In the fast-moving world of financial services, it is quite hard to keep on the pulse of what is going on around the world. We speak to fund managers, stock brokers and the likes on a daily basis – all have an opinion on one thing or another, everyone looking to find a way to making as much money for their clients as possible. Is the information useful? Information is ‘king’, I hear you say. I would therefore like to share with you some insight from a ‘key’ fund manager in London.
“Equity markets around the world had a poor week for a variety of reasons. Will US interest rates need to rise sooner than current expectations? What is going on in the Ukraine and what happens if no one wants to use the European Central Bank credit line? And how will the Scotland vote affect the markets? Bond markets were also down, although it was interesting to note that gilts were fairly steady. Even sterling was quieter after the selloff seen in the last few weeks.
Gold and oil both drifted lower.
“There has been an avalanche of comment about the Scottish referendum which I have dutifully read, watched and listened to. It may be best if I register my ‘don’t know what will happen’ upfront and will also follow the rule that: ‘It is not advisable to venture unsolicited opinions. You should spare yourself the embarrassing discovery of their exact value to your reader’.
“What I do know is that technology continues to drive change with no sign of a slowdown. This issue came up time and again during an informal discussion with a serial entrepreneur whose interests span a range of industries. What is clear is that a huge amount of work is being done to predict how our behavior will change over the next five to 10 years and the impact this will have on the way in which we consume. Innovation is exciting, but it is hard to predict the winners. It may, however, be slightly easier to spot those that fail to adapt, some of which populate the higher echelons of the corporate world. The game of ‘hunt the next Kodak’ is a priority.”
Also interesting were some comments from a leading stock broker:
“Risk appetite was dampened in the initial stages of last week, after investors grew increasingly anxious about the results of the Scottish Independence Referendum, and the Federal Reserve meeting, as they both drew closer and closer.
Throughout Monday to Wednesday, London’s blue-chip index experienced continual declines, opening at 6,806.96 on Monday, while finishing Wednesday’s session 26.06 points down at 6,780.90. These market declines were also pushed along by weak data from China, combined with a poor performance from the UK’s retailing sector.
A spate of data released throughout the weekend from China’s statistics bureau added further to worries about a slowdown in the world’s second-largest economy after it showed that China had failed to meet analysts’ forecasts.
The annual rate of industrial production growth dropped 2.1% from 9 to 6.9%, while fixed asset investment growth slowed from 17% to 16.5%. Furthermore, on Tuesday, a second wave of data from China again compounded investors’ worries after foreign direct investment unexpectedly dropped by 14% in August. This was an improvement on the 16.9% decline experienced in July, but nevertheless, was significantly below the 0.8% increase that was expected by analysts.
Meanwhile, back on domestic grounds, the UK’s retailing sector was one of the worst performers on Tuesday, dragged down by firms such as Asos, who issued a profit warning, and N Brown, who gave a disappointing update.
Nevertheless, strong gains for SABMiller on Monday, along with decent performances from Ophir Energy and JD Sports throughout Tuesday and Wednesday, did help to provide a floor to the FTSE’s losses.
On Monday, rumours emerging that drinks giant Anheuser-Busch Inbev were lining up financing for a possible £75bn takeover bid of SABMiller, whose value currently stands at £61.65bn, helped push the latter’s stock significantly higher.
As well, on Tuesday, FTSE 250 business Ophir Energy rose on the back of the announcement that it has discovered new gas in block R, which it states will increase the value of its 80%-owned offshore Equatorial Guinea project.
Also minimising losses was sportswear retailer JD Sports Fashion, who, despite a disappointing performance in the fashion division, managed to more than double its first-half profits year-on-year thanks to strong performance across sports and outdoor clothing, sending the share higher in early morning trading on Wednesday.
As we entered the penultimate day of the trading week, UK indices managed to reverse the trends encountered in the first half of the week, allowing both the FTSE 100 and 250 indexes to operate back in the blue.
On Thursday, as investors awaited the outcome of the Scottish Independence Referendum, both indexes rose 38.39 and 146.09 points, to close the day at 6,819.29 and 15,722.81 points respectively, with Scottish-based stocks, such as RBS, Lloyds, Standard Life and Aberdeen Asset Management, at the forefront of the heavy gains made.”
So as you have read, we are provided with a huge amount of information from which to make decisions on how best to invest client money. The benefit of discussing these matters with us is that we have substantial experience and work with some of the best professionals in the industry in order to find you, the investor, the most appropriate solution available.
By Robert Mancera
Robert Mancera is Director of Blacktower Financial Management (International) Limited. 289 355 685 | [email protected] | www.blacktowerfm.com
Blacktower Financial Management (International) Limited is licensed by the Financial Services Commission in Gibraltar. Blacktower Financial Management Limited is authorised and regulated by the Financial Conduct Authority in the UK.
