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VOL 20 / ISSUE 36 / 13 SEPTEMBER 2018 / £4.49
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ŶĞŽĨƚŚĞďĞƐƚŝŶǀĞƐƟŶŐƐŬŝůůƐ ĞdžŝƚĞĚĂŌĞƌŽŵŝŶŽ͛ƐĚŝƐĂƉƉŽŝŶƚĞĚǁŝƚŚ
ŝƐƚŚĞĂďŝůŝƚLJƚŽǁĞŝŐŚƵƉƚŚĞ ƌĞĐĞŶƚůŝŬĞͲĨŽƌͲůŝŬĞƐĂůĞƐ͕ĞǀĞŶƚŚŽƵŐŚ
evidence in hand and not ƚŚĞtŽƌůĚƵƉƐŚŽƵůĚŚĂǀĞŐŝǀĞŶŝƚĂ
ďĞƐǁĂLJĞĚďLJƉƌĞĐŽŶĐĞƉƟŽŶƐŽƌďĞ ƚƌĂĚŝŶŐƐƚ͘
ƐŽĞŵŽƟŽŶĂůůLJĂƩĂĐŚĞĚƚŚĂƚLJŽƵ ͚/ŚĂǀĞďĞĞŶŐĞƫŶŐŝŶĐƌĞĂƐŝŶŐůLJ
ĨĂŝůƚŽƌĞĐŽŐŶŝƐĞĚĞƚĞƌŝŽƌĂƟŽŶŝŶƚŚĞ ǁĂƌLJŽĨƚŚŝƐďƵƐŝŶĞƐƐƌĞĐĞŶƚůLJ͕͛ŚĞƐĂLJƐ͘
investment case. ͚ŽŵŝŶŽ͛ƐŝƐďĞĐŽŵŝŶŐŵŽƌĞĐĂƉŝƚĂů
EŽƚďĞŝŶŐŽďƐĞƐƐĞĚǁŝƚŚĂƐƉĞĐŝĮĐ ŝŶƚĞŶƐŝǀĞ͕ĐĂƐŚĐŽŶǀĞƌƐŝŽŶŚĂƐƐƚĂƌƚĞĚƚŽ
ƐƚŽĐŬĐĂŶŽŌĞŶŚĞůƉLJŽƵŵĂŬĞ ƚĂŝůŽīĂŶĚĚĞďƚůĞǀĞůƐŝŶĐƌĞĂƐĞ͘/ŚĂǀĞ
ĂŶŝŵƉŽƌƚĂŶƚĚĞĐŝƐŝŽŶƚŽƐĞůůŝĨ ĚŽƵďƚƐĂďŽƵƚƚŚĞŝŶƚĞƌŶĂƟŽŶĂůĞdžƉĂŶƐŝŽŶ
ĐŝƌĐƵŵƐƚĂŶĐĞƐŚĂǀĞĐŚĂŶŐĞĚ͘ ĂŶĚůĂƐƚůLJƚŚĞKŚĂƐŐŽŶĞƚŚƌŽƵŐŚ
zŽƵƐŚŽƵůĚŶĞǀĞƌďĞĞŵďĂƌƌĂƐƐĞĚĂďŽƵƚƉƵƫŶŐ ƚŚƌĞĞĮŶĂŶĐĞĚŝƌĞĐƚŽƌƐŝŶĨŽƵƌLJĞĂƌƐ͘tĞƚŚĞƌĞĨŽƌĞ
LJŽƵƌŚĂŶĚƵƉĂŶĚĂĚŵŝƫŶŐĚĞĨĞĂƚǁŝƚŚĂůŽƐŝŶŐ ƐŽůĚƚŚĞĞŶƟƌĞŚŽůĚŝŶŐ͛͘
ƚƌĂĚĞ͘ZĞĐŽŐŶŝƐŝŶŐƚŚĂƚƐŽŵĞƚŚŝŶŐŚĂƐŐŽŶĞǁƌŽŶŐ KƚŚĞƌĞdžĂŵƉůĞƐŽĨŐĞƫŶŐŽƵƚǁŚĞŶ
ĐŽƵůĚŚĞůƉLJŽƵŵĂŬĞŵŽƌĞĐŽŶƐŝĚĞƌĞĚŝŶǀĞƐƚŵĞŶƚ ĐŝƌĐƵŵƐƚĂŶĐĞƐŚĂǀĞĐŚĂŶŐĞĚŝŶĐůƵĚĞDŝĚͲtLJŶĚ
ĚĞĐŝƐŝŽŶƐŝŶƚŚĞĨƵƚƵƌĞ͘/ƚĂůƐŽƐŚŽǁƐLJŽƵĂƌĞǁŝůůŝŶŐ /ŶƚĞƌŶĂƟŽŶĂů/ŶǀĞƐƚŵĞŶƚdƌƵƐƚ;DtzͿĨƵŶĚ
ƚŽŵŽǀĞŽŶĂŶĚŶŽƚƐŝƚƟŐŚƚƉƌĂLJŝŶŐĨŽƌĂƌĞĐŽǀĞƌLJ͘ ŵĂŶĂŐĞƌůĞdž/ůůŝŶŐǁŽƌƚŚƐĞůůŝŶŐŚŝƐƉŽƐŝƟŽŶ
ǀĞŶŵĂŬŝŶŐƚŚĞĚĞĐŝƐŝŽŶƚŽĞdžŝƚĂƉƌŽĮƚĂďůĞ ŝŶŚŝŶĞƐĞƚĞĐŚŐŝĂŶƚdĞŶĐĞŶƚ͘dŚĞŚŝŶĞƐĞ
ƚƌĂĚĞƐŚŽǁƐLJŽƵŚĂǀĞŐŝǀĞŶƚŚŽƵŐŚƚƚŽĂŶ ŐŽǀĞƌŶŵĞŶƚŚĂƐƌĞĐĞŶƚůLJůĂďĞůůĞĚŽŶĞŽĨdĞŶĐĞŶƚ͛Ɛ
ŝŶǀĞƐƚŵĞŶƚ͛ƐƐŝƚƵĂƟŽŶ͕ŚŽƉĞĨƵůůLJĞdžĂŵŝŶŝŶŐƚŚĞ ŐĂŵĞƐĂƐ͚ƉŽŝƐŽŶ͛ĂŶĚďůŽĐŬĞĚƚŚĞƐĂůĞŽĨĂŶŽƚŚĞƌ
ĨĂĐƚƐŝŶŚĂŶĚĂŶĚĐŽŶƐŝĚĞƌŝŶŐƚŚĞƉŽƚĞŶƟĂůƵƉƐŝĚĞ ŽĨŝƚƐŐĂŵĞƐ͘
ŽƌĚŽǁŶƐŝĚĞŝŶƚŚĞĨƵƚƵƌĞ͘ ͚ŶĂůLJƐƚŐƌŽǁƚŚƌĂƚĞƐ͕ƚŽŽƵƌŵŝŶĚ͕ŚĂĚŶŽƚ
ŚĂůůĞŶŐŝŶŐLJŽƵƌƐĞůĨĂŶĚĂƐŬŝŶŐǁŚLJLJŽƵƐŚŽƵůĚ ƌĞĂĚũƵƐƚĞĚĚŽǁŶĞŶŽƵŐŚĂŶĚǁĞǁĞƌĞĐŽŶĐĞƌŶĞĚ
ĐŽŶƟŶƵĞƚŽŚŽůĚƐŽŵĞƚŚŝŶŐŝƐĂƐŝŵƉŽƌƚĂŶƚĂƐ ƚŚĂƚƚŚŝƐŚĞŝŐŚƚĞŶĞĚƌĞŐƵůĂƟŽŶǁĂƐůŝŬĞůLJƚŽƐƚLJŵŝĞ
ƋƵĞƐƟŽŶŝŶŐǁŚLJƐŚŽƵůĚŵĂŬĞĂŶĞǁŝŶǀĞƐƚŵĞŶƚŝŶ ƚŚĞŐƌŽǁƚŚƌĂƚĞĨŽƌĂǁŚŝůĞ͕͛ĞdžƉůĂŝŶƐ/ůůŝŶŐǁŽƌƚŚ͘
ƚŚĞĮƌƐƚƉůĂĐĞ͘ >ĞŝŐŚ,ŝŵƐǁŽƌƚŚƐŽůĚŚŝƐƉŽƐŝƟŽŶŝŶ
tŝƚŚƚŚŝƐƚŚŽƵŐŚƚƉƌŽĐĞƐƐŝŶŵŝŶĚ͕/ĂŵĂůǁĂLJƐ ^ĂŝŶƐďƵƌLJ͛Ɛ;^ZzͿĞĂƌůŝĞƌƚŚŝƐLJĞĂƌĨƌŽŵ&ŝĚĞůŝƚLJ
ŝŶƚĞƌĞƐƚĞĚƚŽĚŝƐĐŽǀĞƌǁŚLJĨƵŶĚŵĂŶĂŐĞƌƐĚĞĐŝĚĞƚŽ h<KƉƉŽƌƚƵŶŝƟĞƐ&ƵŶĚ;,ϳ,EϴͿĂƐŚĞǁĂƐ
ƐĞůůĐĞƌƚĂŝŶƐƚŽĐŬƐ͘&ŽƌƚƵŶĂƚĞůLJŵĂŶLJŵĂŶĂŐĞƌƐĂƌĞ ǁŽƌƌŝĞĚĂďŽƵƚŵĂŶĂŐĞŵĞŶƚďĞŝŶŐĚŝƐƚƌĂĐƚĞĚĨŽƌĂ
ŽƉĞŶĂďŽƵƚƚŚĞŝƌĂĐƟŽŶƐ͕ĂŶĚƐŽƚŚĞLJƐŚŽƵůĚďĞ͘ ƉŽƚĞŶƟĂůůLJůŽŶŐƟŵĞǁŚŝůĞĂƟĞͲƵƉǁŝƚŚƐĚĂǁĂƐ
dŚĞLJĂƌĞďĞŝŶŐƉĂŝĚďLJŝŶǀĞƐƚŽƌƐƚŽŵĂŶĂŐĞ ƐĐƌƵƟŶŝƐĞĚďLJƚŚĞĐŽŵƉĞƟƟŽŶĂƵƚŚŽƌŝƟĞƐ͘
ŵŽŶĞLJĂŶĚƐŚŽƵůĚƚŚĞƌĞĨŽƌĞďĞƚƌĂŶƐƉĂƌĞŶƚǁŝƚŚ ,ĂǀŝŶŐƚŚĞĚŝƐĐŝƉůŝŶĞƚŽǁĞŝŐŚƵƉƉŽƐŝƟǀĞĂŶĚ
ƚŚĞŝƌĂĐƟŽŶƐĂŶĚƚŚŽƵŐŚƚƉƌŽĐĞƐƐ͘ŌĞƌĂůů͕ǁŽƵůĚ ŶĞŐĂƟǀĞĨĂĐƚŽƌƐǁŝƚŚĞdžŝƐƟŶŐŝŶǀĞƐƚŵĞŶƚƐƐŚŽƵůĚ
LJŽƵƚƌƵƐƚƐŽŵĞŽŶĞŝĨƚŚĞLJĚŝĚŶ͛ƚĞdžƉůĂŝŶǁŚĂƚƚŚĞLJ ŚŽƉĞĨƵůůLJůĞĂĚƚŽďĞƩĞƌƉŽƌƞŽůŝŽĚĞĐŝƐŝŽŶƐ͘/ĨLJŽƵ
ǁĞƌĞĚŽŝŶŐǁŝƚŚLJŽƵƌŵŽŶĞLJ͍ ĐĂŶŽŶůLJƐĞĞƉŽƐŝƟǀĞĨĂĐƚŽƌƐ͕ĂƐŬĂĨĞůůŽǁŝŶǀĞƐƚŽƌ
&ŽƌĞdžĂŵƉůĞ͕<ĞŝƚŚƐŚǁŽƌƚŚͲ>ŽƌĚ͕ĨƵŶĚ ŝĨƚŚĞLJĐĂŶƐĞĞĂŶLJŶĞŐĂƟǀĞƐƐŽLJŽƵĐĂŶŚĞůƉĨŽƌŵ
ŵĂŶĂŐĞƌŽĨ&W^>h<ƵīĞƩŽůŽŐLJ&ƵŶĚ ĂŵŽƌĞďĂůĂŶĐĞĚǀŝĞǁ͘,ĂǀŝŶŐƐŽŵĞŽŶĞĐŚĂůůĞŶŐĞ
(BF0LDZ3)ŚĂƐďĞĞŶĨĂŝƌůLJĨƌĂŶŬǁŝƚŚŚŝƐĚĞĐŝƐŝŽŶ LJŽƵƌǀŝĞǁƐĐĂŶďĞƌĞĨƌĞƐŚŝŶŐĂŶĚƉŽƚĞŶƟĂůůLJŵĂŬĞ
ƚŽĚƵŵƉŽŵŝŶŽ͛ƐWŝnjnjĂ;KDͿ͘dŚĞƉŽƐŝƟŽŶǁĂƐ LJŽƵƐĞĞŝŶǀĞƐƚŵĞŶƚƐŝŶĂĚŝīĞƌĞŶƚůŝŐŚƚ͘;Ϳ
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Contents VIEWING
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NUMBERS TO JUMP
TO THE START OF
THE RELEVANT
SECTION
EDITOR’S Are you brave enough to sell an investment
02 VIEW when circumstances change?
Setback for US tech stocks / Calls for Whitbread to sell Premier Inn /
BIG
06 NEWS Unilever’s FTSE 100 future / Fundraise fear for Sirius Minerals /
Is Debenhams at death’s door?
MAIN
20 FEATURE Brexit: six months to D-Day
36 AEQUITAS Why September is an important month for Japan (if not the world)
UNDER THE
42 BONNET Amigo distances itself from Wonga in a bid to gain investor interest
Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments.
Issued by Aberdeen Asset Managers Limited, 10 Queen’s Terrace, Aberdeen AB10 1YG, which is authorised and regulated by the Financial
Conduct Authority in the UK. Telephone calls may be recorded. aberdeen-asset.co.uk
BIG NEWS
dKWϭϬ^hZ/d/^zt/',d
Apple 7.98%
comparison given that on 15 September 2008 Amazon 7.23%
investment bank Lehman Brothers collapsed.
With more than $639bn worth of its assets it DŝĐƌŽƐŽŌ 6.64%
was the largest bankruptcy in US corporate Facebook 4.09%
history and arguably represented the zenith of the ůƉŚĂďĞƚůĂƐƐ 3.41%
ĮŶĂŶĐŝĂůĐƌŝƐŝƐ͘ ůƉŚĂďĞƚůĂƐƐ 2.98%
EŽͲŽŶĞŝƐƐƵŐŐĞƐƟŶŐǁĞĂƌĞŚĞĂĚŝŶŐĨŽƌĂŶLJƚŚŝŶŐ
Intel 2.03%
similar in 2018 but given the technology sector has
been a big driver in the bull market of recent years ŝƐĐŽ^LJƐƚĞŵƐ 1.77%
it is worth looking at what lies behind Nasdaq’s EĞƞůŝdž 1.49%
recent weakness. WĞƉƐŝĐŽ 1.35%
/ƚĐŽƵůĚƐŝŵƉůLJďĞĂďŝƚŽĨŶĂƚƵƌĂůƉƌŽĮƚƚĂŬŝŶŐ͘/Ŷ Source: Nasdaq
ƚŚĞůĂƐƚĮǀĞLJĞĂƌƐĂůŽŶĞ͕ƚŚĞŝŶĚĞdžŚĂƐŵŽƌĞƚŚĂŶ
doubled in value as the so-called FAANG stocks 8200 NASDAQ COMPOSITE
;&ĂĐĞŬ͕ŵĂnjŽŶ͕ƉƉůĞ͕EĞƞůŝdžĂŶĚ'ŽŽŐůĞ
(Alphabet)) have soared.
8100
Simmering away in the background is an ongoing
ĞīŽƌƚďLJh^ůĂǁŵĂŬĞƌƐƚŽƐĐƌƵƟŶŝƐĞĨŽƌĞŝŐŶ
ĂƩĞŵƉƚƐƚŽƵƐĞƐŽĐŝĂůŵĞĚŝĂƚŽŝŶŇƵĞŶĐĞƚŚĞ 8000
ŽƵƚĐŽŵĞŽĨĞůĞĐƟŽŶƐ͘džĞĐƵƟǀĞƐĨƌŽŵ&ĂĐĞŬ
ĂŶĚdǁŝƩĞƌďŽƚŚĂƉƉĞĂƌĞĚďĞĨŽƌĞ^ĞŶĂƚŽƌƐ
although Google-owner Alphabet failed to show. 7900
AUG SEP
dŚĞŝŶĚĞdžǁĞĂŬŶĞƐƐĐŽƵůĚĂůƐŽƌĞŇĞĐƚƚŚĞ
ůĂƚĞƐƚŝŶƚĞƌǀĞŶƟŽŶďLJWƌĞƐŝĚĞŶƚŽŶĂůĚdƌƵŵƉ͘
He tweeted on 8 September that if Apple wanted
ƚŽĂǀŽŝĚƚĂƌŝīƐŽŶŚŝŶĞƐĞŐŽŽĚƐŝƚƐŚŽƵůĚ E^Y/EEhd^,>>
manufacture its products in the US. &ŽƵŶĚĞĚŝŶϭϵϳϭ͕EĂƐĚĂƋŝƐƚŚĞƐĞĐŽŶĚůĂƌŐĞƐƚ
ĂŶŬŽĨŵĞƌŝĐĂDĞƌƌŝůů>LJŶĐŚĞƐƟŵĂƚĞƐƉƉůĞ stock exchange in the world by total market
ǁŽƵůĚŚĂǀĞƚŽŝŶĐƌĞĂƐĞƚŚĞƉƌŝĐĞŽĨƚŚĞŝWŚŽŶĞďLJ ĐĂƉŝƚĂůŝƐĂƟŽŶďĞŚŝŶĚƚŚĞEĞǁzŽƌŬ^ƚŽĐŬdžĐŚĂŶŐĞ͘
ϮϬйƚŽŽīƐĞƚƚŚĞŝŵƉůŝĞĚŝŶĐƌĞĂƐĞŝŶůĂďŽƵƌĐŽƐƚƐ ƩƌĂĐƟŶŐŐƌŽǁƚŚĐŽŵƉĂŶŝĞƐůŝŬĞDŝĐƌŽƐŽŌĂŶĚ
if it were to take Trump up on his advice. ƉƉůĞƐŝŶĐĞƚŚĞϭϵϴϬƐ͕ŝƚŝƐŶŽǁƐŝŐŶŝĮĐĂŶƚůLJ
UK investment trusts with exposure to the weighted towards the technology sector.
