Investment ViewPoint - Equity markets

The month of August 2011 has been one of the most turbulent witnessed by the markets in recent years. The September edition of Compass from Barclays Wealth, is now available. Entitled “A testing time – but stay invested”, it reflects on this period, taking an additional focus on the nature of financial behaviour and how it impacts investors during such times.

Compass opens with an economics update and emphasises that despite the recent market volatility, and that Barclays Wealth economic expectations for the second half of 2011 are more modest, the view is that the US will avoid a material recession and that global growth will remain firmly positive. It then goes on to discuss the tactical asset allocation changes made as a result of the recent volatility.

Compass also discusses three more topics this month, examining the behavioural finance traits investors should be aware of during such periods, focussing on investors’ approach to risk and investigating Alternative Trading Strategies (ATS) as a portfolio tool.

Login to read Compass in full.

You can also login to find out details of a conference call to discuss the latest issue of Compass that will be held on Tuesday 6th September at 10.30am (BST).

21 July 2011 - The US loses AAA rating – what does it mean for you?

“As ‘shocks’ go, the announcement was simultaneously not very surprising and deeply shocking.”

At the end of a brutal week for global equities (the fourth worst week since 2008 at the height of the financial crisis), there was bad news for the US. On Friday evening, Standard & Poor’s (S&P) announced they would be downgrading US government bonds from AAA to AA+ (for the first time in US history).

For many, the decision was not surprising, given that S&P issued a negative credit watch announcement on 14 July, which gave the US a 50% chance of downgrade over the next three months. However, in equal parts, the announcement is deeply shocking as yet another “unthinkable” financial event happens.

As to be expected, there is mixed opinion on what this means for the US and the world, over the short term and then the medium to long-term. The general view is that in the short term, market uncertainty will prevail, as well as a reduction in risk appetite and extreme market nervousness. This is an unprecedented event, which makes it hard to tell what might happen as a result.

From an investor perspective, the knee-jerk reaction might well be to default to the Yen, the Swiss Franc and to gold; traditional “safe havens” which have proved consistently popular in turbulent markets. At the same time, the US Dollar’s status as the global reserve currency will stand it in good stead; the Dollar and US debt will most likely remain in high demand. In 1998, when the Yen’s status was downgraded from AAA, the currency actually appreciated in the days after.

One thing is clear. Whatever the impact of events in the US, it does not detract from the severity of the Eurozone sovereign debt crisis. Over the weekend, the European Central Bank agreed to intervene in the markets and support Italy and Spain, by purchasing bonds from both countries.

Many warn that the greatest threat to economic stability still lies in the Eurozone and that investors should proceed with caution when investing regionally.

What should I do?

As events continue to move at a rapid pace, investors should look to stay abreast of news coming from the US and closer to home on the continent. You can login to read the research note published by Barclays Wealth on 8 August 2011 which assesses the impacts of the US downgrade.

Whether you see these latest market developments as a threat to your portfolio. or an investment opportunity, we are committed to providing you with the best trading service. login to your portfolio to trade in the UK market, or to access international markets through Barclays Stockbrokers International Trader.

Investments can fall as well as rise; you may get back less than you invested. You should ensure that you are aware of all the potential risks and downsides when investing overseas, including currency risk

21 July 2011 - Apple – a good job

Do you think we are about to enter another technology bubble? The revolutionary “cloud computing” is on the rise and is fast becoming a reality for consumers and businesses. As our lives become more mobile and move increasingly online, we need the technology to keep up – whether you are trading using your smart phone, telling your Sky+ box to record something remotely, or doing your weekly supermarket shop via an app. There can be no doubt that the technology sector will continue to provide interesting opportunities.

The apple of your eye

One of the world’s most famous stocks – Apple (NASDAQ: AAPL) – continues to dominate the news. This week Apple posted a record quarterly profit of $7.31 billion. As a result, on Wednesday 21 July 2011, the Apple share price reached a record level, just shy of $390. In spite of concerns that sales and parts supply might be impacted by the Japanese tsunami and earthquake, Apple sold more than 20m iPhones and 9.25m iPads during the last quarter.

Apple’s popularity is unquestionable; in fact, our clients recently chose it as the stock they would most like to hold in a dream portfolio. Furthermore, since the launch of our International Trader platform in January 2011, Apple has been the most popular purchase. But with questions around succession planning and competitors on the up, what does the future hold for Apple?

Rise to fame

The record Apple share price demonstrates a meteoric rise since launch at $22 in 1980.

During that time, Apple has cornered the smart phone market with its iPhone and enjoyed an explosive period of growth, which has been reflected in the share price. They seem to sell their products as fast as they can make them, sometimes faster.

However, the competition is getting their act together – and fast. Could this be bad news for Apple’s prospects?

The NASDAQ recently reduced the 20% weighting that Apple had in the Nasdaq 100 Index and boosted the representation of companies like Microsoft and Cisco Systems.

Steve Jobs

There are further questions around whether Apple is overly reliant on their enigmatic CEO Steve Jobs. Jobs has suffered from ongoing medical concerns, and has been on medical leave since January 2011.

What will happen to Apple’s share price when Jobs leaves, given how influential his leadership is? Is there a robust succession plan in place?

Keep an eye out

There are interesting times coming up – the eagerly anticipated launch of the iPhone 5 in September and a clearer picture of how the iPad2 has performed will begin to emerge.

If you are interested in investing in Apple, you can do so using our International Trader platform. login hereto trade now.

Not only can you access Apple, but plenty of other technology stocks listed on exchanges around the world, including Microsoft (NASDAQ: MSFT), Cisco Systems (NASDQ: CSCO) and Google (NASDAQ: GOOG).

Remember that the value of your investments can fall as well as rise. Investing internationally comes with currency risk, which may impact the value of your investments when measured in sterling

4 July 2011 - New research out now: the July issue of Compass

The July issue of Compass is out now, entitled “Summertime blues: a setback, not a reversal”. The headline sets the tone. Since the last issue, further weak economic data and a continuing deadlock from political decision-makers in both Europe and the US have left the equity markets a little bruised.

Barclays Wealth economists predict a summer of ongoing “continued downside volatility in the global equity markets” – likened to a damp British summer. Although they do not anticipate that global politics or economics will clear up any time soon, they do conclude that the “cost of trying to dodge what might be a bumpy road in early July won’t have been worth paying when viewed in retrospect from late September”.

Compass provides a three to twelve month view and maintains that the global economic recovery is on track, even if it is moving more slowly than expected. Things may stay bad before they get better, but the overriding sentiment is optimistic – things will get better.

The challenges remain broadly similar to those discussed in the last issue of Compass: lofty oil prices, fiscal difficulty in Europe and the US, the threat of overheating in emerging markets (particularly China), Japan’s recovery from the March earthquake and tsunami and questions around corporate growth and earnings.

So what does this mean for asset allocation and your portfolio? Although Compass recommends reducing risk a little, Barclays Wealth remains reluctant to slim any exposure to developed equities. The research argues that developed markets are still “inexpensive” and forecasts a market rally later on this year – “the best for stocks is yet to come”.

To read Compass in full, login here.

4 July 2011 - International markets - Weekly Movers

In a week that saw global markets take a much needed confidence boost from the Greek governments approval of its austerity package, the market winners over the last 7 days were all close to home. Top performing market of the week was Ireland, with the country posting a return of 11.37%. Sweden followed close behind with a gain of 9.84%, with France in third place, up 7.63%. Propping up the table this week was Egypt, with a loss of 1.79%, Pakistan followed, down 1.23% and the UAE Large Cap index was the third biggest faller, down 0.7%.

Stocks across international markets had a buoyant week, with the US companies the prominent winners. Best performer across the 7 days was payments technology and credit card firm Visa Inc (NYSE: V) who posted a gain of 19.9%. Their rival firm MasterCard (NYSE: MA) also had a strong week with a rise of 14.7% and sandwiched between the two was internet auction and shopping firm eBay Inc. (NASDAQ: EBAY).

Amongst the biggest fallers for the week were China CITIC Bank (SEHK: 0998), down 4.9%, Australian property giant Westfield (ASX: WDC), down 3.4% and China Minsheng Bank (SEHK: 1998), down 3%.

You should ensure that you are aware of all the potential risks and downsides before investing overseas. These investments can fall in value. You may get back less than you invested. You also need to bear in mind that international investing comes with a currency risk. Fluctuations in currency could have a negative impact on the value of your investment.

To trade in international equities or find out more about the latest international market news and movements, login to International Trader. If you do not yet have an International Trader account, find out more.

27 June 2011 International markets - Weekly Movers

From a markets perspective, South America took centre stage last week with two nations from the region being the best performers for the week. Chile topped the chart with a return of 3.94% over the seven days, followed closely by Peru, up 3.09%. Indonesia came in third, posting a return of +2.51%.

At the other end of the spectrum, the worst performing market across the week was Russia, down 4.09%, followed by last week’s best performer, the United Arab Emirates, whose large cap index was down 3.8% following last week’s gain of +2.43%. European emerging market Hungary was the third worst performer, posting a loss of 3.59%.

Looking at individual stocks across international markets, Chinese firms were prominent amongst the top performers from the week. China’s consumer goods firm Li & Fung (SEHK: 0494) was up 13.2%, online service provider Tencent (SEHK: 700) posted a gain of 11.1% and the cement production and sales firm Anhui Conch (SEHK: 914) saw a rise of 10.3%.

At the opposite end of the scale, Finland’s energy company Fortum saw the biggest fall of the week, down 12.6%. Italy’s Unicredit (BIT: UCG, FWB: CRI) saw a fall of 10.5%, whilst US pharmacy chain Walgreens (NYSE: WAG) was down 7.3%.

22 June 2011 International markets - Weekly Movers

Last week, the United Arab Emirates large cap index posted the largest growth, with a return of 2.43% across the 7 days. Significantly further behind, it was followed by Pakistan on 0.62%, with Thailand in third place on 0.18%.

In contrast, Hungary found itself at the bottom of the international markets table, posting a loss of 8.23%, followed by Sweden, down 6.68% and then Finland, down 6.37%.

Looking at individual stocks across international markets, the top performer was Group Danone (Euronext: BN), the French food multi-national which posted a rise of 5.7% across the week. Other impressive performers include Spanish banking group BBVA (BMAD: BBVA, NYSE: BBVA), up 5%; Paccar (NASDAQ: PCAR) the third largest truck manufacturer in the world which rose by 4.2%, and US banking giant Wells Fargo & Company (NYSE: WFC), up 4.1%.

Last week was not a good week for smart phone manufacturers. The most dramatic faller was Canadian telecommunications company (and developer of the BlackBerry) Research in Motion (TSX: RIM, NASDAQ: RIMM), down 24%, followed closely by HTC, the Taiwan-based smart phone manufacturer, which fell by 14.3%. For the second week in a row, China’s consumer goods firm Li & Fung (SEHK: 0494) was amongst the worst performers, down by 11.7%.

13 June 2011 - International markets - Weekly Movers

Egypt was the international market that made the largest gains last week with a return of 2.98% across the 7 days. It was closely followed by Turkey on 2.81%, with Russia in third place on 2.74%. In contrast, Peru found itself at the foot of the international markets table for the week, posting a loss 15.88%. The South American nation was the biggest faller by a distance, with the nearest nation being Thailand, down 4.95%, followed by Sweden, down 4.69%.

Looking at individual stocks across international markets, top performer was German industrial conglomerate ThyssenKrupp AG (FWB: TKA) who posted a rise of 7.7% across the week. Other significant performers were Russian gas giant GazProm (FWB: GAZ), up 6.4% and US insurance giant AIG (NYSE: AIG), up 4.7%.

Amongst the biggest international fallers last week were Japanese games firm Nintendo (Pink Sheets: NTDOY, FWB: NTO), down 10.4%, China’s consumer good firm Li & Fung (SEHK: 0494) down 9.5% and US machinery producer Cummins (NYSE: CMI), down 8.4%.

