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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U.K. Stocks High Enough to Hedge as Rally Draws Skeptics – Bloomberg 09-04-14

Salient to Investors:

  • The FTSE 100 Index is within 0.1% of its 1999 high, after which it fell for 3 years,
  • The cost of hedging against losses in the FTSE 100 is close to a 2-year high.
  • Alan Higgins at Coutts is not overweight UK equities and said the FTSE 100 still lags most markets.
  • Economists forecast UK GDP will grow 3.1% in 2014 versus 1% for the euro area.
  • The FTSE 100 is up 96 percent since its low in March 2009 and at 14.3 x estimated earnings versus 15.5 x for the Stoxx 600.
  • The average analyst predicts FTSE 100 profits will rise 19% in 2014.
  • Derek Mitchell at Royal London Asset Mgmt said UK shares can grind higher as the Ukraine conflict is easing, we already know that interest rates are going up, and everything that the BOE has said suggests it is going to be very slow.
  • Tim Rees at Insight Investment Mgmt said we are stuck again on the upper ceiling that the market is finding hard to break.

 

Read the full article at http://www.bloomberg.com/news/2014-09-04/u-k-stocks-high-enough-to-hedge-as-rally-draws-skeptics.html

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Pelosky’s Top Five Places in the World to Invest – Bloomberg 03-22-13

Salient to Investors:

Jay Pelosky at 2Z Advisory says investors should focus first on where there is flexibility by policy makers, and the best places to invest in order are:

  1. Japan has twin engines of fiscal and monetary policy.
  2. UK government has made it clear they will not move off austerity but will tolerate inflation. Buy inflation-linked bonds or stocks as the pound weakens over the next 12 months
  3. US stagnation results from highly expansionary monetary policy and contractionary fiscal policy plus rebirth of middle America
  4. Emerging markets have stagflation from low growth and high inflation, and are switching from export driven to domestic driven economies giving opportunities in currencies and local currency debt
  5. EU has contraction and the ECB is inactive 

Watch the full video at http://www.bloomberg.com/video/pelosky-s-top-five-places-in-the-world-to-invest-hk4E7zN8RsuC8NOkyf1rGg.html


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U.K. Stocks Rally to Five-Year High on U.S. JObs Data – Bloomberg 03-08-13

Salient to Investors:

The FTSE 100 is at 11.9 times estimated earnings versus an average of 11.3 over the past 7 years.

 Bob Parker at Credit Suisse Asset Mgmt said equities are the most attractive asset class by default, valuations are still reasonably cheap, and Germany, America and Japan are significantly accelerating.

Read the full article at http://www.bloomberg.com/news/2013-03-08/u-k-stocks-extend-five-year-high-on-china-exports-japan.html

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Vanguard Takes Aim at U.K. as Fees Replace Commissions – Bloomberg 11-15-12

Salient to Investors:

From January 1, 2013, UK advisers will be banned from accepting commissions from asset managers and instead charge clearly delineated fees.

In 2009, the Review of Financial Studies said the cost of investing in British funds is higher than anywhere in the developed world aside from Scandinavia and Canada – and average 2.21 percent of annual expenses versus 1.04 percent in the US.

Gareth Shaw at Which? said the new rules separate all the elements that go into fees and banking commissions and so put power back into the hands of customers. Shaw said greater transparency will heighten interest in index funds. , he said. Morningstar said the average annual fee on UK active equity mutual funds is 1.68 percent of assets, versus 0.61 percent for equity index funds.

Vanguard’s assets managed for US advisers rose to $620 billion as of Sept. 30 from $260 billion at the end of 2007.

The Investment Management Association said mutual-fund sales by intermediaries such as financial advisers and wealth managers are six times greater than direct sales to consumers.

Read the full article at http://www.bloomberg.com/news/2012-11-16/vanguard-takes-aim-at-u-k-as-fees-replace-commissions.html