MoneyWeek

from the editor-in-chief...

“UK stocks are now trading at their biggest discount to global equities in 40 years” Everyone wants the same thing out of an equity investment: the kind of longterm sustainable earnings growth that eventually turns into long-term income (see page 28 for one fund manager’s ideas on this). The problem is that if everyone wants the same thing, that thing is rarely cheap. But every now and then the markets chuck us a bone in the form of a group of perfectly good stocks going cheap. Right now the UK might be such a bone. UK stocks are trading at their biggest discount to global equities in 40 years (see page 5). This is partly to do with the composition of the market (lots of banks) but possibly more to do with…

have we reached “peak” box set?

The boost Netflix saw from “lockdown life” has come to an end, says Anna Nicolaou in the Financial Times. The television streaming group added 2.2 million subscribers from July to the end of September, “well below the 16 million and ten million subscribers it added in the first and second quarters, respectively”. Netflix warned that the global economic recovery in 2021 would likely have an impact on new subscriber numbers, which the company expect to be lower in the first half of next year compared to 2020. Netflix shares slipped by more than 6% after the “tepid results”. To be fair, the company has repeatedly warned that its “coronavirus bump” was temporary, but its “rip-roaring results” had quietened sceptics. Another concern which will no doubt now re-emerge is that the…

bad week for

James Dyson is selling his Singapore penthouse at a loss only one year after buying it, says the BBC. Dyson accepted an offer of S$62m (£35m) from US-based billionaire Leo Koguan, lower than the reported S$73.8m purchase price. Said to be Singapore’s largest flat, Dyson bought it last year after announcing he was moving his company’s headquarters to the country. An increase in requests by peer-to-peer lenders to withdraw their funds from the platforms has led to a huge backlog, with one saver being told her request is 19,050th in the queue, says Rupert Jones in The Guardian. “Billions of pounds” are tied up in the sector as investors rush to withdraw their cash from the illiquid investments.…

is london’s office market abargain?

New York’s commercial property is in trouble, say Julia-Ambra Verlaine and Sebastian Pellejero in The Wall Street Journal. Last month only 10% of office workers in Manhattan had returned to their desks. The pain could spread beyond New York. Wall Street “slices” property loans and packages them as commercial mortgage-backed securities. Pension funds and asset managers worldwide participate in this “half-trillion-dollar” debt market, but prices are falling. Some lower-rated US commercial mortgage bonds are trading on between “70 cents to 50 cents on the dollar”. London property is also in crisis, but these “comatose days” for offices “will not last forever”, says Jim Armitage in the Evening Standard. Post-pandemic, people will probably still head go to the office at least a few days a week. “Canny private-equity groups” such as KKR…

■ the best opportunity to buy british in 40 years

”If the UK were a middle-aged man he’d have just got divorced, lost his job and received bad news from the doctor,” Fidelity’s Tom Stevenson told The Sunday Times. Nevertheless, “the time to get interested in a market is when everyone is familiar with the bad news”. This could prove the best buying opportunity in 40 years. Jitters over a no-deal Brexit, the economic downturn and the shambolic response to Covid-19 have been key reasons why British stocks –tracked by the MSCI UK index – are trading at their biggest valuation discount to their global counterparts on record. The valuation gauge blends the price/earnings ratio (p/e), the price/book ratio (p/b) and the dividend yield (dy). The discount to the MSCI World index’s valuation has reached around 42%,while the historical average is 17.5,…

is a no-deal brexit back on the cards?

EU chief Brexit negotiator Michel Barnier extended an “olive branch” to Boris Johnson in the European Parliament on Wednesday, saying that a trade deal was “within reach” and acknowledging that compromises were needed by both sides to salvage the talks, says Jack Maidment in the Daily Mail. Last Friday, Johnson said that he was prepared to “embrace” no deal and that a trade deal would not be forthcoming without a “fundamental change” of approach from the EU. The two sides remain deadlocked over a number of key issues, including fishing, the so-called “level playing field” guarantees on regulations, and the governance of the agreement. The EU has set an end of October deadline for talks in order to provide enough time for the agreement to be ratified in the remaining…