An alumnus of my old uni Matthew Roberts has been appointed new boss of INTU, which is one of Britain’s largest retail landlords…interesting in one of his first acts as CEO he’s managed to sell their Derby mall for £186m to a Kuwaiti backed firm…

https://www.thisismoney.co.uk/money/markets/article-6937267/Shopping-centre-operator-Intu-sells-stake-Derby-mall-186m-reduce-debts.html

Interest in UK commercial property remains strong despite the hysteria over Brexit…Deutsche Bank brought out a research report last week which highlighted value in the sector…

https://www.proactiveinvestors.co.uk/companies/news/219025/land-securities-lifted-by-deutsche-bank-to-buy-from-hold-in-major-review-of-the-london-office-market-219025.html

and BRITISH LAND which trades at a 30% discount to NAV and a 5% yield (source Bloomberg) has just sold a chunk of retail space through its 12 SAINSBURY super stores for £430m to REALTY TRUST a large US REIT …

https://www.retailgazette.co.uk/blog/2019/04/british-land-sells-12-sainsburys-stores-for-429m/

It’s not just in property either where the UK is getting attention.  As the UK increasingly looks outside Europe to attract investment (country remains the third largest investment destination globally) it will be countries like Australia, Canada, China, India and Japan as well as countries like South Africa and the Gulf states that make up an increasing proportion of this investment.

http://www.cityam.com/276894/uk-third-most-popular-investment-destination-globally

And it will be the likes of the Chinese investor that will increasingly take the place of the French and Germans with the weakened DEUTSCHE BANK and similar groups making way for these Asian, US and other countries from outside the EU.

https://www.ttgmedia.com/news/news/chinese-investor-fosun-increases-stake-in-thomas-cook-17813

It is also symptomatic of the UK being more open to the idea of major Chinese companies like nuclear contractor CGN and telecoms supplier HUAWEI investing in the infrastructure here…

To the east, and while we in ‘Blighty wait for the birth of a new Royal in the UK, spare a thought for those in the land of the rising sun…this week marks the abdication of Emperor Akihito, the first emperor to abdicate in 300 years in favour of his son Crown Prince Naruhito and ushering in 10 days of celebration during Japan’s Golden Week…

japanese-emperor-akihito-moved-a-step-closer-to-abdication_png

We spent some time this month with top Japanese equity fund manager Rupert Kimber from TIBURON Partners who had come back from seeing companies there; the story which is well developed but has long been on the cards, is all about corporate governance, improving returns and higher profitability.  RoE has been below 10% for ever in Japan but there is finally the first signs this is changing.

On the other side of the Pacific and while the land of the rising sun is trying to lower the age profile of its leaders, it seems the leader of the free world is trying to raise it.

Joe Biden and Bernie Sanders who if elected would become the oldest occupants of the Oval Office ever while if the Donald is re-elected and serves a full term any of the three would become the first ever octogenarian President-certainly a great result for the oldies among us…

Biden_Sanders_img

Over on this side of the Atlantic though, European politics is getting weirder and weirder…you’ve got a Socialist government in Spain in coalition with Catalonian separatists while here in the UK it looks likely the party with the most seats that we elect to send to Strasbourg after the European elections on 23 May will be a party that wants to leave the whole thing altogether!

In emerging markets, we caught up with Nathan Shor who with Ulysses D’Oliveira runs our emerging market debt strategy for us.  Galloway Capital buys the debt of emerging markets corporate issuers just below investment grade (B+) and the strategy has performed well for us. The idea is you can still get 7% to 8% in reasonably large and well-funded companies in EM and this is an attractive yield in our view.

Equity markets around the world are hitting new highs for the cycle with the S&P hitting a new all-time high this week and DT urging it on like some kind of cheerleader, raging in a tweet claiming the DOW would be 5,000 points higher were it not for the caution of the Fed…

Generally, US earnings continue to roll in better than expected especially in industrials with GE, HONEYWELL and JOHNSON CONTROLS all up between 20% and 40% year to date. (source Bloomberg).

The Russians however seem to be playing a different game. Cash constraints mean their defence spending has fallen below that of the French and according to the Norwegians this week they in any case seem more preoccupied in efforts to harness the power of their Beluga spy whales…

beluga-whale-with-russian-harness-raises-alarm-in-norway__939586_

South River funds continue to do ok this year…up between 1.5% and 4% for the Cautious funds and 7% for the multi asset funds… Over three years Dynamic Growth Fund is +35% (UK sterling)…

Taking a step back, one of the strangest things about being a fund manager and I’ve been one for over 25 years now, is the way investors swing from euphoria to gloom and back to euphoria again…

  • So a year ago people were full of how the bull market was going to last for ever, valuations didn’t matter and worrying about p/e’s was for wimps.
  • Then six months ago the world was ending until at Christmas last year Fed Chair Jay Powell did his famous volte face since when the markets haven’t looked back…
  • Now six months on again euphoria floods the markets once more and no matter how poor the results, how cautious the outlooks, or how difficult trading conditions are seen, up goes the market on another tear.

A classic case in point is LOCKHEED who were road-showing yesterday in London and despite Germany dropping its idea of buying the group’s big seller, the F-35, and Turkey putting its own decision up for review they, and BOEING, who even with the crash of their best-selling 737 and cut in production, have both seen their shares rise 25% this year.

However, never forget the seasonality of markets and especially when valuations as of now are not exactly overly cheap.. The saying “Sell in May and go away come back on St Leger day” originated historically from English aristocrats and merchants taking to the country for the summer months and despite the seeming irrationality there is method in the market’s madness…

https://www.investopedia.com/terms/s/sell-in-may-and-go-away.asp

 

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