Research finds first-time investors are more diligent than their reputation suggests

Liam Roche
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Research finds first-time investors are more diligent than their reputation suggests

2.5% of investors use social media as their sole research tool according to Freetrade

Freetrade, the investment platform, released research on Monday that challenges some of the misconceptions around first-time retail investors.

There has been an explosion in retail activity over the past year, as retail investors have been portrayed as “young, naive, impatient and highly susceptible to misleading discussions about “hot stocks” pushed via social media”, according to Freedtrade.

However, research suggests that the contrary is true. Freetrade reckons that many first-time retail investors set “realistic” long-term goals, while “developing constructive, life-long habits”.

Two-thirds of investors are under 35, half of whom live with a partner/spouse, while 68% live in a property they own.

81% of investors are approaching investment as a long-term habit, while 91% say they lack confidence when they first invest.

Younger people, 18-25 year-olds, are generally more cautious according to Freetrade, and are also more goal-oriented, with the desire to boost their income being the most common motivator.

The role of social media can be overstated too, as a mere 2.5% of investors saying they use it as their sole research tool.

Adam Dodds, CEO of Freetrade, said: “These findings suggest that the buzz around investing is not a fad. Millions of people are getting into investing for the right reasons and picking up an important, life-long habit which should be nurtured and celebrated.”

“While we have seen a number of stereotypes about new and inexperienced investors taking hold in the last twelve months, our research shows, by contrast, that their behaviour is much more conservative.”

“What we do need to worry about is the behaviour of platforms. We’ve seen genuine, positive momentum build in the DIY investing space this year. It would be a shame if retail investors ended up getting shouldered with heavy losses because they were encouraged to dabble with complex, leveraged derivatives. Firms that offer CFDs and spread betting are simply duping their customers into speculating to line their own pockets, and they threaten to undo the progress made by damaging the reputation of responsible investing.”

Shell’s climate plans not enough according to major UK investor

Liam Roche
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Shell’s climate plans not enough according to major UK investor

Shell loses vote over climate plans at AGM

Legal & General Investment Management (LGIM), one of the UK’s largest fund managers, has come out as being critical of Shell’s (LON:RDSB) efforts to tackle climate change.

At Shell’s AGM last week, LGIM voted against the FTSE 100 oil giant’s energy transition strategy.

The fund manager told the Guardian that it was standing alongside activists as it does not buy the credibility of Shell’s plan.

Although LGIM did say that some progress was being made. “We remain concerned that the strength of interim targets (up to 2035) and disclosed plans for oil and gas production fall short of the level of ambition required for the company to credibly claim alignment with a 1.5C pathway,” the company said.

At the recent AGM, a resolution put forward by shareholders called the oil company to do more to address climate concerns by setting binding emissions targets received 30% of the vote. Among the voters in favour was LGIM.

The result builds further pressure on Shell and now means the oil giant will be required to consult shareholders and report on their views within six months.

The resolution was put forward by Follow This, a campaign group that uses activist investment that pressures oil companies to reduce their emissions in line with the limits set by the 2015 Paris climate agreement.

“This is really a very strong signal to the board of Shell that their current targets are not sufficient to reach the [aims of the] Paris climate agreement. That is what investors one by one are realising,” said Mark van Baal, the founder of Follow This.

Cineworld hails successful opening weekend as cinema goers return

Liam Roche
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Cineworld hails successful opening weekend as cinema goers return

Cineworld anticipates its recovery will gain momentum amid the releases of Cruella and A Quiet Place 2

Cineworld praised a “strong” opening weekend across the country and anticipates a continued recovery after cinemas were forced to close down for months due to the pandemic.

The cinema group said that Peter Rabbit 2: The Runaway was to thank for its opening weekend success as families flocked to cinemas in droves.

Cineworld said that its performance over the weekend surpassed its own expectations as “customers were eager to return to the movies and enjoy the full movie experience”.

One week ago, on Monday, cinemas were officially allowed to welcome customers back after being closed due to lockdowns for over four months during the third lockdown.

Mooky Greidinger, chief executive of Cineworld, said the business anticipates its recovery will gain momentum amid the releases of Cruella and A Quiet Place 2.

“We are thrilled to have our cinemas back in business in the US and UK and to welcome movie fans back to the big screen for an exciting and full slate of films. We are especially pleased with the warm welcome our employees have received, and the positive feedback from returning guests,” Greidinger said.

“With the releases next week of Cruella, and A Quiet Place 2, we expect next weekend’s results to be strong. When combined with improving consumer confidence and the success of the vaccination rollout, we expect a good recovery in attendance over the coming months, noting the record breaking success of F9 in the Asian market.”

“We are excited for our customers to experience the magic of big screen entertainment again, all made possible by the hard work of our colleagues around the world, and remain committed to be the best place to watch a movie.”