6 June 2011 - International markets - Weekly Movers

Hungary was the biggest market winner last week, with the developing European economy posting a return of 6.6% across 7 days. South Africa was in second place with a rise of 4.57%, followed by Russia on 4.5%. This week Finland propped up the table with a fall of 5.61%, followed by Canada (-2.43%) and Australia (-0.96%).

Looking at individual stocks across international markets, amongst the top performers for the week were China’s Li & Fung (SEHK: 0494), the consumer goods firm, who bounced back from a loss of 13.5% last week to rise 9.3% in the week, South Korean financials firm Shinhan Financial (NYSE: SHG), up 5.1% and Hong Kong based American International Insurance (SEHK: 1299), who’s share price also increased 5.1%.

The biggest international faller last week was Finland’s Nokia (OMX: NOK1V, NYSE: NOK, FWB: NOA3), who saw a sharp fall of 22.1% across the week. The second biggest faller was US networking hardware firm Juniper (JNPR), down 12.7%, followed by Australian financial giant National Australia Bank (ASX: NAB), who fell 7.8%.

31 May 2011 - International markets - Weekly Movers

Peru was the biggest market winner last week, with a return of 8.57% across 7 days, while Pakistan in second place saw a rise of 2.77%, followed by Mexico on 1.85%. It was the turn of the Europeans to prop up the table with Ireland the biggest faller, down –(-6.72%), followed by Italy (-5.07%) and then Euro powerhouse Germany (-4.64%).

Looking at individual stocks across international markets, the top performer for the week was Broadcom Corporation, (NASDAQ: BRCM), the US semiconductor producer who saw a change of +9.5% over the week. Other notable strong performers were Canadian materials firm Potash (TSX: POT, NYSE: POT) who had a gain of 8.1% and Texan firm National Oilwell Varco (NYSE: NOV) who went up 7.5%.

Among the biggest international fallers last week were China’s Li & Fung (SEHK: 0494), the consumer goods firm, with a loss of 13.5%, US healthcare firm Medco Health Solutions (NYSE: MHS), down 8.8% and Asian financial services company China Everbright (SEHK: 165), down 7.9%

You should ensure that you are aware of all the potential risks and downsides before investing overseas. This extends to making sure you research the regions you are interested in and fully understand the product in which you are investing. You also need to bear in mind that international investing comes with a currency risk. Fluctuations in currency could have a negative impact on the value of your investment.

To trade in international equities or find out more about the latest international market news and movements, log into International Trader. If you do not yet have an International Trader account, find out more

23 May 2011 - International markets - Weekly Movers

From a markets perspective, Egypt and Canada led the pack last week, posting returns of 4.66% and 2.06% respectively over seven days. Indonesia came in third with a gain of 1.99%. Turkey remained the lowest performer of the week, posting a loss of 4.11%. Japan and Peru came next with losses over the week of 3.32% and 2.50% respectively.

Looking at individual stocks across international markets, the top performer for the week was Teck Resources Limited, (TSX: TCK.A, TCK.B, NYSE: TCK), Canada’s largest diversified mining company, which posted a return of 8.6% across the week. Other notable strong performers for the week were US financing firm Capital One Financial Corporation (NYSE: COF) which gained 5.2% and Yanzhou Coal (NYSE: YZC), posting a 5.0% positive return.

Among the biggest international fallers last week were US tech stock Hewlett Packard, whose share price slid 11.0%, US insurance provider Aflac (NYSE:AFL) was down 8.2% and chemical manufacturer Dow Chemical (NYSE: DOW) fell by 6.2% across the week. UniCredit, the Italian banking group, fell by 6.0% (BIT: UCG, FWB: CRI).

17 May 2011 - International markets - Weekly Movers

The past week saw several economic drivers trigger a bout of market movement. Strong Chinese economic data followed by fears of "overcooking", renewed concerns on Greek sovereign debt, pressure on commodity prices and a focus on inflation set the economic agenda across the past seven days.

From a markets perspective, positive performance across the week was moderate. Columbia and Egypt led the pack, each posting a return of 2.8% over seven days, while Peru came in third with a gain of 1.6%. Turkey pulled back from a strong performance last week to sit at the foot of the table, posting a loss of 6.82%. European neighbours Portugal and Spain came next with losses over the week of 4.69% and 4.63% respectively.

Looking at individual stocks across international markets, top performer for the week was the pan-European aerospace and defence corporation EADS (Euronext: EAD, FWB: EAD) who posted a return of 10.2% across the week. Other notable strong performers for the week were US networking hardware firm Juniper (NYSE: JNPR) who gained 6.7% and US retail pharmacy Walgreen (WAG), who posted a 6.2% return.

Among the biggest international fallers last week were US household name Yahoo, whose share price slid 11.3% over the seven days. Other notable fallers were banking giant Citigroup (NYSE:C) and gaming company Nintendo (FWB: NTO, Pink Sheets: NTDOY), both of which were down 8.1% across the week.

9 May 2011 - International markets - Weekly Comment

The past week saw a sharp sell off in international markets, a move triggered by the release of weak economic data from the US, where service sector and jobs growth rates were poorer than expected.

From a markets perspective, only five countries posted a positive performance across the week. Pakistan led the way with a 6.63% gain over seven days, while Japan was in second pace with a 3.56% return. Turkey, Indonesia and Peru were the other positive performers. In contrast, Norway, Russia and India were the worst performers, all posting weekly losses in the 6% - 8% range.

Looking at individual stocks across international markets, top performer for the week was Swedish retail clothing company H & M (OMX: HM B), who posted a return of 7.4% across the week. German consumer products producer Henkel (FWB: HEN) was the second best performer, with an increase of 6.1% and in third place came US biopharmaceutical Gilead Sciences (NASDAQ: GILD), up 5.6%.

Among the biggest international fallers last week were Texan firms National Oilwell Varco (NYSE: NOV) and Baker Hughes (NYSE: BHI), and Canadian gold miner Goldcorp (TSX: G) (NYSE: GG) all of which dropped 10.5% across the seven day period.

5 April 2011 - Compass April 2011 – Investing in a resilient recovery

This week’s Investment ViewPoint summarises the most recent edition of Compass, the monthly investment research publication from Barclays Wealth. The four main themes identified for April are: the terrible events following the earthquake and tsunami in Japan, unrest in North Africa and the Middle East, sovereign debt concerns in Europe and the changing interest rate landscape in Europe and the US.

Japan

Some of the damage done to Japan since the earthquake and tsunami of 11 March is irreversible. The loss of human life is devastating and the prognosis for nuclear power in the region is still to be determined. However, our experts would not place the economic prognosis for Japan in the same category. As discussed in a previous Investment ViewPoint – The Japanese earthquake and its global impact – Japan is a resilient nation and will no doubt undergo an incredibly effective and convincing recovery from this natural disaster.

In addition to the uncertainty that investors feel when events unfold extremely quickly (as they have done during this situation), Compass details three very specific effects – “the viability of nuclear energy will be questioned again; the global insurance sector will see its profits hit hard; the Western central banks may be a little slower to act on official interest rates than seemed likely, at least in Europe…”.

Events in North Africa

Events continue to unfold in Libya and Compass again states that “the human and political significance outweighs the likely economic impact”. Oil prices remain volatile but the commodity is relatively stable, given the political control in Saudi Arabia. As the largest provider of oil to the Western world, the importance of that stability cannot be overestimated. On a slightly different tack, it would be advisable for investors to keep an eye on events as they unfold in Bahrain. If the West is forced to intervene, that could be damaging to what is currently a strong economic relationship.

Sovereign debt in Europe

There remains a visible risk to European sovereign debt although politicians are now beginning to build “a more unified fiscal framework that has been missing from the euro architecture since its inception”. The economic circumstances in Europe continue to unnerve investors and are a destabilising force in the global recovery.

Global interest rates

Compass states that “the outlook for official interest rates is slowly hardening, and will inevitably fuel discussion of pending policy mistakes and renewed “double dip” risk”. It notes that interest rates are still at emergency levels and inflation is a growing risk. If governments are indeed forced to raise interest rates (Compass predicts this will happen in Q2), there will be a negative impact on mortgage and business borrowing costs, corporate confidence and relative returns on investment portfolios. The risk is that with a rise in interest rates, comes a rise in uncertainty and a fall in risk appetite.

Resilient global recovery

Despite the doom and gloom, Compass reassures investors that the global recovery still has considerable momentum. In particular, the US is less fragile than it was last year. Compass sticks by its previous line – investors should focus on developed equities, as that “is where prospects are brightest relative to expectations”. Although emerging markets are forecast to grow at a faster pace, they also face more pressing inflation and interest rate concerns.

Investors looking for exposure to international developed equities could consider International Trader. Our platform allows clients to trade in stocks listed on major US, Canadian and European exchanges.

You should ensure that you research the regions you are interested in and fully understand the nature of the stocks in which you invest. Also bear in mind that investing internationally brings with it currency risk. Fluctuations in currency values could have a negative impact on the value of your investments.

For those with an interest in investing in Japan, or in commodities such as oil, you could consider using Exchange Traded Funds (ETFs) or Exchange Traded Commodities (ETCs). ETFs such as the iShares MSCI Japan (IJPN), an ETF designed to track the MSCI Japan index, or ETCs such as ETFS Crude Oil (CRUD), designed to track the DJ-UBS Crude Oil Sub-IndexSM could be worth considering.

You should be aware that the price of oil can be volatile and you may incur losses if you invest in oil-related products. The value of investments in ETCs such as ETFS Crude Oil can go down as well as up and you may get back less than you invest.

You should ensure that you read and understand the full simplified prospectus for products such as ETFs and ETCs before investing.

8 March 2011 - The year of the international investor?

Profile of an international investor

What would I look like if I had picked the best performing stocks in the US last year? Well…. I would like to surf and my footwear of choice would be ‘Crocs’. My job would be to produce semi-conductors for use in networking hardware that supported internet video streaming. The best news? I would have made a nine-fold return on my investment. Surf’s up! Get your Crocs on!¹

Is it time for investors to look further afield?

In the UK many investors, quite naturally, choose to keep their investments close to home. At first glance, that may be a sensible strategy. An investor’s domestic market is the one they are likely to be most familiar with. There are no currency risks, no language barriers, there is excellent access to information and there is confidence that comes from the familiar.

There is also a common perception that there are barriers to investing elsewhere. In some cases it may be that investors do not know about the alternative - investing internationally. Whilst that may have been true for the typical retail investor in days gone by, for us, at the start of the second decade of the 21st century, it is far easier to gain direct access to international markets.

Why look overseas?

Whilst keeping investments close to home might seem like a reasonable approach, it could place unnecessary limits on an investor’s ability to get the most from their portfolio. There is currently a strong case for investing in international markets, particularly in developed equity markets.

In January’s edition of Compass, Barclays Wealth economists recommended investing in developed market equities, as they are generally considered one the cheapest asset classes. Although developed equity markets have disappointed over recent years, they started to ‘make good some of this disappointment’ in 2009 and 2010. The five-year forecast for these markets is strong - 5.1% per annum (vs. an annual average of 2.6% over the last 20 years). Login to view Compass or if already logged in select "Investment ViewPoint Connect" from the top menu.

Investors should bear in mind that this is of course Barclays Wealth’s view. Developed markets may not deliver good returns for investors.

US focus

Clients of Barclays Stockbrokers are singing from the same song sheet. In a recent client web poll, 30% of respondents said they expected the US market to grow in 2011. There are also promising signs that dividends and merger and acquisition activity on that side of the Atlantic are on the rise again.

In January, the Standard & Poor’s 500 Index reached its highest level since 2008². The S&P 500 Index is generally taken as a broad measure of the performance of US shares and many attribute its resurgence to strong corporate profits, resilient consumer spending and the Federal Reserve’s bond shopping spree.

