Vietnam Holding Investor Presentation December 2023.
Vietnam Holding (LON:VNH) invests in high-growth companies in Vietnam, focusing on domestic consumption, industrialisation and urbanisation. Craig Martin, Chairman of Dynam Capital, the manager of Vietnam Holding, presents at a London Stock Exchange event.
Oil prices continue to fall as the promised Oil and Petroleum Exporting Countries and Allies (OPEC+) cuts fail to buoy prices.
Despite potential support for oil prices from recent OPEC+ production cuts, oil has fallen exponentially since late September.
“We have seen a mild recovery since then, and the next few weeks may be crucial in deciding whether this is just a brief pause before the sell-off since September resumes or an early indication that a bottom of some sort has been reached,” said David Morrison, Senior Market Analyst at FCA.
WTI Crude and Brent Crude were broadly flat at the time of writing on Wednesday.
Brent hit a six-month low last Thursday.
The front-month WTI contract has recently bounced off support in the region of $70 to $67.50.
The agreement reached on November 30 by the OPEC+ involves the producers maintaining existing cuts of 1.3 million barrels per day (bpd). It also includes adding nearly 1 million bpd in new voluntary reductions by other participating nations.
Saudi Arabia and Russia are already implementing domestic production cuts and have been urging other countries to join them. However, Russia continues to maintain strong levels of exports which is weighing on global markets.
“In terms of the demand outlook, orders for Saudi Arabian crude from Chinese refiners are at a multi-month low,” said David Morrison.
“As for tensions across the Middle East,” added David Morrison, “there has been relatively little reaction to several missile and drone attacks on ships in the Red Sea from Houthis in Yemen.”.
Leading electric vehicle (EV) data analysis firm Rho Motion has revealed that global EV sales in November reached a record-breaking 1.4 million EVs.
In November, the year-on-year (YoY) growth in EV sales was up 20%.
The figures, released by Rho Motion this week, indicate robust market growth of 8% compared to the previous month.
This marks 2023 as the most successful year for electric vehicle (EV) sales in history.
When it comes to the last month of the year, December, Charles Lester, Data Manager at Rho Motion, said, “Sales have continued to rise despite a lot of negative sentiment in the market, and we’re expecting sales to remain strong.”.
In Europe, battery-electric vehicles have experienced a remarkable 37% year-to-date increase compared to 2022.
Sales of plug-in hybrid electric vehicles have remained steady since the beginning of the year, according to Rho Motion.
In China, where November and December typically mark the annual peak for sales, Rho said this trend looks set to continue in 2023, with November showing a month-on-month increase of 9%.
North America has witnessed the most significant year-on-year sales surge, with a notable 43% jump in total sales.
While Tesla and BYD still dominate the market, legacy car manufacturers are quickly rampig up production and taking market shares. For example, General Motors sales in North America alone were up by 16.5% at the end of three months on September 30, 2023.
On Wednesday in Dubai, during the Conference of the Parties (COP28) summit, which is the UN’s main climate Conference, a deal to phase out all fossil fuels was struck.
The COP28 deal states that “transitioning away from fossil fuels in energy systems in a just, orderly, and equitable manner […] so as to achieve net zero by 2050 is in keeping with the science.”
UN Secretary General António Guterres said on Wednesday that “whether you like it or not, the phaseout of fossil fuels is inevitable. Let’s hope it doesn’t come too late.”
The result
During the Conference, COP28 members are separated into delegate groups, which usually share similar geographical locations and political and economic interests.
Saudi-Arabia-led oil-producing members of the Climate Conference lobbied hard for a prolonged reliance on mixed energy sources. The oil producer group clashed with approximately 100 other members of the Conference.
They were met with strong opposition from the Alliance of Small Island States, which also pushed for the specific, stronger wording of “phasing out” the fossil fuels in the deal.
On Wednesday, the deal was finally approved by COP28 President Sultan Al Jaber.
But while it’s nonetheless a big win, many worry that the wins might stop there, as stronger phrasing is not enough when stronger implementations are not in place.
The deal was criticised by many, who said that the only thing that seems to be set in stone with this agreement is that it aims at phasing out fossil fuels.
Each country will now need to set targets on their own. Much resistance to comply might once again follow.
