MoneyController

MoneyController

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Investing in emerging markets: focus on select opportunities

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  • 0
  • Investments
Posted on 22.06.2021

Pandemic stress continues as India and Brazil fight against virus mutations. China, on the flip side, has restrained the spread of infection. But, how are emerging markets (EM) expected to recover from an investment viewpoint? A spotlight on China According to the National Bureau of Statistics of China, the country’s GDP grew annually at 18.3% for Q1 2021. The Chinese economy was the first to recover from the global recession that ensued due to the pandemic. A closer look at the figures shows a different scenario quarterly. The data shows that the economy is slowing over the long term. So, any further upside potential is unlikely. Analysts see the Purchasing Managers’ Indices (PMIs) as an adequate economic health indicator. China’s PMIs are suggesting the country’s bounce back is over and done. Instead, March figures show signs of weakness.  To top it, in March, the government started to tighten its credit policy. Although currently, this is small. Ana ...

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Renting v. buying: what’s cheaper?

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  • 0
  • Mortgage loan
Posted on 22.06.2021

For the first time in five years, renting is cheaper than buying a house in the UK. Pandemic-driven parameters are driving a housing boom. Demand is picking up as homebuyers look to rural dwellings with outdoor space and more work-from-home accommodation. According to Hamptons, rents are £71 cheaper than mortgage payments for first-time buyers securing a 90% LTV mortgage. A renter can expect a monthly rent payable of £1,054 versus the £1,125 monthly mortgage payment. Out of 11 regions in the UK, seven have cheaper rents now compared to mortgage payments. The exceptions include North East and West, Yorkshire and Humber, and Scotland. But why has renting become cheaper than buying? There are three reasons: 1. Demand-supply gap The housing market is in short supply. Any time a house goes on the market, it’ll find buyers rushing to snap it up. 2. London rents decreasing The figures show that rents have dropped by £251 in May 2021. Before, a buyer would h ...

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4 drivers for ESG investing in the next decade

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  • ESG - sustainability
Posted on 22.06.2021

One thing the pandemic has highlighted is the social inequity and injustice that’s prevalent in the global financial and economic system. So, investors are taking matters into their own hands to ensure companies address environmental, social, and governance issues. Four key factors are expected to drive the ESG investing environment in the next decade. 1. People first Increasing digitalization means human capital will be at the core of any robust business model. Companies will need to invest in proper recruitment, training, and development of their employees to achieve innovation. ESG investors welcome this focus as they scrutinize social issues such as minimum wage and employee welfare. 2. Alignment of stakeholders As the pandemic forced people to change their socializing patterns, investors and companies needed to change the way they engage. ESG investors are getting a better opportunity to discuss ESG issues with company management. ESG criteria are being highlighted for c ...

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3 tips to consider when selling your business

Posted on 21.06.2021

Maybe selling the business was the last thing on your mind when you created it. But now, years later, the situation is different. Perhaps Covid-19 challenges have made it difficult to stay afloat. Or maybe that first spark of motivation has subsided. Death and incapacity can be other factors. But no matter the reason, planning and execution will help you get the best price. Here are a few tips to help you get started.  Put a plan in place Let’s start with the planning phase. There are five things to consider to have a proper plan: Set a timeline in place and plan accordingly. Decide on your target value and make the necessary changes to achieve that value. If you have non-negotiable red lines, then start thinking of the acquirers who will stick to those red lines. As for negotiating points, pencil them in for when the discussions start. If you have a targeted presence in the future company, then decide what that will be. Once you have those br ...

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5 value picks to invest in the rise of UK equities

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  • Investments
Posted on 21.06.2021

Investor sentiment has been high on UK equities. A prolonged rise, though, could mean some stocks are overvalued. So, what can portfolio managers do to avoid holding overvalued stocks? Here are five recommendations to invest in. Linen suppliers Now that may be new. But, it’s a good way to gain exposure to a rise in the hospitality sector without the uncertainty of demand. The hospitality sector will benefit from a post-pandemic recovery. But, Alexandra Jackson, from Rathbone UK Opportunities fund, says the scale of the future demand is still uncertain. In her view, current prices already factor in the positive news surrounding the sector.  Another way linen suppliers benefit is from increased public awareness of hygiene issues, especially those triggered by the pandemic. She recommends Johnson Service Group as a potential buy. Housebuilding Simon Murphy, equity fund manager at Tyndall, sees housebuilding as a value pick. For one, there is a shortage of houses in the cou ...

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How will the BoE react to 2.1% inflation?

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  • Financial markets/economy
Posted on 21.06.2021

If the jump to 1.5% in CPI inflation in April wasn’t enough, May figures reported last week deepened fears. CPI inflation in May reached 2.1%, confirming fears of rising inflation. But, how will the situation evolve? How will the Bank of England (BoE) react? Economist views are mixed. Some anticipate an imminent action from the policymaker to raise interest rates. Others see the current numbers as less alarming than achieving a balanced recovery and addressing rising unemployment. A rise in interest rates Some economists see the BoE taking action to increase interest rates. The Bank’s mandate is to keep CPI inflation at 2%. As inflation surpassed this limit, Ulas Akincilar at INFINOX says it’s highly likely that the Bank will step in and raise interest rates. Paul Craig, portfolio manager at Quilter Investors, discussed the economic recovery from the pandemic. In his view, lower-income households are the hardest hit by the rise in inflation. If this rise sustains t ...

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Why are investors buying bonds when yields are low?