&E'ƐŚĂǀĞďĞĞŶŚŝƚďLJƚŚĞƚĞĐŚƐĞůůͲŽī͘^ŝŶĐĞƚŚĞ
start of September ^ĐŽƫƐŚDŽƌƚŐĂŐĞ/ŶǀĞƐƚŵĞŶƚ
S ƉĞĐƵůĂƟŽŶŚĂƐďĞĞŶďƌĞǁŝŶŐŽǀĞƌǁŚĂƚǁŝůů
happen to tŚŝƚďƌĞĂĚ;tdͿ following the
ĂŐƌĞĞĚƐĂůĞŽĨŽƐƚĂŽīĞĞƚŽŽĐĂͲŽůĂĨŽƌ
£3.9bn.
ŽĐĂͲŽůĂŝƐďƵLJŝŶŐŽƐƚĂƚŽĚĞǀĞůŽƉƚŚĞĐŽīĞĞ
chain and make cold-brew and ready-to-drink
ĐŽīĞĞƉƌŽĚƵĐƚƐƵŶĚĞƌĂƐƚƌŽŶŐŐůŽďĂůďƌĂŶĚ͘
ĂŶĂĐĐŽƌĚ'ĞŶƵŝƚLJĂŶĂůLJƐƚEŝŐĞůWĂƌƐŽŶďĞůŝĞǀĞƐ
ƚŚŝƐƉŽƚĞŶƟĂůůLJƐŝŐŶĂůƐ͚ƚŚĞďĞŐŝŶŶŝŶŐŽĨƚŚĞĞŶĚ͛
ĨŽƌtŚŝƚďƌĞĂĚ͕ĐůĂŝŵŝŶŐŝƚƐŽƚŚĞƌĐŽƌĞďƌĂŶĚ͕ŚŽƚĞů
ĐŚĂŝŶWƌĞŵŝĞƌ/ŶŶ͕ƐŚŽƵůĚŶŽƚĞdžŝƐƚŝŶŝƐŽůĂƟŽŶĂŶĚ
should be taken over by rivals.
WĂƌƐŽŶĂƌŐƵĞƐĐŽŵƉĞƟƚŽƌƐƐƵĐŚĂƐ,ŽůŝĚĂLJ
Inn-owner /ŶƚĞƌŽŶƟŶĞŶƚĂů,ŽƚĞůƐ;/,'Ϳ͕DĂƌƌŝŽƩ
and Accor could work with a property investor to
ƐƉůŝƚƚŚĞƉƌŽƉĞƌƚLJĨƌŽŵŝƚƐŽƉĞƌĂƟŽŶƐ͘
tŝƚŚŽƵƚŽƐƚĂ͕tŚŝƚďƌĞĂĚǁŽƵůĚŽǁŶWƌĞŵŝĞƌ Nigel Parson claims that Premier Inn should be taken over by rivals
/ŶŶ͕ĂůŽŶŐǁŝƚŚƉƵďĂŶĚƌĞƐƚĂƵƌĂŶƚĐŚĂŝŶƐƌĞǁĞƌƐ EƵŵŝƐĂŶĂůLJƐƚdŝŵĂƌƌĂƩŶŽƚĞƐWƌĞŵŝĞƌ/ŶŶŝƐ
&ĂLJƌĞ͕ĞĞĨĞĂƚĞƌ͕ĂƌнůŽĐŬ͕dĂďůĞdĂďůĞ͕ĂŶĚ ŐĂŝŶŝŶŐƉŽƐŝƟǀĞŵŽŵĞŶƚƵŵǁŝƚŚƚƌĂĚŝŶŐŝŵƉƌŽǀŝŶŐ
in-house restaurant Thyme. in London.
Whitbread is expected to use the proceeds from ͚tĞĞdžƉĞĐƚƚŚĞƉŽƚĞŶƟĂůĨŽƌĨƵƌƚŚĞƌĐŽƌƉŽƌĂƚĞ
ƐĞůůŝŶŐŽƐƚĂƚŽƌĞƚƵƌŶĐĂƐŚƚŽƐŚĂƌĞŚŽůĚĞƌƐ͕ĐƵƚ ĂĐƟǀŝƚLJƚŽƵŶĚĞƌƉŝŶĂƉƌĞŵŝƵŵǀĂůƵĂƟŽŶĨŽƌƚŚĞ
debt and boost the pension fund. ŚŽƚĞůďƵƐŝŶĞƐƐ͕͛ĐŽŵŵĞŶƚƐĂƌƌĂƩ͘;>D:Ϳ
d,/ZYhZdZ 2018 to bat back Brexit worries. investors have been willing to
survey shows 21% of ,ŽǁĞǀĞƌ͕ƚŚŝƐƐƟůůŝŵƉůŝĞƐ ŐŝǀĞƚŚĞh<ƚŚĞďĞŶĞĮƚƚŚĞ
ŝŶƐƟƚƵƟŽŶƐĂƌĞƚŚŝŶŬŝŶŐĂďŽƵƚ ďĂƌĞůLJĂĮŌŚŽĨŝŶƐƟƚƵƟŽŶƐ ĚŽƵďƚ͕͛ƐĂLJƐDŝĐŚĂĞůDĞƚĐĂůĨĞ͕
ŝŶĐƌĞĂƐŝŶŐƐƚĂŬĞƐŝŶh<ĂƐƐĞƚƐ͕ ĂƌĞĐŽŶĮĚĞŶƚĞŶŽƵŐŚŝŶ head of global macro strategy
up from 13% in the second UK economic prospects to at State Street Global Markets.
ƋƵĂƌƚĞƌ͕ĂĐĐŽƌĚŝŶŐƚŽ^ƚĂƚĞ increase exposure. dŚĞh<͛Ɛ&d^ůů^ŚĂƌĞŝŶĚĞdž
^ƚƌĞĞƚ͘dŚĞĞƋƵŝǀĂůĞŶƚĮŐƵƌĞ ͚dŚĞƐƚŽƌLJŽĨƌĞdžŝƚƐŽĨĂƌ has underperformed several
was 16% for the third quarter is that fears of economic ůĞĂĚŝŶŐŐůŽďĂůŝŶĚŝĐĞƐƚŚŝƐLJĞĂƌ͕
ŽĨϮϬϭϳ͕ƐƵŐŐĞƐƟŶŐŝŶǀĞƐƚŽƌƐŝŶ ĚŝƐƌƵƉƟŽŶĂŶĚĐĂƉŝƚĂůŇŝŐŚƚ ŝŶĐůƵĚŝŶŐďŽƚŚƚŚĞ^ΘWϱϬϬ
increasing numbers are willing have been unfounded and ĂŶĚƚŚĞD^/tŽƌůĚ/ŶĚĞdž͘;^&Ϳ
ŽŶƐƵŵĞƌŐŽŽĚƐŐŝĂŶƚĂŶĚĐƵƌƌĞŶƚ&d^ϭϬϬ
ĐŽŶƐƟƚƵĞŶƚhŶŝůĞǀĞƌ;h>sZͿ is poised for
a crucial shareholder vote on moving its
headquarters to the Netherlands.
On 11 September the company published the
ĨƵůůĚĞƚĂŝůƐŽĨĂƉůĂŶƚŽƐĐƌĂƉŝƚƐĚƵĂůh<ͲƵƚĐŚƐƚŽĐŬ
ŵĂƌŬĞƚůŝƐƟŶŐĂŶĚŵĂŬĞƚŚĞŵŽǀĞƚŽZŽƩĞƌĚĂŵ͕
ŚĂǀŝŶŐĮƌƐƚŽƵƚůŝŶĞĚƚŚĞƉƌŽƉŽƐĂůƐŝŶDĂƌĐŚ͘
dŚĞƟŵŝŶŐŽĨƚŚĞŵŽǀĞŚĂƐƐĞĞŶŵĂŶLJŽďƐĞƌǀĞƌƐ
link it to Brexit although Unilever itself argues it is a
ůŽŶŐͲŶĞĞĚĞĚƐŝŵƉůŝĮĐĂƟŽŶŽĨŝƚƐĐŽƌƉŽƌĂƚĞƐƚƌƵĐƚƵƌĞ͘ Could we see the owner of Marmite move its headquarters to the Netherlands?
SCOTTISH MORTGAGE
ENTERED THE
FTSE 100 INDEX IN
MARCH 2017.
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PZSVUN[LYTHUK^LPU]LZ[^P[OUVSPTP[ZVUNLVNYHWOPJHSVYZLJ[VYL_WVZ\YL
6\Y[YHJRYLJVYKHZSVUN[LYTZ\WWVY[P]LZOHYLOVSKLYZTHRLZ\ZH[[YHJ[P]L[VHUL^IYLLKVMJHWP[HSSPNO[I\ZPULZZLZ
(UKV\YJVTTP[[LKHWWYVHJOTLHUZ^LJHULUQV`HIL[[LYX\HSP[`VMKPHSVN\L^P[OTHUHNLTLU[[LHTZH[[YHUZMVYTH[PVUHS
VYNHUPZH[PVUZ6]LY[OLSHZ[Ä]L`LHYZ[OLScottish Mortgage Investment TrustOHZKLSP]LYLKH[V[HSYL[\YUVM
JVTWHYLK[VMVY[OLZLJ[VY(UK:JV[[PZO4VY[NHNLPZSV^JVZ[^P[OHUVUNVPUNJOHYNLZÄN\YLVMQ\Z[†
:[HUKHYKPZLKWHZ[WLYMVYTHUJL[V1\UL
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7SLHZLYLTLTILY[OH[JOHUNPUNZ[VJRTHYRL[JVUKP[PVUZHUKJ\YYLUJ`
L_JOHUNLYH[LZ^PSSHќLJ[[OL]HS\LVM[OLPU]LZ[TLU[PU[OLM\UKHUK
HU`PUJVTLMYVTP[0U]LZ[VYZTH`UV[NL[IHJR[OLHTV\U[PU]LZ[LK
-VYHMHYZPNO[LKHWWYVHJOJHSS0800 917 2112
VY]PZP[\ZH[www.scottishmortgageit.com
(2L`0UMVYTH[PVU+VJ\TLU[PZH]HPSHISLI`JVU[HJ[PUN\Z Long-term investment partners
*Source: Morningstar, share price, total return as at 30.06.18. †Ongoing charges as at 31.03.18. Your call may be recorded for training or monitoring
purposes.Scottish Mortgage Investment Trust PLC is available through the Baillie Gifford Investment Trust Share Plan and the Investment Trust
ISA, which are managed by Baillie Gifford Savings Management Limited (BGSM). BGSM is an affiliate of Baillie Gifford & Co Limited, which is the
manager and secretary of Scottish Mortgage Investment Trust PLC.
BIG NEWS
ver the past 3 years, Miton Global Opportunities (MIGO) has returned 78% by exploiting inefficiencies in the RISKS
O closed-ended sector. Looking forward, we are continuing to see structural shifts throwing up interesting and
exciting opportunities, where we are able to buy £1 worth of assets on occasions for as little as 70p. Closed-
Forecasts are not
reliable indicators of
ended funds (generically known as Investment Trusts) are bought and sold on the stock market. This means that future returns.
the price that an investor pays can differ dramatically from the value of the underlying assets, often at a discount. The value of
investments can fall
Discrete Performance as well as rise and
investors may not get
30/06/2017 30/06/2016 30/06/2015 30/06/2014 30/06/2013 back the full amount
to 30/06/2018 to 30/06/2017 to 30/06/2016 to 30/06/2015 to 30/06/2014 invested.
Currency exchange
Miton Global Opportunities Plc 14.4% 49.6% 4.2% 3.7% 10.4%
rate fluctuations may,
when not hedged,
IT Flexible Investment Sector 3.4% 22.1% 2.5% 5.4% 3.4% cause the value of your
investments to increase
Past performance is not a guide to future returns. Source: FE Analytics as at 30/06/2018 Retail units in Sterling, net income reinvested, bid to bid basis.
or decrease.
Historically, the dominant traditional owners of investment to generate much faster earnings growth than available in Miton Global
trusts have been private client stockbrokers buying on behalf developed markets. Opportunities plc
of their clients. The rapid consolidation of these broking may borrow money
Vietnam is also at an exciting stage of its development. which can then be
firms into a handful of major wealth management chains has
Like India, the demographics are very favourable in used to make further
effectively removed the traditional buyer of many investment
comparison to those in the West with 57% of the population investments (gearing).
trusts. This is because it is difficult to acquire sufficient shares In a rising market, this
under the age of 35. In the past few years, Vietnam has been
to complete orders given the vast assets these firms now ‘gearing’ can magnify
moving from mainly state-owned enterprises to privately
manage. This evaporation of demand has created an ideal the gains or losses on
owned. The country has also positioned itself as an exporter
hunting ground for MIGO. your investment.
to neighbouring countries such as China, triggering strong
The nature of MIGO’s portfolio dictates that returns have come economic growth which we anticipate continuing in the
in fits and starts. Sometimes there are significant moves once coming years. DEFINITIONS
some of our investments are noticed by the wider world.
We have also added to Phoenix Spree Deutschland and 1
Bond – A loan in the
At other times it feels like we are watching paint dry as our
Macau Property Opportunities Fund. We remain extremely form of a security, either
holdings remain below the radar. The portfolio has seen little
bullish about the outlook for residential property in Berlin. issued by a UK or
movement in recent months. Nevertheless, value has been
Apartments remain cheap in comparison to most major overseas government
building and the seeds of our next run are in place. (government bonds) or
European cities and the population of Germany’s capital
company (corporate
The rise in both the US dollar and US interest rates has continues to grow at a time when new supply is muted.
bonds), which pays a
applied pressure on emerging market company shares and Macau Property Opportunities trades on a significant discount fixed rate of interest over
bonds1. Many investors trade this asset class as a block, despite the trust entering its realisation phase where the a given time period, at
therefore, they fail to differentiate between the fundamentals assets are being sold and cash being handed back to the end of which the
of specific markets. Should a retail investor watch a negative shareholders. The imminent opening of the Hong Kong to initial amount borrowed
report on events in Turkey or Argentina, they are most likely to Macau bridge will stimulate the local economy driving property is repaid.
sell a generic emerging markets exchange-traded fund2. When prices higher creating a perfect sellers’ market. 2
Exchange Traded
they do this, they will also be dumping shares from countries Fund (ETF) – An
We have also bought Stenprop, which moved to London in
that are at an interesting stage of their development, such as exchange traded fund
June. Prior to obtaining its London listing its shares could still is a fund that tracks an
India and Vietnam, where we are seeing opportunities arise as
be bought in Johannesburg at a 20% discount despite offering index, a commodity or a
these markets have declined.
an attractive yield4. It is refocusing its portfolio on UK mixed basket of assets like an
Falling portfolio values combined with a widening discount light industrial properties which are located in unfashionable index fund. Most ETFs
is a powerful combination which quickly throws up value locations such as Mytholmroyd and Huddersfield. Supply is track an index, such as
the FTSE All-Share.
opportunities. We have been adding to our positions in contracting as urban sites are converted to housing whilst
3
Vietnam Opportunities Fund and India Capital Growth demand increases. A greater proportion of business is Discount/premium
Fund. At the time of writing these trade on discounts to the being conducted over the internet, which has removed the to share price – The
discount/premium
share price3 of 23% and 16% respectively. India Capital requirement for many businesses to locate so many of their
to share price is the
Growth Fund was trading on a 6% discount earlier this year operations close to their customers, allowing them to rent difference between the
highlighting how the share price has fallen much further than cheaper provincial space. share price and the
the underlying assets. underlying value of an
The diverse nature of the underlying investments means
investment trust.
We believe that a significant proportion of market concerns that MIGO is little correlated to wider markets. We find good
4
are already priced into these investment trusts. Their potential assets trading at a discount where we see a catalyst for the Yield – The income
is being overlooked. India has entered a period of structural value to be realised. Over the past six months we have been return on an investment.
Fund yields are a
change reducing the endemic bureaucracy and corruption uncovering and adding to trusts where conditions are ripe
measure of income
which has blighted the economy. This process will benefit for a narrowing of the discount to occur. We will now wait to earned by the fund’s
the formal sector allowing listed companies to take an unlock the hidden value. portfolio, net of the fund’s
ever-larger share of growth. This will enable Indian equities expenses.