There is a certain level of vagueness around the implementation of the deal that many worry about. This vagueness was demonstrated by Al Jaber’s words at the Conference when he said, “Now it is up to you,” to his fellow delegates.
John Kerry, the USA’s climate envoy, said that everyone should be happy with this deal,even if it is not ideal.
“Everyone might have said things a bit differently, but I think this is a cause for optimism. I am in awe of the spirit of cooperation,” he said.
The role of Saudi Arabia
COP28 President and Saudi Arabia’s delegate, Sultan Al Jaber, famously opened the climate change Conference on October 30 by calling all the members to continue burning fossil fuels.
Sultan Al Jaber, apart from being the year’s COP President, is also the CEO of Adnoc, the UAE’s state-owned oil company.
Last month, Al Jaber also said at a live event that he believes there is “no science” behind the need to phase out fossil fuels.
“There is no science out there, or no scenario out there, that says that the phase-out of fossil fuels is what’s going to achieve 1.5 C,” he angrily said during the event.
1.5 C is a crucial threshold that, when overstepped, might cause irreversible climatic consequences. Scientists and multiple government bodies have reached a consensus regarding this threshold, but many interested in continuous oil production still disagree.
After the deal to phase out fossil fuels was reached at COP, Sultan Al Jaber said that “we are what we do, not what we say. We must take the steps necessary to turn this agreement into tangible actions.”.
Recruitment firm Impellam (LON: IPEL) has finally agreed a takeover offer after months of being in a bid situation. HeadFirst is offering 557.2p/share in cash and 392.8p/shares in loan notes for each Impellam share. Shareholders will also receive the 55.9p/share dividend announced, plus a further cash dividend of 22.4p/share and a in specie dividend of 56.1p/share. This all adds up to 1,084.4p/share and values Impellam at £483.2m. The non-convertible loan notes offer annual interest of 17% and last an initial 3 years. The convertibles have annual interest of 12% and the total loan amount can be converted into 20% of the bid vehicle. The share price rose 34.6% to 875p.
Power Metal Resources (LON: POW) is pushing ahead with the sale of its Canadian uranium assets to former AIM company Teathers Financial, which will be renamed Uranium Energy Exploration. The proposed disposal was originally announced in August 2022. Teathers Financial has raised pre-IPO funding of £421,500 at 1.241135p/share. A London quotation is planned for the first half of 2024. The share price improved 14.2% to 0.725p.
Wishbone Gold (LON: WSBN) says visual inspection of core from recent drilling at the Cottesloe project in Western Australia show zones containing base metals while x-ray fluorescence scanning shows elevated base metals readings. Assay results will make things clearer. The share price is 9.85% higher at 1.45p.
Phase 3 trials of the grass allergy treatment developed by Allergy Therapeutics (LON: AGY) show highly statistically significant reductions in symptoms compared with a placebo. There will be a meeting with the regulators in the first quarter of 2024. This helped the share price to recover 8.25% to 2.1p, following last week’s announcement that cash would last until January.
FALLERS
Toys and leisure products supplier Tandem (LON: TND) says full year results will be worse than anticipated and a £1.1m loss is forecast for 2023 – down from a 2022 pre-tax profit of £1.2m. The only bright area was bicycles, where new product launches helped growth. Elsewhere, pre-Christmas trading has been tough. There is potential to generate additional income from leasing spare warehouse space. The share price slumped 22.8% to 110p.
There is a continued decline in the share price of energy and water efficiency company Eneraqua Technologies (LON: ETP) after yesterday afternoon’s announcement that two local authorities are delaying spending. There is also a £900,000 exceptional charge relating to defective equipment. A loss of £6m is forecast for 2023-24. There was a near one-third share price decline yesterday and today there is a further fall of 12% to 40.5p.
Trading in platinum-focused miner Future Metals (LON: FME) shares has been halted on ASX due to an imminent capital raising but continues on AIM. The share price has slipped 11.9% to 1.3p, which is a new low.
Steppe Cement (LON: STCM) says new tax legislation in the Netherlands and Kazakhstan makes the payment of dividends inefficient. Tax would be charged in multiple jurisdictions. A dividend of 2p-3p/share had been promised. Alternative ways of returning cash to shareholders are being assessed. The share price is 8.33% lower at 22p.