The Cineworld share price is up by 2.96% to 89.39p per share during the morning session on Monday.

Ofgem to invest £300m into electric vehicle infrastructure

Liam Roche
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Ofgem to invest £300m into electric vehicle infrastructure

Ofgem will install 1,800 new ultra-rapid charge points for EVs

Ofgem, the UK energy market regulator, outlined on Monday its plan to invest £300m in over 200m infrastructure projects to ready the UK for the future of electric transport.

The plans will come into action over the next two years and is part of a wider £40bn project to move the UK to a system that uses low-carbon transport and heating.

Boris Johnson has previously confirmed plans to forbid the sale of petrol and diesel cars from 2030 in order to reduce its emissions to net-zero by 2050. However, the country may well need to upgrade its infrastructure significantly to support the future influx of electric vehicles.

Ofgem has confirmed that it will install 1,800 new ultra-rapid charge points for EVs, thereby tripling the current network, on motorway service areas and trunk road locations across the UK.

Electric Car Owners to be Rewarded for Charging at Off-Peak Times

Financial rewards will be given to up to 25,000 drivers of electric vehicles as an incentive to charge their cars at off-peak times as part of a wider plan to reduce pressure on the power grid.

UK Power Networks, which runs electricity networks across London and surrounding regions, is anticipating up to 4.5m electric vehicles charging on the network by 2030, up from current levels at 150,000.

Sotiris Georgiopoulos, head of smart grid development at UK Power Networks, said that people usually charge their vehicles from 5:30pm to 9pm.

Sotiris Georgiopoulos, its head of smart grid development, said that people tended to put their cars on charge from about 5.30pm until around 9pm. He added that it would be necessary to take action to avoid overrunning the network.

“The network may need some additional capacity,” Georgiopoulos said. “Our traditional solution would be to say, ‘OK, let’s upgrade the local infrastructure’.”

Avon Rubber waits on contract news

Andrew Hore
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Avon Rubber waits on contract news

Interim figures from Avon Rubber (LON:AVON) will be reported on Tuesday (25 May). Those figures will not be as important as the indications about the timing of contracts.
There were delays to product approvals for the company’s body armour and this means that revenues have moved into next year. There could be more news about the timing of these revenues, although it may be too soon for this to be finalised.  
This contract will be important for the coming years. Even so, profit can improve this year with a bigger boost the following year.
Interims
Interim revenues are expected to grow to ...

Zotefoams is fleet of foot

Andrew Hore
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Zotefoams is fleet of foot

Zotefoams (LON: ZTF) is holding its AGM on Wednesday 26 May and there should be a further update on trading, which appeared to be going well at the time of the full year figures. Profit should bounce back this year, but there are still short-term uncertainties.
The 2020 figures held up relatively well with a small drop in underlying pre-tax profit to £8.6m. That was after a record second half. The high performance products (HPP) business continues to benefit from demand from footwear manufacturers, while PPE demand held up sales of polyolefin foams.
If the losses can be stemmed at MuCell, whic...

Revolting shareholders: Pendragon remuneration policies questioned

Andrew Hore
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Revolting shareholders: Pendragon remuneration policies questioned

Motor dealer Pendragon (LSE: PDG) continues to have significant votes against its remuneration report and certain directors. It paid significant bonuses despite the large loss in 2020.
Three votes at the AGM had significant minorities against them. This includes the approval of the remuneration report, where 42.2% of votes were against the motion. This was similar to the 41.3% votes against the remuneration policy and the long-term incentive plan the year before (the vote against the 2020 remuneration report was 21.5%).
Pendragon reported a £25.5m pre-tax loss on continuing operations for 2020...

IHG Share Price: all set for a return to travel

Liam Roche
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IHG Share Price: all set for a return to travel

IHG Share Price

2020 proved to be an especially trying year for IHG, and it remains unclear whether or not further issues lie ahead. Having said that, the IHG share price stands at 73.68p, around its pre-pandemic level, as the return to travel appears to be factored in. While the FTSE 100 company has its books in order, it remains vulnerable to continued lockdowns.

Performance

The IHG share price is currently trading well over 40 times its expected earnings. This figure exceeds its ten-year average and is comfortably an all-time high. “That’s largely down to the abnormally low profits expected over the next 12 months,” said Nicholas Hyett, equity analyst at Hargreaves and Lansdown. With the IHG share price now trading at a similar level to before the pandemic, “it’s still a big vote of confidence from the market”, Hyett added.

The optimism on the part of investors comes despite demand drying up over the past 12 months. IHG even remained profitable thanks to the nature of its business model.

“Despite having a portfolio of nearly 6,000 hotels globally, the group only owns 25. Instead IHG licences a brand to the hotel owner, which means it’s not on the hook for hotel running costs. That’s kept cash burn to a minimum and enabled the group to offer support to its partners – with flexible payments and fee breaks. Keeping franchisees in business is crucial to IHG’s business model, so this was the right (albeit expensive) move in our view,” according to Hyett.