IMPORTANT INFORMATION
Any mention of a specific stock is not a recommendation to buy or sell. The views expressed are those of the fund manager at the time of writing and are subject to change without notice. They are not necessarily
the views of Miton and do not constitute investment advice. Miton has used all reasonable efforts to ensure the accuracy of the information contained in the communication, however some information and statistical
data has been obtained from external sources. Whilst Miton believes these sources to be reliable, Miton cannot guarantee the reliability, completeness or accuracy of the content or provide a warrantee. Investors
should read the Trust’s product documentation before investing including, the PRIIPs Key Information Document (KID), the latest Annual Report and Accounts and the Alternative Investment Fund Managers Directive
(AIFMD) Disclosure Document as they contain important information regarding the trust, including charges, tax and specific risk warnings and will form the basis of any investment. This financial promotion is issued
by Miton, a trading name of Miton Trust Managers Limited. Miton Trust Managers Limited is authorised and regulated by the Financial Conduct Authority and is registered in England No. 220241 with its registered
office at 6th Floor, Paternoster House, 65 St Paul’s Churchyard, London, EC4M 8AB. MFP 18/263
GREAT IDEAS
ƐLJŶĞƌŐŝĞƐŽĨΨϮϴϬŵďLJϮϬϮϬ͘
$0.6Tn $0.5Tn
$1.4Tn
HOW DO THE COMPANIES
SIT TOGETHER?
sĂŶƟǀǁĂƐƚŚĞŶƵŵďĞƌŽŶĞ Rest of World
ŵĞƌĐŚĂŶƚĂĐƋƵŝƌĞƌŝŶƚŚĞ
h^͕ƐƉĞĐŝĂůŝƐŝŶŐŝŶƚŚĞƌĞƚĂŝů͕ $0.4Tn
ƌĞƐƚĂƵƌĂŶƚ͕ŐƌŽĐĞƌLJĂŶĚĚƌƵŐ
ƐĞĐƚŽƌƐ͕ĂŶĚďƵƐŝŶĞƐƐͲƚŽͲďƵƐŝŶĞƐƐ Source: Worldpay, eMarketer, McKinsey & Company
ŵĂƌŬĞƚƐ͘tŽƌůĚƉĂLJƐƉĞĐŝĂůŝƐĞĚŝŶ than $300B in addressable
ĚŝŐŝƚĂůƐĞƌǀŝĐĞƐ͕ƚŚĞƚƌĂǀĞůƐĞĐƚŽƌ
ĂŶĚŽŶůŝŶĞƌĞƚĂŝů͕ĂŶĚǁĂƐƚŚĞ ŽĨŶĞǁŐƌŽǁƚŚĂŶŶƵĂůůLJ͛͘ ͚dŚĞW^ZǁŝůůůŝŬĞůLJĐŽŶĚƵĐƚŝƚƐ
ŶƵŵďĞƌŽŶĞŵĞƌĐŚĂŶƚĂĐƋƵŝƌĞƌ ŵĂƌŬĞƚƌĞǀŝĞǁŝŶϮϬϭϵĨŽůůŽǁŝŶŐ
ŝŶƚŚĞh<͘ A RISK TO CONSIDER ĂĐŽŶƐƵůƚĂƟŽŶƉĞƌŝŽĚƚŚĂƚ
EĞŝƚŚĞƌŽĨƚŚĞƚǁŽƉĂƌƟĞƐ KŶĞŝƐƐƵĞƚŽŶŽƚĞŝƐƚŚĞh< ĞŶĚƐŝŶ^ĞƉƚĞŵďĞƌŽĨƚŚŝƐLJĞĂƌ͘
ŚĂĚŵƵĐŚŽĨĂƉƌĞƐĞŶĐĞŽŶƚŚĞ WĂLJŵĞŶƚ^LJƐƚĞŵƐZĞŐƵůĂƚŽƌ͛Ɛ dŚĞƌĞĨŽƌĞ͕ǁŚŝůĞŝƚŝƐŝŵƉŽƐƐŝďůĞ
ŽƉƉŽƐŝƚĞƐŝĚĞŽĨƚŚĞƚůĂŶƟĐ͕ ƉƌŽƉŽƐĂůƚŽĐŽŶĚƵĐƚĂŵĂƌŬĞƚ ƚŽƉƌĞĚŝĐƚƚŚĞŽƵƚĐŽŵĞŽĨƚŚĞ
ŵĞĂŶŝŶŐůŝƩůĞŐĞŽŐƌĂƉŚŝĐ ƌĞǀŝĞǁŝŶƚŽƚŚĞƐƵƉƉůLJŽĨĐĂƌĚ ƌĞǀŝĞǁ͕ǁĞĚŽŶŽƚĐƵƌƌĞŶƚůLJ
ĐƌŽƐƐŽǀĞƌ͘ ĂĐƋƵŝƌŝŶŐƐĞƌǀŝĐĞƐ͘/ƚǁĂŶƚƐƚŽƐĞĞ ĞdžƉĞĐƚĂŶĞĂƌͲƚĞƌŵŝŵƉĂĐƚ͛͘
dŚĞĞŶůĂƌŐĞĚďƵƐŝŶĞƐƐƌĞĐĞŶƚůLJ ŝĨďĂŶŬƐĂŶĚƉĂLJŵĞŶƚƐƉĞĐŝĂůŝƐƚƐ
ƐĞĐƵƌĞĚŝƚƐĮƌƐƚƚǁŽũŽŝŶƚĐƌŽƐƐͲƐĞůů ŚĂǀĞƚĂŬĞŶĂĚǀĂŶƚĂŐĞŽĨĂůĂĐŬ OUR VIEW ON THE
ĐŽŶƚƌĂĐƚǁŝŶƐǁŝƚŚ͚ůĂƌŐĞĂŶĚ ŽĨĐŽŵƉĞƟƟŽŶƚŽŽǀĞƌĐŚĂƌŐĞ INVESTMENT CASE
ǁĞůůͲŬŶŽǁŶĚŝŐŝƚĂůƉůĂLJĞƌƐ͕͛ ƐŵĂůůĞƌďƵƐŝŶĞƐƐĞƐĂŶĚ tŚŝůĞƚŚĂƚŝƐĐĞƌƚĂŝŶůLJĂŶŝƐƐƵĞ
ƐŚŽǁŝŶŐŚŽǁĐŽŵďŝŶŝŶŐ ƉƌĞǀĞŶƚƚŚĞŵĨƌŽŵ ƚŽŵŽŶŝƚŽƌ͕ǁĞƌĞŵĂŝŶďƵůůŝƐŚŽŶ
ĨŽƌĐĞƐŚĂƐĂůƌĞĂĚLJůĞĚƚŽ ŵŽǀŝŶŐƚŽĂůƚĞƌŶĂƟǀĞ tŽƌůĚƉĂLJ͛ƐŝŶǀĞƐƚŵĞŶƚĐĂƐĞĂŶĚ
ĮŶĂŶĐŝĂůƐƵĐĐĞƐƐ͘ ƐĞƌǀŝĐĞƉƌŽǀŝĚĞƌƐ͘ ĐĞƌƚĂŝŶůLJďĞůŝĞǀĞŝƚƐƐŚĂƌĞƐĂƌĞ
͚ͲĐŽŵŵĞƌĐĞŝƐĂΨϯ tŽƌůĚƉĂLJŝƐĂŵŽŶŐ ǁŽƌƚŚďƵLJŝŶŐ͘
ƚƌŝůůŝŽŶŝŶĚƵƐƚƌLJǁŝƚŚǀŽůƵŵĞ ĂƉƉƌŽdžŝŵĂƚĞůLJϯϬĐĂƌĚͲ ƉƌŝĐĞͲƚŽͲĞĂƌŶŝŶŐƐƚŽŐƌŽǁƚŚ
ŐƌŽǁŝŶŐŵŝĚͲƚĞĞŶƐŽǀĞƌĂůů ĂĐƋƵŝƌĞƌƐǁŚŝĐŚĚŽŵŝŶĂƚĞ ŽƌW'ƌĂƟŽŝƐĂŐŽŽĚǁĂLJ
ĂŶĚϮϱйŝŶĐƌŽƐƐͲďŽƌĚĞƌ ƚŚĞh<ŵĂƌŬĞƚŝŶĐůƵĚŝŶŐ ŽĨǀĂůƵŝŶŐƚŚĞďƵƐŝŶĞƐƐĂŶĚ
ĞͲĐŽŵŵĞƌĐĞ͕͛ƐĂLJƐ ĂƌĐůĂLJĐĂƌĚĂŶĚ>ůŽLJĚƐ tŽƌůĚƉĂLJŝƐǀĞƌLJĂƩƌĂĐƟǀĞŽŶ
tŽƌůĚƉĂLJ͛ƐĐŚĂŝƌŵĂŶ ĂŶŬĂƌĚŶĞƚ͘tŽƌůĚƉĂLJ͛Ɛ ƚŚŝƐďĂƐŝƐ͘/ƚƚƌĂĚĞƐŽŶĂϮϬϭϵ
ŚĂƌůĞƐƌƵĐŬĞƌ͚͘tĞĂƌĞ h<ďƵƐŝŶĞƐƐĐŽŶƚƌŝďƵƚĞƐ W'ƌĂƟŽŽĨϬ͘ϵͲƟŵĞƐďĂƐĞĚŽŶ
ƚŚĞůĂƌŐĞƐƚƉůĂLJĞƌŝŶŐůŽďĂů ϭϱйŽĨƚŽƚĂůĐŽŵƉĂŶLJŶĞƚ ĨŽƌĞĐĂƐƚƐĨƌŽŵĞƌĞŶďĞƌŐʹĂ
ĞͲĐŽŵŵĞƌĐĞ͕ƚĂƌŐĞƟŶŐƚŚĞ ƌĞǀĞŶƵĞǁŝƚŚŝƚƐh<ƐŵĂůůͲƚŽͲ ĮŐƵƌĞďĞůŽǁϭ͘ϬŝƐĐŽŶƐŝĚĞƌĞĚ
ĨĂƐƚĞƐƚͲŐƌŽǁŝŶŐĂƌĞĂŽĨƚŚĞ ŵĞĚŝƵŵďƵƐŝŶĞƐƐĂĐƋƵŝƌŝŶŐ ŐŽŽĚǀĂůƵĞ͘;d^Ϳ
ŵĂƌŬĞƚ͕ŝŶĐůƵĚŝŶŐŐůŽďĂů ƉŽƌƞŽůŝŽĐŽŶƚƌŝďƵƟŶŐ
ďƌĂŶĚƐĂŶĚůĂƌŐĞĚŝŐŝƚĂů ĂƉƉƌŽdžŝŵĂƚĞůLJϱйŽĨƚŽƚĂů 8000
WORLDPAY
ŶĂƟǀĞƐ͘dŚŝƐĂůůŽǁƐƵƐ ĐŽŵƉĂŶLJŶĞƚƌĞǀĞŶƵĞ͘
ƚŽŐƌŽǁĨĂƐƚĞƌƚŚĂŶƚŚĞ ͚tĞďĞůŝĞǀĞƚŚĞ 7500
S ŽŵĞƌĞĂĚĞƌƐǁŝůůƌĞŵĞŵďĞƌ
ƚŚĞŶĂŵĞSopheon
(SPE:AIM)ƐŝŶĐĞǁĞŚĂǀĞ
ƵƉĚĂƚĞĚŵĂŶLJƟŵĞƐŽŶŽƵƌ
ƉƌĞǀŝŽƵƐGreat IdeaĨƌŽŵϮ:ƵŶĞ
XXXX È BUY
SOPHEON
(xxx)
È BUY
(SPE:AIM)
xxxp 930p
Stop loss: 651p
xxp
ĞĂƌŶŝŶŐƐĞdžƉĞĐƚĂƟŽŶƐĂƌĞ
ƉŝƚĐŚĞĚĐŽŶƐĞƌǀĂƟǀĞůLJ͘dŚĂƚ
ŵĞĂŶƐƚŚĞƌĞŝƐŽŶŐŽŝŶŐ
ƉŽƚĞŶƟĂůĨŽƌŐƵŝĚĂŶĐĞƵƉŐƌĂĚĞƐ͕
ƐŽŵĞƚŚŝŶŐƚŚĞĐŽŵƉĂŶLJŚĂƐ
Market value: £97m
xxx
ϮϬϭϳĂƚϯϯϬƉ͘tĞĂĐƚƵĂůůLJĮƌƐƚ ďĞĞŶĂďůĞƚŽĚŽŵƵůƟƉůĞƟŵĞƐ
ŇĂŐŐĞĚƚŚĞĐŽŵƉĂŶLJŝŶƵŐƵƐƚ ŽǀĞƌƚŚĞƉĂƐƚĨĞǁLJĞĂƌƐ͘
ϮϬϭϲĂƚϮϬϮƉ͘ &ŽƌĞĐĂƐƚΨϬ͘ϰϯϮĞĂƌŶŝŶŐƐƉĞƌ
dŚĞƐŚĂƌĞƐŚĂǀĞďĞĞŶŽŶĂ EXPANDING AND MORE ƐŚĂƌĞ;W^ͿƚŚŝƐLJĞĂƌǁŝůůďĞ
ƌĂŵƉĂŶƚƌƵŶ͕ŶƵĚŐŝŶŐĂďŽǀĞ PREDICTABLE ůĞƐƐƚŚĂŶƚŚĞΨϬ͘ϰϳϮĂĐŚŝĞǀĞĚ
άϭϬ͘ϬϬƚǁŝĐĞƚŚŝƐLJĞĂƌ͘tĞƐƟůů ^ŽƉŚĞŽŶŝƐƐƵĐĐĞƐƐĨƵůůLJ ŝŶϮϬϭϳďƵƚŶŽƚƐŽŵĞƚŚŝŶŐƚŽ
ƚŚŝŶŬƚŚĞƌĞŝƐǀĞƌLJĚĞĐĞŶƚƵƉƐŝĚĞ ĞdžƉĂŶĚŝŶŐďĞLJŽŶĚŝƚƐƚƌĂĚŝƟŽŶĂů ǁŽƌƌLJĂďŽƵƚ͘/ƚŐŽĞƐďĂĐŬƚŽƚŚĞ
ĨƌŽŵĐƵƌƌĞŶƚůĞǀĞůƐ͘ĞĨŽƌĞǁĞ ŝŶĚƵƐƚƌŝĂůĞŶŐŝŶĞĞƌŝŶŐͲƚLJƉĞ ĐŽŶǀĞƌƐŝŽŶůĂƐƚĞĐĞŵďĞƌŽĨůŽĂŶ
ĞdžƉůĂŝŶŽƵƌƌĞĂƐŽŶƐ͕ŝƚ͛ƐĮƌƐƚ ƐƉĂĐĞ͘ƌĞĂƐůŝŬĞĐŽŶƐƵŵĞƌ ŶŽƚĞƐŝŶƚŽĞƋƵŝƚLJ͕ĂŽŶĞͲŽīĞǀĞŶƚ
ŝŵƉŽƌƚĂŶƚƚŽƵŶĚĞƌƐƚĂŶĚǁŚĂƚ ŐŽŽĚƐ͕ĨŽŽĚĂŶĚĚƌŝŶŬ͕ĂŶĚ ƚŚĂƚǁŝůůŶŽƚŝŵƉĂĐƚƚŚĞĮŶĂŶĐŝĂů
^ŽƉŚĞŽŶĚŽĞƐ͘ ƚĞĐŚŶŽůŽŐLJĚĞǀĞůŽƉŵĞŶƚĂƌĞ ƉĞƌĨŽƌŵĂŶĐĞďĞLJŽŶĚϮϬϭϴ͘
dŚĞ^ƵƌƌĞLJͲďĂƐĞĚƐŽŌǁĂƌĞ ƉƌŽǀŝŶŐƚŽďĞƵƐĞĨƵůŶĞǁŐƌŽǁƚŚ &ŝŶŶĂƉ͛ƐϮϬϭϵĞƐƟŵĂƚĞƐĐĂůů
ĐŽŵƉĂŶLJŚĞůƉƐƐƚƌĞĂŵůŝŶĞƚŚĞ ĂƌĞĂƐ͕ǁŚŝůĞƚŚĞĐŽŵƉĂŶLJŝƐ ĨŽƌW^ŽĨΨϬ͘ϱϯϳŽŶƵŶďƌŽŬĞŶ
ƌĞƐĞĂƌĐŚĂŶĚĚĞǀĞůŽƉŵĞŶƚ ĂůƐŽĐůŽƐŝŶŐǁĂƚĐŚŝŶŐŝŶƐƵƌĂŶĐĞ͕ ƌĞǀĞŶƵĞŐƌŽǁƚŚƚŽΨϯϱŵ͘
ƉƌŽĐĞƐƐĨŽƌĐůŝĞŶƚƐĂŶĚƉƌŽǀŝĚĞƐ ĂƵƚŽŵŽƟǀĞĂŶĚŽƚŚĞƌŝŶĚƵƐƚƌŝĞƐ͘ dŚĞďƵƐŝŶĞƐƐŚĂĚΨϭϱ͘ϱŵ
ƉƌŽĚƵĐƚůŝĨĞĐLJĐůĞŵĂŶĂŐĞŵĞŶƚ ŝƚďLJďŝƚ^ŽƉŚĞŽŶ͛ƐƌĞǀĞŶƵĞƐ ŶĞƚĐĂƐŚĂƚƚŚĞĞŶĚŽĨ:ƵŶĞƚŚŝƐ
ƚŽŽůƐ͘&ƌŽŵĞĂƌůLJƌŽŽƚƐĂƐĂ ĂƌĞďĞĐŽŵŝŶŐŵŽƌĞƉƌĞĚŝĐƚĂďůĞ͘ LJĞĂƌ;ϮϬϭϳ͗Ψϲ͘ϲŵͿ͕ĨŽƌĞĐĂƐƚƚŽ
ƉƌŽǀŝĚĞƌŽĨƉƌŽĐĞƐƐĂƵƚŽŵĂƟŽŶ ,ĂůĨLJĞĂƌƚŽϯϬ:ƵŶĞϮϬϭϴĮŐƵƌĞƐ ƌŝƐĞƚŽΨϮϭ͘ϰŵďLJƚŚĞĞŶĚŽĨ
ƚŽŽůƐ͕ŝƚŚĂƐĞŵĞƌŐĞĚĂƐĂŶ ƌĞǀĞĂůƌĞĐƵƌƌŝŶŐƌĞǀĞŶƵĞŐƌĞǁ ϮϬϭϵ͘/ƚŚĂƐĂůƐŽƐƚĂƌƚĞĚƉĂLJŝŶŐ
ŝŶŶŽǀĂƟŽŶŵĂŶĂŐĞŵĞŶƚƐŽůƵƟŽŶ ƚŽΨϭϯ͘ϳŵĨƌŽŵΨϭϬ͘ϱŵĂLJĞĂƌ ĚŝǀŝĚĞŶĚƐ͕ĂůƚŚŽƵŐŚƚŚŝƐLJĞĂƌ͛Ɛ
ƚŽĐŽŵƉůĞdžŵĂŶƵĨĂĐƚƵƌĞƌƐ͘ ĞĂƌůŝĞƌ͘ZĞĐƵƌƌŝŶŐƌĞǀĞŶƵĞ ƉƌŽƐƉĞĐƟǀĞLJŝĞůĚŝƐǀĞƌLJƐŵĂůů
^ŽƉŚĞŽŶŚĂƐŵŽƌĞƚŚĂŶ ŚĂƐƌŽƵŐŚůLJĚŽƵďůĞĚŝŶĂďŽƵƚ ĂƚϬ͘ϯй͘;^&Ϳ
ϲϬ͕ϬϬϬƵƐĞƌƐĂĐƌŽƐƐϱϬͲƉůƵƐ ƚŚƌĞĞLJĞĂƌƐ͘
ĐŽƵŶƚƌŝĞƐǁŽƌůĚǁŝĚĞ͕ĨĞĂƚƵƌŝŶŐ KŶĐĞLJŽƵĨĂĐƚŽƌŝŶĐŽŶƚƌĂĐƚĞĚ SOPHEON
ƚŚĞůŝŬĞƐŽĨE^͕DĞƌĐŬĂŶĚ ŵĂŝŶƚĞŶĂŶĐĞŝŶĐŽŵĞĨƌŽŵ 1100
1000
^&͘/ƚƐĐĐŽůĂĚĞƉůĂƞŽƌŵŝƐ ŵƵůƟͲLJĞĂƌůŝĐĞŶĐĞƐ͕ΨϮϳ͘ϮŵŽĨ 900
ƵƐĞĚŽŶŝŶŶŽǀĂƟŽŶƉƌŽũĞĐƚƐ ƚŚĞĐƵƌƌĞŶƚĨƵůůLJĞĂƌ͛ƐΨϯϭŵ 800
ǁŽƌƚŚĂŶĞƐƟŵĂƚĞĚάϮϱďŶ͘ ĨŽƌĞĐĂƐƚƌĞǀĞŶƵĞŝƐĞīĞĐƟǀĞůLJŝŶ 700
ŶĂůLJƐƚƐĂƚƐƚŽĐŬďƌŽŬĞƌ&ŝŶŶĂƉ ƚŚĞďĂŐ͕ĂŶĚƚŚĂƚ͛ƐďĞĨŽƌĞƚŚĞ 600
ĐĂůĐƵůĂƚĞĂĨĂŝƌǀĂůƵĞŽǀĞƌƚŚĞŶĞdžƚ ƚLJƉŝĐĂůůLJďƵƐLJĨŽƵƌƚŚƋƵĂƌƚĞƌ 500
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These can be found at fandc.co.uk/literature.
