How to Trade ‘Scotsie 100’ If Scotland Votes to Split – Bloomberg 09-10-14

Salient to Investors:

  • Andrew Garthwaite et al at Credit Suisse say there is a 25% chance Scotland will choose independence on September 18, while markets will price in a 35% chance, so recommend buying Scottish stocks 2 days before the vote because investors tend to overact to political uncertainty. If independence wins, they recommend avoiding Scotland’s stocks because it would cause a deep recession and ongoing political turmoil. The strategists say 20 Scottish companies are at risk of a “yes” vote because of their reliance on Scottish revenues or connections to North Sea oil or other reasons: stocks including Royal Bank of Scotland, John Wood, SSE and Stagecoach.
  • Paul Marsh at London Business School and Scott Evans at Walbrook Economics found that £1 invested in their “Scotsie 100” in 1955 would have grown to £648 versus £1,168 in the rest of the UK – excluding financial stocks, the Scottish index outperformed the rest of the UK by a small margin.

Read the full article at http://www.bloomberg.com/news/2014-09-10/how-to-trade-scotsie-100-if-scotland-votes-to-split.html

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Gold’s Flow East Seen for 20 Years as Incomes Increase Demand – Bloomberg 06-26-14

Salient to Investors:

The China Gold Association said the global flow of gold from west to east that helped to make China the world’s largest user at 28 percent of global usage in 2013 will last for up to two decades as rising incomes spur demand. Asia accounted for 63 percent of total consumption of gold jewelry, bars and coins in 2013 versus 57 percent in 2010. Zhang Bingnan at CGA said there are less investment options in the east compared with the west, and the notion of gold as an insurance is inherent in eastern society.

Gold is up 8.9 percent in 2014 and headed for the first back-to-back quarterly increase since 2011.

Credit Suisse and Goldman Sachs expect prices to fall for a second year as holdings in gold ETFs drop to the least since 2009 and the Fed cuts stimulus.

Tom Kendall at Credit Suisse said physical demand from China or India won’t be sufficient to offset further sales by bullion investors once the Fed’s path from tapering to tightening becomes clearer – the direction of US monetary policy and real interest rates remains paramount in setting the gold price for the time being.

Goldman Sachs said gold faces significant downside on the back of higher real interest rates and forecast a drop to $1,050 in 12 months.

Victor Thianpiriya at Australia & NZ Banking said physical gold demand remains unsupportive as Chinese buyers remain on the sidelines and expects gold to decline to $1,180 an ounce at the end of 2014.

Read the full article at http://www.bloomberg.com/news/2014-06-26/gold-s-flow-east-seen-for-20-years-as-asian-wealth-spurs-demand.html

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