MARKET REPORT
Friday 28 October 2016 | | | Dear Gutenberg,
As discussed yesterday on the TipTV Master Investor Show, we think that going long on the Pound could be a good play right now.
While we think that Sterling is probably undervalued right now, the fact of the markets mean that the opportunities are being created by the current environment. Despite some rise in the indices in recent months, the falling Pound has made a number of companies more attractive takeover targets for foreign buyers. Robert Stephens has taken a particular look at Diageo for us today and you can read his full opinion below. | | | Perhaps the biggest effect of Brexit thus far has been its impact on the pound. It has weakened by 18% versus the dollar since the EU referendum as confidence in the UK economy has deteriorated. More of the same could lie ahead and it would be unsurprising for the pound to weaken yet further, particularly since US interest rate rises are likely to lead to a stronger dollar. One effect of this is to make companies that report in sterling cheaper to buy for foreign investors. That's a key reason why I think Diageo (LON:DGE) is now an obvious takeover target.
Undoubtedly, the future direction of sterling is difficult to predict and depends to a large extent on news flow. However, it seems likely that a further weakening of the pound will take place since uncertainty surrounding Brexit is building. Unemployment is forecast to rise, GDP growth is unlikely to be significantly positive in 2017 and UK interest rates are more likely to move down rather than up as the Bank of England has stated that inflation may be a necessary cost of supporting UK economic growth.
Further, the political risks to the UK remain high. The government has not yet invoked Article 50 of the Lisbon Treaty to begin negotiations with the EU on the terms of the UK's exit. Once this starts, there is likely to be a ramp-up in uncertainty since there could be periods of time where a deal to access the single market seems unlikely. With the clock ticking towards the UK leaving the EU in 2019, investor confidence in the pound could decline.
| | | LATEST STORIES FROM OUR BLOG | | | by Zak Mir | Trading |  1 mins. to read
It may be the case that with retail traders long up to the eyeballs of Gold and Silver, we are due a new leg to the downside. But at least the minnow stocks in the area such as Greatland Gold (LON:GGP) appear to be progressing well.
| by Robert Stephens, CFA | Equities | 4 mins. to read
Last week I wrote about Miton Global Opportunities (LON:MIGO), which is an interesting investment trust that exploits pricing anomalies amongst closed-ended funds. One of its holdings is the New Star Investment Trust (LON:NSI) and I think it is worth a closer look as it offers an intriguing and possibly unique opportunity.
| | by Zak Mir | Trading | 1 mins. to read
Wearables group Cloudtag (LON:CTAG) has been one of the big stock market winners of the year to date. It has been helped along by being in the midst of the Zeitgeist of tech gadgets, as well as health and fitness concerns. Being a fan of a stock which has climbed far and fast over the near term can be a dangerous stance, especially if the cynics start to gain the upper hand. But so far Cloudtag appears to remain on the front foot.
| | by Nick Sudbury | Funds | 4 mins. to read
Last week I wrote about Miton Global Opportunities (LON:MIGO), which is an interesting investment trust that exploits pricing anomalies amongst closed-ended funds. One of its holdings is the New Star Investment Trust (LON:NSI) and I think it is worth a closer look as it offers an intriguing and possibly unique opportunity.
| | by Zak Mir | Trading | 1 mins. to read
It has certainly been a long journey for fans of the would-be Yorkshire Potash miner Sirius Minerals. As most of us are aware, it is usually the case that for mining companies the key is less about the digging, and more about the funding.
| | |
"When we argue for our limitations, we get to keep them."
Evelyn Waugh
| | | | TIPTV MASTER INVESTOR SHOW | | |
INFLATION - Nuclear Power: Does it have a future after Fukushima?
- Philip Fisher: Invest like the Father of Growth Investing
- Profit Warnings: Three small cap stocks set to bounce back
- US Election: How to position yourself in the currency markets
| | | |
Ingen kommentarer:
Send en kommentar