© 2018 BMO Global Asset Management. All rights reserved. Issued and approved by BMO Global Asset Management, a trading name of F&C Management Limited, which is authorised and regulated by the Financial
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BREXIT
6 MONTHS TO D-DAY
HOW COULD A NO-DEAL IMPACT INVESTORS?
A
s the UK prepares to leave the EU on ƵŶĚĞƌƐƚĂŶĚŝŶŐƚŚĞĚŝīĞƌĞŶƚƐĐĞŶĂƌŝŽƐĂŶĚŚŽǁƚŚĞLJ
29 March 2019 at 11pm, there are many ŵĂLJĂīĞĐƚŵĂƌŬĞƚƐ͕ĞĐŽŶŽŵŝĐƐĂŶĚĐƵƌƌĞŶĐŝĞƐ͘
ƋƵĞƐƟŽŶƐůĞŌƵŶĂŶƐǁĞƌĞĚĨŽƌŝŶǀĞƐƚŽƌƐ͕ ƚƌĂŶƐŝƟŽŶƉĞƌŝŽĚŝƐƐĐŚĞĚƵůĞĚƚŽďĞŐŝŶŽŶ
ďƵƐŝŶĞƐƐĞƐĂŶĚƚŚĞŐĞŶĞƌĂůƉƵďůŝĐ͘ ϮϵDĂƌĐŚϮϬϭϵ͕ůĂƐƟŶŐƚŽϯϭĞĐĞŵďĞƌϮϬϮϬ͕ƚŽ
^ƚŽĐŬŵĂƌŬĞƚƐŝŶƌĞĐĞŶƚŵŽŶƚŚƐŚĂǀĞŶ͛ƚďĞĞŶ ůĞƚďƵƐŝŶĞƐƐĞƐĂŶĚŝŶĚŝǀŝĚƵĂůƐƉƌĞƉĂƌĞĨŽƌƚŚĞ
ƚƌŽƵďůĞĚƚŽŽŵƵĐŚďLJƚŚĞƌĞdžŝƚŶĞŐŽƟĂƟŽŶƐĂƐ ƟŵĞǁŚĞŶƚŚĞŶĞǁƉŽƐƚͲƌĞdžŝƚƌƵůĞƐďĞƚǁĞĞŶ
ŝŶǀĞƐƚŽƌƐŚĂǀĞŚĂĚƉůĞŶƚLJŽĨŽƚŚĞƌĚŝƐƚƌĂĐƟŽŶƐ ƚŚĞh<ĂŶĚhďĞŐŝŶ͘
ƐƵĐŚĂƐƚŚĞh^ͬŚŝŶĂƚƌĂĚĞǁĂƌĂŶĚǀŽůĂƟůŝƚLJŝŶ &ƌĞĞŵŽǀĞŵĞŶƚǁŝůůĐŽŶƟŶƵĞĚƵƌŝŶŐƚŚĞ
ĞŵĞƌŐŝŶŐŵĂƌŬĞƚƐ͘dŚĞƐŝƚƵĂƟŽŶŵĂLJƐŽŽŶ ƚƌĂŶƐŝƟŽŶƉĞƌŝŽĚĂŶĚƚŚĞh<ĐĂŶƐƚƌŝŬĞƚƌĂĚĞ
ĐŚĂŶŐĞŐŝǀĞŶǁĞ͛ƌĞŶŽǁƐŝdžŵŽŶƚŚƐĂǁĂLJĨƌŽŵ ĚĞĂůƐ͕ĂůƚŚŽƵŐŚƚŚĞLJǁŽŶ͛ƚďĞĂďůĞƚŽĐŽŵĞŝŶƚŽ
ƚŚĞďŝŐĚĂLJŽĨƐĞƉĂƌĂƟŽŶ͘ ĨŽƌĐĞƵŶƟůϭ:ĂŶƵĂƌLJϮϬϮϭ͘ƵƚĨĂŝůƵƌĞƚŽƐƚƌŝŬĞ
dŚĞƚLJƉĞŽĨĞdžŝƚĨƌŽŵƚŚĞĞĐŽŶŽŵŝĐďůŽĐŬŝƐƐƟůů ĂǁŝƚŚĚƌĂǁĂůĂŐƌĞĞŵĞŶƚďLJƚŚĞĚĞĂĚůŝŶĞŶĞdžƚ
ƵŶĐůĞĂƌǁŝƚŚƉŽůŝƟĐĂůŝŶĮŐŚƟŶŐĚŽŵŝŶĂƟŶŐƚŚĞ DĂƌĐŚǁŽƵůĚƐĐƵƉƉĞƌƚŚŝƐƚƌĂŶƐŝƟŽŶƉĞƌŝŽĚ͕
ĂŐĞŶĚĂ͘ŶĚǁŚŝůĞŝƚŝƐŝŵƉŽƐƐŝďůĞƚŽƉƌĞĚŝĐƚƚŚĞ ŚĞŶĐĞǁŚLJĂ͚ŶŽĚĞĂů͛ŽƵƚĐŽŵĞĐŽƵůĚƐƉŽŽŬƚŚĞ
ƉƌĞĐŝƐĞŝŵƉĂĐƚŽŶŝŶǀĞƐƚŽƌƐ͛ƉŽƌƞŽůŝŽƐ͕ŝƚŝƐǁŽƌƚŚ ƐƚŽĐŬŵĂƌŬĞƚ͘
THE POUND VERSUS THE US DOLLAR SINCE THE BREXIT VOTE IN 2016
1.50
1.45
1.40
1.35
1.30
1.25
1.20
2016 2017 2018
EK>
ŶŽͲĚĞĂůƌĞƐƵůƚǁŽƵůĚŵĞĂŶƚŚĞh<͛ƐƌĞůĂƟŽŶƐŚŝƉ
ǁŝƚŚƚŚĞhǁŽƵůĚďĞĐŽŶĚƵĐƚĞĚǀŝĂtŽƌůĚdƌĂĚĞ
KƌŐĂŶŝƐĂƟŽŶƌƵůĞƐ͘'ŝǀĞŶƚŚĞŝŶĐƌĞĂƐĞŝŶƚĂƌŝīƐ͕
ŝŶŇĂƟŽŶǁŽƵůĚƉƌŽďĂďůLJƌŝƐĞĂŶĚĂƌĞĐĞƐƐŝŽŶ
ĐŽƵůĚŚĂƉƉĞŶĂƐŝƚǁŽƵůĚďĞŵŽƌĞĐŽƐƚůLJƚŽƚƌĂĚĞ ƉůĂŶƐǁŚŝĐŚĐŽƵůĚŚĂǀĞŵĂũŽƌƌĞƉĞƌĐƵƐƐŝŽŶƐ͘
ŐŽŽĚƐǁŝƚŚŵĂŶLJŽǀĞƌƐĞĂƐƉĂƌƚŶĞƌƐ͘ sĂƌŝŽƵƐƚŚŝŶŬͲƚĂŶŬƌĞƐĞĂƌĐŚƉĂƉĞƌƐŚĂǀĞĂůƐŽ
'ƌŽǁƚŚĐŽƵůĚďĞƐƚĞĚŝŶƚŚĞůŽŶŐƚĞƌŵ ƐƵŐŐĞƐƚĞĚĨŽŽĚƉƌŝĐĞƐĐŽƵůĚŐŽƵƉĂŶĚǁĞĐŽƵůĚ
ǁŚĞŶŶĞǁƚƌĂĚĞĚĞĂůƐĂƌĞƐƚƌƵĐŬĂůƚŚŽƵŐŚ ƐĞĞƐŽŵĞƐŚŽƌƚĂŐĞƐŽĨŐŽŽĚƐ͕ďƵƚƚŚŝƐŵĂLJŽŶůLJ
ƚŚĞƌĞĂƌĞĐƵƌƌĞŶƚůLJŶŽĐŽŶĐƌĞƚĞƉůĂŶƐŝŶƉůĂĐĞ͘ ďĞĂƚĞŵƉŽƌĂƌLJƉŚĞŶŽŵĞŶŽŶ͘
^ŚĂƌĞƐŝŶh<ĚŽŵĞƐƟĐĐŽŵƉĂŶŝĞƐŵĂLJƐƵīĞƌ &ƌŽŵĂŶŝŶǀĞƐƚŵĞŶƚƉĞƌƐƉĞĐƟǀĞ͕ǁĞďĞůŝĞǀĞ
ĐŽŵƉĂƌĞĚƚŽŐůŽďĂůŝŶĚŝĐĞƐĂƐƐƚĞƌůŝŶŐǁŽƵůĚ ƚŚĞƐƚŽĐŬŵĂƌŬĞƚĐŽƵůĚĞdžƉĞƌŝĞŶĐĞĂƐŚŽƌƚƉĞƌŝŽĚ
ŵŽƐƚĐĞƌƚĂŝŶůLJƚƵŵďůĞ͘ ŽĨǀŽůĂƟůŝƚLJƵƉŽŶĂŶŽͲĚĞĂůŽƵƚĐŽŵĞǁŚŝĐŚ
WŚŝůŝƉ^ŵĞĂƚŽŶ͕ĐŚŝĞĨŝŶǀĞƐƚŵĞŶƚŽĸĐĞƌĂƚ ĐŽƵůĚƉƌŽǀĞƚŽďĞĂŐŽŽĚƟŵĞƚŽŐŽďĂƌŐĂŝŶ
^ĂŶůĂŵ͕ƐĂLJƐƐŝŶĐĞƚŚĞ'ŽǀĞƌŶŵĞŶƚƌĞůĞĂƐĞĚŝƚƐ ŚƵŶƟŶŐĨŽƌƐƚŽĐŬƐ͘
ƌĞdžŝƚǁŚŝƚĞƉĂƉĞƌƚŚĞŵĂƌŬĞƚŝƐĐĞƌƚĂŝŶůLJƉƌŝĐŝŶŐ
ŝŶĂŶŽͲĚĞĂůŽƵƚĐŽŵĞ͘ EKZy/dΈZD/E/Ed,hΉ
tŚŝůĞƚŚŝƐŵĂLJƐĞĞŵĂƉŽƚĞŶƟĂůĚŝƐĂƐƚĞƌ͕ tĞƚŚŝŶŬĂ͚ŶŽƌĞdžŝƚ͛ŽƵƚĐŽŵĞŝƐŚŝŐŚůLJƵŶůŝŬĞůLJ
^ŵĞĂƚŽŶĐŽŵŵĞŶƚƐ͚͗ǀĞŶĂ͞ŶŽĚĞĂů͟ƉƌŽǀŝĚĞƐ ĚĞƐƉŝƚĞĐŽŶƟŶƵĞĚĐĂůůƐĨŽƌĂƐĞĐŽŶĚƌĞĨĞƌĞŶĚƵŵ
ĐůĂƌŝƚLJĂŶĚƐŽŵĞƚŚŝŶŐLJŽƵ͛ƌĞǁŽƌŬŝŶŐǁŝƚŚĂŶĚ ĨƌŽŵǀĂƌŝŽƵƐĐĂŵƉƐ͘dŚĞƐĞŝŶĐůƵĚĞ'D͕ŽŶĞŽĨ
LJŽƵŬŶŽǁǁŚĂƚĞǀĞƌŚĂƉƉĞŶƐĂŌĞƌǁĂƌĚƐǁŝůůďĞ ƌŝƚĂŝŶ͛ƐďŝŐŐĞƐƚƵŶŝŽŶƐ͕ĂŶĚ^ƵƉĞƌĚƌLJ;^ZzͿ
ĂŶŝŵƉƌŽǀĞŵĞŶƚ͛͘ ĐŽͲĨŽƵŶĚĞƌ:ƵůŝĂŶƵŶŬĞƌƚŽŶǁŚŽƌĞĐĞŶƚůLJ
dŚĂƚ͛ƐďĞŝŶŐŽƉƟŵŝƐƟĐ͘/ŶƌĞĂůŝƚLJƚŚĞ ŐĂǀĞάϭŵƚŽƚŚĞWĞŽƉůĞ͛ƐsŽƚĞĐĂŵƉĂŝŐŶĨŽƌĂ
'ŽǀĞƌŶŵĞŶƚǁŽƵůĚŚĂǀĞƚŽƌĞƚŚŝŶŬŝƚƐƐƉĞŶĚŝŶŐ ƌĞĨĞƌĞŶĚƵŵŽŶƚŚĞĮŶĂůƌĞdžŝƚĚĞĂů͘
t,d͛^,WWEdKd,h<KEKDz t,d͛^d,>d^d
^/Ed,Zy/dsKd͍
dŚĞƌŝƟƐŚĞĐŽŶŽŵLJŚĂƐĚŝƐĂƉƉŽŝŶƚĞĚƐŝŶĐĞƚŚĞ
^ddK&W>z͍
ƌĞĨĞƌĞŶĚƵŵǀŽƚĞƚǁŽLJĞĂƌƐĂŐŽĂƐďƵƐŝŶĞƐƐĞƐ
ŚĂǀĞďĞĐŽŵĞŵŽƌĞĐĂƵƟŽƵƐǁŝƚŚƐƉĞŶĚŝŶŐĂŶĚ
ĐŽŶƐƵŵĞƌƐŚĂǀĞďĂƩůĞĚǁŝƚŚƌŝƐŝŶŐŝŶŇĂƟŽŶ͘
/ŶϮϬϭϳ͕ƚŚĞƐĂǀŝŶŐƐƌĂƟŽͶŵĞĂƐƵƌŝŶŐƚŚĞ DŝĐŚĂĞůĂƌŶŝĞƌ͕ƚŚĞh͛Ɛ
ƉƌŽƉŽƌƟŽŶŽĨh<ŚŽƵƐĞŚŽůĚŝŶĐŽŵĞƚŚĂƚŝƐŶŽƚ ĐŚŝĞĨŶĞŐŽƟĂƚŽƌ͕ƐĂLJƐĂŶĂŐƌĞĞŵĞŶƚ
ƐƉĞŶƚͶĚƌŽƉƉĞĚƚŽϰ͘ϭй͕ŝƚƐůŽǁĞƐƚƌĂƚĞĨŽƌ ŽŶƚŚĞƚĞƌŵƐŽĨƚŚĞh<͛ƐĞdžŝƚŝƐ
ŵŽƌĞƚŚĂŶϱϬLJĞĂƌƐ͘ ƉŽƐƐŝďůĞďLJĞĂƌůLJEŽǀĞŵďĞƌƚŚŝƐLJĞĂƌ͘
ĐŽŶŽŵŝĐŐƌŽǁƚŚƐůŽǁĞĚŝŶϮϬϭϳĂŶĚƐƚĂƌƚĞĚ dŚĞh<ĂŶĚhĂƌĞŚŽƉŝŶŐƚŽĐůĂƌŝĨLJ
ϮϬϭϴƉŽŽƌůLJĚƵĞƚŽƐŶŽǁĚŝƐƌƵƉƟŽŶ͘&ŝŐƵƌĞƐ ƚŚĞƚĞƌŵƐŽŶƚŚĞŝƌĨƵƚƵƌĞĞĐŽŶŽŵŝĐ
ŶŽǁƐŚŽǁĂŶŝŵƉƌŽǀĞŵĞŶƚĂƐƚŚĞLJĞĂƌ ĐŽͲŽƉĞƌĂƟŽŶŝŶƟŵĞĨŽƌĂŶ
ƉƌŽŐƌĞƐƐĞƐ͕ŚĞůƉĞĚďLJŐŽŽĚǁĞĂƚŚĞƌŽǀĞƌƚŚĞ hƐƵŵŵŝƚŝŶŵŝĚͲKĐƚŽďĞƌŽƌ
ƐƵŵŵĞƌ͘dŚĞůĂƚĞƐƚĮŐƵƌĞƐƐŚŽǁϬ͘ϲйŐƌŽǁƚŚ ďLJƚŚĞĞŶĚŽĨƚŚĞŵŽŶƚŚ͘
ĨŽƌƚŚĞƚŚƌĞĞŵŽŶƚŚƐƚŽ:ƵůLJ͘ dŚĂƚǁŽƵůĚůĞĂǀĞĞŶŽƵŐŚƟŵĞƚŽ
hůƟŵĂƚĞůLJƚŚĞh<ĞĐŽŶŽŵLJŚĂƐďĞĞŶƐůƵŐŐŝƐŚ ĐŽŶƐŝĚĞƌĂŶĚǀŽƚĞŽŶƚŚĞƉƌŽƉŽƐĂůƐ
ďƵƚƚŚĞƉĞƌĨŽƌŵĂŶĐĞŚĂƐŶ͛ƚďĞĞŶĚŝƐĂƐƚƌŽƵƐĂŶĚ ďĞĨŽƌĞŶĞdžƚDĂƌĐŚ͛ƐĚĞĂĚůŝŶĞ͘
ƵŶĞŵƉůŽLJŵĞŶƚƌĂƚĞƐĂƌĞůŽǁ͘
