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Valencia- a few Brexit free days in Spain with light sunny days, fabulous juicy Spanish oranges and wonderful local wines and the best paella in Spain- just what the Doctor ordered.


Spain is great and a world away from the febrile and heated political maelstrom in London…but it pays for that in that the local economy is moribund and lacking dynamism…while youth unemployment is 25%… and the country has difficult general elections on 28 April in which a Catalan minority will kick back  hard against the centre and PM Sanchez will struggle to hold his leftist coalition together…

Spain is increasingly looking away from Europe for its future similarly to Britain as Europe gets stuck in the slow lane and the rest of the world booms-in Spain’s case 20% of its investments now go to investing in South America…

Back to the UK and the best that can be said about Brexit ‘Blighty over the w/e was the excellent horse racing with the annual big steeplechase, the Grand National at Liverpool, being won by super horse Tiger Roll…trained by Gordon Elliot in Ireland and owned by Michael O’Leary, boss of low cost airline RYANAIR.

Watched by 600m people around the world this was one of the great horse races of recent years (though this is probably disputed by bookmakers given the Tiger was the hot 4-1 favourite and their satchels were well emptied).

Politically the world’s longest existing democracy (discounting San Marino) sure has a funny way of showing it…out of 650 constituencies 408 voted in an in out referendum to Leave the EU while three years on we’re still in it.

I’m still not sure what part of “Leave” UK lawmakers don’t get and the latest attempt by Her Majesty’s government to get the opposition Labour party involved in some sort of half-baked solution has led to an ever more bemused public.

And now apparently we’re supposed to be fighting European elections…the whole thing is truly bizarre- anyway, whatever, the focus on the customs union that Labour seems to be obsessed with is starting to look like evolving to become the basis of a compromise much to the chagrin of those on the right…

Stock markets in any event smell compromise in the air with sterling and the FTSE having strong starts to 2019, the stock market having risen 8.2% in Q1 2019.

South River funds have had a strong start to 2019 with Q1 returns between 1.5% and 4% year to date while Diversified and Dynamic funds are up between 8% and 10%.

Chinese equity, High Yield and emerging market debt remain the key drivers to the portfolios’ strong performance this year so far with holdings in the China A shares etf, KAMES’s fund, THREADNEEDLE’s fund and our etfs in China A shares energy and utilities are driving returns.

We remain reasonably well diversified and reasonably cautious but equity is cheap, high yield is cheap and EM debt is cheap.

Meanwhile IPO activity is alive and well, iconic jeans maker LEVI STRAUSS , on line platform TRADEWEB and ride sharing app group LYFT all coming to the market in Q1 while hotly anticipated floats UBER and PINTEREST are waiting in the wings…

M&A has started the year strongly with major deals already announced in banking (the US$66bn BB&T and SUNTRUST deal) healthcare (BMS’s US$74bn bid for CELGENE) and technology (Fidelity International buying WorldPay for £32.4bn) while in banking, market rumours were rife last week that UNICREDIT is preparing to gate crash DEUTSCHE BANK’s planned merger with COMMERZBANK with a bid for the latter.

We caught up this week with Sam Armstrong and his team at private equity fund of funds house PARETURN BARWON…PE is where the real money is in this cycle with BLACKSTONE, KKR and APOLLO are raising huge sums of new money (only this quarter BLACKSTONE has raised US$20bn for a global property fund).

That’s it, have a good week.


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