Global Matters Weekly Blog

I recently returned from a client trip to Asia, during which I visited Hong Kong for the first time. The ‘Fragrant Harbour’, to coin its literal name. From my short time there I found it to be a fascinating and vibrant melting pot of ‘East meets West’, with a can-do and pro-business attitude. Yes, the city has witnessed major politically motivated unrest and change in recent years, which has undoubtedly had knock-on effects, but as an outsider visiting for the first time, I could feel the city’s welcoming energy.

It’s that time of year again where Mariah Carey and Michael Bublé are defrosted for their annual appearances, Coca-Cola’s Christmas truck graces our cities, and sock sales men and women are awoken from their slumber. What a wonderful time of the year.

Following the start of the US Federal Reserve’s belated rate hiking cycle in March 2020, this year has seen a marked pickup in interest rate volatility and a significant increase in the benchmark 10-year yield in recent months, which have contributed to broader economic uncertainty.

In this week's Global Matters Weekly Richard Parfect discusses regarding Investment Companies (ICs), or more commonly called Investment Trusts in relation to Alternative Investment Fund Managers Directive (AIFMD)

In this week's Global Matters Weekly Glyn Owen discusses the yield on the US 10-year Treasury bond last week crossing a milestone of 5%

In this week's Global Matters Weekly Tom Delic explains that Base rates are a useful tool for investors when making decisions that involve factors that can disrupt the balancing of risk and reward.

Richard Stutley, CFA - 14 November 2022

I wanted to provide a quick update on the Euro-zone economy. It’s good practice to step behind the headlines, which as we know are written with the aim of being interesting, rather than painting a complete picture of any topic. While we firmly believe that a good macroeconomic outcome is neither sufficient nor necessary for good investment returns (although it does help, particularly in the short term!), we nevertheless need to be aware of the macro when managing portfolios.

Lorenzo La Posta, CFA - 7 November 2022

For some reason, any time it’s my turn to write our weekly Global Matters blog, there is something happening in China worth writing about. Or perhaps, it is just my colleagues deliberately leaving me with the honour of updating our readers on the latest developments within the Chinese walls (pun intended). Luckily, these days we are not short of significant news and while the west is struggling with rising rates and elevated inflation, China is facing a different set of issues that still have global consequences.

Robert White - 31 October 2022

We are living in a dollar-dominated world, a fact most famously captured by John Connally, President Nixon's Treasury Secretary, who once told a group of global finance ministers “the dollar is our currency, but it's your problem”. Students of economic history will be aware of the disruption that a strong US dollar can cause, however, at times such as this it is important to remember that the global economy is cyclical, and such periods eventually do pass.

Jackson Franks - 24 October 2022

As mentioned in my previous blogs, I am an avid Watford football club supporter. Although there are some ups and (a lot more) downs, being a Watford supporter has had one positive outcome. It’s enabled me to cope with the ever-changing UK political situation. Since David Cameron resigned as Prime Minister in 2016, following the UK’s vote to leave the EU, there have been three UK Prime Ministers over the preceding six years, with the fourth set be announced.

Alex Harvey, CFA - 17 October 2022

Three weeks ago, I had just landed in Morocco and with impeccable timing, as I worked out how to use Agadir airport’s ATM, Sterling tanked on the back of the UK government’s now well pored over ‘mini-budget’. I found it mildly amusing that the ticker for the Sterling-Dirham currency pairing is GBPMAD. It certainly felt like it! Of course, this wasn’t a bout of Dirham strength but a Sterling maelstrom resulting from the aforementioned budget, and the Pound was in freefall against every major currency. After reaching an intraday low of 1.035 dollars to the Pound on Monday 26th September (the lowest level ever plumbed and breaching the 1.054 set in February 1985¹), the currency has bounced back, albeit limply, to over 1.12 dollars to the Pound today.