zĞƚŝŶǀĞƐƚŵĞŶƚďĂŶŬh^ďĞůŝĞǀĞƐh<'WŝƐ
ĂůƌĞĂĚLJϮ͘ϭйůŽǁĞƌƚŚĂŶǁŚĞƌĞŝƚǁŽƵůĚŚĂǀĞ
ďĞĞŶǁŝƚŚŽƵƚƌĞdžŝƚ͚͘/ŶǀĞƐƚŵĞŶƚŝƐϰйǁĞĂŬĞƌ͕
ŝŶŇĂƟŽŶϭ͘ϱйŚŝŐŚĞƌ͕ĐŽŶƐƵŵƉƟŽŶŝƐϭ͘ϳйůŽǁĞƌ ĞƋƵĂůƚŽƚŚĞĨƵůůĐŽƐƚƐŽĨƐŽŵĞŽĨƚŚĞŵŽƌĞ
ĂŶĚƚŚĞZZ;ƌĞĂůĞīĞĐƟǀĞĞdžĐŚĂŶŐĞƌĂƚĞͿŝƐ ŽƉƟŵŝƐƟĐĂƐƐĞƐƐŵĞŶƚƐ͘ƵƚƚŚĞh<ŚĂƐŶŽƚĞǀĞŶ
ϭϮйŵŽƌĞĚĞƉƌĞĐŝĂƚĞĚ͕͛ŝƚƐĂLJƐ͘ ůĞŌƚŚĞhLJĞƚ͊
͚dŽƉƵƚϮ͘ϭйĐƵŵƵůĂƟǀĞĚĞĐůŝŶĞŝŶƌĞĂůŐƌŽǁƚŚ ͚tŚLJŝƐŝƚŐŽŝŶŐůĂƌŐĞůLJƵŶŶŽƟĐĞĚ͍ĞĐĂƵƐĞƚŚĞ
ŝŶĐŽŶƚĞdžƚ͕ƚŚĂƚ͛ƐƌŽƵŐŚůLJĂƋƵĂƌƚĞƌƚŽĂƚŚŝƌĚ ŐůŽďĂůĞĐŽŶŽŵLJƐƚĂƌƚĞĚƚŽĂĐĐĞůĞƌĂƚĞƐƚƌŽŶŐůLJ
ŽĨƚŚĞƚŽƚĂůƌĞdžŝƚĐŽƐƚƐĞƐƟŵĂƚĞĚŝŶƚŚĞŵŽƐƚ ƌŝŐŚƚĂŌĞƌƚŚĞŵŝĚͲϭϲƌĞĨĞƌĞŶĚƵŵ͕ĂůůŽǁŝŶŐh<
ƉĞƐƐŝŵŝƐƟĐĂƐƐĞƐƐŵĞŶƚƐĚŽŶĞƉƌŝŽƌƚŽƚŚĞh 'WŐƌŽǁƚŚƚŽŵŽǀĞƐŝĚĞǁĂLJƐƌĂƚŚĞƌƚŚĂŶĚŝǀĞ
ƌĞĨĞƌĞŶĚƵŵ;ĞŐ͘,DdƌĞĂƐƵƌLJ͕KͿĂŶĚĂůŵŽƐƚ ůŽǁĞƌ͕͛ĞdžƉůĂŝŶƐh^͛ƐĞĐŽŶŽŵŝƐƚƐ͚͘tŝƚŚŽƵƚ
ƌĞdžŝƚ͕ŚŽǁĞǀĞƌ͕ǁĞƚŚŝŶŬh<'WĐŽƵůĚŚĂǀĞ
ďĞĞŶϭϬϬďĂƐŝƐƉŽŝŶƚƐƉĞƌLJĞĂƌŚŝŐŚĞƌ͛͘
UK GDP: quarter on quarter growth
dŚĞŬĞLJƉŽŝŶƚƚŽŶŽǁĐŽŶƐŝĚĞƌŝƐǁŚĞƚŚĞƌ
% ĐŽŵƉĂŶŝĞƐŐĞƚĞǀĞŶŵŽƌĞũƵŵƉLJĂƐƚŚĞƌĞdžŝƚ
0.75
ĚĞĂĚůŝŶĞĂƉƉƌŽĂĐŚĞƐ͘tĞďĞůŝĞǀĞŝƚŝƐƉůĂƵƐŝďůĞ
ƚŚĂƚĐŽŵƉĂŶŝĞƐĐŽƵůĚƐĐĂůĞďĂĐŬĞŵƉůŽLJŵĞŶƚ
ĂŶĚŝŶǀĞƐƚŵĞŶƚĚĞĐŝƐŝŽŶƐƵŶůĞƐƐƚŚĞƌĞŝƐĮƌŵ
0.5 ƉƌŽŐƌĞƐƐǁŝƚŚƚŚĞƚĂůŬƐďĞƚǁĞĞŶƚŚĞh<ĂŶĚh͘
͚dŚĞh<dƌĞĂƐƵƌLJĞƐƟŵĂƚĞĚƚŚĂƚh<'WŵŝŐŚƚ
ĨĂůůďLJϯ͘ϲйƚŽϲйŽǀĞƌƚǁŽLJĞĂƌƐŝŶĂ͚ĐůŝīͲĞĚŐĞ͛
ƌĞdžŝƚ͘dŚŝƐƉƌŽďĂďůLJĂŶƵŶĚĞƌĞƐƟŵĂƚĞʹĨĂŝůŝŶŐ
0.25
ƚŽĂĐĐŽƵŶƚĨŽƌƚŚĞůĞŐĂůͬƌĞŐƵůĂƚŽƌLJďĂƐŝƐĨŽƌ
hͬh<ƚƌĂĚĞƐƵĚĚĞŶůLJďĞŝŶŐĞůŝŵŝŶĂƚĞĚ͕͛ƐĂLJƐ
ŽŶĂůůDĂĐŽŝůůĞ͕ĐŚŝĞĨĞĐŽŶŽŵŝƐƚĂƚƐƚŽĐŬďƌŽŬĞƌ
0 ĂǀLJ͚͘tĞŝůůƵƐƚƌĂƚĞĂŚĂƌĚƌĞdžŝƚƐĐĞŶĂƌŝŽǁŚĞƌĞ
h<'WĨĂůůƐďLJϰйŝŶϮϬϭϵĂŶĚϮйŝŶϮϬϮϬ͛͘
DĂĐŽŝůůĞďĞůŝĞǀĞƐĂĐůŝīͲĞĚŐĞƌĞdžŝƚŝƐĂ
ůŽǁƉƌŽďĂďŝůŝƚLJĞǀĞŶƚ͘/Ŷ:ƵůLJ͕h^ƐƚƌĂƚĞŐŝƐƚ
/^^h^&/E'YhKdKDWE/^
dŝŵtĂƌĚ͕ĐŚŝĞĨĞdžĞĐƵƟǀĞŽĨƚŚĞYƵŽƚĞĚ
ŽŵƉĂŶLJůůŝĂŶĐĞ;YͿ͕ŚĂƐďĞĞŶƚĂůŬŝŶŐ
ƚŽƐŵĂůůĐŽŵƉĂŶŝĞƐǁŚŽĂƌĞĐŽŶĐĞƌŶĞĚǁŝƚŚ
ƌĞĐƌƵŝƟŶŐ͘tŝƚŚŽƵƚƚŚĞĨƌĞĞŵŽǀĞŵĞŶƚŽĨ
ƉĞŽƉůĞ͕ƚŚŝƐůŝŵŝƚƐƚŚĞƉŽƚĞŶƟĂůƉŽŽůŽĨƚĂůĞŶƚ
ĂǀĂŝůĂďůĞƚŽh<ŶĂƟŽŶĂůƐ͘
dŚŝƐŝƐĂŬĞLJƉŽŝŶƚŽĨĐŽŶƚĞŶƟŽŶŝŶƚŚĞǁŚŽůĞ
Small companies
are concerned with
recruiting. Without
the free movement of
“
people, this limits
the potential pool
of talent available to
UK nationals
nals
ƌĞdžŝƚĚĞďĂƚĞĂŶĚLJĞƚĂŐĂŝŶŽŶĞƚŚĂƚŝƐƵŶĐůĞĂƌ͘
,ŽǁĞǀĞƌ͕^ĂũŝĚ:ĂǀŝĚ͕ŚŽŵĞƐĞĐƌĞƚĂƌLJ͕ŚĂƐƐĂŝĚ
ƚŚĂƚĨƌĞĞŵŽǀĞŵĞŶƚŽĨƉĞŽƉůĞǁŝůůĞŶĚ͕ǁŝƚŚ
ŶŽĂƵƚŽŵĂƟĐƌŝŐŚƚĨŽƌĂŶLJŽŶĞĨƌŽŵƚŚĞhƚŽ
ĐŽŵĞƚŽƚŚĞh<ĂŶĚǁŽƌŬ͘KƚŚĞƌƐŝŶ'ŽǀĞƌŶŵĞŶƚ
ŚĂǀĞƐĂŝĚƚŚĞh<ǁŝůůŽīĞƌǁŽƌŬǀŝƐĂƐƚŽh ďĞƚǁĞĞŶŵĞŵďĞƌƐƚĂƚĞƐĂŌĞƌƌĞdžŝƚ͘
ŶĂƟŽŶĂůƐĨŽƌh<ĞŵƉůŽLJŵĞŶƚ͘ ,^;,^ͿŚĂƐƐŚŝŌĞĚŽǁŶĞƌƐŚŝƉŽĨŝƚƐ
tĂƌĚŽĨƚŚĞYƐĂLJƐĐŽŵƉĂŶŝĞƐŚĞ͛Ɛ WŽůŝƐŚĂŶĚ/ƌŝƐŚƐƵďƐŝĚŝĂƌŝĞƐĨƌŽŵŝƚƐ>ŽŶĚŽŶͲ
ƐƵƌǀĞLJĞĚĂƌĞĮŶĚŝŶŐŝƚŚĂƌĚƚŽƌĞƚĂŝŶĂŶĚĂƩƌĂĐƚ ďĂƐĞĚĞŶƟƚLJƚŽŝƚƐ&ƌĞŶĐŚƵŶŝƚ͕ĂŶĚƉůĂŶƐƚŽĚŽ
ƚĂůĞŶƚŐŝǀĞŶƚŚĞƵŶĐĞƌƚĂŝŶƚLJƐƵƌƌŽƵŶĚŝŶŐƚŚĞ ƚŚĞƐĂŵĞĨŽƌƐĞǀĞŶŵŽƌĞƵƌŽƉĞĂŶďƌĂŶĐŚĞƐ͕
ƐƚĂƚƵƐŽĨǁŽƌŬĞƌƐĂŌĞƌϮϵDĂƌĐŚϮϬϭϵ͘ ĂƐŝƚƉƌĞƉĂƌĞƐĨŽƌƌĞdžŝƚ͘
dŚĞƌĞĂƌĞŶƵŵĞƌŽƵƐƐĞĐƚŽƌƐŝŶƚŚĞh<ǁŚŝĐŚ ŶĚĂƐƐĞƚŵĂŶĂŐĞƌƐŚŵŽƌĞ;^,DͿŝƐƐĞƫŶŐ
ĞŵƉůŽLJůĂƌŐĞĂŵŽƵŶƚƐŽĨƉĞŽƉůĞ͕ŵĂŶLJŽĨ ƵƉĂŶŽĸĐĞŝŶ/ƌĞůĂŶĚƚŽĞŶƐƵƌĞĐŽŶƟŶƵĞĚ
ǁŚŽŵŚĂǀĞĐŽŵĞĨƌŽŵĂďƌŽĂĚƚŽƐĞĞŬǁŽƌŬ͘&Žƌ ĂĐĐĞƐƐƚŽhͲďĂƐĞĚŝŶƐƟƚƵƟŽŶĂůĐůŝĞŶƚƐ͘
ĞdžĂŵƉůĞ͕ƚŚĞĐŽŶƐƚƌƵĐƟŽŶ͕ƌĞƚĂŝůĂŶĚƐĞƌǀŝĐĞƐ
ƐĞĐƚŽƌƐĐŽƵůĚďĞƐŝŐŶŝĮĐĂŶƚůLJĂīĞĐƚĞĚŝĨƚŚŝƐ KZWKZd^WE/E'͗t/d/E'&KZ
ƉŽŽůŽĨǁŽƌŬĞƌƐƐŚƌŝŶŬƐ͘ Zy/d>Z/dz
&ƌŽŵĂŶŽƚŚĞƌƉĞƌƐƉĞĐƟǀĞ͕ŵĂŶLJh< tŚŝůĞƐŽŵĞĐŽŵƉĂŶŝĞƐĐĂŶŵĂŬĞĐŽŶƟŶŐĞŶĐLJ
ĐŽŵƉĂŶŝĞƐǁŝƚŚůĂƌŐĞŽƉĞƌĂƟŽŶƐĂĐƌŽƐƐŵƵůƟƉůĞ ƉůĂŶƐ͕ƚŚĞƌĞŝƐƐƟůůƉůĞŶƚLJŽĨĞǀŝĚĞŶĐĞƚŚĂƚ
ĐŽƵŶƚƌŝĞƐƐŚŽƵůĚďĞĂďůĞƚŽĂĚĂƉƚƚŽƚŚĞƌĞdžŝƚ ďƵƐŝŶĞƐƐĞƐĂƌĞĚĞůĂLJŝŶŐŝŶǀĞƐƚŵĞŶƚƐƉĞŶĚŝŶŐ
ůĂŶĚƐĐĂƉĞ͕ƉĂƌƟĐƵůĂƌůLJŝĨƚŚĞLJŶĞĞĚƚŽŽƉĞƌĂƚĞ ƵŶƟůƚŚĞƌĞŝƐĐůĂƌŝƚLJŽǀĞƌŚŽǁƌĞdžŝƚǁŝůůƉůĂLJŽƵƚ͘
ĂĐƌŽƐƐƚŚĞh͘ ŌĞƌĂůů͕ǁŚLJŵĂŬĞĂĚĞĐŝƐŝŽŶŶŽǁǁŚĞŶLJŽƵĐĂŶ
&ŽƌĞdžĂŵƉůĞ͕EasyJet (EZJ)ŚĂƐďĞĞŶŵĂŬŝŶŐ ǁĂŝƚĂƐŚŽƌƚƟŵĞĂŶĚŬŶŽǁǁŚĂƚ͛ƐŐŽŝŶŐŽŶ͍
ƉƌĞƉĂƌĂƟŽŶƐĨŽƌĂŶĞǁďĂƐĞŝŶƵƐƚƌŝĂĂƐĂŝƌůŝŶĞƐ ŽŶƐƵůƚĂŶĐLJsĞŶĚŝŐŝƚĂůƐĂLJƐƐŝŶĐĞƚŚĞ
ŵƵƐƚŚĂǀĞĂŶĂŝƌŽƉĞƌĂƚŽƌĐĞƌƟĮĐĂƚĞŝŶĂŶh ƌĞĨĞƌĞŶĚƵŵǀŽƚĞŝŶϮϬϭϲ͕ďƵƐŝŶĞƐƐĞƐŚĂǀĞ
ŵĞŵďĞƌĐŽƵŶƚƌLJƚŽĂůůŽǁŝƚƚŽĐŽŶƟŶƵĞŇLJŝŶŐ ŝŶǀĞƐƚĞĚάϮϮďŶůĞƐƐƚŚĂŶƚŚĞLJǁŽƵůĚŚĂǀĞĚŽŶĞ
T
he Government has
ƌĞůĞĂƐĞĚƚŚĞĮƌƐƚŽĨ
ĂƚƌĂŶĐŚĞŽĨƉĂƉĞƌƐ
ŽƵƚůŝŶŝŶŐŚŽǁĚŝīĞƌĞŶƚŝŶĚƵƐƚƌŝĞƐ
ǁŽƵůĚďĞĂīĞĐƚĞĚďLJĂŶŽͲĚĞĂů
ƌĞdžŝƚ͘dŚĞLJŝŶĐůƵĚĞĚĞƚĂŝůƐ
ŽŶŚŽǁƚŚĞĮŶĂŶĐŝĂůƐĞƌǀŝĐĞƐ
ŝŶĚƵƐƚƌLJ͕ĐŽǀĞƌŝŶŐďĂŶŬŝŶŐ͕
ŝŶƐƵƌĂŶĐĞĂŶĚƉĞŶƐŝŽŶƐ͕ǁŽƵůĚ
ĐŚĂŶŐĞĂƐĂƌĞƐƵůƚŽĨĂ͚ŶŽĚĞĂů͛͘
DƵĐŚŽĨƚŚĞŝŶĨŽƌŵĂƟŽŶŝŶƚŚĞ
ƚĞĐŚŶŝĐĂůƉĂƉĞƌƐƌĂŝƐĞĚƉŽƚĞŶƟĂů
“
ŝƐƐƵĞƐ͕ďƵƚƉƌŽǀŝĚĞĚĨĞǁƐŽůƵƟŽŶƐ that to use certain credit or debit
on how to overcome the cards charges would cost them
ƉƌŽďůĞŵƐƌĂŝƐĞĚ͕ŽƌŝŶƐŽŵĞĐĂƐĞƐ an extra £5 or £10.