IHG remains well positioned financially with significant liquidity. Therefore its future prospects appear reliant on the hastiness of a return to travel.

Return to Travel

Demand appears to be picking up as the recovery is gathering pace. So far the recovery has been led by China and the US, as Europe lags behind. Of course, it remains difficult to forecast exactly when things will pick up further but the wheels are in motion.

Analysts at Peel Hunt commented on the near-term prospects of the IHG share price: “Getting the share price right from here in our view depends on the relative impact of forecasts declining further as they catch up with the prolonged lockdowns in Europe in particular, and the signs of global economic recovery speeding up as vaccines take effect,” analysts at Peel Hunt commented.

“On balance we continue to believe that IHG’s share price, now 12% below its 2019 high, has further to fall to reflect the prolonged nature of the recovery in the hotel cycle, and we reiterate our ‘Reduce’ recommendation and 4,600p target price.”

BP Share Price: striking the balance between shareholders and the climate

Liam Roche
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0
BP Share Price: striking the balance between shareholders and the climate

BP Share Price

There is much contention over the direction of the BP share price in the coming months. Analysts at Barclays are tipping it to move upwards, while climate activist groups continue to put pressure on the oil giant. Following steady growth over the last month, the BP share price is now sitting at 312p. Since the turn of the year it is up by 22.6%, as its recovery looks on course. However, it has someway to go before it is close to its pre-pandemic level of above 490p.

Climate Activist Pressure

Earlier this month BP avoided proposals calling for climate action although shareholder support for the demands of Follow This, an activist shareholder group, is growing. At the company’s AGM, just under 21% of votes supported a resolution by Follow This to put in place targets that satisfy the goals of the Paris climate accord.

The vote fell well short of the 75% needed, although it could serve to place further pressure on BP as well as major shareholders that have stood by the company. “We will continue to engage with our stakeholders as our plans evolve over time,” BP said after the vote.

BP’s currency chief Bernard Looney has promised to make the company carbon neutral by 2050. “Going back to the drawing board on strategy, targets and aims would disrupt our business plans and set us back at the very time when shareholders are asking us to focus on execution,” the company added.

It is clear there is a balance to be struck for BP between addressing environmental concerns and the concerns of shareholders in the short-term. Especially while revenues from fossil fuels remain the most reliable stream of income. For now, the vote may give the company more freedom to secure the BP share price, although it could serve to put investors off the company altogether.

Analyst’s View

The BP share price has been tipped by Barclays as one to watch over the coming months. Barclays set the oil giant a price target of 475p. This remains some way of its level of above 490p in early 2020 before coronavirus struck. However, it would also represents a significant increase from its current level. Barclays’ bullish outlook on BP was accompanied with an “overweight” rating.

The reasoning for such a bullish outlook on the FTSE 100 company, according to Barclays, is that it is misunderstood. Analysts at Barclays believe the company’s efforts to switch to low carbon will eventually be rewarded by shareholders.

Biden could tax crypto transfers as Fed proposes ‘digital dollar’

Liam Roche
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0
Biden could tax crypto transfers as Fed proposes ‘digital dollar’

Fed chair Jay Powell warned against ‘illegal activities’ associated with cryptocurrencies

New proposals by the Biden administration will require cryptocurrency transfers above $10,000 to be reported to US tax authorities.

The news comes in the aftermath of a regulatory crackdown in China, which caused the price of bitcoin to plummet.

The crash took the price of bitcoin to below $40,000, and occurred alongside a slump in the wider crypto market.

Chair of the Federal Reserve Jay Powell gave his view on the matter, arguing that authorities in the US should be “paying attention to private-sector payments innovators who are currently not within the traditional regulatory arrangements applied to banks, investment firms, and other financial intermediaries”.

He also warned against “illegal activities” that he suggested cryptocurrencies could encourage, in a smaller vain to comments from the European Central Bank earlier in the week.

Biden’s proposal is part of a report by the Treasury highlighting the administration’s plans to close the “tax gap” by giving more power to the Inland Revenue Service. Many of the proposals are aimed at extracting more revenue from America’s wealthiest tax payers.

Jay Powell has also pushed forward proposals by the Federal Reserve to create a digital dollar that would be controlled by the US central bank.

“The effective functioning of our economy requires that people have faith and confidence not only in the dollar, but also in the payment networks, banks, and other payment service providers that allow money to flow on a daily basis,” he said.

“Our focus is on ensuring a safe and efficient payment system that provides broad benefits to American households and businesses while also embracing innovation.”

Powell’s comments come amid increasing focus on the possibility of central bank digital currencies (CBDCs) being implemented across the world.

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