Further data suggests that during 2010, consumer spending in the US grew at its fastest pace in three years. Similarly, figures from January this year indicated that factory output had increased at its quickest rate in seven years.

On the continent – European opportunities

On the other side of the pond, and closer to home, there are good opportunities for investors in Europe. Although sovereign debt issues remain well-documented, there is still the potential for good returns. In fact, during 2010, some European markets offered double or almost treble the returns that the UK did.

The top performing European market in 2010 was Sweden, the “tiger economy”, where the OMX Stockholm All Share Index grew by over 20%. This performance was fuelled by a couple of sectors which posted particularly impressive growth; in this case Trucks, Auto Parts and Industrial Machinery. Volvo AB, Scania and Atlas Copco were just a few of the high flyers. In fact, 2010 was Sweden’s strongest year since 1970³.

The Swedish economic recovery was led by exporters, which in turn was bolstered by the weaker Swedish Krone and low commodity prices.

Elsewhere, Germany, the traditional European powerhouse, saw its main equity index (DAX) surge by 14.3%. Some are confident that this growth will continue into 2011. In the same recent poll, 32% respondents predicted strong growth prospects for Germany in 2011.

When you consider that, in comparison, the UK’s FTSE 100 Index grew by 7.3%, there is a strong argument for considering international alternatives.

Of course, past performance is not an indication of future performance and some might argue that these European markets may have hit their peak. Nevertheless, it demonstrates the point that taking a broader view beyond your own domestic market can increase your opportunity to make better returns on your investments – a simple case of casting the net wider.

International sectors

Investing in international equities not only allows investors to trade across a broader range of countries and geographies, it also gives them access to many more sectors.

The oil and gas sector dominated the limelight in 2010 and revealed that investors often spot and react to market news and volatile price movements extremely quickly. Clients of Barclays Stockbrokers behaved the same way. Having full access to a sector, across global geographies is a great advantage for investors. For example, if an investor was interested in exploring equities in the technology sector, they would not be able to trade companies like IBM or Apple without access to US markets. An international perspective on your investing can compliment an existing investment strategy and broaden the choice you have in your particular areas of interest.

Asset allocation and international portfolios

Spreading your portfolio across a range of geographies and global sectors has long been a favoured approach of the savvy investor. At home, UK interest rates are at an all time low, making it difficult for investors to find returns. As a result, many investors who are prepared to take a risk are now looking further afield, as cash is struggling to keep up with inflation.

Equity markets look attractive at the moment, as they can offer decent yields and inexpensive valuations. Global stocks have nearly recovered to pre-credit crisis levels and the economic mood at the beginning of 2011 is optimistic (albeit mixed). For the educated investor selecting a global portfolio, rather than a UK-only one, there is a great range of opportunities.

Think of what your portfolio could look like - Apple alongside Astra Zeneca, Boeing next to BP or Coca-Cola with Centrica.

As with every type of investment that is linked to the health and performance of the global economy, investors need to be vigilant in monitoring the markets. Recent events in the Middle East, Libya in particular, have revealed how quickly the global economy responds to regional or sector specific news. It is important for investors to consider the impact that global events will have on their portfolio. This is all the more important if your investments are diversified internationally. Some events can have a global economic impact, others can be more localised.

Things to bear in mind

When you travel abroad, it is always wise to think about your safety. Investing internationally is no different. You should ensure that you are aware of all the potential risks and downsides before investing overseas. This extends to making sure you research the regions you are interested in and fully understand the product in which you are investing. You also need to bear in mind that international investing comes with a currency risk. Fluctuations in currency could have a negative impact on the value of your investment.

You spoke, we listened

We have seen that more and more of our clients are looking for exposure to international markets, with higher levels of demand for Exchange Traded Funds and managed funds with an international focus. We are always looking to ensure that we provide a range of products that can allow clients to take advantage of international investment opportunities. For example we launched the Barclays Wealth Global Markets funds range in the last part of 2010. Now, for those clients who wish to pick their own international stocks, we have launched International Trader.

What is International Trader?

International Trader is a state-of-the-art online trading platform which provides 24/7 online equities trading, with access to 13 international markets and 21 exchanges. Each user can customise the platform to suit their individual preferences.

Find out more about International Trader

25 February 2011 - O Canada!

Two weeks ago, the London Stock Exchange struck a deal with TMX Group, the operator of the Toronto Stock Exchange. The deal looks likely to reduce costs for users, offer greater levels of liquidity and provide broader access to mining and natural resources stocks.

For investors, this is particularly attractive at a time when commodity prices are front page news and exploration activity continues to thrive worldwide. Mining and energy companies account for 34 per cent of the LSE’s FTSE 100 index at the moment and interest amongst investors continues to grow.

Canada has become a more attractive proposition for foreign investors since its relatively strong performance during the credit crisis. Although the region still felt the effects of the global crisis, it has since been widely acknowledged that Canada emerged in a stronger position than at the start of the recession, particularly in the banking and financial sectors.

Major multinational companies are also improving Canada’s investment prospects for retail investors and putting their money where their mouth is. For example, the Canadian natural gas producer EnCana (listed on the Toronto Stock Exchange), made the news recently, after it was announced that PetroChina, China’s largest oil and gas producer, had paid $5.4bn for a 50 per cent stake in EnCana-owned shale gas deposits.

This is just one example of the way in which Canada is increasingly on the international investor’s radar.

In fact, a large portion of the Canadian economy is now open to foreign investment, something that has not always been true. Statistics Canada notes that the Canadian economy has undergone economic cycles that have changed the country’s ability to attract foreign investment. Currently, 22 per cent of business assets are owned by foreign investors and they receive 30 per cent of the profits.

For international investors, things in Canada are looking up.

Visit our International Trader page to learn more about the Canadian markets that we offer.

14 February 2011 - What investment opportunities are there in America?

For many investors, the American Dream is still alive and kicking. As an increasing number of retail investors look overseas for portfolio growth and income, the US is a common first port of call.

Many investors gain exposure to the US market using instruments such as and One extremely popular ETF is the iShares S&P 500 (IUSA), which tracks the performance of the Standard & Poor’s 500 Index, a broad-based US equity market index. Whilst ETFs are both incredibly useful and very efficient, there are also considerable possibilities in picking individual stocks.

At the beginning of February 2011, the S&P 500 reached its highest level since August 2008, buoyed by positive consumer spending and market sentiment. Those who invested in an S&P ETF two years ago would have just seen their investment recover to where it was at the time of purchase. On the other hand, stock-picking investors who researched and selected individual equities, could potentially have made a significantly better return.

On 4 August 2008, IBM shares were trading at $129. At the time of writing, early February 2011, those shares are now trading at $164. Investors who spotted this opportunity could have made a 27% increase in the value of their investment, dealing costs aside.

A less extreme example is McDonalds. In the same week in August, McDonald’s shares traded at $66. Today, the figure is $73.

There are many others that fall into the same category, that of outperforming the index, but it is important to remember that individual stock picking does not always work out positively. For example, since August 2008, shares in Yahoo have fallen from $20 to $17. This translates into a 15% loss for investors.

The key is portfolio diversification based upon thorough research in order to ensure investors are not overly exposed to any individual stock. This is all the more crucial, given that currency fluctuations too can have a significant impact on the value of overseas investments.

Another challenge for investors looking at the UK is the over-concentration of dividends within FTSE 100 companies. Of the 100 companies covered by this Index, 61% of dividend payments came from just 15 of the businesses. As a result, investors chasing yields run the risk of becoming overly concentrated in just a handful of shares. If and when a shock occurs, for example the BP crisis, this can have a disproportionately large effect on a portfolio.

This could go some way to explaining why retail investors continue to look overseas for alternative investment opportunities – there is most certainly an increased interest amongst our clients as demonstrated in a recent web poll, which showed that 77% of our clients believe the UK will be outperformed by Europe, the US or Emerging Markets in 2011.

If you are interested in investing in international markets then find out more about Barclays Stockbrokers International Trader.

You should remember that shares can fall as well as rise in value and you may get back less than you invested. Overseas investments may be affected by currency fluctuations which might reduce their value in sterling.

28 January 2011 - Markets hit the ground running in 2011 as the issue of inflation starts to rear its head.

We have had a fast paced start to 2011. As we near the end of the first month of the year, the markets have been active and already there are some clear economic themes beginning to emerge.

Using the FTSE-100 as a proxy for market performance so far this year, the Index looked as though it was steady above the 6,000 points threshold that it broke through at the end of 2010. A combination of early mergers and acquisition speculation, strong data from the US on jobs and manufacturing and a positive reaction to Eurozone bond issues, saw the FTSE-100 above the 6,000 mark everyday apart from three in the run up to 18 January. Its peak of 6,056 on 18 January was a two and a half year high.

However, weak earnings results from the US and poor UK unemployment data were then followed by strong Chinese growth numbers. This had a direct knock-on effect on the FTSE 100. The index lost a lot of ground, shedding over 180 points across 19 and 20 January. Despite a mild recovery, the index is now still languishing below 6,000.

After over two years of fiscal prudence from the UK government, with interest rates at historic lows, the inevitable threat of inflation is coming to the fore. The strong Chinese growth data was the real catalyst for the market pulling back; inflation fears arose as a direct consequence.

What is inflation?

Inflation n 1 a general rise in the prices of goods and services in an economy, which consequently leads to a reduction in the real value of money or the underlying spending power.

Inflation generally stems from economic growth so policy makers and governments must constantly try to achieve a balance between stimulating that growth but at the same time, keeping inflation in check. It can be a very fine balancing act.

Since the credit crisis in 2008 and the subsequent global recession, the key focus has been to reverse this trend and move the global economy back towards steady growth. Two key measures generally applied were the reduction in interest rates and the injection of capital into the economy.

However, now those measures have, in most cases, successfully triggered growth, that growth has to be managed well. If inflation is left to escalate and develops into hyperinflation, then an economy can become “over-cooked” and the underlying value of money within that economy dwindles rapidly.

China and inflation

The release of positive Chinese growth data shows that the Chinese economy continues to strengthen, but it also heightens the risk of inflation. Although the Chinese Central Bank has already raised interest rates, on Christmas Day, the country may look to implement further inflation prevention.

How do we beat inflation?

The general concern amongst global markets is the fight to control inflation. Now that inflation fears are firmly on the Chinese economic agenda, they will begin to cascade through to everyone else. It seems inevitable that tackling inflation will be a key economic focus in 2011, the main question will be when and how policy makers go about it.

From a UK perspective, the unexpected news on Tuesday 25 January that the economy had shrunk by 0.5% as a result of the cold weather in late 2010, raised speculation that concerns about faltering growth might stem the onset of higher inflation, at least for a short period. However, subsequent comments on Wednesday 26 January from Mervyn King, the Governor of the Bank of England, asserted the view that inflation will continue to rise, with King forecasting a move to between four and five per cent in the coming months. King stated that the current rate of inflation, which stands at 3.7%, well above the bank’s target of 2%, has been driven by higher import prices due to sterling weakness, rising energy and commodity prices and the recent increase in VAT.

Investors concerned about the impact that inflation may have on their portfolios may wish to consider investment products that factor inflation into their performance. For example the iShares Barclays Capital Global Inflation-Linked Bond (SGIL) is an Exchange Traded Fund (ETF) that that aims to track the performance of the Barclays Capital World Government Inflation-Linked Bond Index. The Index itself offers exposure to developed world government inflation-linked bonds issued in the domestic currency of each country.

You should bear in mind that the value of investments such as ETFs, which track inflation-linked bond indices, can go down as well as up and you may receive back less than you invest. You should ensure that you read and understand the full simplified prospectus for such products.

6 December 2010 - Continental shift

You could be forgiven for feeling confused about what is going on in the Eurozone. Every day the news seems to change. Either we are teetering on the edge of an economic abyss, or politicians are assuring us that things are under control. So how should investors react to the daily news coming out of Europe?

