FTSE 100 stocks most exposed to Chinese stimulus
Reports that Chinese authorities were considering measures to help stimulate their domestic property market lifted global risk sentiment last week.
After a dismal week’s performance, London’s leading index finished the week on a high, with China-exposed stocks among the top gainers.
Should China unleash a wave of support for its property market, these stocks will likely be the biggest FTSE 100 winners and provide shareholders with outperformance compared to the benchmark.
The FTSE 100 is heavily exposed to China, and not holding these stocks in a UK equity portfolio could mean the index leaves you in the dust.
Miners
Support for the Chinese property market will likely increase demand for natural resources. The FTSE 100’s mining companies will directly benefit from any subsequent rise in commodity prices.
Companies such as Rio Tinto, Anglo American, Glencore and Antofagasta supply a significant part of the world’s iron ore and copper – crucial materials for construction.
The sector is trading near the lowest levels of the year and is primed for a recovery should Chinese stimulus be delivered.
Prudential
After the divestment of M&G Investments, Prudential is almost entirely focused on Asia and China. Hong Kong accounted for most of Prudential’s income in 2022, and the company is targeting mainland China as a core area of growth in the future.
The company also has operations in Singapore, Malaysia and a number of growth markets in the region.
Prudential shares rallied over 5% last week when reports of possible Chinese stimulus first broke.
Standard Chartered
Standard Chartered also earns a significant proportion of its revenue in Hong Kong. Of their $16,255m income earned in 2022, $11,213m was earned in Asia. Hong Kong and Singapore were the largest contributors.
Standard Chartered recently received approval for a new securities business in mainland China that a stronger Chinese economy will support.
BP & Shell
Although the two companies are not as directly exposed to China as other companies covered in this article, BP & Shell will enjoy the benefits of Chinese stimulus. A more robust Chinese economy will help support oil prices and the oil major’s earnings.
SEED Innovations at an all-time low as portfolio updates fail to impress
SEED Innovations are trading near all-time lows after a string of uninspiring updates by portfolio companies eroded the value of the company.
SEED Innovations shares were trading at 1.71p at the time of writing. The stock is down 34% in 2023 and 89% over the past five years.
SEED Innovations was previously known as FastForward Innovations before changing its name in 2021.
The cannabis-focused company has released a number of updates on portfolio companies in recent weeks, none of which have sparked a sustainable bid in the stock.
SEED shares were little moved last week despite portfolio company Little Green Pharma’s revenue jumping 89% to A$19.9m. SEED Innovation holds a 2.45% stake in Little Green Pharma.
Another portfolio company, AQUIS-listed Yooma Wellness had its shares suspended recently after failing to make annual filings.
Ed McDermott, SEED’s CEO, commented at the time:
“It is disappointing to see Yooma’s shares suspended from trading on the CSE and Aquis today. Whilst Yooma expects to make its Annual Filings as described above, this follows the widely reported very poor operational performance in recent months.”
SEED recorded a 1.18x return on investment in South West Brands as the brand agreed on a sale to OTO International Ltd. SEED invested £500,000 and made a £90,000 profit.
Oil prices jump after OPEC+ production cut
Oil prices rose on Monday after OPEC+ announced a production cut designed to help prop up prices.
OPEC+ countries supply around 40% of the world’s oil and will cut daily production by 1.4m barrels of oil per day.
Brent and WTI surged in early trade on Monday, but the rally faded as the session developed. Brent was 1.6% higher at $77.36 at the time of writing.
OPEC+ producing countries are at odds with most of the West, who would like to see oil prices fall further to control inflation.
OPEC+ countries rely heavily on oil income, and falling prices may adversely affect their domestic economies. Saudi Arabia, for example, has committed to multi-billion dollar spending and investment plans that rely on higher oil prices.
Saudi Arabia pushed ahead with 1 million barrels of oil production cuts themselves.
“Brent crude is trading higher, just above $77 a barrel, but has lost a little bit of steam, after initially jumping on the news of Saudi Arabia’s production cut, which is designed to keep cash rolling into the kingdom,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“The decision by Riyadh to reduce production by a million barrels a day in July, and the pledge from other OPEC+ members to lower targets again next year was aimed at shoring up the oil price to breakeven levels. Oil prices are trapped in conflicting tides between production cuts on one hand, and concerns about demand as China’s recovery slows, while a recession in the US looms. So, for now, this production cut is unlikely to show up in a dramatic way at the pumps.
