were only going to hike into a strengthening economy, she did say that it was likely that rates would rise this year. These comments suggest rates were not raised last to give the FOMC time to judge any impact from the recent market volatility.
Markets took Yellen’s confidence of a 2015 rate hike as a sign that the underlying economy was strong and would support corporate earnings going forward.
The FTSE 100 was up over 2% in mid-morning London trade.
Volkswagen to elect new Chief Executive
The board of Volkswagen will meet today to choose a new Chief Executive after the company was hit by an emissions test scandal earlier this week.
Ex-Chief Executive Martin Winterkorn resigned on Wednesday. VW have been accused of rigging emissions tests in the US, with thousands of cars sending out diesel emissions considerably higher than found in tests.
Porsche Chief Executive Matthias Mueller is reportedly the front runner for the job, gaining the task of steering the company through what will arguably be the most difficult period in its history. Customers and car dealers have shown frustration at the lack of information on the scandal, and the new CEO will be given the difficult job of regaining consumer trust.
Both Europe and the US have started further enquiries, with the UK regulator launching its own investigation on Thursday.