Matt Connor - 10 October 2022

Like it or not, there is no doubt that social media is now an integral part of our lives, with our online presence an extension of who we are, and for many, who they aspire to be. There were almost three billion monthly active users on Facebook in the second quarter of this year1, some 37% of the global population. For a business, social media offers a treasure trove of potential customers, but still so many seem to get it wrong when advertising through these channels.

Richard Parfect - 3 October 2022

All through life our brains like to use “general rules of thumb” when dealing with problems. These rules may come through personal experience or maybe they are more prescriptive and laid down by doctrine. When dealing with problems I have sometimes found it useful to use a “factor of three”. For example, if I plan to do a DIY job in the house, bitter experience tells me it will take three times as long as I might expect. 

Mark Wright, CFA - 26 September 2022

When it rains in Mallorca it doesn’t just rain, it pours and not only does it pour, it hails! One minute I was soaking up the sun, swimming in the sea with little care in the world, the next I was running back to the hotel to take cover from giant hail stones. The speed with which the weather turned was breath-taking, but maybe not quite as remarkable as the speed with which inflation has gone from close to zero in the UK and other parts of the world, to double digits now.

Ferdi van Heerden -  20 September 2022

The death of Her Majesty Queen Elizabeth II has prompted a time of quiet reflection.

For me, the most valuable reflection has been on the lessons that we can take from how she lived her life. The Queen will be remembered for the values that she lived by. These are also values that we hold dear and that we aspire to live by.

As she so eloquently commented, “The true measure of all our actions is how long the good in them lasts.”

Tom Delic -  5 September 2022

In 1964, American author and academic Albert Goldman wrote an article in US magazine The New Republic, titled ‘Lindy’s Law’1. While dining at Lindy’s, a New York delicatessen, Goldman became interested in the discussions that took place between entertainment industry veterans who frequented the restaurant and would analyse the latest televised comedy shows. The unwritten rule amongst the gossipers was that “the life expectancy of a television comedian is (inversely) proportional to the total amount of his exposure on the medium”, in other words, the more frequent the comedian was on the television, the shorter the comedian’s time in the spotlight…due to running out of material!

Gary Moglione -  22 August 2022

As investors in the investment trust market, we have seen the UK market grow significantly over the years. In addition to diversification and access to many asset classes not usually available to retail investors, closed-ended trusts have significantly outperformed open-ended funds over the long term. In the UK, over the ten years to September 2021, the average investment company returned 265% versus the average open-ended fund returning 70%.

Richard Parfect -  15 August 2022

Back in February I gave a sob story of my childhood of how the 1970s and early 80s saw “austerity” hit my household, including my father’s industrial clothing factory closing down. Recent developments on the Continent, brings another childhood memory to mind; cold housing. Admittedly, the central heating system, decades past its use by date and an insufficiently insulated house, was not conducive to staying warm. However, an article caught my eye in the Financial Times* this week that showed the average temperature in British homes has risen considerably since the 1970s; even those that actually had central heating in 1971 saw average temperatures rise from circa 14C to 18C today.

Robert White, CFA -  8 August 2022

Japan has been in the headlines for the sad and shocking death of Shinzo Abe, one of the few truly visionary democratic leaders in modern times. The former Prime Minister was instrumental in transforming Japan’s economic and military ambitions, and while both remain a work in progress, he became a revered figure on the international stage. As investors, we are optimistic about the opportunity in Japanese equities; not only are they cheap, but nascent structural reforms and robust corporate profitability should provide a healthy tailwind over the coming years.

Richard Stutley, CFA -  1 August 2022

I met with one of our underlying global listed property managers last week and I thought some of the discussion points were worth repeating here. Until such time that we all live in the metaverse, what is happening with physical space remains important, with implications for investors beyond dedicated property buyers. 

From a sector perspective, we discussed the supply outlook for industrial/logistics space, following Amazon’s announcement earlier this year that they plan to mothball several new warehouse projects and sublet excess space.