ŚŽǁĞdžĂĐƚůLJƚŚĞƉƌŽďůĞŵƐǁŽƵůĚ Mu of the
Much
M dŚĞƌĞǁĞƌĞŽŌĞŶĂůƐŽŚŝŐŚĞƌ
ŽĐĐƵƌ͘ƵƚƵƐŝŶŐƚŚŽƐĞƉĂƉĞƌƐ͕ information in ĐŚĂƌŐĞƐĂƚŽŶůŝŶĞƌĞƚĂŝůĞƌƐĨŽƌ
ǁĞ͛ǀĞƐƵŵŵĂƌŝƐĞĚƚŚĞďŝŐŐĞƐƚ the technical papers ƵƐŝŶŐŽŶůŝŶĞƉĂLJŵĞŶƚƐLJƐƚĞŵƐ͕
ŝƐƐƵĞƐĨĂĐŝŶŐLJŽƵƌĮŶĂŶĐĞƐŝŶƚŚĞ raised potential ƐƵĐŚĂƐWĂLJWĂů͘dŚĞhďĂŶ
ĞǀĞŶƚŽĨĂŶŽͲĚĞĂůƌĞdžŝƚ͘ ƉƵƚĂŶĞŶĚƚŽĐŚĂƌŐŝŶŐďĂƐĞĚ
issues, but provided ŽŶŚŽǁLJŽƵƉĂLJ͘,ŽǁĞǀĞƌ͕ƚŚĞ
HIGHER CARD CHARGES few solutions on Government warns that in a
/ĨǁĞůĞŌƚŚĞƵƌŽƉĞĂŶhŶŝŽŶ how to overcome the ŶŽͲĚĞĂůƌĞdžŝƚƚŚĞh<ǁŽƵůĚďĞ
ǁŝƚŚŶŽĚĞĂůŝƚ͛ƐĐůĞĂƌĨŽƌƚǁŽ ŽƵƚƐŝĚĞƚŚŝƐhůĂǁ͕ĂŶĚƐŽƚŚŝƐ
”
ƌĞĂƐŽŶƐƚŚĂƚƌŝƚƐǁŽƵůĚƉĂLJ problems raised
ised ƌƵůŝŶŐǁŽƵůĚŶŽůŽŶŐĞƌĂƉƉůLJʹ
higher debit and credit card leaving retailers able to charge
ĐŚĂƌŐĞƐǁŚĞŶƚŚĞLJƚƌĂǀĞůůĞĚ ƚŚĞƐĞ͚ƌŝƉͲŽī͛ĨĞĞƐŽŶĐĞĂŐĂŝŶ͘
abroad.
&ŝƌƐƚ͕ƚŚĞh<ǁŽƵůĚŶŽůŽŶŐĞƌ ĂƉƉůLJƚŽh<ĐƵƐƚŽŵĞƌƐ͘/Ŷ PENSIONERS ABROAD
ďĞƉĂƌƚŽĨĂĐĞŶƚƌĂůƉĂLJŵĞŶƚ :ĂŶƵĂƌLJƚŚŝƐLJĞĂƌĂŶhͲǁŝĚĞ The biggest warning in the
ƐLJƐƚĞŵƵƐĞĚƚŽƉƌŽĐĞƐƐ ďĂŶǁĂƐďƌŽƵŐŚƚŝŶĨŽƌĐĞƌƚĂŝŶ ƚĞĐŚŶŝĐĂůƉĂƉĞƌƐǁĂƐĨŽƌƚŚĞ
ƚƌĂŶƐĂĐƟŽŶƐŝŶĞƵƌŽƐ͘dŚŝƐŵĞĂŶƐ ĐĂƌĚĐŚĂƌŐĞƐ͕ǁŚŝĐŚƐƚŽƉƉĞĚ ϯϬϬ͕ϬϬϬнh<ƉĞŶƐŝŽŶĞƌƐǁŚŽ
ƚŚĂƚƉƌŽĐĞƐƐŝŶŐƉĂLJŵĞŶƚƐŵĂĚĞ ĐŽŵƉĂŶŝĞƐďĞŝŶŐĂďůĞƚŽĐŚĂƌŐĞ ůŝǀĞŝŶĂŶŽƚŚĞƌhĐŽƵŶƚƌLJ͕
ďLJĂƌŝƟƐŚƉĞƌƐŽŶ͕ƵƐŝŶŐƚŚĞŝƌ LJŽƵďĂƐĞĚŽŶƚŚĞŵĞƚŚŽĚLJŽƵ ĂŶĚĂƌĞƵƐŝŶŐďĂŶŬĂĐĐŽƵŶƚƐ͕
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ŝŶĐŽŵĞĨŽƌůŝĨĞ͕ƚŽh<ŝŶĚŝǀŝĚƵĂůƐ PENSIONERS
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the right permissions to
ƚŚŽƵŐŚ͘dŚĞĮŶĂŶĐŝĂůƐĞƌǀŝĐĞƐ operate in EU countries.
This includes the insurance
ĐŽŵƉĂŶŝĞƐĐŽƵůĚƐĞƚƵƉĂŶ companies which pay out
hďĂƐĞ͕ŽƌĐƌĞĂƚĞĂƌĞĐŝƉƌŽĐĂů an annuity or pension
ĂŐƌĞĞŵĞŶƚǁŝƚŚĂŶhͲďĂƐĞĚ
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ĐůĞĂƌƚŚĂƚƚŚĞLJŶĞĞĚƚŽŝŶǀĞƐƚƚŚŝƐ HIGHER COSTS for Brits buying
items from
ŵŽŶĞLJĂŶĚŵĂŬĞƚŚĞƐĞĐŚĂŶŐĞƐ͕ OF ONLINE EU retailers
ƚŚĞLJĂƌĞƵŶůŝŬĞůLJƚŽĚŽƐŽ͘ SHOPPING
,ƵŐŚ^Ăǀŝůů͕ĚŝƌĞĐƚŽƌŽĨ
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ŽĨƌŝƟƐŚ/ŶƐƵƌĞƌƐ͕ƐĂLJƐ͗ ĨĂĐĞŚŝŐŚĞƌĐŽƐƚƐ͘ those who do minimal business
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HIGHER COSTS OF ,ŽǁĞǀĞƌ͕ŝĨǁĞŵŽǀĞŽƵƚŽĨ ŽŶůŝŶĞƉĂLJŵĞŶƚƐLJƐƚĞŵƚŽƌĞĐŽƌĚ
ONLINE SHOPPING ƚŚĞhƵŶĚĞƌĂŶŽͲĚĞĂůƐĐĞŶĂƌŝŽ͕ ĂŶĚĐŽůůĞĐƚƚŚĞĂĚĚŝƟŽŶĂůsd
/ŶĂĚĚŝƟŽŶƚŽƚŚĞĂĨŽƌĞŵĞŶƟŽŶĞĚ ƚŚŝƐ͚>ŽǁsĂůƵĞŽŶƐŝŐŶŵĞŶƚ ƉĂLJŵĞŶƚƐ͕ǁŚŝĐŚǁŽƵůĚŚĞůƉƚŽ
ĞdžƚƌĂĐĂƌĚĐŚĂƌŐĞƐ͕ŝŶĂŶŽͲĚĞĂů ZĞůŝĞĨ͛ǁŝůůŶŽůŽŶŐĞƌĂƉƉůLJ͕ĂŶĚ cut the costs involved.
Brexit the Government warns ƐŽsdǁŝůůďĞĚƵĞ͘DŽƌĞƚŚĂŶ
ƚŚĂƚƌŝƚƐďƵLJŝŶŐŝƚĞŵƐĨƌŽŵ ĂŶLJƚŚŝŶŐ͕ƚŚĞƌĞƉƌĞƐĞŶƚƐĂŵĂũŽƌ Laura Suter,
hƌĞƚĂŝůĞƌƐĂŶĚƐĞůůĞƌƐĐŽƵůĚ ĂĚŵŝŶƚĂƐŬĨŽƌƌĞƚĂŝůĞƌƐ͕ĂŶĚ ƉĞƌƐŽŶĂůĮŶĂŶĐĞĂŶĂůLJƐƚ͕:Ğůů
THE IMPORTANCE
OF INCOME
One advantage of contrarian investing is that the out-of-
favour stocks we look for often offer higher-than-average
dividend yields. But we never consider a high yield an
attraction in its own right.
Being paid for our patience portfolio to experience a temporary shortfall in income the company
If our research shows that the dividend is sustainable, then we would still be able to maintain its dividend policy.
can afford to be patient – secure in the knowledge that we are being Drip, drip
paid to wait. That’s an ideal situation for us: a strong dividend yield Finally, it is always worth emphasising the potential impact of
that gives us a consistent and attractive level of income while we reinvesting dividends. Dividends form a large part of total returns
await the return of health to the business – and hence its share price. and this is especially true when the income is reinvested. Certificated
We value dividends not only because they boost portfolio shareholders can take advantage of our Dividend Reinvestment
returns, but also because we understand the importance of regular Programme (DRIP), allowing them to harness the power of
income to our investors. compounding and potentially enhance returns significantly over the
Making income more predictable long-term. As at the end of July 2018, an investment in The Scottish
We announced a step-change increase in our dividend in Investment Trust would have returned 3 times its value over the last
December 2017. This boosted the regular dividend by 48%, the 20 years. With dividends reinvested, this would have increased to
total dividend increased by 11%. As our investment style tends to 3.7 times the original investment – an uplift of 25%. This underscores
generate an above-average dividend income, compared with global the importance of income – and shows how a steady drip of dividends
equities, we have rewarded our shareholders with a higher and more can swell to a sizeable flow. ■
predictable income stream than previously. Also, we have moved
from semi-annual to quarterly dividend payments. This provides a
more regular income to our shareholders. Of course, it should be
remembered that dividend income is not guaranteed and can go
down as well as up.
Thirty-four not out High conviction, global contrarian investors
Another key objective is to achieve dividend growth ahead of
UK inflation. We have increased our net dividend in each of the last For more information visit
34 years and the net dividend has been increased or maintained www.thescottish.co.uk
since at least the Second World War. Just as with our portfolio of or follow
investments, the sustainability of our own dividend is important to @ScotInvTrust
us and this is helped by revenue reserves of more than three times The Scottish Investment Trust PLC
the regular dividend. This provides a strong foundation, so were the
RISK WARNING
Please remember that past performance may not be repeated and is not a guide for future performance. The value of shares and the income from them can
go down as well as up as a result of market and currency fluctuations. You may not get back the amount you invest. The Scottish Investment Trust PLC has
a long-term policy of borrowing money to invest in equities in the expectation that this will improve returns for shareholders. However, should markets fall
these borrowings would magnify any losses on these investments. This may mean you get back nothing at all. Investment trusts are listed on the London Stock
Exchange and are not authorised or regulated by the Financial Conduct Authority. Please note that SIT Savings Ltd is not authorised to provide advice to
individual investors and nothing in this article should be considered to be or relied upon as constituting investment advice. If you are unsure about the suitability
of an investment, you should contact your financial advisor. Issued and approved by SIT Savings Ltd, registered in Scotland No: SC91859, registered office:
6 Albyn Place, Edinburgh, EH2 4NL. Authorised and regulated by the Financial Conduct Authority.
Telephone: 0131 225 7781 | Email: info@thescottish.co.uk | Website: www.thescottish.co.uk
INVESTMENT TRUSTS
“
MAJOR HOLDINGS favoured by the ageing
dŚĞƉŽƌƞŽůŝŽŝƐŝŶǀĞƐƚĞĚŝŶŚŝŐŚ ƉŽƉƵůĂƟŽŶƐǁŚŽůŝŬĞŝƚʹďƵƚ
yield names including Royal Carnival seems to be Carnival does have brands for
Dutch Shell (RDSB) and BP (BP.) delivering on its profits younger passengers as well.
and lower yielders including and growth
wth Carnival seems to be delivering
publisher RELX (REL) and ŽŶŝƚƐƉƌŽĮƚƐĂŶĚŐƌŽǁƚŚĂŶĚŝĨ
alcoholic beverages behemoth there was a setback in the oil
Diageo (DGE). price, that would be quite a good
͚/ƚŝƐĂďůĞŶĚ͕͛ƐĂLJƐƵƌƟƐ͕ ĐĂƚĂůLJƐƚĂŶĚŝŶƚŚĞƉŽƌƞŽůŝŽŝƚŝƐ
‘but I do like my stocks to pay a Investors shouldn’t panic quite a good hedge against (oil
dividend and almost all of our about such a short performance ƉƌŝĐĞďĞŶĞĮĐŝĂƌŝĞƐͿWĂŶĚ^ŚĞůů͛͘
stocks have a yield of 2% or period. City of London’s longer Another new holding is wealth
more. And I believe in running term track record is far more manager St. James’s Place (STJ).
my winners,’ an exemplar being impressive. ͚/ƚŝƐŽƉĞƌĂƟŶŐĂƚƚŚĞŚŝŐŚĞƌĞŶĚ
precision engineer Renishaw KǀĞƌƚŚĞƉĂƐƚĚĞĐĂĚĞ͕ŝƚŚĂƐ ŽĨƚŚĞĮŶĂŶĐŝĂůƐĞƌǀŝĐĞƐŵĂƌŬĞƚ
(RSW) which he describes as delivered 10.4% annualised total and is very much the leader
return (share price gain plus ŝŶƚŚĞh<͕͛ĞŶƚŚƵƐĞƐƵƌƟƐ͕
CITY OF LONDON: dividends) versus 8% from the ĂƩƌĂĐƚĞĚƚŽƚŚĞĐŽŵƉĂŶLJ͛Ɛ
TOP TEN HOLDINGS &d^ůůͲ^ŚĂƌĞǁŚŝĐŚŝƐŵĂĚĞƵƉ fast-growing assets under
ŽĨƚŚĞ&d^ϭϬϬ͕&d^ϮϱϬĂŶĚ management.