“However, depending on the trajectory of the world’s largest economies, and if Saudi Arabia cuts again, supply shortages could emerge later this year, which could push prices higher but still way off the excruciating levels of last summer.”
Kew Soda plans premium listing
Turkey and US focused Kew Soda has published its registration document ahead of the proposed flotation on the premium list of the Main Market. The shares on offer will be sold by an existing shareholder. The focus will be institutions, but a Primary Bid offer of up to £6.95m is being considered.
Kew Soda owns West East Soda, which is the world’s largest producer of natural soda ash, which is an essential component for a variety of industrial processes. Glass manufacturing accounts for three-fifths of world demand. This could change with potential growth in demand for solar photovoltaic and lithium carbonate for electric vehicle batteries.
Global demand for soda ash is forecast to grow from 65 million metric tonnes to 81 million metric tonnes by 2030.
There are plans to invest $5bn to more than double production capacity by 2030. In 2022, the company produced 4.6 million metric tonnes of soda ash and 400,000 metric tonnes of sodium bicarbonate. The existing facility is in Turkey and there are two projects planned in the US.
In 2022, revenues jumped from $894m to $1.77bn and EBITDA was $838m, while cash flow soared from $303m to $741m. In the first quarter of 2023 revenues were $495m and EBITDA was $248m
Turkey-based industrial company Ciner Group is the current owner of Kew Soda, which has headquarters in the UK. There will be a free float of at least 10% with potentially a further 15% available through an over-allotment option. The offer is focused on institutions outside of the US.
The cash raised by the shareholder will be used to repay intercompany loans. That will then go towards reducing the net debt of the company.
Aquis weekly movers: Wishbone Gold awarded grant for drilling
Wishbone Gold (LON: WSBN) has been granted A$220,000 by the Australian government to help fund the drilling programme for the Cottesloe project in Western Australia. There have been eight priority targets identified. The share price increased 18.9% to 2.2p.
In the first quarter, technology investment company SuperSeed Capital (LON: WWW) grew its NAV by 8% to 105p a share. The share price rose 14.3% to 80p. There is available cash of £310,000. Lower technology company valuations mean that there are plenty of opportunities for investment. Portfolio companies have raised cash at higher valuations, though. The most recent investment was in Kluster Enterprises, which is a revenue analytics and forecasting platform for scaling B2B SaaS companies.
Invinity Energy Systems (LON: IES) is supplying nine Invinity VS3 vanadium flow batteries to Orcas Power and Light in the US. Delivery is expected in the first half of 2024. The share price edged up 9.86% to 39p.
Blockchain assets investor KR1 (LON: KR1) announced net assets of £101.2m at the end of April 2023, which is 57.03p a share. The share price improved 7.94% to 34p. There was more than £400,000 of income generated during April. At the end of May, KR1 invested $1m in Aroma, as part of a $25m financing. Aroma is developing technology for building decentralised infrastructure and a related new operating system.
Singer Capital Markets published a new analyst report on wines producer Chapel Down Group (LON: CDGP) and it says that it believes the recent share price decline has been due to a lack of news and it has been overdone. The broker has an estimated NAV of 38p. The share price rose 6.78% to 31.5p. This year’s growing season got off to a good start. A trading update is due in July.
Hydrogen Future Industries (LON: HFI) chairman Daniel Maling bought 200,000 shares at 6.5p each, taking his stake to 2.51%. The share price moved ahead by 4% to 6.5p.
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Fallers
Cadence Minerals (LON: KDNC) ASX-listed investee company Hastings Technology Metals says that a model review supports a staged development of the Yangibana rare earths project. That will reduce upfront capital spending and provide a way to reach positive cash flow in the first quarter of 2025. Stage one investment is around $470m. The stage one post-tax NPV11 is $538m. Investee company Evergreen Lithium, which is listed on ASX and Cadence Minerals owns 8.74%, has announced the results of a geochemical programme at the Bynoe lithium project. This has extended the lithium anomalies. There are also indications of other elements. The Cadence Minerals share price dipped 14.1% to 8.55p.
Clarify Pharma (LON: PSYC) reported a reduced annual loss of £1.01m, due to lower admin expenses. There was £435,000 in cash at the end of November 2022, following a cash outflow of £581,000 and net investments of £508,000. The share price fell 4.94% to 0.77p.