On Wednesday, the FTSE 100 shook off poor UK GDP data to tentatively gain as investors braced for the Federal Reserve’s interest rate decision this evening.
The Federal Reserve is not expected to change interest rates. But that doesn’t make the decision and accompanying commentary any less important.
Markets will be fixated on the Federal Reserve for any hints of their thinking around the trajectory of interest rates, and, crucially, when the Federal Reserve will first cut rates in 2024.
London’s leading index gained 0.3%, while the German Dax added 0.05%.
“The FTSE 100 ticked higher as investors await the latest decision from the Federal Reserve on interest rates,” said Danni Hewson, head of financial analysis at AJ Bell.
“So far, the market is seeing nothing to disabuse it of the notion that rate cuts are on the way in 2024 as US inflation came in as expected yesterday and UK GDP figures show the economy is weakening faster than anticipated.
“To what extent Fed chair Jerome Powell and his Bank of England counterpart Andrew Bailey seek to dampen these expectations could well determine the trajectory of stocks heading into the end of the year.”
The Bank of England is due to announce its interest rate decision on Thursday, but like the Federal Reserve, is not expected to amend the base rate.
Gaming group Entain was the FTSE 100 best performer on Wednesday after CEO stepped down following the settlement of a bribery case relating to their Turkish business. Entain shares jumped as much as 4% on Wednesday.
Investors could observe weakness in UK focused stocks including B&M European Value and Rightmove as profit takers took the poor UK GDP as a trigger to book recent gains.
B&M fell 6%, and Rightmove slipped 4%.
Rolls Royce slipped marginally as investors booked profits after a rip-roaring run. Rolls Royce is the FTSE 100’s best performer of 2023.
There was mild favour for defensive stocks, with utilities and pharma rising while cyclical banks and miners fell.
Sterling sank against the dollar on Wednesday as traders digested a dismal GDP reading for October that fueled speculation the Bank of England will be required to cut rates earlier than previously thought.
The UK economy contracted 0.3% in October as poor weather dented spending amid an already challenging environment for the UK’s consumer.
“Awful weather and the disruption caused by strikes won’t have helped, but even with the continued squeeze on consumer spending, the contraction in economic growth recorded in October was greater than had been expected,” said Danni Hewson, head of financial analysis at AJ Bell.
“All sectors of the economy were affected as the impact of two years of interest rate hikes work their way through the system. The big question is whether October is the harbinger of recession or a tipping point as wage growth finally surpasses inflation?”
Economists and market analysts have flip-flopped on calls for a UK recession over the past two years, with the economy dodging the most damaging effects of the cost of living crisis and rising interest rates.
It will take a brave forecaster to put their head above the parapet and call for a recession after so many have got it so wrong for so long.
That said, a 0.3% contraction is material, and the UK will need a bumper festive trading period to grow in the fourth quarter.
Importantly for markets, a UK recession, or projections of a recession, will play into central bank thinking and could bring forward the eventual date for the Bank of England’s first rate cut after the hiking cycle.
Slower wage growth released yesterday certainly supports the view that the UK is ready for borrowing cost to fall. However, timing the first cut is pure conjecture at this stage.
Susannah Streeter, head of money and markets, Hargreaves Lansdown, said: “it does increase the likelihood that the Bank of England might cut rates earlier than forecast, although it’s still not likely until the second half of next year, given that wage increases, although slowing, are still strong.”
The Bank of England will announce their last interest rate decision of 2023 tomorrow.
Another day, another important step forward for Tekcapital’s portfolio company, Innovative Eyewear.
Today, we learned Innovative Eyewear’s ChatGPT-enabled Lucyd smart eyewear Andriod app will be upgraded with 2.0 features, including a voice interface and the ability to export ChatGPT output to email.
Innovative Eyewear’s Lucyd app is the first app to provide a voice interface for ChatGPT.
The app is available in the Google Play store now, and the 2.0 features will be launched later this month.
“We are excited to launch the new version of the Lucyd app for Android, which powers seamless voice access to ChatGPT on Lucyd eyewear,” said Harrison Gross, CEO of Innovative Eyewear.
“The new state-of-the-art interface makes the world’s most popular AI language model easier to use than ever on our glasses and while on the go. We look forward to introducing additional features, a shop, and a pro version of the app in the near future.