The latest fiscal casualty was close to home. The €85bn, or £72 billion¹, bailout extended to Ireland by European finance ministers and the International Monetary Fund has helped to stabilise the situation for now, but many commentators suggest that the remedy does not go far enough. David Wighton at The Times described the bailout as “a large and expensive plaster… [when] what the patient needs is a blood transfusion”².

Ireland is not the only poorly economy. So far, Greece has experienced the most dramatic sovereign debt crisis in Europe, but several other European economies are starting to feel the pain.

Conversely, some nations are still posting strong performances. For example, Germany’s economy grew by 2.2% in the second quarter of 2010 and 0.7% in the third. As the gap between rich and poor widens, the Euro looks likely to come under an increasing amount of pressure and its future form is being called into question.

Against a brutal market backdrop, politicians remain assured of their ability to avert a disaster of apocalyptic proportions in Europe. In particular, the rhetoric from Brussels tells us to stay calm and believe in the Eurozone’s resilience.

Barclays Wealth’s economists tell a slightly different story, criticising economic optimism as “misplaced”. Signpost, the Barclays Wealth research publication, anticipates that the recovery demonstrated by nations such as Germany will likely stall, “with the second quarter probably [being] the peak of the recovery in terms of GDP growth”³.

This week, Jean-Claude Trichet and the European Central Bank announced their decision to maintain interest rates at 1%. Investors would be wise to stay tuned and watch for signs of this monetary policy having a positive impact on the region’s stability and hopes of recovery.

That said, this region still presents some options for investors with a good understanding of the potential risks involved.

For those investors who are aware of the sovereign and currency risk but still believe the region presents good investment opportunities, there are several ways to get investment exposure to the Eurozone. Among the most popular ways are using

Exchange Traded Funds (ETFs) and / or managed funds. Investors could consider ETFs such as the iShares MSCI Europe or the iShares Euro STOXX 50, or they could investigate managed funds from the 'Europe excluding UK' sector using our Fund Factsheet Search function.

If you feel more confident staying closer to home, you may be interested in our structured product, the FTSE Linked Income Note, which offers potential returns linked to the performance of the UK FTSE-100 Index.

The value of investments can fall as well as rise and you could get back less than invested.

¹The Daily Telegraph, http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8166507/Ireland-gets-72bn-bail-out-in-attempt-to-stem-contagion.html
²Ireland’s bailout is a large and very expensive sticking plaster, David Wighton, 29 November 2010 http://www.thetimes.co.uk/tto/business/economics/article2825143.ece

³Signpost, Barclays Wealth, October 2010

12 November 2010 - A perfect storm?

Last week the markets experienced a mini-perfect storm of economic data, which went on to trigger an equities rally. The US mid-term elections, along with the much anticipated announcement from the Fed that they would relaunch their quantitative easing plan - ‘QE2’ – were the two weather systems that combined to drive this. In the UK, the FTSE 100 enjoyed the warm glow of the US sun as the index hit a two-year high of 5,862.79 points.

The general hope now is that the fragile recovery in the developed markets will stabilise into something stronger. Many will be curious to see which other economic policymakers choose to follow suit.

It was not just the equity markets that rallied on the back of the good news; commodities also saw their prices strengthened by the Fed’s decision. In particular, gold and silver hit new highs, as fears grew that the Fed’s intervention could fan the flames of inflation. Inflation is the major concern for policymakers thinking about their QE2 policies. Many investors consider precious metals a way to hedge against inflation and it appears that the markets share this view.

Currencies were also on the move last week. Sterling hit its highest level against the US$ since the beginning of the year. The Bank of England decided against jumping on the Fed’s coat tails as far as a fresh injection of capital was concerned, instead remaining averse to fiscal tightening and keeping interest rates stable at 0.5%. No change is anticipated until 2011.

Is the latest surge in equity values built on solid foundations and set to continue, or could it just be a tentative step along the road of this fragile economic recovery? The UK government announced an austere Spending Review package in October, and although some would say this has been priced in to the markets, there remain concerns that the balance is still too delicate. The bears say there will be lean times ahead. However the bulls will be pointing to last week’s strong UK growth data and surveys indicating that manufacturing and service sector activity is still growing, saying that the UK economy is robust enough to tough it out.

Compass

In the November/December issue of Barclays Wealth’s Compass publication, Aaron Gurwitz, Barclays Wealth’s Chief Investment Officer, considers last week’s events and offers his outlook on the markets. Log in and read Compass to find out more.

Overall, Compass continues to hold the view that the emerging economies will still provide the most attractive risk adjusted-returns. Investors who share this view and are looking for exposure to the emerging markets economies might be interested to find out more about the latest Structured Product available through Barclays Stockbrokers.

The new Emerging Markets Autocall Accelerator from RBS offers a possible 20% fixed return after two years if the MSCI Emerging Markets Index is then above its starting level or, if not, a return based on any rise in that index after the full term of five years. Investors considering this product should be aware that their capital is at risk and they could lose some or all of their investment.

Remember that you can login and use our online Research Centre to keep pace with market movements or have a look at our top 10 equity buy and sell lists to see what stocks your fellow clients are trading.

24 September 2010 - FTSE-100 Index changes - who are the new kids in school?

Every quarter, the FTSE-100 index is rebalanced to ensure its constituents reflect the 100 most highly capitalised UK companies listed on the London Stock Exchange. The most recent rebalance has just taken place, coming into effect from 20 September 2010 and coinciding with the index crossing the 5,600 points level for the first time in over four months.

So who are ‘the new kids in school’ and how have they settled in during their first few days? Who has slipped out of the top set as a result?

First to get the call up to the top class is Resolution (RSL), the insurance investment vehicle. With a market capitalisation of £3.3 billion, Resolution recently built on the 2009 acquisition of life insurer Friends Provident by adding French insurer AXA’s UK life insurance business to the stable. Despite the share price being on a declining trend since listing, the company’s growth through acquisition has seen it meet the market cap criteria for FTSE-100 inclusion. Resolution’s first few days in the FTSE-100 have been less than spectacular, with the share price falling 9%.

Joining Resolution in the FTSE-100 index is Scottish based pumps manufacturer Weir Group (WEIR). The company has a strong international presence, and this month progressed with acquisitions of South African and Indian companies to bolster that international footprint. With a market cap of £2.88 billion Weir’s share price has been on the up since November 2008, seeing a four fold increase since then. Indeed Weir’s entry to the FTSE-100 saw its share price hit an all time high of 1440p at the beginning of the week, only to subsequently fall back by 8%.

Both Resolution and Weir Group have found that the first few days in a new school can be a little tough!

Last of the new kids is engineering group Tomkins (TOMK), currently valued at £2.87 billion. However the company’s stay in the top class will be short lived as the board has recommended a 325p cash offer to shareholders that many analysts believe undervalues the firm’s potential. Like a naughty pupil, Tomkins had its LSE listing temporarily suspended as a result of the offer. This means that either healthcare firm SSL International (SSL) or specialist publisher Informa (INF), both waiting in the corridor as potential replacements, will come in to take Tomkins place.

Making way in the FTSE-100 class for the new ‘pupils’ were Home Retail Group (HOME), Segro (SGRO) and Cable and Wireless Worldwide (CW.), all of which have seen their share prices decline across the last three months.

Remember that you can visit our Research Centre to keep track of FTSE-100 index movements or follow news and prices of the new members of the top class.

Of course, as well researching investment into individual equities, some investors might also be considering broader exposure to the UK market. If so, Exchange Traded Funds (ETFs) could be the answer. For example, an investor looking to get exposure to the FTSE-100 index could consider an ETF designed to track the index, such as iShares FTSE 100 (ISF).

You should remember that with investments into equities and ETFs, your capital is at risk, the value of your investments can fall as well as rise, and you may receive back less than you invested.

14 September 2010 - All change down under

Our far-flung friend Australia has finally emerged from a political deadlock that has extended almost three weeks past their snap elections on 21 August. Much like the period of political machinations experienced in the UK earlier this year, before our hung parliament was announced, candidates have spent the past few weeks vying for the support of independent MPs.

With the backing of a handful of Green and independent MPs, Julia Gillard now has the 76 seats she needs to form a Labour minority government.

There are interesting implications for investors here. It is unlikely that a minority government will be able to push through any radical policies and from an investment perspective, this removes some of the perceived political risk associated with the region.

In particular, there are some markets that will heave a sigh of relief. The previous Prime Minister, Kevin Rudd, had proposed a 40% super tax on the mining sector; a policy move that was met with outrage from investors. In the interests of making a diplomatic gesture, Julia Gillard tried to calm investors with a lower rate of 30%, but remains adamant that she will go no lower.

This government could prove welcome for operators in the Australian mining sector and potential investors. The mining tax was a deterrent for foreign investors and the prevention of such a tax should boost investment in the Australian Stock Exchange.

There have also been bold political and economic promises. Tony Abbott, the leading liberal candidate, has promised to cut debt by a third, were he to take the reins (which looks unlikely); whereas Gillard has sworn that she will return the budget to a surplus in 2012/13.

Recent economic announcements also push Australia in a positive direction on the investment barometer. Australia’s central bank left its key cash rate unchanged at 4.5%; an upbeat drum for investors to beat.

For Barclays Stockbrokers clients, it is well worth keeping an eye on events as they develop, for the political happenings in Australia will have a real impact on the country’s investment potential.

For investors looking to gain investment exposure to Australia then the iShares MSCI Australia, an ETF designed to track the MSCI Australia index, could be worth considering. Bear in mind that investment into ETFs can fall as well as rise and you may get back less than you invested.

1 July 2010 - Markets back in focus as sporting distractions fade

After a relatively quiet period for the markets and as the World Cup in South Africa reaches the quarter finals, economic events have come back into focus. Markets wobbled on Tuesday 29 June on the back of worries that the European Central Bank (ECB) is being too rapid in scaling back its support to Eurozone banks.

The ECB news was further exacerbated by fresh concerns over China’s growth rate. The US based Conference Board indicated that the recently introduced leading Chinese economic index showed an upward shift of just 0.3% in April, well behind the initial forecast of 1.7%. This heightened fears of a slow down in Chinese growth and the knock on effect that would have on economies across the globe. The Conference Board added further fuel to the fire as it announced that US consumer confidence had decreased to 52.9, from 62.7 in May, once again well below expectations.

Amid these news flows, major markets endured a turbulent trading session with all developed market indices suffering losses on Tuesday. In the UK, the FTSE 100 index fell 3.1%, to close below 5,000 and across the English Channel, both French and German markets suffered similar losses, with the CAC40 and the DAX falling 4% and 3.3% respectively. Wall Street fared no better in the later trading session with the Dow Jones closing down 2.65% at 9,870.3 points.

In currency markets, the Euro tumbled to a 19 month low against sterling and an eight year low against the Japanese Yen.

Conferences for the G20 and also G8 are key fixtures on the economic calendar, particularly in the aftermath of the credit crisis as these forums were seen as instrumental in enabling a consistent strategic global response. Reaction to the recent G20 summit in Toronto has been less than enthusiastic. The agreement reached by participants to halve economic deficits by 2013 appeared at first to be a strong commitment. However, sceptics were quick to highlight that for most, this falls within the threshold of the deficit cuts already committed to. This makes it no more than a validation of targets each nation had already planning to achieve.

Here in the UK, most investors are already familiar with new Chancellor George Osborne’s austerity budget and this was specifically referenced in the final G20 output. Banks were the other main area of focus for the G20, with the summit participants agreeing to focus on achieving new minimum capital level requirement in time for their next summit in Seoul, South Korea, scheduled for November.

So, has the football lull been a mask for the calm before the storm or are we experiencing some minor road bumps in the long haul journey to full recovery? Keep track of market events and movements by logging into our Research Centre.