AIM weekly movers: Rockfire Resources encounters high zinc grades
Gold and base metals explorer Rockfire Resources (LON: ROCK) has announced the highest zinc grades ever encountered at the Molaoi deposit in Greece. In one case there was 50.8% zinc from a drill hole. This could help to increase the overall grade. The drilling has confirmed the continuity of mineralisation throughout the deposit. The share price soared 53.5% to 0.33p.
Edenville Energy (LON: EDL) is raising £1.47m at 5p a share from Q Global Commodities Group, which will take its stake to 29.95%, and Gathoni Muchai Investments, which will own 20.1%. The share price jumped 45.5% to 8p. The two shareholders will also receive warrants exercisable at 35p until 25 May 2024. The cash will fund reviews of potential new and strategically complimentary projects in Africa. Jason Brewer of Gathoni Muchai Investments has been appointed as an executive director.
Telecoms marketing software and services provider Pelatro (LON: PTRO) has won a large contract for campaign management service for a Middle East telecoms company. This extends an existing relationship. The overall contract provides annual recurring revenues of around $650,000. Last year’s group annual revenues were $5.4m and recurring revenues were $4.3m. The share price rose 34.8% to 7.75p.
Telecoms services provider Maintel Holdings (LON: MAI) said trading was in line with expectations when it held its AGM. The new strategy plan is already helping to reduce costs. The share price jumped 31.8% to 145p, which is still only nine times prospective 2023 earnings, falling to less than five in 2024. This indicates a lack of confidence in Maintel delivering these figures. If it does then there could be a further re-rating.
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Fallers
Amur Minerals Corporation (LON: AMC) went ex-dividend last Thursday ahead of the 1.8p a share special dividend. Ascent Resources (LON: AST) subsequently bid one share for every 21 Amur Minerals shares. At an Ascent Resources share price of 3.55p, each Amur Minerals share is valued at 0.17p. Amur Minerals is considering the offer. The share price fell 86.1%, or 1.55p, to 0.25p.
Digital marketing service provider Silver Bullet Data Services (LON: SBDS) grew revenues by 53% to £5,82m in 2022, but there was a flat underlying loss before tax. The cash outflow from operating activities did fall from £7.22m to £5.14m and capitalised development spending was reduced from £1.46m to £1.1m. This meant that Silver Bullet Data Services moved into net debt of £487,000. A convertible loan note issue raised £500,000 last week. There is an 8% cash interest payment with a 4% payment in additional loan notes. The conversion price is 50p. The share price slumped 52.7% to 21.5p. The June 2021 placing price was 257p.
Antibody profiling company Oncimmune (LON: ONC) reported a cash outflow from operations of £2.32m in the six months to February 2023. This is prior to the recent sale of the IVD EarlyCDT Lung blood test antibody technology to US biotech Freenome for £13m. That disposal will lower ongoing costs. Even so, there are concerns about how long the company’s cash will last and how quickly it can move to breakeven. The share price declined by 46.1% to 19.95p.
Mineral sands project developer Capital Metals (LON: CMET) has been sent a notice of cancellation for the Industrial Mining Licences for the Eastern Minerals project by the Sri Lanka authorities, which claim that certain licence conditions have not been complied with. The licences were suspended in December and all mining activities were halted. The share price dipped 37.5% to 2.25p, which is just above the all-time low.
How can ISAs support a comfortable retirement?
Having a comfortable retirement is one of the main aims of many investors. With that being said, achieving this goal that can often be complex, especially without expert investment guidance.
Therefore, we wanted to use this article to show you how Individual Savings Accounts (ISAs) can help you plan for the comfortable retirement you desire.
Read on to learn what an ISA is and how they can be beneficial for your retirement.
For more expert guidance on investing for your retirement, be sure to speak to your modern wealth management service.
What is an ISA?
An ISA is a unique type of account that allows you to build your savings up whilst sheltering your money from tax.
ISAs are often referred to as ‘tax-wrappers’ for this specific reason. The money you invest in your ISA is not subject to any tax charges, and you can invest in these accounts every tax year.
The amount you can save in an ISA is determined by the annual ISA allowance for your tax year. This is the total amount you can shelter from tax in your ISA each year.
As of the current tax year, 2023/2024, the ISA allowance is £20,000.