“We also anticipate making the app a hub for connecting to multiple AI systems through our glasses with voice control, as outlined in our pending utility patent on the app. We believe this will deliver more functionality to our community and foster the development of an additional revenue stream from users of other “hearables” that want seamless voice access to ChatGPT.”
The news follows yesterday’s announcement that Nautica-branded smart eyewear will be available starting in January.
Innovative Eyewear’s Android app includes a raft of new features, including:
by Craig Erlam
As commodities go, few are as unique and versatile as gold. From its historical roots as the asset at the heart of monetary systems, to its enduring appeal as a status symbol to be adorned, the precious metal has shown lasting appeal.
Gold trading is highly liquid, and the international gold market can offer opportunities for traders.
But there are some common and long-held assumptions about gold as an investment asset that require deeper interrogation. In this article, I unpack three key factors to understand before trading gold.
Gold as an inflation hedge
One of the most commonly-held assumptions about gold is that it can offer protection against inflation.
During periods of high inflation, gold – a physical asset with intrinsic value and limited supply – tends to retain its value compared to fiat currencies, which decrease in actual value as the cost of goods and services rise.
While it is true that gold has historically demonstrated an ability to hold value and therefore to preserve wealth during periods of high inflation, this concept is neither foolproof nor true in all circumstances.
Gold may be more likely to act as a successful hedge against inflation in extreme conditions: for example, in a country experiencing runaway inflation or seeing its currency collapse. However, traders and investors should be aware that gold is not a guaranteed hedge against inflation, and that multiple factors influence the price of gold.
Gold as a safe haven asset
Many investors will be familiar with the concept that gold is a ‘safe haven’ in uncertain times, from economic instability to geopolitical turbulence. Seen as less correlated to asset classes such as stocks and bonds, gold’s relative stability means it is often viewed as a good asset to diversify portfolios.
While gold’s status as a stable asset even in an unstable market has built up over the centuries, it’s important to understand that gold is not immune to volatility. The safe haven maxim can be true, but it is still situation-dependent. In reality, a range of factors from market conditions to investor sentiment have an impact on the price of gold, and crucially, interest rates play a key role.
The impact of US interest rates
Unlike stocks and bonds, gold does not provide dividends or cash flow to investors. As a result, the price of gold is typically inversely correlated with real interest rates – specifically those of the US’s Federal Reserve, as gold is priced in USD. Broadly speaking, when US yields are high, assets that generate no cash flow become less appealing, and vice versa.
As a result, expectations around interest rates play into the price of gold too – and this is a difficult relationship to navigate. While actual changes to US interest rates only occur every six weeks following Federal Reserve meetings, expectations and sentiment around interest rates can fluctuate constantly.
Interest rate expectations can impact the price of gold in a number of ways: for example, higher interest rates in the US can lead to the USD appreciating, which makes buying gold more expensive for non-USD holders. Additionally, rising rates can be perceived as anti-inflationary, which can impact gold’s appeal to investors.
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After almost 40 years with Aberdeen Asset Management (now abrdn) – including 28 years founding and running abrdn Asia Focus investment trust (AAS) – venerable Asia hand Hugh Young is finally to hang up his managerial boots, or at least leave them on the step for his teammate and successor Gabriel Sacks to step into.
They’re undoubtedly big boots to fill. Morningstar data shows that AAS has produced annualised returns of almost 12% since launch in 1995, compared with 4.5% from the MSCI AC Asia ex Japan Small Cap benchmark index. Put another way, £1,000 invested in AAS in 1995 would now be worth almost £22,000, versus £3,400 from the benchmark.
Young “fell into” his career after studying politics at Exeter University, and by the early 1980s was running Asian equities in the UK. In 1985 he moved to Aberdeen to run what is now the abrdn Asia Pacific and Japan Equity fund, and in 1987 launched abrdn’s specialist Asia ex Japan unit trust.
He had several very successful years, followed, inevitably, by an awful one. At that point, Young took radical action: “It seemed a bit daft to manage funds investing in Asia from London, so I moved out to Singapore to set up the office here in 1992.”
With around £200 million under management across various UK funds to look after, he and a lone assistant from London set up Aberdeen’s Asia desk in an old shophouse on the Singapore river.
