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Issue 948

There's a reason MoneyWeek is Britain's best-selling financial magazine. We exist to help you ground your portfolio so that it keeps your money safe during rough patches and growing in the good times. We don't just look at how to maximise your returns and limit your losses, we also like to look at how you can keep more of the money you've made. Week-in, week-out we'll guide you through the financial world as it changes, alerting you to all the opportunities to profit and dangers to avoid, as they appear. Income strategies, rising-star companies, the best funds and trusts, clever ways to preserve your wealth during market turmoil... you will get the best ideas from the sharpest financial minds and investing professionals in Britain.

United Kingdom
Dennis Publishing UK
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R1 712,53
51 Issues


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from the editor-in-chief...

“Until recently, it made sense to shift manufacturing abroad. It’s not the case now” Emerging markets are the place to be if you want to make the best possible returns in the future. After all, that’s where populations are growing; where the West’s manufacturing is migrating too; and where new middle classes are emerging. Right? Maybe (see page 28 for one take). Or maybe not. The latest Barclay’s Equity Gilt Study suggests something rather different. Population growth is not much higher in emerging markets than in developed ones, for example, so the idea that demographics can drive growth in the latter, but not the former, holds no water.More importantly, however, technological progress is in the process of flipping from “supporting faster emerging market growth through globalisation to…

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philanthropist of the week

Almost 400 graduating students at Morehouse College in Atlanta in the US were pleasantly surprised this week when former student and billionaire tech investor Robert Smith (pictured) announced he would pay off the student debt of the entire class of 2019. Smith, who was receiving an honorary doctorate at the time, had already pledged £1.5m as a gift to the college. “This is my class, 2019,” he said. “And my family is making a grant to eliminate their student loans.” It is not yet known exactly how much his generosity could cost him, reports The Guardian, but it could be up to $40m. Student debt is becoming a political hot potato in the US, with the total outstanding estimated at around $1.5trn. Good week for: Jordan Adlard…

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new front in trade war spooks stocks

“Here be dragons,” says Christopher Beddor on Breakingviews. The White House’s move against Huawei, the world’s second-biggest smartphone maker, “takes the trade war into uncharted territory”. The US president has added Huawei to an export blacklist on national security grounds. The order prompted Google to ban the firm from accessing some features on its Android operating system. The move follows prolonged attempts by American officials to persuade allies, including Britain, to bar Huawei from involvement in their 5G networks and potentially stokes “a new tech cold war”. Stocks were unnerved at the thought. Domestic Chinese equities slipped by 4% in three days; America’s S&P 500 has lost 3% from its record high.Huawei has doubled its global share of the smartphone market in the last two years, says Jim Armitage…

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bonds signal gloom ahead

May has proved a turbulent month for investors, prompting many to wonder if the US bull market that began in March 2009 – the longest on record – is coming to an end. Those inclined to take a more negative view on the outlook for equities are pointing to signals coming out of the bond market. When investors are fearful they pile into safe fixed-income assets, such as government bonds, which drives down their yields. When bond prices go up, yields fall.Yields on ten-year US Treasury notes dipped as low as 2.37% last week, notes Peter Wells in the Financial Times, close to a 15-month low reached in March. Yields on short-dated three-month bills are higher than those that lock up your money for ten years. Such an “inverted…

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investors still too gloomy about uk

Investors are gloomy about the prospect of a Brexit deal, but that means that the worst scenarios are already in the price, Jason Hollands of wealth manager Tilney tells The Times.UK investors have deserted their own stockmarket en masse since June 2016, with £11.47bn of net inflows into global equity funds, says Hugo Cox in the same paper. That has significantly increased their exposure to America and the dollar in particular.Meanwhile, it’s interesting to note that for all the Brexit fuss, the MSCI United Kingdom All Cap index has “been the least volatile of any stockmarket index in the world since 2016”, says Harry Brennan in The Daily Telegraph. The strong presence of multinationals such as Unilever on the London market has shielded investors. These firms make over 70%…

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“US political gridlock [is good news]. Stocks dislike active government because legislation shifts the rules, creating winners, losers and unintended consequences — and discourages risk-taking. Gridlock renders a do-little government. Inactivity gives executives more clarity to manoeuvre — like an obstacle course with stationary obstacles versus one comprised of big, sharp, painful, fast-moving ones. Which would you prefer? Central to this gridlock is last November’s US midterm elections. Every four-year cycle the midterms create gridlock, a little or a lot... Hence, US presidents jam all big legislation into their first two years. That legislative flurry stokes uncertainty — hurting stocks [in] presidential years one and two. Then, midterms bring gridlock for years three and four. US stocks have traditionally celebrated gridlock by rising in 91% of all third years…