Currently, there are four types of ISAs available – cash ISAs, stocks and shares ISAs, innovative finance ISAs, and lifetime ISAs.
You’re only able to put money into one of each type of ISA each tax year, and the total allowance must be shared across all your investments.
How can investing in an ISA benefit your retirement?
Utilising an ISA can be a significant benefit to your retirement in many ways, including, but not limited to:
- Growing your wealth tax-efficiently
Investing in an ISA can benefit your retirement since it allows you to grow your wealth tax-efficiently.
Every investor is likely to have their own financial goals for the future, whether it be to retire at an early age, support financial dependants in retirement, or to live a particular retirement lifestyle.
Whatever your unique goals are, a core component of achieving them is to have sufficient savings when you retire.
With an ISA, you can continuously grow your wealth each tax year, without your money being impacted by tax charges.
This can maximise your savings, and help you build your wealth effectively towards your financial goals.
- Diversifying your investments
Another benefit of ISAs when planning for retirement, is that it allows you to diversify your investments.
Pensions are an important part of retirement planning, but it can also benefit you to expand your investment profile to also include ISAs.
For one, this can add an additional £20,000 of savings each tax year on top of the £60,000 allowance you have for your pension. This means even more money being sheltered from tax each year.
Also, having different types of ISAs can benefit your wealth, such as investing in a stocks and shares ISA as well as a cash ISA.
The cash ISA can help you save your money in a standard account, but the stocks and shares ISA can help you grow your wealth with potentially successful investments.
Any growth made in your account will be free from Capital Gains Tax (CGT).
- You can invest in an ISA right away
Investing in an ISA is also good for your retirement planning since it’s an account you can begin investing in right away.
You must be over 16 to open a cash ISA and over 18 to open other types of ISAs. As well as this, you must be a resident in the UK or a Crown servant or their partner.
This means you can start investing in ISAs at an early age, to give you even more preparation for your retirement.
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Now you’re aware of the importance of ISAs when planning for retirement, make sure you consult your wealth manager to find the right approach to your own ISA investments.
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Please note, the value of your investments can go down as well as up.
FTSE 100 extends risk-on rally after bumper Non-Farm Payrolls report
The FTSE 100 touched the highest levels of Friday’s session after another bumper US jobs report suggesting underlying health of the US economy. Reports China was considering measures to help prop up the property sector also lifted the mood on Friday.
The FTSE 100 was trading at 7,574 at the time of writing, a gain of 1.12%. The S&P 500 was around 1% higher.
Today’s rally builds on yesterday’s gains ignited by a US debt ceiling deal which means the world’s US economy will avoid a default that would plunge the global financial system into meltdown.
“As expected, the Senate swiftly approved the new debt ceiling deal in the US prompting relief in the markets with the FTSE 100 making decent progress on Friday morning,” said AJ Bell investment director Russ Mould.
“A bigger bounce might have been forthcoming had investors not already been very much factoring in an agreement, with only a modest sell-off around the crisis.
“With disaster averted for now, attention will turn to other matters which have been overshadowed by the drama in Washington.”
The other matters Mould alludes to include the health of the US economy and the next move by the Federal Reserve.
Judging by today’s jobs report, the US economy is ticking along just fine. The US added 339,000 jobs in May, beating median estimates of 195,000.
May’s jobs report is the 14th in a row that has beaten estimates suggesting the financial community is consistently over-pessimistic about growth. It strengthens the argument against a US recession predicted by some analysts.
Nonetheless, the good news for the US economy may prove to be bad news for equity investors hoping for lower borrowing costs in the short term.
With the US economy ticking along and inflation rates falling, there is no impetus or justification for the Federal Reserve to cut rates.
FTSE 100 movers
The FTSE 100’s top risers on Friday reflected a firmly risk-on mood in markets.
The highly-cyclical mining sector drove London’s leading index higher on Friday as Anglo American, Rio Tinto, Glencore, and Antofagasta stormed ahead.
If measures to stimulate the Chinese property market materialise, demand for natural resources will be supported and could translate to more robust mining earnings.
Anglo American was the FTSE 100 top riser, up 5.7% at the time of writing.
Financials joined in the rally led by Prudential who earn most of their revenue in China and Asia. Prudential was 4.75 higher.
As one would expect in a risk-on move in equities, shares with defensive attributes suffered.
BT, SSE, Vodafone and Centrica were the top fallers.