12 February 2010 - Roses are red, the FTSE is blue, markets are tough so what can you do…?

Love may well be in the air as we approach Valentine’s Day, but there are mixed emotions on the performance of the FTSE since the start of the year and indeed what may lie in store for the year ahead.

This week’s ViewPoint takes a look at the current market landscape on this Valentine’s weekend and considers what opportunities are out there for those investors looking for a hot trade!

On Friday 5 February the FTSE danced around the psychologically important level of 5,000, down from a high of 5,420 a month earlier, a near 8% drop. And while there has been a steady incline in the last week, the FTSE is again trading down today at 5,149 (Fri 12 Feb).

So what does this mean for lovers and traders alike? Now that the FTSE is trading at a relative low does this mean its time to play footsie with the FTSE? Could this be the time to consider the iShares FTSE 100 for your portfolio? Or are there some more exotic asset classes primed to get temperatures rising?

In January, the UK technically came out of recession, posting a 0.1% growth in the economy, but this marginal growth means the UK continues to monitor its quantitative easing strategy. Indeed, last week the Bank of England hinted that it could still inject billions more into the economy with the Bank Governor Mervyn King saying it was “too soon” to suggest halting quantitative easing.

In Europe we are also seeing debt fears materialise, with Greece, the land of Aphrodite, continuing to have problems. This week EU leaders acted to help Greece alleviate its debt crisis in order to ensure stability was maintained across the euro zone, but have stopped short of making any specific commitments. This development has put pressure on the euro, making currency and equity markets very nervous indeed.

This nervousness has also affected Portugal and Spain, which are seen as vulnerable if Greece’s problems aren’t managed successfully. The Spanish economy shrank by 0.1% in Q4 2009, which means it is the last major economy to remain in recession. President of the European Council Herman Van Rompuy appeared keen to voice his support for Greece at this week’s EU summit, issuing the following statement: “We fully support the efforts of the Greek government and their commitment to do whatever is necessary including adopting measures to ensure that the ambitious targets set in the stability programme for 2010 and the following years are met.”

Despite this turbulent backdrop of macro economic activity, there are a number of ways to trade to your heart’s content including looking at our Top Ten trades, which are the most heavily traded shares by clients on the Barclays Stockbrokers website.

Oil and gas turns steamy

Petrofac, BP, Desire Petroleum all in the top ten trades this week, with crude oil prices climbing above $75 a barrel as investors find confidence in the European Union’s plans to support Greece.

Mining stocks to melt your heart

Xstrata was the fifth most purchased stock on Thursday 11 February, with Rio Tinto the sixth most sold stock on the day.

If you hold a long-term view of love and life in general then why not take a look at our new FTSE 100 Accelerated Returns issue 5 structured product, which is available exclusively to Barclays Stockbrokers clients from Monday 15 February until 15 March. To speak to one of our structured product specialists, call 0845 300 9040.

However, if this isn’t hot enough for you and you have the experience and knowledge to trade our more risky products, then why not speculate on the price movement of sectors, indices or currencies with BARXdirect: CFDs and Financial Spread Trading or BARXdirect: FX which all offer online trading on a global time-zone.

CFDs and Financial Spread trading are leveraged products which mean that you are required to deposit a fraction of the overall value of the trade. Margins are variable and enable you to magnify your return on investment. However, losses are also magnified and so CFDs and FST should only be used by experienced investors who are comfortable with the risks associated.

Happy Valentines Day!

1 February 2010 - Out of recession but not out of the woods

It was confirmed on Wednesday that the UK officially came out of recession with a 4th quarter growth of 0.1%.

Despite a return to growth, following six consecutive quarters of contraction and a 6.1% reduction in the economy, the news was met by a tentative market reaction, with a small 16 point rise to 5,276.85 by close on Wednesday 26 January.

This reluctance to celebrate follows a shaky start to the year for the economy. Take for example last weeks Investment ViewPoint: Comment Parallel economics where we discussed how investors are historically wary in the run up to a close run election and fuelling this, the continued uncertainty of how the Government will tackle Britain’s budget deficit of £178billion. Additional factors this week may have added to the apprehensive market mood including a shock announcement of sweeping reforms of the US banking system by President Obama (although the response from both UK Government and opposition indicate this might not be a consistently adopted approach), rumours around the possibility of the Chinese economy overheating and policy makers reigning in domestic bank lending.

The glimmer of recovery also seems to be restricted to certain sectors with others struggling to return to the black such as construction with public spending cuts adding to the pressure of low levels of building activity.

Alastair Darling yesterday warned that there remains a possibility that the UK could slip back into recession despite the growth. The impact of the return to previous tax levels of 17.5% and the Big Freeze have yet to take hold and may still have a detrimental effect on the economy.

A return to growth could also mean that it might not be too long until the quantitative easing measures introduced to combat recession, are paused, with close monitoring and control of inflation a prerequisite. No doubt the government will be paying very close attention to market reaction and next quarter’s figures to inform their next steps.

To stay abreast of market sentiment and the latest economic news sign up for our Alerts services. To register, select ‘Alerts’ from the left hand menu of the Research section. Choose from a range of stock alerts that will notify you via email whenever a stock prices rises/falls by an amount or percentage you select. Alternatively register for Market Insight Alerts directly from our research partners for all the latest market movements and news including Morning Call, Midday roundup and Analysts Views.

8 January 2009 - M&A news thaws a frosty outlook for the New Year

Looking back on the decade we have just left, the ‘noughties’ were notable for some significant Mergers and Acquisitions activity, particularly in the early years, which saw M&A deals such as America Online with Time Warner and Glaxo Welcome with SmithKline Beecham. However Mergers & Acquisition volumes were hit hard in 2009 as a result of the financial crisis and the freezing up of the credit markets. Now though, early indicators already suggest that 2010 may be a year for the revival of M&A. Equity valuations, rehabilitated credit markets and economic recovery all provide an ideal environment for a growth in M&A activity.

Historically, M&A activity has been closely correlated to the state of equity markets and some chief executives may want more clarity before committing themselves to any significant deals. However a cautious revival is expected and the market has already buoyed as a result of the first major M&A deal of the year (Swiss food group Nestlé said it was selling a majority stake in its eyecare unit Alcon to Swiss drugmaker Novartis). The FTSE has started the year on a positive note, rising 87 points by close of Market 4 January, despite suspicions that the rally seen in the final weeks of 2009 would fade come the New Year.

At the start of the week the FTSE World index also rose 1.5 per cent to 344.4, a new 15-month high, as the M&A sunshine brightened what is generally considered the northern hemisphere’s most depressing day – a post-festive, back-to-work Monday.
Indeed the market has continued to offer a respite from the cold, with the FTSE 100 staying above the 5500 point mark for two consecutive days for the first time since the collapse of Lehman Brothers in September 2008.

Login to our Research Centre to monitor M&A news and potential market reaction or investigate companies that might be a potential M&A target or acquirer. Alternatively if you want to keep an eye on the Barclays Wealth view of M&A activity login to our research centre and look out for our monthly investment strategy publication Compass.

You should be aware of the risks involved in investing in stocks associated with M&A activity. The value of these stocks can quickly fall as well as rise and you may receive back less than you invest.

23 December 2009 - Market pace slows down as the decade draws to a close

With X-Factor and Strictly Come Dancing reaching their conclusions and even the Christmas Number one now decided, clearly the year is now drawing to a close. That is certainly the case from an economic perspective. As the Copenhagen summit on unilateral climate change policy disperses with a tone of dissatisfaction emanating, there now remain only a handful of economic events in the diary with the potential to distract markets from the onset of the seasonal festivities.

Perhaps the most notable was the announcement of the revised third quarter UK GDP figures. The initial figures issued in November are an estimate and the subsequent revisions can paint a slightly different picture. There was consensus that the forecast contraction of Q3 GDP would be revised upwards, with a minority of analysts speculating that the revision may go as high as suggesting that the UK did in fact come out of recession in Q3. The reality was a revision of economic contraction from 0.3% to 0.2%, so while a move in the right direction, it was not the early Christmas present of the UK pulling out of recession that some may have hoped for. It would seem that economic data remains in line with the expectations for a gradual economic recovery in the UK next year, at a far slower pace than many developed and emerging market counterparts. Remember you can login to our research centre to track market reaction to all macro and micro economic events.

It almost seems to be going unnoticed but Thursday 31 December will not only herald the end of the 2009, but the end of the decade. The end of the ‘nougties’ as they are now affectionately known, does not seem to be being greeted with the same level of excitement as the end of the 80’s or the 90’s but there is certainly nothing unremarkable about the decade from an economic perspective and it is perhaps worth reflecting on where the markets have been in the last 10 years. Almost 10 years ago to the day the FTSE 100 was at a high of 6,930 points. Its decade low was 3,287 points in March 2003, a threshold we came close to revisiting at the start of this year. Since then, recovery has gradually kicked in and with the FTSE 100 now above 5,300, there is cautious optimism looking ahead into the next decade.

Since 2000, we have had the tail end of the tech boom, the burst of the dot.com bubble, the full advent of the Euro and the now all too familiar Credit Crisis, not to mention countless political and social events that have shaped the markets. Wouldn’t it be interesting to know what events we will be reflecting on at the end of 2019?

We wish all our clients a very Merry Christmas and a Happy and Prosperous New Year.

8 December 2009 - Gold and Japan both on the rise

It has been quite a year for gold. The commodity has been one of the significant beneficiaries of the financial climate over the last 12 months, with the gradual weakening of the US $, an environment of low interest rates, and periods of cautious investment appetite all combining to provide the right blend of economic conditions for gold’s price to soar. Gold hit a new all-time price high on Thursday 03 December as it broke through $1,225/oz and its spot price has now appreciated by 61% in the last 12 months.

Forecasters seem to have consensus on gold’s price remaining strong in the short term, with some predicting it will stretch as high as $1,350/oz in 2010. However there is also consensus that the inherent market movement in the commodity’s value will remain, which clearly presents risks to investors. In addition, the mid to long term view on gold is mixed. While the economic conditions currently favour the precious metal, those will inevitably change over time, and combined with the market movement gold’s price displays, this could mean a sudden burst of the bubble. Investors who choose to buy into gold would be wise to monitor the commodity closely and manage their position. As with everything, timing of the exit from an investment in gold could be critical.

For further background on the economic dynamics of gold read our Investment ViewPoint: Analysis article from December 2008 “Gold – A wise man’s gift?”.

If gold is a commodity you want to investment in then you could consider the Exchange Traded Commodity (ETC) ETFS Physical Gold (PHGP) as one of the most direct ways to get investment exposure.

You should bear in mind that investment in gold produces no income; its value lies in only its capital value which can go down as well as up, its price may fall as well as rise and can incur losses. Dealing in ETCs is not for everyone; please seek independent advice if you are in doubt as to their suitability for you.

Elsewhere in global equity markets, Japan captured investor attention as the Nikkei 225 Index rose by 10% during the week, its biggest weekly gain in 17 years. The main driver behind this was a shift in policy from the Bank of Japan who sought to halt appreciation of the Yen by introducing a new short term liquidity programme.

Japan embraced low interest rates and quantitative easing before most developed markets with the Yen strengthening throughout the year as a consequence. However the change in direction is viewed as a move that may take pressure off exports, a critical component of Japan’s economy that has been constrained by the Yen’s strength. Japanese equity markets responded very strongly as a result. Further changes to bolster this position are anticipated. The new Japanese government announced its first fiscal package of 7tr Yen on Tuesday 08 December, aimed at preventing a return to recession in 2010 and announcements on more aggressive measures at the Bank of Japan’s scheduled meeting in two weeks time are expected.

Investors interested in gaining exposure to the Japanese market might want to consider an Exchange Traded Fund (ETF), such as the iShares MSCI Japan. Alternatively a managed fund focussed on investing in Japanese equities may be of interest. There are over 30 funds in the IMA ‘Japan’ sector on Barclays Stockbrokers Funds Market. Access the Fund Factsheet Search on our Funds Research Centre and select ‘Japan’’ from the IMA menu selection to find out more.