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  • Gov. bonds and Spread
Posted on 18.06.2021

In the first four months of 2021, the US Treasury issued $1.73 trillion in long-term bonds. The Fed bought $320 billion, while $1.40 trillion remained open for investor interest. Some investors have been buying these bonds and selling equities.  The negative real yield on bonds makes this counterintuitive. What is driving investors in this direction? According to John Authers, automatic asset allocation rules are to blame. Regulators also have a say in it. Investor trading According to Morningstar Inc., investors have sold $108 billion worth of holdings in mutual funds and ETFs investing in stocks, over the past 12 months. On the flip side, they’ve invested $785 billion in US taxable bond funds. Why this seems irrational? Authers compares the performance of stock ETF (SPY) and bond ETF (TLT) over the year ended May 2021. The former outperformed its bond counterpart by 62%.  Automatic asset allocation funds How do automatic asset allocation funds work? Plainly sai ...

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How to earn more on your children's trust fund

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  • Banks and banking products
Posted on 18.06.2021

How old were you when you started to save? For many young ones now, the government has helped them take their first steps in saving. The Labour government launched Children Trust Funds in 2005. The government awarded children born between September 2002 and January 2011 a sum of either £250 and £500 depending on their financial background. The government topped up the funds once for hundreds of thousands of families. In 2010, the program came to a halt but those already in existence could continue. Friends could contribute a maximum of £9,000 a year to the CTF. HMRC published official data this month showing that more than 6.1 million CTF accounts exist. They’re worth more than £9 billion.  To many, though, CTFs have gone unnoticed for some time. As the numbers show, 5.1 million CTFs haven’t had any money going in during the year ended April 2020. If you’re one of those having a eureka moment now, you have many options to take hol ...

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9 things to look for in a crypto exchange

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  • Cryptocurrencies
Posted on 18.06.2021

All the hype around cryptocurrencies may have lured you in. But, how can you buy cryptocurrencies? You’ll have to create an account on a crypto exchange. The exchange performs the transactions to and from US dollars, or your national currency, and cryptocurrency.   There are many exchanges out there. Coinbase, for one, was one of the early birds in the market. Others are newbies like Robinhood and PayPal. With so many crypto exchanges available, how can you choose the one that fits you? There are 9 things to look for in an exchange. 1. Accessibility Where you live can tune down your options. China recently banned all access to crypto exchanges, for example. According to the National Conference of State Legislators, 31 US states have pending digital currency legislation in 2021. Take the example of the state of New York. A crypto exchange has to have a BitLicense to operate in the state. That may limit the number of exchanges you can choose from in the state. Perha ...

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How opening six bank accounts can help you budget better

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  • Financial advice
Posted on 17.06.2021

The key to cash flow management is planning. What better than a budget to plan your finances? But if you don’t keep track of those tiny costs, your lifestyle could eat out your earnings. Financial advisor, Victoria Devine, suggests opening six bank accounts to help stick to a budget. Although that may seem a lot, they do the organizing for you. Instead of keeping money within reach and at risk of spending, each account is for a specific purpose. Account 1: the piggy bank This account is where your money first lands. Ideally, Devine recommends not having a debit card linked to this account. From here, bills and other similar expenses are funded. Devine also suggests structuring it in a way to offset a mortgage, if you have one. Account 2: your allowance Maybe it’s been a while since you got an allowance. This time around it’s from you. Decide on your weekly budget. How much do you need for food and fuel? How much will you spend on dining out, entertainment, ...

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Where to look for investment opportunities: consider Europe, financials, and consumer staples

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  • Financial markets/economy
Posted on 17.06.2021

It’s been a bull market for sure. The Nasdaq 100, S&P 500, and the Dow almost doubled in value. The FTSE 100 is up 50% compared to March 2020. Risky assets such as tech, crypto, and “junk bonds” are also riding the wave. Crypto for one has seen a lot of volatility and ballooning gains. Cardano (ADA/USD) is up 6,150%, followed by Ethereum (ETH/USD) at 2,010%, NEO (NEO/USD) at 838%, and Bitcoin (BTC/USD) at 503% gains. Price ratios are robust too. UK price-to-earnings ratios increased from 13.2x in March 2020 to 22.8x by end of May 2021. US and European valuations saw similar jumps. You’re maybe at a crossroads thinking, should I invest, or has the market peaked? You’d hate to enter the market at its peak. Filipe Costa standardized these earnings ratios and found that Europe, specifically Italy, Austria, and Greece are undervalued. Japan is also a good play. As for US sectors, financials and consumer staples offer better opportunities. What are the op ...

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Inflation worries? Financials may offer a diversification play

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  • Banks and banking products
Posted on 17.06.2021

The jump in April inflation rates boosted concerns of an impending high inflation period. As economies open up after pandemic lockdown, people are on a spending spree. How can investors benefit? One sector that could benefit is the financial sector and specifically banking. Banking stocks stand to benefit from widening margins and strong capital reserves. Growth versus value stocks In periods of high inflation, prices and interest rates rise. For one, rising prices result in higher corporate revenues for growth stocks. This rise would slowly find its way into the stock market as share prices gain momentum. But rising prices also mean consumer purchasing power decreases and growth stocks start to look expensive. During inflationary periods, interest rates also rise. That puts pressure on the valuations of growth stocks as discount rates rise. So interest rates would slowly eat out previously high valuations. Return on value stock, alternately, stands to benefit from “mild inf ...

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