View more on these topics

Investment View: FTSE loose and fancy free

You would have thought that now was the time to wax lyrical over something other than the UK stockmarket. Property, perhaps. Or alternative investments – surely becoming one of the most overused of terms.

The emerging markets of Eastern Europe are worthy of a mention and Japan has been rewarding investors over recent months. Do not forget China either, where third-quarter GDP growth was an impressive 11.3 per cent.

All these are worthy of mention but the fact remains that our domestic stockmarket has been something of a star of late. Regaining all the ground it lost during October in a few short days, the FTSE 100 looked as though it had 5,500 in its sights as last week began. As for the FTSE 250, fresh highs have been achieved recently as bid fever travels down the capitalisation tables. For equity investors, happy days seem to be here again.

This renewed confidence is not solely about M&A activity. A mini results season is under way, with those companies that operate to March 31 year ends reporting their half-year figures. Just as US third-quarter figures were tending to come in ahead of expectations, so there have been few disappointments so far at home. Even the airlines have been painting a rosier picture, despite higher fuel costs. Corporate Britain looks in good shape – for now.

Fuel costs are, however, becoming an issue. While you might reasonably expect transport companies to have been hit by the dearer oil price, many businesses are highlighting how higher distribution costs are impinging on the bottom line. Of course, the fact that oil is down by more than 20 per cent from its peak provides some justification for the greater optimism that currently exists. Even so, not all the statistics we are seeing provide a positive contribution to the overall picture.

Manufacturing output in this country is a case in point. The second successive monthly downturn disclosed in last week’s figures highlight the difficulties being faced by this still important sector of the economy. In contrast, manufacturers in the US and eurozone are posting year-on-year growth in excess of 2 per cent. Little wonder the CBI is demanding more emphasis to be placed on the private, rather than the public, sector of the economy.

As for house prices, Land Registry figures suggest 2005 could deliver the lowest volume of house transactions for 30 years, despite an upturn in new mortgage lending. It seems hard to believe that the price of the average house in London has topped 300,000 for the first time. People are clearly moving home less often but presumably still feel comfortably off because of previous price inflation. Only the high street is suffering as people adjust their spending rather than up their borrowing.

Fortunately, the UK market is receiving support from overseas. After a patchy period, US economic data is beginning to strengthen. Even continental Europe looks set to deliver rising growth, spurred by a weaker euro. Remember, the FTSE 100 is a global collection of businesses, so the health of the domestic economy is of less significance when it comes to judging likely trends in profitability.

One danger lurking in the background remains pension liabilities. The takeover of Marconi demonstrated how the interests of pensioners could take precedence over those of shareholders. Accounting for these liabilities will be a knotty problem for finance directors and will doubtless be exercising the minds of regulators. The extent of individual company pension needs are likely to be something of a matter of opinion. It will make valuing businesses that much more difficult.

Recommended

Burns-Anderson selects The Exchange

Burns-Anderson has chosen The Exchange to manage its new multi-tie proposition.The multi-tie will be available to Burns-Anderson’s ARs as well as directly authorised IFAs.Burns-Anderson chief executive Mike Hughes says: The Exchange team clearly understood that we wanted an original multi-tie proposition to appeal to existing network members and attract a new calibre of adviser.The Exchange […]

SVM replaces investment team defectors

Investment boutique Scottish Value Managers has taken on three managers to rebuild its investment team after a series of defections. Hugh Cuthbert, Hector Kilpatrick and Neil Veitch join the firm from Kempen Capital Management. SVM says it anticipates being up to full strength by the end of the year. Cuthbert will run the continental European […]

FSA approves Genesis and Guaranteed merger

Genesis Home Loans and Guaranteed Home Loans have received approval from the FSA for their merger, announced in August this year.Initially, both companies will continue to trade under separate brands with compliance functions based at Genesiss Peterborough office.Additionally, the branded lending operation, finance, marketing and personnel functions will be based in Peterborough with the packaging, […]

Liv Vic group chief executive Malcolm Berryman steps down

Malcolm Berryman steps down as Liverpool Victoria’s chief executive after six years in office.Until a formal appointment can be made, chairman John Woolhouse has taken on the position of group chief executive in addition to his current role.Woolhouse says: “The board of directors thank Malcolm Berryman for his commitment and vigorous leadership in seeing Liverpool […]

Leading Edge June – Investment panel debate

RLAM’s asset class specialists discuss some of the findings from the panel session at our recent Investment Conference. By Rob Williams, Head of Distribution Welcome to the latest edition of Leading Edge. It has been an eventful six months since the last e-zine. The European Central Bank announced ongoing stimulus measures, while the immigration crisis in Europe threw the […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com