Remember that the value of funds can fall as well as rise.

30 November 2009 -Standing still makes markets move

There appears to be a new sense of what constitutes normal market conditions, with the relative calm and steady gains in the FTSE 100 over early to mid November seeming somewhat unusual after the experiences of the past 12 months. “New normality” resumed on Thursday 26 November, as equity markets were significantly weakened following unsettling news from Dubai on the request for a debt standstill. Dubai World, the government flagship holding company behind much of the Emirates’ ambitious programme of real estate projects, requested the standstill, asking to cease payments on all financing related to itself and its property unit, Nakheel, until 30 May 2010.

The request has come as an unwelcome surprise to the markets, which had taken comfort from several government assurances over recent months that all the debt obligations would be met. The standstill request raised the spectre of potential defaults on debts, which in turn triggered fear in the markets and led to the losses seen on 26 November - the FTSE 100 fell 170 points on the day.

The event certainly erodes investor confidence, which in the context of the current financial climate is fragile as global markets gradually move into recovery but cast nervous glances behind them for signs of credit crisis aftershocks catching back up. The timing of the announcement itself is curious. The local stock market in Dubai was closed for the Eid holidays and the US market was unable to react fully until Monday 30 November due to the Thanksgiving holidays.

The short-term impacts on global markets are already apparent, and the region itself would appear to have a tough time on the horizon, following a 6-7% drop in equity markets when they re-opened. However there is speculation that the wider impacts over the mid to long-term may not be as serious a problem. The debt in question is in the region of $80bn, and while far from insignificant, it is not on the scale of the exposures involved in the credit crisis, which surpassed the trillion dollar mark. Similarly, the bonds in question are not as complex as the derivative credit structures at the root of the main problem last time. And let us not forget that there is now a year’s experience in the market when it comes to dealing with such a crisis. There are also some suggestions that the standstill request from Dubai is a test, designed to measure investor tolerance to potential voluntary restructuring of debts.

The next chapter in this particular story will unfold in due course, with investors looking to Dubai for full clarity on its plans and watching for broader market reaction from the US and elsewhere over the coming days. To keep close to all the related market events as they happen, access the latest news and market movements by visiting our Research Centre.

16 November 2009 - Is defence the best form of attack?

The UK’s third quarter GDP figures proved disappointing. Output fell by 0.4% on the previous quarter, confirming the UK remains mired in the longest recession on record. However, the GDP data itself has been questioned, as most economists had been expecting a small rise in output. It is generally accepted that GDP data can be unreliable around economic turning points and separate business activity surveys suggest a resumption of growth. So, we suspect that the economy contracted by less than reported in the third quarter; expansion in the fourth quarter of this year remains a reasonable possibility.

Consumer price inflation has fallen from its recent peak of 5.2% in September 2008 to just 1.1% this September. A number of factors now conspire to start nudging it up again. Tax changes – notably, the return of VAT to its pre-crunch level in January 2010 – will be one of these. But sub-trend growth could result in increasing spare capacity in the economy, offsetting some of these upward pressures, so a persistently sharp rise in prices looks unlikely.

So, what does this mean for investors?

Considering recovery stocks is one approach. Particularly strong in this sector are Astra Zeneca (AZN) and Glaxo Smithkline (GSK). What makes these appealing is their strong fundamentals; - both have relatively secure dividends of +5% and PES of 10 or less making them potentially good value growth stocks.

Last week, positive news from the high street showing the strongest October retail sales growth in 7 years (3.8pct) suggests that there may be some mileage in cyclical retail stocks. Sainsbury (SBRY) announced, a 37% rise in pre tax profits over the same period last year and increased its final dividend from 3.6p to 4p.

Tesco (TSCO) has seen its first growth in market share for almost two years according to research firm TNS Worldpanel. The UK's number one supermarket has reaped the benefit of its double Clubcard points promotion and took 30.7 per cent of the grocery market, in the 12 weeks to 1 November. Looking closer, the fundamentals are strong, with an already relatively low PE at 11.4 and its highest final dividend in 5 years (8.39p) in Feb 2009, recent good news from the sector could be viewed as positive lead indicator for Tesco.

As an investment strategy, retail stocks, that are cyclical, combine well with pharmacuetical stocks which are defensive. In theory, should the retail sector resurgence fail to flourish, pharmaceutical stocks should not be affected.

The value of stocks and shares, and the income from them, can fall as well as rise and you may not get back the full amount you originally invested. House view on AZN (buy)/GSK (hold)/TSCO (accumulate).

11 November 2009 - Choose your next move

When looking at investor behaviour and opinion, it is often possible to see a clear pattern in terms of a consensus view on expectations of future market direction – at the moment however, the picture is less clear. Of course it takes opposing views to create a market, but opinion as to the shape of the recovery and the future direction of equity markets is extremely mixed right now.

Investors appear to feel nervous at the risks of being both in and out of the market – it seems that a sharp market move may be imminent, but in which direction?

With manufacturing output rising, PMI (Purchasing Managers Index) data pointing to economic growth in the UK, encouraging US GDP figures, US house sales higher for the eighth consecutive month and stability apparent across equity markets generally, the picture might appear rosy. But equally there are several pieces of evidence that are clearly causing some nervousness amongst investors – uncertainty over the future direction of the Quantitative Easing programme being implemented by the Bank of England, GDP figures confirming that the UK remains in recession being key elements that are unsettling investors.

In this Investment ViewPoint, we look at how you might look to protect your portfolio against a possible broad pull-back in equity markets or indeed how you might look to profit from such moves should they occur.

Firstly, let us look at defensive options – how to remain invested yet appropriately positioned in order to minimise any losses that may be incurred should there be a pullback or dip in the markets. The traditional ways to achieve this remain valid considerations today – look at defensive equity sectors such as pharmaceuticals or food retailers, areas that remain relatively stable in times of heightened volatility or weakness. Or you may wish to consider switching some of your portfolio into Fixed Income investments View our Investment ViewPoint: Analysis – Are returns still Income-ing?

Alternatively, in order to retain exposure to equity markets, you may wish to look at our Structured Products. Currently there are no issues available in the primary market but in the secondary market there are a variety of products that you may wish to consider, such as the FTSE 100 Protected Defined Returns structured product

Finally, experienced investors may wish to consider the use of leveraged products in order to either hedge core holdings or even achieve outright short exposure with a view to profiting from a downturn in the market. Products that can be used to implement these strategies include covered warrants as well as CFDs and Financial Spread Trading

We will go into each of these areas in future publications, so please keep an eye on our secure research centre regularly and watch out for future Investment ViewPoints and Cotter’s Corner pieces.

As with all investments these asset classes carry different levels of risks and you can lose money as well as making profits.

12 october 2009 - Whatever the weather

The market appears to have paused for thought recently, but this week will see investors looking to 3rd Quarter results releases on both sides of the Atlantic for clues as to future direction.

Recent unemployment data has been poor and economic releases generally have been mixed, but equity markets have held on to their gains of recent months. The recovery appears to be built upon measures introduced by Central Banks to improve global liquidity conditions and, on an individual company basis, by implementation of cost-cutting measures.

But equity markets are a barometer, not a thermometer – they are forward-looking rather than an indication of current conditions – and this may help to explain the apparent anomaly of a strong equity market against the backdrop of a poor employment picture. Unemployment is a lagging indicator whereas equity markets look ahead at future economic prospects, but eventually there has to be some clear evidence to support the confidence that appears to prevail at the moment in investors’ minds – this week could be pivotal in that regard as we enter 3rd Quarter earnings season in both the UK and the US.

These results have to demonstrate evidence of some of the much talked-about green shoots in order for the rally to be sustained – last night, Intel reported earnings and revenue ahead of expectations and markets will no doubt take a short-term boost from that, but investors are keenly focussed on the financial companies results as they come through later in the week (JP Morgan Chase 14th October; Goldman Sachs and Citigroup 15th October and BoA Merrill Lynch on 16th October).

2nd Quarter reporting season in July was clearly an important time in the market’s recent rally log in to our website and keep in touch with market news as it breaks.

8 October 2009 - Engage and prepare

As we move into the final quarter of 2009, the markets generally appear to have returned to the growth track but questions remain as to the short-term sustainability of the rally. While the occurrence of the much talked about ‘double dip’ recession (or W shaped recovery) cannot be ruled out, as market wobbles such as the FTSE 100 drop of more than 140 points at the start of October bears evidence to, there remains a strong view that the time is ripe for investment engagement as general market confidence and growing liquidity can combine to propel markets higher.

So there are two things investors may now want to focus on. Firstly, if the market rally continues, what can they do to maximise the benefits of that market engagement? Secondly, if a market correction takes place in the near future does it represent an opportunity? What should investors do to prepare for that eventuality?

In terms of market engagement, we suggested in last week’s Investment ViewPoint Commentary “Sugar and spice and all things… equities” that equities may be in a sweet spot as market liquidity enables companies to turn their attention to stability and growth. Now, the October issue of Barclays Wealth Compass publication suggests that investor attention should also focus on the asset classes and sectors that typically do well in the early stages of a recovery. It points to two areas for consideration – emerging markets and developed equity market small caps, in particular US small caps.

Regular readers of Investment Viewpoint will be well versed by now on the emerging markets theme. Our recent Investment ViewPoint Analysis articles have discussed at length the resurgence of interest in these sectors and the various ways to get investment exposure here, either broad-based across the emerging markets spectrum or focused on specific markets such as China and Brazil. They have also highlighted the risks inherent in these markets, primarily their higher levels of volatility when compared to developed equity markets.

Small caps by definition are stocks with relatively small market capitalisations and the sector is often associated with fledgling companies with growth potential ahead of them. However small caps consequently carry higher risk due to the increased potential for these companies to fail. Our latest Cotter’s Corner article looks at the lessons to be learned from analysing top moving stocks and John touches on the characteristics of small caps, and the investment dangers that lie therein. There is certainly more risk involved in small cap investment and these need to be fully considered. However if this is an area that has appeal, and if US small caps are of particular interest, then ETFs or traditional funds might be worth consideration. For example, the iShares S&P Small Cap 600 is an ETF that provides exposure to 600 companies which reflect the risk and return characteristics of the broader small cap universe in the US – this covers companies with a market capitalisation in the range of US$200m – US$1bn and represents 3-4% of the US equities market. Alternatively look for funds in the ‘North American smaller companies’ IMA sector through our funds research centre. Bear in mind that ETFs and funds may not be suitable for everyone and their values can fall as well as rise.

In terms of a market correction, what should investors be looking at should one occur? That obviously depends on an individual’s investment approach but there are a number of strategies one might wish to consider.

Investors with a mid to long term time horizon may simply view a correction as part of the short term market movements that they largely ignore. In that case, they may sit tight and ride it out.

However others might see a correction as an opportunity. Some investors might look to exit current positions as the market starts to go down, then re-invest when they think the correction has levelled out. This could be a risky strategy as timing would be key and there are no guarantees of getting the exit and re-entry points right. Others may look to open new positions or top up on existing ones if they believe a market correction leads to investments being of fairer value.

Finally, investors with an appetite for higher levels of risk may be looking for a correction in order to take advantage of the downward market movement. In this case, the use of CFDs and FSTs may come into play as a leveraged way to maximise opportunities when confident of a sharp market movement in a particular direction. Bear in mind the risks associated here, these are leveraged products that place capital at risk and investor losses can quickly exceed their initial deposit. For those who may be looking to profit from a downturn in the market but in a less highly-geared manner, then consideration should be given to Covered Warrants and Turbos – instruments designed to offer a degree of leverage whilst also limiting potential losses to the amount originally invested. There is a series of Put Covered Warrants currently listed which focus on individual stocks or on specific equity indices, which should satisfy investors’ requirements to hedge their portfolios or indeed to gain overall short exposure to the market. Put Covered Warrant worked example

So regardless of which way the markets move next, there is likely to be a way to play it for most investment strategies. And with over a year having passed since the extraordinary events of the Lehman Brothers collapse, surely one key investment lesson learnt must be to be prepared for anything.