The gamble paid off. Young and his expanding team were on the ground as regional economic growth gathered momentum and markets such as Korea, Taiwan, the Philippines, Thailand, China and India progressively opened up to foreign investors over the next three decades.
“Operating from London and doing two-week visits, it’s easy to claim you’re an Asia expert,” he observes. “But especially at that time, it was very difficult unless you were living and breathing it – certainly the way we operated, which was and still is a very old-fashioned method involving spending time with the companies and doing a lot of individual due diligence.”
The team’s approach has always been based on diversity, investing on a long-term, bottom-up basis across a spread of countries and sectors, he adds. “We’re looking for good, well-run companies with honest owners and decent employment practices, in industries we believe will grow over the next five or 10 years.” Some holdings have been in the portfolio for 20 or 30 years.
Young made his name as an Asian smaller companies specialist – “smaller companies are just a lot more interesting” – and has remained as lead manager on the small-cap focused abrdn Asia Focus investment trust, after giving up high-profile roles as head of investments at Aberdeen and CEO/chair of Aberdeen Standard Asia.
But he is quick to point out that the whole Asian enterprise, as it has grown, is based on teamwork: “A team-based process was crucial simply to cover the ground, given we had getting on for 20 countries and potentially thousands of companies to invest in.”
The team ethos is simple enough: “We look for honest managers and owners running decent businesses doing the right things, and invest at the best price. Now we have around 40 analysts and managers on the equity team and around 500 employees in total across the region, and the Asia office runs roughly $50 billion,” he adds.
New recruits start as analysts and progress to management as their knowledge of different markets and sectors grows. Brazilian-born Gabriel Sacks is one of many who started and stayed with abrdn, cutting his teeth with the emerging markets (EM) team during and after internship in 2008.
“As a youngster, one of the great things about abrdn was how much exposure to major EM companies I got, and how much room to grow,” he comments. “Hugh has instilled a really collaborative, supportive way of working, and in an industry with a bad reputation for competition and hierarchy.”
Sacks spent a decade in London on the EM desk, working closely with Young and the Asia team, followed in 2018 by five years in the Singapore office itself.
“With around 70% of our emerging market portfolios in Asia, I became very aware of the shift in the global centre of gravity towards the east, so it was important to spend some time on the ground,” he explains. He covered mainly small caps, but also had input into other Asian and EM portfolios.
Sacks is returning to London to take AAS’s reins. While this is an exciting move for him, he is at pains to stress that it’s still basically all about the team. “Hugh became a star manager because he was a pioneer in Asia and was very successful there, but he himself would say it’s always been very much a collaborative approach,” he says.
Nor does he see himself as ‘taking over’ when Young leaves at Christmas. “I’d love to think I’m irreplaceable, but in reality there would be a large, experienced team to pick up things where I left off, including my co-managers Flavia Cheong and Xin-Yao Ng.”
Nonetheless, there has been a lot of succession planning, and Sacks has been working closely with Young to refresh the AAS portfolio over the past five years: changing the name, trimming the number of holdings, weeding out some legacy stocks and introducing new ideas to drive performance in the future (some of which have since done extremely well).
Sacks, like his predecessor, is fired up by the potential of smaller companies: “It’s an opportunity to find some real gems that even other Asian fund managers haven’t really heard much about,” he enthuses.
He’s keen to play forward-looking themes for AAS, including Asia’s extremely strong technology supply chain, the emergent green theme, and the growth of the Asian middle class: “Globally, of the next billion people to join the middle class, almost 90% is expected to come from Asia, which is a great tailwind for well-managed companies in areas such as consumer goods and financial services.”
But there are no changes planned for the fundamentals on which abrdn Asia Focus is run, says Sacks. “Hugh has always said to keep things simple: understand what the business is, how it’s run and what the growth trajectory is, and then don’t overpay for it.”
Of course, that is often easier said than done, but the abrdn Asia Focus team is thriving on a wealth of innovative ideas, robust discussion and peer review, in a part of the Asian market that has seen great outperformance and real long-term growth.
Important information
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Issued by abrdn Investments Limited, registered in England and Wales (740118) at 280 Bishopsgate, London EC2M 4AG. abrdn Investments Limited, registered in Scotland (No. 108419), 10 Queen’s Terrace, Aberdeen AB10 1XL. Both companies are authorised and regulated by the Financial Conduct Authority in the UK.
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