Brian’s Brainstorm

The Media and Markets

The newspaper industry is not what it was.  Most titles are loss making as they try to compete with free online content.  Inevitably there has been cost cutting and the quality of journalism has suffered, even on the finance pages.  Consider the two paragraphs below summarising the performance of stock markets in 2017.

Despite the FTSE 100’s latest record, its annual 7.6% increase was dwarfed by the 19% gain recorded by Japan’s Nikkei 225, the 32% rise on the Nasdaq 100, the near 13% jump on Germany’s Dax and the almost 26% boost to the Dow Jones Industrial Average.

Over the year, the FTSE 100 has added £141bn to the value of Britain’s top companies. But it has lagged rivals due to concerns about the increasingly tricky talks on the terms of the UK’s departure from the EU. However, a breakthrough deal on the Irish border and citizens’ rights in December lifted some of that cloud, and nearly 5% of the FTSE 100’s annual gain came in the final month of the year following the Brexit agreement. 

The crude message is that the UK stock market had lagged behind because of concerns about Brexit and it only recovered in the last month because of a breakthrough deal on the Irish border.

Here are some facts.  A key reason why FTSE 100 lagged other indices is its tiny 1% weighting in information technology stocks.  The big stock market story of 2017 was not Brexit or Trump but the surge in the FANG stocks (Facebook, Apple, Netflix, Google) which were up 51%, 48%, 60% and 37% respectively last year.

Meanwhile the rally in FTSE 100 in December owed much to the large gains in mining stocks like Anglo American up 17%, Rio Tinto up 14% and Glencore up 16%. Mining stocks have a 15% weighting in FTSE 100 and their fortunes have little to do with the Irish border.

So if you want to invest in the fortunes of UK plc, the FTSE 100 is not the place to put your money (it has a 35% weight in energy and mining), and if you want exposure to large high growth IT businesses you need to look to overseas stock markets.  There is a natural home bias to the UK stock market but retail equity fund investors are over 40% exposed to the UK; this is too high.  Sensible diversification requires a greater exposure to overseas markets which is what we do at Conçerva.

And finally please bear in mind the calibre of financial reporting is not what it was and Brexit is not to blame for every market move.

Brian Durrant

Staff Matters

  • We are delighted to announce that both Martin Kettle and Martyn Mulligan have been appointed as Directors of Conçerva.
  • Matin Kettle joined the Conçerva team in September 2013 after nearly 18 years working with Aegon where he was one of their most senior and successful members of their sales team for many years. Martin’s main focus at Conçerva remains his work in the Personal Injury Market.
  • Martyn Mulligan started work at Conçerva in September 2016 after beginning his career in financial services in 1993. Martyn’s specialities are technical problem solving for clients’ financial goals with specific expertise in pensions with a particular slant towards divorce and other family matters.
  • Ian Bromley, our Managing Director, is pleased to have them as part of the management team and feels that they will be a great asset to the board of Directors

Tax Card 2018/19

As we enter the final stretch of the 2017/18 tax year, Conçerva are happy to announce that we have prepared in advance of the 2018/19 tax year a new tax card for your use.

Copies can be downloaded from our website by following the link below:

Tax Card 2018/19

Statistical Information

Last Month This Month Change
CPI 3.1% 3.0% -0.1%
RPI 3.9% 4.1% +0.2%

The latest figures released by the Office for National Statistics (ONS) has shown that the Consumer Prices Index (CPI) has fallen while the Retail Priced Index (RPI) has risen since the previous statistics were published.

The RPI measure of inflation includes various costs of housing that are excluded from the CPI. This means that the increases in Council Tax that have come into force over the last year are not reflected in the CPI measure recorded last month and so this index has seen a reduction.

This reduction in CPI has been driven by falls in the prices of toys and games, as well as various audio-visual products which had seen price increases at this time last year. These falls were offset by an increase in motor fuel costs and an increase in the price of tobacco products following on from the Autumn Budget.

UK Consumer Price Inflation

Nov 2017 Dec 2017 Change
Base Rate 0.50% 0.50% +0.00%

The Monetary Policy Committee (MPC) is yet to convene in 2018. The first scheduled meeting for the new year is 8th February. The Base Rate remains unchanged at 0.50%

The MPC is next due to meet on 8th February.

Statistical Information

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