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10 September 2009 - Looking back to the future

Regular readers of Investment ViewPoint will recall that in April we discussed a number of topics including G20, Euro weakness vs. Sterling strength, Green shoots of a US recovery and the UK Budget Announcement. In each of these articles we focused on key themes which we believed could prove interesting for investors in the future. This week we take a look back at those macro-economic decisions reached in April and assess the affect these developments have had on the world’s mainstream markets and economies.

In April the agenda for the world’s richest nations as they assembled together in London for the G20 summit was very much to focus on the macro measures required to revive the global economy. Quantitative easing was agreed as a central tool for stimulating recovery with a $1.1 trillion package announced in an attempt to address the credit crunch. At the time Gordon Brown, the British Prime Minister was quoted as saying “This is the day the world came together to fight back against the global recession” Markets initially rallied on the back of this news with the FTSE closing up 4.3% on 2nd April taking it over the 4,000 mark for the first time since February. Fast forward five months and the FTSE is now trading at around 4,950, a two year high – suggesting that the fiscal packages announced have had a sustained positive effect on global markets as captured below.

With regard to global currencies, Sterling has been a big winner strengthening against both the Euro and the US Dollar. Back in April, 1 euro would buy you 91 pence but will now only buy you 87 pence. With respect to the US Dollar £1 will now get you $1.64 of the greenback versus the measly $1.44 on offer back in April. However, what about the world’s largest economy? Despite the US Dollar devaluing against the pound in recent months is it really all still doom and gloom or are we finally starting to see those green shoots that have been long heralded?

Last week the US government reported better than expected GDP results which showed the economy had shrunk by 1% (vs. a consensus estimate of 1.5%) in what looks like another sign on the road to recovery and in the last few months we have had Japan, Germany, Hong Kong and France all come out of recession. Here in the UK, GDP for the 2nd quarter fell by 0.7% (consensus -0.8%) and only last week the OECD (Organisation for Economic Co-operation and Development) downgraded its forecast for the UK economy saying the UK will miss out on this early global recovery from recession which has started. So we can see that not only have global economic measures had a profound effect on the global economy but, closer to home, the UK economy is now showing signs of recovery albeit not as quickly as competing economic nations.

If you have a view on how these macro economic decisions may continue to influence financial markets, you can do so through a number of products at Barclays Stockbrokers. Our foreign exchange platform, BARXdirect:FX allows you to speculate on the movement of the world’s currencies, whether they are rising or falling. Equally our CFD and Financial Spread Trading (FST) products have proven popular as clients look to take advantage of falling and rising indices and equities with the FTSE 100 one of our most actively traded instruments. If you are more conservative in your trading approach but would still like to get diversified exposure to some of these economies you can do so through a range of trackers including Exchange Traded Funds (ETFs) and structured products.

Always bear in mind though that these investments can fall as well as rise in value and with FX, CFD and FST products you can lose significantly more than your initial deposit or margin payment. The investments are not suitable for everyone; if you are in doubt about their suitability for you, you should seek independent advice.

You can keep up to date with market news and events by logging in to your account and visiting our Research Centre and of course future Investment ViewPoint articles as we continue to track and analyse market trends.

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27 July 2009 - Recovery due in 2010… so what does Henk Potts think about investment opportunities in 2009?

Both the US FED & the National Institute of Economic and Social Research (NIESR) agreed this week that it is unlikely we will see an immediate change in terms of fiscal policy and that the economic recovery is not going to fully begin until 2010.

Head of the US Federal Reserve, Mr Bernanke, stressed that despite glimmers of improvement in the economy, the Fed intended to keep interest rates extremely low for an “extended period”:

“I want to be clear that we have a very long haul here because, even if the economy begins to turn up in terms of production, unemployment is going to stay high for quite a while, so it’s not going to feel like a really strong economy,” he said in his biannual report to Congress.

Also,the National Institute of Economic and Social Research (NIESR), predicts that UK GDP will fall by 4.3% in 2009 before growing 1% in 2010 and 1.8% in 2011.

So what does this mean for the ordinary investor in 2009? Many of us are left wondering what we should do to make the most of the markets in the current economic climate.

If you tend to adopt a more cautious or moderate approach to investing then you might want to consider investing in a product which offers attractive income compared to a typical high street retail savings account, such as our iShares Corporate Bond (SLXX).

ETFs are traded like shares and may not be for everyone. They closely track the performance of an index and as such their value can go down as well as up and you may get back less then you invested.

Find out more about the iShares Corporate Bond >>

If however you have a more bullish outlook you might consider investing in equities. Henk Potts, Equity Strategist at Barclays Wealth cites five stocks to watch in an article in our up and coming summer edition of Smart Investor magazine.

Henk says:
‘Continuing growth in emerging markets has offered some hope for recovery. BHP Billiton is an attractive option because of its superior operational track record… Login and visit Investment ViewPoint from our Education tab to find out which other stocks Henk has identified >>

If you are not yet a client open an account today and you will benefit from our market-leading research and educational content including Smart Investor and Investment ViewPoint.

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20 July 2009 - The shape of things to come?

L, U, V or W? That is the main question investors are asking when considering what shape or pattern the market recovery will take, if and when it materialises.

After a turbulent first three months of the year, where the global economy remained apprehensive about further after-effects of the credit crisis and waited anxiously for the first signs of good news, positive economic data started to emerge across March and April. This led to a rally in the second quarter with the markets eager to accept the view that recovery was on its way.

In our Investment Viewpoint from 24 June “Road to recovery always going to be rocky” we noted the effect of less optimistic global growth forecasts on the markets, as equities, commodities and currencies all lost ground, and we questioned what stage the economy was at on the path to recovery. Was it a wobble, a correction or a bear market clawing back?

The past week saw further market movement in a positive direction, which added fuel to the debate on the shape and timing of an economic upturn. The Fed revealed upward revisions in their projections for growth and inflation, lessening their concerns on the risk of a prolonged bout of deflation. China revealed a year-on-year growth in Q2 GDP of 7.9%, up from 6.1% in Q1. And equity markets rose, in the US on the back of a strong set of quarterly figures and a bullish outlook from Intel, the world’s biggest chipmaker, and in the UK, driven by mining stocks benefiting from gains in metals prices.

The bulls took this encouraging news by the horns as markets bounced away from short term lows seen in the previous weeks. In the US, the S&P 500 index closed above 940 points on 16 July, a gain of 7% since 10 July. Similarly the FTSE 100 closed at 4361.8 points, up 5.7% over the same period.

And yet, even though the bulls have dominated the week, there were still mixed signals being issued. Both US and UK unemployment data last week was pessimistic. UK jobless figures showed unemployment to be at its highest levels since January 1997 in the three months to May, and mixed into the Fed’s growth and inflation forecasts was concern about the US labour market, where their projection for unemployment was revised higher. Had the more optimistic news not been there to offset these announcements, the economic outlook for the week could have been very different.

So although it was a week for the bulls, the pattern of recovery remains unclear. With most commentators ruling out the ‘L’ shaped recovery (which is effectively a depression), the U, V and W models all remain possibilities and it is interesting to consider what recent market movements are contributing to that eventual outcome.

What’s your view? To find out more on the different scenarios for recovery shapes and what they mean, look at the summary chart featured in our recent Smart Investor email.

Remember that you can stay close to market activity throughout the day by logging into our Research Centre and tracking the movements of the index or equities of your choice.

And if the S&P 500 is an index you track, you may be interested to know more about our latest structured product, the US Supertracker Investment Note Issue 2, which follows that index. Although structured products are not suitable for everyone; when investing in these products you should be aware that you may receive back less than you invested. If you are unsure about the suitability of structured products for you, you should seek independent advice.

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24 June 2009 - Road to recovery always going to be rocky

After weeks of encouraging economic data boosting investor confidence, the markets have undergone something of a reality check over the last couple of days. Doubts have crept back into general investor sentiment with views now emerging to counter the positive outlook that’s been prevalent in recent weeks as the markets have rallied.

The principal driver was the downbeat assessment on global growth prospects from the World Bank, issued on 22 June. They changed their prediction on the contraction the global economy is likely to experience in 2009, downgrading this to 2.9% from the 1.7% contraction forecast in March. The Organisation for Economic Co-operation and Development (OECD) expressed a similarly negative outlook on global economic growth for 09, highlighting the current rise in unemployment as a particular difficulty.

Equity markets, commodities and currencies all felt a resultant impact. The FTSE 100 index closed on Monday 22 June at 4,234.1 points, a drop of over 110 points (2.5%), with the US Dow Jones Index experiencing a similar decline, falling 200 points (2.35%). Gold and oil prices fell to $920/oz and $67/bbl respectively after sustained rallies over recent weeks and copper also dropped to a 3 week low. The $ benefited from its perceived safety status as investors shifted back into the currency.

With the OECD Ministerial Forum taking place in Paris this week and the publication of their own economic forecast on 24 June, there may be further market reaction.

In our Viewpoint from 15 June we asked ‘Where do we go from here?’ following the period of sustained good news that indicated recovery was possibly being cemented as a reality. We suggested that despite current optimism, factors such as the rising costs of raw materials may stifle the apparent revival. If there was any doubt that the road to recovery was likely to be a rocky one then the past couple of days in the market make a strong argument to support this.

As always, it remains to be seen whether this latest bout of market turbulence is a wobble in a bull market resurgence, a correction to a more measured recovery or the first signs of a bear market clawing back.

Keep track of the latest market movements by logging into our Research Centre. From here you can follow the major market indices, read the latest financial news and track individual market sectors.

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08 May 2009 - The secret to successful investing? Like good comedy …

Last week saw the FTSE 100 Index (the ‘FTSE’) complete two consecutive months in positive territory for the first time in more than a year and the key consideration for most investors is whether we have finally turned the corner or are we simply witnessing a bear-market rally?
Of course there are no reliable crystal balls out there, but maybe there are some lessons to be learned from simply looking at the calendar, specifically at the price action of the FTSE during two months in the first half of the year, January and May.

‘The January Effect’
Originally observed in the 1980s by Dom Keim, a graduate student at the University of Chicago, ‘The January Effect’ is widely described as the theory that the price action of the market in January will generally govern activity for the remaining 11 months of the year. Applying this interpretation of his theory to the UK market, the FTSE, in 2009, would suggest that we should expect to see the current recovery petering out as the year progresses. The FTSE closed in January at 4,149, down 6.4% on the month – but the recovery since making a low of 3,460.7 on March 9th has been extremely powerful, ending April at 4,243.7 – a rally of more than 22% in just 8 weeks.

This strong recovery presents an interesting scenario as we now move in to the critical month of May.

“Sell in May and go away, stay away till St Leger Day”
All eyes now turn to May which is historically a very poor month for equities.

This time last year, if you had decided to sell in May, you would likely never have looked back. Getting out of the FTSE (or, indeed, going short) at the beginning of May, at 6087 or thereabouts, would have been a very astute trade. As for getting back in to the market (or covering your short position), well maybe St Leger Day might have been a little early – although the FTSE opened on September 15th 2008 (the next trading day after the running of the St Leger) at 5416, 11% lower, there was plenty more to come on the downside through the remainder of the year and indeed into 2009.

There are some obvious clouds on the horizon when you consider May’s traditional poor performance and the likelihood of profit-taking by those who have benefited from the recovery of the last two months.

However looking at the other side of the coin, these are unprecedented times in the markets and if the FTSE manages to put in a positive performance again in May, then the bulls will certainly be in the ascendancy - maybe the green shoots that we hear so much about will have become established roots for a sustained recovery. Three consecutive months of positive performance would be an extremely bullish signal that the markets were starting to shrug off the bad news and a long-term base could certainly be in place.