ZŽLJĂůƵƚĐŚ^ŚĞůů 6.6% &d^^ŵĂůůͲĂƉŝŶĚŝĐĞƐ͘ ƵƌƟƐĂůƐŽďĞůŝĞǀĞƐƚŚĞZĞĂů
,^ 4.5% EŽŶĞƚŚĞůĞƐƐ͕ŝŶǀĞƐƚŽƌƐƐŚŽƵůĚ ƐƚĂƚĞ/ŶǀĞƐƚŵĞŶƚdƌƵƐƚ;Z/dͿ
W ϯ͘ϵй always appreciate that no ƐƉĂĐĞŝƐĂŶŝŶƚĞƌĞƐƟŶŐĂƌĞĂ
ƌŝƟƐŚŵĞƌŝĐĂŶdŽďĂĐĐŽ ϯ͘ϳй investment trust is guaranteed and has put shareholders’
to achieve the same level of ŵŽŶĞLJƚŽǁŽƌŬǁŝƚŚƉŽƐŝƟŽŶƐ
Diageo ϯ͘ϯй success in the future as it has in ƌŝƟƐŚ>ĂŶĚ;>EͿ and Land
Unilever ϯ͘Ϭй done in the past. ^ĞĐƵƌŝƟĞƐ;>EͿ. ‘Both are
WƌƵĚĞŶƟĂů 2.9% trading on discounts because
Z>y 2.9% PORTFOLIO MOVEMENTS ŽĨƌĞdžŝƚǁŽƌƌŝĞƐĂŶĚƚŚĞĞīĞĐƚ
Lloyds Banking 2.6%
‘Diageo is a long term holding ŽŶƚŚĞŽĸĐĞŵĂƌŬĞƚ͘ŶĚƚŚŽƐĞ
and it has been a great stock for ĚŝƐĐŽƵŶƚƐůŽŽŬǀĞƌLJĂƩƌĂĐƟǀĞ
'ůĂdžŽ^ŵŝƚŚ<ůŝŶĞ 2.4% ŵĞ͕͛ƐĂLJƐƵƌƟƐ͘,ĞĚĞƐĐƌŝďĞƐ to me.’ (JC)
Source: Janus Henderson Investors, as of 31 July 2018
etc.venues - St Paul’s
200 Aldersgate
London
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tŝƚŚƌĂƚĞƐƐŽůŽǁĨŽƌƐŽůŽŶŐ͕
ďĂŶŬƐŚĂǀĞƐĞĞŶƚŚĞŝƌŵĂƌŐŝŶƐ
ƐƋƵĞĞnjĞĚďƵƚ͕ǁŝƚŚŝŶƚĞƌĞƐƚ
ƌĂƚĞƐŶŽǁƌŝƐŝŶŐ͕ǁŝůůƉƌŽĮƚĂďŝůŝƚLJ
ŝŵƉƌŽǀĞĂŶĚŝĨƐŽ͕ĐŽƵůĚ
ƐƉĞĐŝĂůŝƐƚĮŶĂŶĐŝĂůƐĨƵŶĚƐďĞ
ǁŽƌƚŚĐŽŶƐŝĚĞƌŝŶŐ͍
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ƉƌĞĐĞĚŝŶŐƚŚĞĮŶĂŶĐŝĂůĐƌŝƐŝƐ͕
ǁŝƚŚǀĂƐƚƐƵŵƐƐĞƚĂƐŝĚĞƚŽ
ĐŽǀĞƌWW/ĐůĂŝŵƐ͕ůŝƟŐĂƟŽŶ
ĐŽƐƚƐĂŶĚǁƌŝƚĞĚŽǁŶƐ͕ďƵƚ
ƚŚĞƐĞůŝĂďŝůŝƟĞƐƐŚŽƵůĚŶŽǁďĞ
ŶĞĂƌŝŶŐƚŚĞŝƌĞŶĚ͘
dŚĞŝŐ&ŝǀĞ&d^ϭϬϬďĂŶŬƐ ,^͕^ƚĂŶĚĂƌĚŚĂƌƚĞƌĞĚ͕Z^͕>ůŽLJĚƐĂŶĚĂƌĐůĂLJƐƌĞƉŽƌƚĞĚĂĐŽŵďŝŶĞĚάϵ͘ϯďŶƉƌĞͲƚĂdžƉƌŽĮƚƐ
ƌĞƉŽƌƚĞĚάϵ͘ϯďŶŝŶƉƌĞͲƚĂdžƉƌŽĮƚ
ŝŶYϮϮϬϭϴ͕ƚŚĞŝƌďĞƐƚƚŚƌĞĞͲ ƚŚĞŵŽƐƚƐŝŵƉůĞďƵƐŝŶĞƐƐŝŶ ďĞƚǁĞĞŶŝŶƚĞƌĞƐƚƌĂƚĞƐĂŶĚ
ŵŽŶƚŚƐŚŽǁŝŶŐŝŶĮǀĞLJĞĂƌƐ͘ ƚŚĞǁŽƌůĚ͗LJŽƵůĞŶĚŵŽŶĞLJĂƚ ďĂŶŬƐ͛ďŽƩŽŵůŝŶĞƐŝƐŶŽƚĂ
Barclays (BARC) ĂŶĚLloyds ŽŶĞƌĂƚĞ͕LJŽƵƉĂLJĚĞƉŽƐŝƚŽƌƐ ŽŶĞͲĨŽƌͲŽŶĞĐŽƌƌĞůĂƟŽŶ͕ŶŽƚĞƐ
(LLOY)ďŽƚŚƌĂŝƐĞĚƚŚĞŝƌŝŶƚĞƌŝŵ ĂŶŽƚŚĞƌĂŶĚLJŽƵĞĂƌŶƚŚĞŵĂƌŐŝŶ DŝŬĞŽŽƉ͕ŚĞĂĚŽĨŵƵůƟͲ
ĚŝǀŝĚĞŶĚƐ͕ǁŚŝůĞRoyal Bank of ďĞƚǁĞĞŶƚŚĞƚǁŽ͘ ĂƐƐĞƚƉŽƌƞŽůŝŽŵĂŶĂŐĞŵĞŶƚĂƚ
Scotland (RBS) ĂŶĚStandard ͚ĂŶŬƐŚĂǀĞŐŽƚďĂĐŬƚŽĚŽŝŶŐ DŽƌŶŝŶŐƐƚĂƌ͘
Chartered (STAN) ƌĞƐƵŵĞĚ ƚŚĂƚĂŶĚ͕ĂƐƌĂƚĞƐŐŽƵƉ͕ƚŚĞ ͚dŚŝƐůŝŶŬǁŝƚŚŝŶƚĞƌĞƐƚƌĂƚĞƐŝƐ
ĮƌƐƚͲŚĂůĨĚŝǀŝĚĞŶĚƉĂLJŵĞŶƚƐ͕ ĂŵŽƵŶƚƚŚĞLJĐĂŶĞĂƌŶŽŶƚŚĂƚ ŶŽƚƐƚĂďůĞĂŶĚŝƐŶŽƚĂƌĞůŝĂďůĞ
ƉƵƫŶŐƚŚĞŵŽŶƚƌĂĐŬĨŽƌ ĚŝīĞƌĞŶƟĂůŝŶĐƌĞĂƐĞƐƚŽŽƐŽ ǁĂLJŽĨĂƐƐĞƐƐŝŶŐǁŚĂƚŝƐŐŽŝŶŐ
ƚŚĞŝƌůĂƌŐĞƐƚĐŽŵďŝŶĞĚƉĂLJŽƵƚ ǁĞƐŚŽƵůĚƐĞĞĂŶŝŶĐƌĞĂƐĞŝŶ ƚŽŚĂƉƉĞŶ͕͛ŚĞƐĂLJƐ͕ƉŽŝŶƟŶŐƚŽ
ƐŝŶĐĞϮϬϬϳ͘,ŽǁĞǀĞƌ͕ƚŚĞƐĞ ƉƌŽĮƚĂďŝůŝƚLJĂŶĚĂŶŝŶƚĞƌĞƐƟŶŐ ŽƚŚĞƌĨĂĐƚŽƌƐůŝŬĞƚŚĞŝŶƚĞƌĞƐƚ
ĞŶĐŽƵƌĂŐŝŶŐƐŝŐŶƐĂƌĞŶŽƚLJĞƚ ŽƉƉŽƌƚƵŶŝƚLJĨŽƌŝŶǀĞƐƚŽƌƐ͛͘ ƚŚĞLJƉĂLJŽŶƚŚĞŝƌŽǁŶĨƵŶĚŝŶŐ
ďĞŝŶŐƌĞŇĞĐƚĞĚŝŶƐŚĂƌĞƉƌŝĐĞƐ͘ ,ĞĂĚĚĞĚh<ďĂŶŬƐĂƌĞ ƐŽƵƌĐĞƐ͕ƚŚĞƋƵĂŶƟƚLJŽĨŵŽŶĞLJ
ƐŚŽǁŝŶŐĂĐŽŵŵŝƚŵĞŶƚƚŽƉĂƐƐ ƚŚĞLJĐĂŶůĞŶĚ͕ĂŶĚƚŚĞĂŵŽƵŶƚ
BACK TO BANKING ƚŚŽƐĞŝŶĐƌĞĂƐĞƐŽŶƚŽŝŶǀĞƐƚŽƌƐ ŽĨďĂĚĚĞďƚŽŶƚŚĞŝƌŬƐ͘
ZLJĂŶ,ƵŐŚĞƐ͕ŚĞĂĚŽĨĂĐƟǀĞ ĂƐĚŝǀŝĚĞŶĚƐ͕ĂŶĚƚŚŝƐƐŚŽƵůĚ ,ĞƉŽŝŶƚƐŽƵƚƚŚĂƚŝŶĐŽŵĞ
ƉŽƌƞŽůŝŽƐĂƚ:Ğůů͕ƐĂLJƐďĂŶŬƐ ďĞƌĞǁĂƌĚĞĚŝŶƐŚĂƌĞƉƌŝĐĞ ĨŽƌƵƌŽƉĞĂŶĂŶĚh<ďĂŶŬƐŚĂƐ
ŚĂǀĞŶŽƚďĞĞŶĂŐƌĞĂƚƉůĂĐĞƚŽ ƉĞƌĨŽƌŵĂŶĐĞ͘ ĂĐƚƵĂůůLJƌŝƐĞŶƐŝŶĐĞϮϬϭϯ͕ĞǀĞŶ
ďĞŝŶǀĞƐƚĞĚ͕ďƵƚƚŚĞĨŽĐƵƐŝƐ ƚŚŽƵŐŚŝŶƚĞƌĞƐƚƌĂƚĞƐĐĂŵĞĚŽǁŶ
ŶŽǁďĂĐŬŽŶƚŚĞĚĂLJũŽď͘ THE LINK WITH RATES ŽǀĞƌƚŚĂƚƉĞƌŝŽĚĂŶĚƐƚĂLJĞĚůŽǁ͘
͚ĂŶŬŝŶŐŝƐĂŶĚƐŚŽƵůĚďĞ ,ŽǁĞǀĞƌ͕ƚŚĞƌĞůĂƟŽŶƐŚŝƉ dŚŝƐŝƐďĞĐĂƵƐĞďĂŶŬƐǁĞƌĞĂďůĞ
“
ƚŽƌĞĚƵĐĞƚŚĞŝƌĐŽƐƚƐĂŶĚƚŚĞ ŝƐŝŶĮŶĂŶĐŝĂůƐ͕ďƵƚŝƚŝƐŵĂĚĞ
ŝŶƚĞƌĞƐƚƚŚĞLJƉĂŝĚŽŶƚŚĞŝƌůŽĂŶƐ͘ ƵƉŽĨŵŽƌĞŝŶǀĞƐƚŵĞŶƚďĂŶŬƐ
,ŝƐǀŝĞǁŝƐƚŚĂƚƌĞůĂƟǀĞ ƚŚĂŶƌĞƚĂŝůďĂŶŬƐ͘ Banking is and
ǀĂůƵĂƟŽŶďĂƐĞĚŽŶƐƵƐƚĂŝŶĂďůĞ
ĞĂƌŶŝŶŐƐŝƐĂŵŽƌĞƌĞůŝĂďůĞŐƵŝĚĞ
ƚŽďĂŶŬƉĞƌĨŽƌŵĂŶĐĞƚŚĂŶƚŚĞ
ĚŝƌĞĐƟŽŶŽĨƌĂƚĞƐ͘KŶƚŚŝƐŵĞƚƌŝĐ͕
ďĂŶŬƐůŽŽŬďĞƩĞƌǀĂůƵĞƚŚĂŶ
ĞdžƉĞŶƐŝǀĞŐůŽďĂůĞƋƵŝƟĞƐĂƚƚŚĞ
ŵŽŵĞŶƚ͕ƐĂLJƐŽŽƉ͕ĂůƚŚŽƵŐŚŚĞ
ǁĂƌŶƐƚŚĞLJĂƌĞ͚ŶŽƚĐŚĞĂƉĂŶĚ
ĂƌĞŝŶŚĞƌĞŶƚůLJƌŝƐŬLJ͛͘
/ĨLJŽƵǁĂŶƚŵŽƌĞĞdžƉŽƐƵƌĞ͕Ă
ŚĂŶĚĨƵůŽĨĂĐƟǀĞĨƵŶĚƐĞdžŝƐƚǁŝƚŚ
ůŽŶŐƚƌĂĐŬƌĞĐŽƌĚƐ͕ŚĞĂĚĞĚďLJ
ĞdžƉĞƌŝĞŶĐĞĚŵĂŶĂŐĞƌƐ͘,ƵŐŚĞƐ
ŚŝŐŚůŝŐŚƚƐ:ƵƉŝƚĞƌ/ŶƚĞƌŶĂƟŽŶĂů
Financials (B58D9P3)͕ŵĂŶĂŐĞĚ
ďLJ'ƵLJĚĞůŽŶĂLJ͕ĂŶĚJanus
Henderson Global Financials
(3191923)͕ǁŚŝĐŚŚĂĚĂŵĂŶĂŐĞƌ
should be the most
simple business in
the world: you lend
money at one rate,
you pay depositors
another and you
earn the margin
“
ĐŚĂŶŐĞůĂƐƚLJĞĂƌ͘ between thee two
ACTIVE FUND PICKS DŽƌŶŝŶŐƐƚĂƌĨƵŶĚĂŶĂůLJƐƚ
dŚĞƌĞŝƐŵŽƌĞƚŽƚŚĞĮŶĂŶĐŝĂů ^ĂŵƵĞůDĞĂŬŝŶƉŽŝŶƚƐƚŽƚŚĞ
ƐĞĐƚŽƌƚŚĂŶũƵƐƚƚŚĞďŝŐďĂŶŬƐ͘ ŵƵĐŚůĂƌŐĞƌFidelity Global
/ƚŝŶĐŽƌƉŽƌĂƚĞƐĂǁŝĚĞƐƉĞĐƚƌƵŵ Financial Services (BJVDYZ3)
ŝŶĐůƵĚŝŶŐŐĞŶĞƌĂůŝŶƐƵƌĞƌƐ͕ ĨƵŶĚ͕ƌƵŶďLJ^ŽƟƌŝƐŽƵƚƐŝƐ͘
ƌĞŝŶƐƵƌĞƌƐ͕ĂƐƐĞƚŵĂŶĂŐĞƌƐ ĞĐĂƵƐĞƚŚĞŵĂŶĂŐĞƌŝŶǀĞƐƚƐ
ĂŶĚƐƵďͲƉƌŝŵĞůĞŶĚĞƌƐ͘ ŝŶƋƵĂůŝƚLJĮŶĂŶĐŝĂůƐƚŽĐŬƐ͕ƚŚĞ ƉĂƐƐŝǀĞƉƌŽĚƵĐƚƐůŝŬĞĞdžĐŚĂŶŐĞͲ
,ƵŐŚĞƐĞdžƉůĂŝŶƐƚŚĂƚƐŽŵĞ ĨƵŶĚŝƐŵŽƌĞůŝŬĞůLJƚŽŽƵƚƉĞƌĨŽƌŵ ƚƌĂĚĞĚĨƵŶĚƐĂƌĞĂŐŽŽĚƐƚĂƌƟŶŐ
ŽĨŝŶƐƵƌĞƌƐ͛ƉƌŽĮƚĂďŝůŝƚLJĐŽŵĞƐ ŝŶĂĨĂůůŝŶŐŵĂƌŬĞƚ͕ŚĞƐĂLJƐ͘ ƉŽŝŶƚĨŽƌŝŶǀĞƐƚŽƌƐŝŶƚĞƌĞƐƚĞĚŝŶ
ĨƌŽŵǁŚĂƚƚŚĞLJĞĂƌŶŽŶƚŚĞŝƌ /ŶƚŚĞĐůŽƐĞĚͲĞŶĚĞĚƐƉĂĐĞ͕ŽŶĞ ĮŶĂŶĐŝĂůƐƚŽĐŬƐ͘
ĐĂƐŚďĂůĂŶĐĞƐ͕ƐŽƚŚĞLJĐŽƵůĚ ŽƉƟŽŶŝƐƚŚĞPolar Capital Global ,ƵŐŚĞƐƐĂLJƐŝŶǀĞƐƚŽƌƐƐŚŽƵůĚ
ůŽŽŬĂƩƌĂĐƟǀĞŝŶĂƌŝƐŝŶŐŝŶƚĞƌĞƐƚ Financials (PCFT) ŝŶǀĞƐƚŵĞŶƚ ƚŚŝŶŬĂďŽƵƚǁŚLJƚŚĞLJĂƌĞŐŽŝŶŐ
ƌĂƚĞĞŶǀŝƌŽŶŵĞŶƚ͘,ĞƐƵŐŐĞƐƚƐ ƚƌƵƐƚ͕ǁŚŝĐŚŚĂƐĂƌŽƵŶĚϲϰйŝŶ ŝŶƚŽƚŚĞƐĞĐƚŽƌ͕ŚŽǁůŽŶŐƚŚĞLJ
Polar Capital Global Insurance ŐůŽďĂůďĂŶŬƐĂŶĚϭϭйŝŶŝŶƐƵƌĞƌƐ͘ ƉůĂŶƚŽŬĞĞƉƚŚĞŝƌĞdžƉŽƐƵƌĞ͕ĂŶĚ
(B530JS2)ĂƐĂƐƉĞĐŝĂůŝƐƚĨƵŶĚ DĞĂŬŝŶĂĚĚƐ͚͗/ĨLJŽƵĂƌĞ ǁŚĞƚŚĞƌĂŶĂĐƟǀĞŵĂŶĂŐĞƌĐĂŶ
ǁŚŝĐŚƐŚŽƵůĚďĞŶĞĮƚĨƌŽŵ ůŽŽŬŝŶŐƚŽŝŶǀĞƐƚŝŶƐƉĞĐŝĂůŝƐƚ ĚŽǁĞůůĞŶŽƵŐŚŽǀĞƌƚŚĂƚƟŵĞƚŽ
ƚŚŝƐƚƌĞŶĚ͘ ĮŶĂŶĐŝĂůƐĨƵŶĚƐ͕ŐŝǀĞŶLJŽƵĂƌĞ ũƵƐƟĨLJƚŚĞŝƌĨĞĞƐ͘
&ŝŶĂŶĐŝĂůƐŵĂŬĞƵƉĂůĂƌŐĞƉĂƌƚ ƚĂŬŝŶŐŽŶƚŚĞƐƚLJůĞƌŝƐŬŽĨƚŚĞ ͚dŚĞƌĞŝƐŶŽƚĂŚƵŐĞĂŵŽƵŶƚ
ŽĨƚŚĞh<ƐƚŽĐŬŵĂƌŬĞƚ͕ĂƌŽƵŶĚ ŵĂŶĂŐĞƌ͕LJŽƵǁĂŶƚƚŽŚŽůĚ ŽĨĞǀŝĚĞŶĐĞŽĨĂĐƟǀĞŵĂŶĂŐĞƌ
ϮϬй͘ŶLJŝŶǀĞƐƚŽƌǁŚŽŽǁŶƐĂ ƚŚĞŵĂƐůŽŶŐͲƚĞƌŵŚŽůĚŝŶŐƐĨŽƌ ƐŬŝůůĂŶĚĂůƉŚĂƚŚĂƚŝƐĐŽŶƐŝƐƚĞŶƚ
&d^ůů^ŚĂƌĞƚƌĂĐŬĞƌŽƌĂŶĂĐƟǀĞ ĂƚůĞĂƐƚƚŚƌĞĞƚŽĮǀĞLJĞĂƌƐ͛͘ ŽǀĞƌƟŵĞƐŽ/ƚŚŝŶŬƚŚĂƚǁŽƵůĚ
h<ĞƋƵŝƚLJĨƵŶĚŝƐůŝŬĞůLJƚŽĂůƌĞĂĚLJ ƉƵƐŚŵĞƚŽǁĂƌĚƐƐŝŵƉůLJƚĂŬŝŶŐ
ŚĂǀĞƌĞĂƐŽŶĂďůĞĞdžƉŽƐƵƌĞ͘/ŶƚŚĞ A PASSIVE APPROACH ƚŚĞƉĂƐƐŝǀĞŽƉƟŽŶĂŶĚďƵLJŝŶŐ
h^͕ĂƌŽƵŶĚϭϰйŽĨƚŚĞ^ΘWϱϬϬ ůůƚŚƌĞĞĨƵŶĚĞdžƉĞƌƚƐƐĂLJ ƉƵƌĞĞdžƉŽƐƵƌĞƚŽĞŝƚŚĞƌďĂŶŬƐ
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APPEARS IN THE WEEKLY DIGITAL MAGAZINE.
