Government considers new investment fund to support start-ups post-Brexit

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The government is considering launching a new investment fund to support the growth of start-ups in the UK, fearing a loss in access to funds from the European Investment Fund (EIF) after its exit from the European Union.

EIF-backed funds have participated in around £1 billion per year of private equity investment into UK firms between 2014  and 2016.

According to a new consultation released by the Treasury, UK start-ups struggle to reach their potential in the latter stages of investment and growth, falling well short of what is seen in the US and China. The government wants to set up a National Investment Fund to help more young, innovative firms in the UK reach Unicorn status (valued at over $1 billion).

Read more on Diginomica

Waterfall

FTSE 100 history: how the index has changed over 33 years

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The FTSE 100 index has just seen one of its quarterly changes with security firm G4S and real estate investment trust Segro promoted to the top 100.

Although perhaps small in themselves, these regular events have changed the face of the UK’s leading index since it was formed in 1984.

For the many investors whose savings are tied to the fortunes of this barometer of the stock market, these changes are crucial as they have fundamentally altered the risks and returns to which their investments are exposed.

The FTSE 100 now looks vastly different from the 1980s. Just 28 of the original 100 remain listed on the index. UK-focused businesses and conglomerates have been replaced by international juggernauts.

Unlike the US Dow Jones index, which has seen fewer changes over the past 100 years, the FTSE 100 has evolved to reflect the global economic revolution. This creates issues for investors to consider.

 

Read more on City A.M

UK Trading Costs Rise Since Brexit

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It has cost fund managers an average of six additional basis points to trade UK equities since the UK voted to leave the European Union in June last year according to analysis by electronic broker ITG.

The Brexit referendum was held on June 23 2016.  ITG said the extra costs means that any investment firm trading up to £200m ($258m) per year would have to pay an extra £120,000.

Andre Nogueira, ‎head of EMEA Analytics client coverage at ITG said in an email:  “Given the current low volatility environment, it appears that, when it comes to trading costs, the UK has ended up with the worst end of a bargain since Brexit. In contrast, the clear trend for both Germany and particularly France is one of lower trading costs since Brexit.”

 

 

read more on Markets Media

FTSE Supermarkets Split On The Amazon Effect

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Greek deal buoys European stocks

The shock sensation that the Bank of England could finally be about to lift UK interest rates died down on Friday. If monetary tightening spreads beyond US shores, that’s when global stock markets could start to become unstuck. Sentiment was lifted by an agreement between Greece and its international creditors that should remove the threat of another debt default next month.

FTSE supermarkets split on Amazon-effect

The FTSE 100 ends the week well off the one-month lows reached on Thursday but further gains could be tough since higher rates would naturally make UK equities less attractive.

Tesco (LON:TSCO) shares managed a spectacular 180 degree change in fortunes on Friday. Investors flipped from satisfaction at the highest sales growth in seven years to fears that Amazon (NASDAQ:AMZN) could knock Tesco off its perch as Britain’s number one supermarket. Amazon’s $13.7bn purchase of US natural food store Whole Foods (NASDAQ:WFM) marks the entrance of a major new player into the supermarket space.

 

Read more on UK Investing

Stocks that are an investor’s best friend

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The Safer Dogs of the TSX returned from their vacation this week. The occasion prompted me to take a closer look at the developments in the world of the high-yield blue-chip stocks over the last six weeks.

Seven stocks passed the Safer Dogs test on both April 26 and June 8. They are: the Bank of Nova Scotia (BNS), BCE (BCE), CIBC (CM), National Bank (NA), Power Corp. (POW), Shaw (SJR.B), and TELUS (T). All should be familiar names. The newcomers this time around are: the Bank of Montreal (BMO), Emera (EMA), and Sun Life Financial (SLF).

Back in April the highest dividend yield of 4.58% was offered by both CIBC and BCE. This time around Power Corp took home top prize with a dividend yield of 4.96%. Dividend yields also climbed at the bottom end of the pack with April’s Royal Bank (RY) yielding 3.65% and June’s Sun Life yielding 3.82%. Overall, the Safer Dogs provided an average dividend yield of 4.09% in April and 4.32% in June. The average dividend yield climbed by 23 basis points over the period.