youinvest.co.uk/future
Why September
is an important
month for Japan
(if not the world)
Monetary policy update and
leadership contest top the opponent is former Defence Minister
agenda ^ŚŝŐĞƌƵ/ƐŚŝďĂ͘ďĞƐĂǁŚŝŵŽīƚŽǁŝŶ
the LDP leadership in 2012 so he does
S
not look overly threatening especially as
eptember is going to be an former Foreign Minister Fumio Kishida’s
important month for those investors decision to support the PM looks to
who have exposure to Japan. ƐŶƵīŽƵƚĂŶLJƌŽŽŵĨŽƌĚŝƐƐĞŶƚǁŝƚŚŝŶ
First, the Bank of Japan (BoJ) is the party ranks.
scheduled to provide its latest monetary ƐƐƵĐŚ͕ŝƚƐĞĞŵƐƚŚĂƚďĞ͛ƐƉŽůŝƟĐĂů
By Russ Mould,
policy decision on 19 September. investment colleagues like what they see, every bit
Although Governor Haruhiko Kuroda director, AJ Bell ĂƐŵƵĐŚĂƐĂŶLJŽŶĞǁŝƚŚƉŽƌƞŽůŝŽ
ŝƐƉƵďůŝĐůLJƐƟůůƉƌĞƐƐŝŶŐĂŚĞĂĚǁŝƚŚ ĞdžƉŽƐƵƌĞƚŽƚŚĞdŽŬLJŽŵĂƌŬĞƚƐ͘
ƋƵĂůŝƚĂƟǀĞĂŶĚƋƵĂŶƟƚĂƟǀĞĞĂƐŝŶŐ;YYͿ͕ƚŚĞ dŚĞEŝŬŬĞŝϮϮϱŝŶĚĞdžŝƐƵƉďLJϭϯϬйƐŝŶĐĞďĞ͛Ɛ
Ž:ŝƐƵŶĚĞƌƐŚŽŽƟŶŐŝƚƐďŽŶĚͲďƵLJŝŶŐƚĂƌŐĞƚƐ landslide win in 2012 in local currency terms (it is
ĂŶĚĮŶĚŝŶŐŝƚĂŶŝŶĐƌĞĂƐŝŶŐƐƚƌƵŐŐůĞƚŽďĞŶĚƚŚĞ ƵƉďLJϭϭϰйŝŶƐƚĞƌůŝŶŐ͕ĐŽŵƉĂƌĞĚƚŽĂϮϯйŐĂŝŶŝŶ
market for Japanese government bonds to its will. ƚŚĞ&d^ůůͲ^ŚĂƌĞŽǀĞƌƚŚĞƐĂŵĞƉĞƌŝŽĚͿƚŚĂŶŬƐ
^ĞĐŽŶĚ͕WƌŝŵĞDŝŶŝƐƚĞƌ^ŚŝŶnjƃďĞŵƵƐƚĮŐŚƚ ĂƚůĞĂƐƚŝŶƉĂƌƚƚŽƚŚĞdŚƌĞĞƌƌŽǁƐƉƌŽŐƌĂŵŵĞ͕
a triennial contest for the leadership of the ruling which comprises:
>ŝďĞƌĂůĞŵŽĐƌĂƟĐWĂƌƚLJ;>WͿŽŶŽƌďĞĨŽƌĞ • &ŝƐĐĂůƐƟŵƵůƵƐ
ϮϬ^ĞƉƚĞŵďĞƌ͘ůŽƐƐĐŽƵůĚƐĞĞŚŝƐƉŽƐŝƟŽŶĂƐ • ĐŽŶŽŵŝĐĂŶĚƐŽĐŝĂůƌĞĨŽƌŵ͕ŝŶĐůƵĚŝŶŐĂ
WDďĞĐŽŵĞƵŶƚĞŶĂďůĞĂŶĚƚŚĞƐŽͲĐĂůůĞĚ͚dŚƌĞĞ ƐŚĂŬĞͲƵƉŽĨĐŽƌƉŽƌĂƚĞŐŽǀĞƌŶĂŶĐĞĂŶĚŚŽǁ
ƌƌŽǁƐ͕͛Žƌ͚ďĞŶŽŵŝĐƐ͛ƉƌŽŐƌĂŵŵĞĐŽŵĞƵŶĚĞƌ companies interact with investors, an area of
ƚŚƌĞĂƚ͕ƚŽƚŚĞƉŽƚĞŶƟĂůĐŽŶƐƚĞƌŶĂƟŽŶŽĨƚŚŽƐĞ ŐƌĞĂƚŝŵƉƌŽǀĞŵĞŶƚďƵƚŽŶĞǁŚĞƌĞƚŚĞƌĞŝƐƐƟůů
ǁŚŽŚĂǀĞǁĂƌŵĞĚƚŽ:ĂƉĂŶĞƐĞĞƋƵŝƟĞƐďĞĐĂƵƐĞ scope for further advances in return on equity
of his targeted reforms. ĂŶĚĚŝǀŝĚĞŶĚƐŝŶƉĂƌƟĐƵůĂƌ
• ,ƵŐĞŵŽŶĞƚĂƌLJƐƟŵƵůƵƐʹĂŶĚƚŚŝƐŝƐǁŚĞƌĞƚŚĞ
LEADERSHIP FIGHT Bank of Japan comes in
Nothing can be taken for granted in Japanese
ƉŽůŝƟĐƐ;ŽƌƐŽŝƚƐĞĞŵƐĂŶLJǁŚĞƌĞĞůƐĞƚŚĞƐĞĚĂLJƐͿ POLICY POSER
but Prime Minister Abe is expected to prevail in dŽƐƵƉƉŽƌƚďĞŶŽŵŝĐƐ͕ŚĞůƉ:ĂƉĂŶĐŽƉĞǁŝƚŚŝƚƐ
the LDP leadership poll, barring some grievous ϮϱϬйĚĞďƚͲƚŽͲ'WƌĂƟŽĂŶĚƚƌLJƚŽďŽŽƐƚďŽƚŚ
ƐĞůĨͲŝŶŇŝĐƚĞĚǁŽƵŶĚ͘ ŐƌŽǁƚŚĂŶĚŝŶŇĂƟŽŶ͕ƚŚĞŽ:ŚĂƐƌƵŶƵůƚƌĂͲůŽŽƐĞ
dŚĞŽƉƉŽƐŝƟŽŶŽŶƉĂƉĞƌĚŽĞƐŶŽƚůŽŽŬƐƚƌŽŶŐ͕ monetary policy for two decades and more. But
not least because leading malcontents defected it has been taken to a new level by Governor
ƚŽƚŚĞƐŚŽƌƚͲůŝǀĞĚdŽŵŝŶ&ŝƌƐƚƉĂƌƚLJŽĨzƵƌŝŬŽ Haruhiko Kuroda.
<ŽŝŬĞ͕ŽŶůLJĨŽƌŝƚƚŽŝŵƉůŽĚĞŝŵŵĞĚŝĂƚĞůLJĂŌĞƌŚĞƌ Since October 2014, the BoJ has been buying
ĐƌƵƐŚŝŶŐĚĞĨĞĂƚŝŶƚŚĞϮϬϭϳ'ĞŶĞƌĂůůĞĐƟŽŶ͘ ¥80tr a year in Government bonds, real estate
ƚƚŚĞƟŵĞŽĨǁƌŝƟŶŐŚŝƐŽŶůLJĐŽŶĮƌŵĞĚ ŝŶǀĞƐƚŵĞŶƚƚƌƵƐƚƐ;:ͲZ/dƐͿĂŶĚĞƋƵŝƚLJĞdžĐŚĂŶŐĞͲ
ƚƌĂĚĞĚĨƵŶĚƐ;d&ƐͿʹƚŚĂƚŝƐƚŚĞĞƋƵŝǀĂůĞŶƚŽĨ
άϱϱϬďŶĂLJĞĂƌ͕ŵŽƌĞƚŚĂŶƚŚĞĂŶŬŽĨŶŐůĂŶĚ
ŚĂƐĚŽŶĞŝŶYŝŶƚŽƚĂůƐŝŶĐĞŝƚƐƚĂƌƚĞĚǁŝƚŚŝƚƐ
scheme in 2009.
zĞƚŝŶŇĂƟŽŶŝƐƐƟůůŶŽƚĂƚƚŚĞŽ:͛ƐϮйƚĂƌŐĞƚ
ĂŶĚƚŚĞLJŝĞůĚŽŶƚŚĞŚĞĂĚůŝŶĞ:'ŝƐƐƚĂƌƟŶŐƚŽ
break out above the central bank’s intended
Ϭ͘ϭйĐĂƉ͕ŝŶĂĚŝƌĞĐƚƚŚƌĞĂƚƚŽŝƚƐŵŽŶĞƚĂƌLJ
authority.
L investment words
which sounds rather too
vague and complex to really
worry about. Yet liquidity can
determine whether you make a
ƉƌŽĮƚŽƌůŽƐƐŽŶĂŶŝŶǀĞƐƚŵĞŶƚ
and, crucially, whether or not
you can get your hands on your
money when you want it.
In plain English, liquidity is
about being able to buy or sell
an investment when you want,
in the amount you want, at the
price you want.
If an investment is deemed
to be illiquid it could mean you where to allocate your money. dŚĞĚŽǁŶƐŝĚĞŽĨƚŚŝƐƐŝƚƵĂƟŽŶ
aren’t able to put your money Smaller companies, for is that the price can change while
into it when you would like or, example, tend to have fewer LJŽƵĂƌĞǁĂŝƟŶŐ͕ŵĞĂŶŝŶŐLJŽƵ
perhaps more importantly, get people trading their shares, could end up paying more than
your money out. ƉĂƌƟĐƵůĂƌůLJƚŚĞǀĞƌLJƐŵĂůů you want to buy or selling for less
Why does this happen? businesses. That means when than you had hoped.
Because there are not always you want to buy or sell some of
the same number of buyers and the stock it could take longer to THE PERILS OF LIQUIDITY
sellers in the market. ĮŶĚƐŽŵĞŽŶĞƚŽƚĂŬĞƚŚĞŽƚŚĞƌ Russ Mould, investment director
side of the trade than, say, a at AJ Bell, says: ‘There will
SUPPLY AND DEMAND ISSUES FTSE 100 company. (nearly) always be a trade to be
Think of it like going into the done but in a panic, it may be at
“
“
supermarket to buy three loaves a price that is a lot lower than
ŽĨďƌĞĂĚĂŶĚĮŶĚŝŶŐƚŚĞƌĞŝƐŽŶůLJ you want. Liquidity is never there
one for sale. There’s nothing There will (nearly) when you really need it, so you
you can do about it, you just always be a trade should never depend on it.
ŚĂǀĞƚŽǁĂŝƚƵŶƟůŵŽƌĞďĞĐŽŵĞ ‘This is why it’s best to invest
available. On the other side of to be done but in a in things for the long-term
the trade, it’s like having an item panic, it may be at and because you believe they
to sell that no one wants. a price that is a lot are fundamentally strong and
WĂƌƟĐƵůĂƌƚLJƉĞƐŽĨŝŶǀĞƐƚŵĞŶƚ lower than you u want ĂƩƌĂĐƟǀĞůLJƉƌŝĐĞĚ͕ŶŽƚũƵƐƚ
are more prone to illiquidity because you think shares will go
than others and it’s an important up and you can quickly sell them
ĐŽŶƐŝĚĞƌĂƟŽŶǁŚĞŶĐŚŽŽƐŝŶŐ to someone else.’
“
ŶŽĚĞŶLJŝŶŐƚŚĞƐƚƌĞŶŐƚŚŽĨ ƚŚĞĐĂƐŚ͘
ŵŝŐŽ͛ƐďƵƐŝŶĞƐƐŵŽĚĞů͘ ŵŝŐŽŚĂƐƐƉĞŶƚĂůŽƚŽĨ
ZĞůĞĂƐŝŶŐĮƌƐƚƋƵĂƌƚĞƌƌĞƐƵůƚƐ Amigo lets friends ŵŽŶĞLJŽŶĂĚǀĞƌƟƐŝŶŐĂŶĚƚŚŝƐŝƐ
recently, the company increased
ŝƚƐƌĞǀĞŶƵĞďLJϰϳйƚŽάϲϮ͘ϵŵ
guarantee loans, so it has ƉĂƌƚŽĨƚŚĞĐŽŵƉĂŶLJ͛ƐĞīŽƌƚƐƚŽ
create a high barrier to entry to
ŽŶĂLJĞĂƌͲŽŶͲLJĞĂƌďĂƐŝƐ͘/ƚƐƉƌŽĮƚ two people to chase if ŝƚƐŶŝĐŚĞŵĂƌŬĞƚ͘
ĂŌĞƌƚĂdžŽŶůLJŝŶĐƌĞĂƐĞĚďLJϰйƚŽ the debt goes
es bad While some companies have
άϭϮ͘ϯŵ͕ĂŶĚƚŚŝƐĚŝƐĂƉƉŽŝŶƚĞĚ ĂƩĞŵƉƚĞĚƚŽůĂƵŶĐŚŐƵĂƌĂŶƚŽƌ
ŝŶǀĞƐƚŽƌƐĂƐƐŚŽǁŶďLJĂϲйƉƌŝĐĞ loan products, given that Amigo
ĚĞĐůŝŶĞŽŶƚŚĞĚĂLJ͘,ŽǁĞǀĞƌ͕ŝƚ ǁĂƐĮƌƐƚŽƵƚŽĨƚŚĞƐƚĂůůƐŝŶϮϬϬϱ
ŝƐǁŽƌƚŚŶŽƟŶŐƚŚĞƉƌŽĮƚĮŐƵƌĞ ŝƚĐŽƵůĚƚĂŬĞĂůŽŶŐƟŵĞĨŽƌƚŚĞƐĞ
ǁĂƐĐŽŶƐƚƌĂŝŶĞĚďLJ/WKĐŽƐƚƐ͘ ƌŝǀĂůƐƚŽĐĂƚĐŚƵƉ͘;^Ϳ
032018
COMPANIES PRESENTING
OCT Novotel Tower Bridge
London
EC3N 2NR ALLERGY THERAPEUTICS (AIM:AGY)
Nick Wykeman, FD
S
Bank
ch
Minorie
S
biotechnology company specialising in allergy
hur
eet
Gra
London
focused on the funding and scaling of innovative
businesses with high growth potential from the UK
Londo