 

Read more on Money Sense

Technology sell-off weighs on Britain’s FTSE

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By Helen Reid

LONDON, June 12 (Reuters) – British shares fell on Monday as a technology sell-off spread across Europe, while contractor Mitie jumped after forecasting a recovery in its fortunes.

Britain’s FTSE 100 dropped 0.3 percent by 1000 GMT, with investors dumping tech and other cyclical stocks, which feature heavily on the blue-chip index, and heading into defensive sectors.

Software company Micro Focus and accounting platform provider Sage Group were the biggest blue-chip fallers, taken down by a pan-European tech sector set for its worst day since the post-Brexit sell-off a year ago.

Read more on UK Reuters

Sector movers: Retailers in the red as consumer spending worries worsen

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Retailers were the big drag on the FTSE 350 today as survey data showed households continued to show caution on spending.

UK households spent less for the second month in a row in June, Visa said in its monthly consumer spending index, dropping to its lowest quarterly level for three and a half years.

There was a 5.8% decline for transport & communication, a 3.4% fall for household goods, a first monthly drop for recreation & culture in four years and and a much smaller dip for clothing & footwear than than the previous month’s five-year plunge.

 

Read more on Digital Look

Oil prices and safe-haven assets jump following US missile strike on Syria

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Oil prices climbed to one-month highs on Friday while investors flocked to safe-haven assets, after the US launched a missile strike on an airbase in Syria in response to recent chemical weapon attacks.

According to Reuters, US President Donald Trump said the strike  was in the US’s “national security interest”.

On the news, the price of Brent Crude spiked above $56 a barrel but has now fallen back, rising 1.42% to $55.67, while West Texan Intermediate climbed 1.61% to $52.53, both one-month highs.

While Syria’s oil production remains limited, its location and alliances with big oil producers have raised concerns about an escalation of the conflict disrupting crude shipments.

Officials said the US did inform Russia about the airstrikes, which were targeted on sections of the Syrian base where Russian forces were not located, according to Reuters.

Jeffrey Halley, senior market analyst at Oanda, told Reuters: “The US cruise missile strikes have seen crude oil jump over 2% in a straight line.

“What will be the response of Iran and Russia, two of the world’s largest oil producers and staunch allies of the Assad regime? … We will have to wait for these answers as the day moves on.”

Meanwhile, the airstrikes prompted investors to seek out safe-haven assets. Gold gained as much as 1.4% to $1,269 per ounce, according to the BBC, while the Japanese yen and government bonds also benefitted.

…read more on Investment Week

The Trump effect on US Economy: The Positive Take

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You can call it the Trump effect. For the first time since the economic crisis, more Americans feel positive about the economy than negative about it, a Pew Research survey found.

“What a difference a year, and possibly an election, makes,” Pew reported Monday. “Nearly six-in-ten people in the United States (58%) say the economic situation is very or somewhat good, according to a new Pew Research Center survey conducted Feb. 16-March 15. Last spring, 44% of the American public described the economy as good.”

It’s the most positive people have felt about the economy since 2007 — a year before the economic crisis — and only the second time that half or more of those surveyed have given the economy a thumbs-up, Pew reported.

Driving the higher scores are Republicans feelings about the economy — and their trust that President Donald Trump will improve lagging GDP growth, invest in infrastructure and tax reform, all of which will spur economic prosperity and improve job opportunities and wage growth.

 

…read more on Washington Post

87% of active UK equity funds underperformed in 2016

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Nine out of 10 actively managed funds focused on UK equities underperformed the stock market last year, a development that will stoke concerns among investors and regulators that traditional asset managers are failing their customers. Britain’s vote to leave the EU and Donald Trump’s US presidential election victory led to a severe deterioration in the performance of actively managed UK equity funds in 2016, according S&P Dow Jones Indices, the index provider.

 

Read more on Financial Times