So, we could be in a crucial part of the year’s market cycle and it will be as important as ever to keep monitoring the markets. As it says in the headline, like good comedy… it’s all in the timing.

Keep track of the market’s performance throughout May using our Research Centre. From here you can follow the major market indices, read the latest financial news and track individual market sectors.

Looking for investment exposure to the FTSE 100? You could consider the iShares FTSE 100 which tracks the performance of the FTSE 100 Index. Or look at our range of Investment Notes, designed to provide a return linked to the FTSE 100 after a fixed period of time together with repayment of capital in some cases.. The value of both these investments can fall as well as rise.

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20 April 2009 - Green shoots are increasingly visible ….but could there still be a late frost?

In our Viewpoint published on 20 March: US Recession – Is this the beginning of the end? we highlighted the first commentary from the US authorities that the recession would probably end this year and the required political will was beginning to kick in.

In the last week we have seen President Obama claiming that the aggressive action taken by the US authorities is beginning to make a difference, and Ben Bernanke (Chairman of the US Federal Reserve) has supported the change in rhetoric by moving to a more positive stance. However, the degree of change means that investors should remain vigilant, and there will certainly not be an easy ride from here.

Bernanke commented that “We have seen tentative signs that the sharp decline in economic activity may be slowing” and “A levelling out of economic activity is the first step toward recovery”. This continued caution was echoed by Duncan Niederauer, Head of the New York Stock Exchange, who is reported to have observed that the stock market recovery seen in recent weeks has been driven not by long term investors who are identifying good value and positive long term prospects, but instead by short term traders seeking to take advantage of continued volatility. This is not only relevant to the US, but is a general observation on the leading global markets. Mr Niederauer suggests that the definitive sign of a more general return of confidence would be further market rally in June or July, and he expects that by April 2010 the global economy would be significantly healthier than it is today.

The S&P500 rose by 8.5% in March, the best month since October 2002, which has lead to some speculation that the markets are already pricing in the recovery.

If you are looking to take advantage of the continued market volatility– be it the US or UK, iShares offer easy access to indices with the potential to take advantage of short term market movements. You can access major markets, for example the US through the iShares S&P 500 or the iShares FTSE 100 giving you low cost access to the UK market. Alternatively, longer term investors who think that the markets are on the brink of recovery, again iShares can be an excellent cost-efficient tool for you to use in order to gain access to these markets.

If you are an experienced investor looking to capitalise on market volatility and comfortable with the idea of leveraged investments why not take a look at CFDs or FST. However, due to the nature of these investments you can lose more than you invested.

Alternatively if you want to avoid exposure to the current volatile markets, but are prepared to accept a risk to capital over the medium term in order to receive the opportunity of securing above market returns then the FTSE 100 Defined returns Investment Note issue 2 may be of interest. This Investment Note offers an early maturity option on the first anniversary that the FTSE 100 is above its starting level.

Please remember however, that the value of these investments may go down as well as up and you can lose money as well as gain. Barclays Stockbrokers do not give advice and if you have any doubt about the suitability of these investments you should seek professional advice.

Whatever your viewpoint, be it that the green shoots are visible or that late frosts will halt recovery and potentially increase market volatility, you can monitor all the latest news flows and market movements through our research centre.

More information
iShares S&P 500
iShares FTSE 100
FTSE 100 Defined returns Investment Note issue 2
Find out more about CFDs and FST

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20 March 2009 - US Recession – Is this the beginning of the end?

Earlier this week, the Chairman of the US Federal Reserve, Ben Bernanke, gave the first televised interview by a Fed chairman since 1987, in which he stated that the US recession will probably end this year. Although he also commented that the biggest risk to this recovery is the potential lack of political will to attack the problems of the “Credit Crisis”.

Actions speak louder than words, so the surprise announcement on Wednesday that the Federal Reserve will be buying $300bn of US Government debt, should increase liquidity in the markets. The Fed also announced that it will be doubling the purchase of securities from Fannie Mae and Freddie Mac, to $1,450bn.

Such bold actions will undoubtedly have had political support, thus removing the hurdle that Bernanke suggested may impede recovery.

As a result of these announcements, the US equity markets rallied on Wednesday, specifically in the financial sector. If you think that this marks the beginning of the end of recession in the US, you may want to get exposure to this power house of the world economy in your portfolio.

You could consider the iShares S&P 500, which tracks the performance of the S&P500 Index, or if you’re looking for enhanced returns on the US Market, the US Top 500 Supertracker Investment Note, which is currently available in the secondary market, might be for you.

The move also sparked quite a reaction in the Foreign Exchange (‘FX’) markets with the US Dollar weakening sharply. Barclays Capital Research opinion suggests that this “further loosening of an already expansionary US monetary policy will leave the USD vulnerable throughout the remainder of 2009”, with 1.4500 being the target for the Euro vs the US Dollar by year-end (current level 1.3700).

Whatever your ViewPoint on the outlook for major global currencies, for the experienced investor, you have the opportunity to access the world’s most liquid market, the foreign exchange market, via BARXdirect: FX from Barclays Stockbrokers. Here you will find all the research, news, analysis and technical trading tools to help you navigate your way around the global foreign exchange markets, FX is a high risk investment and you can lose money.

More information

iShares S&P 500

US Top 500 Supertracker Investment Note

BARXdirect: FX

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09 March 2009 - Seeking alternative returns?

The BoE has cut rates to 0.5%. This marks the sixth interest rate cut since October 2008 and given this historic low, investors are increasingly focused on sourcing alternative sources of return on their investment.

We have just launched two new FTSE 100 Investment Notes, available exclusively to Barclays Stockbrokers clients which have been tailored to provide investment opportunities depending upon an investor’s view and appetite for risk.

Primarily concerned about protecting capital (i.e. making sure that you get your money back at the end of an agreed term) and achieving a reasonable return on it? Then the FTSE 100 Protected Defined Returns Investment Note might interest you. Or do you view the decline in markets as setting us up for a period of growth, and you want to take the opportunity to achieve significant returns? Our FTSE 100 Accelerated Returns Investment Note Issue 3 could be for you. Please bear in mind that the value of both of these investments can fall. You may get back less than you invested.

Also remember that tax planning is important to maximise the proportion of your returns that you retain, but in an environment where these returns are under pressure as a result of market volatility then investing tax efficiently can make a significant difference to you. Both these Investment Notes are ISA and SIPP eligible if purchased in the ‘primary market’.

Our new online Tax Centre brings you a host of information around tax-efficient accounts and factors to consider when investing, we'll also post important changes to tax regulations, current allowance levels and comment on topical issues in this section.

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24 February 2009 - Is it all doom and gloom?

Moving on from a week where the FTSE struggled to keep it’s head above the psychologically important 4000 mark and the governor of the Bank of England, Mervyn King, has warned that the UK is in a ‘deep recession’ – is it all doom and gloom?

In the Bank of England’s latest forecast for economic growth and inflation, the economy is forecast to decline by around 3% in 2009, followed by a sharp recovery with positive growth in 2010.

This is a view which shared by many of our clients in a recent Barclays Stockbrokers web poll*. Of nearly 3,000 clients surveyed, almost half believed that the FTSE would start to recover in six months and almost a third expected recovery within a year.

So what steps can investors take now, to protect their investments in the short term but also be ready for potential economic recovery in the medium to long term?

Whatever your viewpoint on the market, products offering capital protection may be worth considering, as they can repay your initial investment at maturity or in some cases offer returns that outstrip the underlying markets they track.

If you have a cautious view, the FTSE 100 Protected Defined Returns Investment Note, may be for you. Over a five year term, it offers full repayment of capital at maturity and a fixed return of 32% provided FTSE100 is not lower than the initial level at maturity. If the FTSE 100 is lower than the initial level at maturity only your capital will be repaid and no return.

Alternatively, if you have a more optimistic market outlook, then you may prefer our new FTSE 100 Accelerated Returns Investment Note Issue 3. Over a five year term, this offers a return payable at maturity equal to five times the rise in the FTSE 100 Index over the term, limited to a maximum of 100%. If you invest at launch you’ll get your initial investment back at maturity, provided that the Index has not fallen to less than 50% of the Initial Index Level at any time during the Observation Period. If it does fall to less than 50% of the Initial Index Level and is below this level at maturity your capital return will be reduced by 1% for every 1% the Index is below its Initial Level.

*Results taken from those clients who took part in a Barclays Stockbroker’s web poll:

I believe that the FTSE will start to recover...
• In six months - 48% (1259)
• In a year - 29% (778)
• In two years - 16% (415)
• Not sure at the moment - 7% (188)
(Total responses: 2640)

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13 February 2009 - Looking for an alternative source of income?

The FTSE Index seemed unimpressed by last week’s interest rate cut from the Bank of England with minimal overall movement. Given how low interest rates are in the UK, investors are becoming increasingly focused on sourcing alternative sources of income.If you are seeking a potentially high level of income from your investments then you may be interested in our newly-released structured product - The FTSE 100 Defined Returns Investment Note. This Note gives the opportunity to earn a return of 13.5% per annum for each year that the Note is in force, with a maximum term of five years.It is important to note that an automatic early maturity feature may lead to the investment coming to an end on any of the four anniversaries prior to the end of the five year investment period. Should the Note redeem early, you will receive your capital plus a return of 13.5% for each year that the Note has been in force. Your capital is at risk should the FTSE fall to 50% (or lower) of its initial value, at any time whilst the investment is in place. This note is also eligible for holding within an ISA, providing you purchase before 17th February. With such low rates currently on offer on cash in deposit/saving accounts; savers should consider using their Investment ISA allowance.

More about the FTSE 100 Defined Returns Investment Note

Please ensure that you are familiar with all features of the structure before deciding whether to invest.

And for the more experienced and opportunistic investors …Sterling again pulled back last week from a move towards parity with the Euro. Interest rate announcements by the Bank of England and the European Central Bank (‘ECB’) helped sterling strengthen and once again move away from the psychologically important level of parity with the Euro.The Bank of England’s MPC (‘Monetary Policy Committee’) cut the UK base rate to 1.00% on Thursday but the accompanying statement may have reduced investor’s perceptions of the likelihood of further cuts or the possibility of the Bank using more extreme measures such as quantitative easing. The MPC said that they expected the rate cuts so far, the fiscal stimulus and recent sterling depreciation to “provide a considerable stimulus to activity as the year progressed”. As the ECB left rates unchanged later the same day, its President Jean-Claude Trichet acknowledged a further worsening of the economic backdrop in the Eurozone and emphasised that interest rates could be cut further in the future. Investors appeared to interpret these comments as a reason to Buy Sterling vs the Euro and the rate is now trading at lower levels (for the Euro). If you agree with this view, you may like to consider taking advantage of such opportunities via FX on BARXdirect from Barclays Stockbrokers, our market-leading Margin FX platform. There you will find all the necessary tools to participate in the world’s largest financial market, Foreign Exchange.

Foreign exchange trading is done on margin and hence you can lose more than your initial deposit. The product is suitable for experienced investors only.

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27 January 2009 - Go defensive?

The tone set early in 2009 is that global equity markets have experienced a “sell off” pushing equities indices lower. On Friday the UK Government announced that the economy had shrunk by 1.5% in Q4 2008, the largest contraction in more than 28 years. But when investors look closer there are particular sectors which have traditionally performed well under these tough economic conditions.

The latest research from Barclays Wealth “Signpost” suggests that investors should remain cautious and adopt a defensive stance when choosing their investments, particularly for the first half of 2009 whilst the UK economy is tipped to remain in deep recession.

“We are maintaining our defensive stance in the portfolios for the first part of the year and have actually reduced our cyclical exposure for the short term. We focus on stocks which have strong balance sheets and solid yields” (Source: Barclays Wealth Signpost Equities, One Step at a Time)

Defensive sectors such as healthcare, pharmaceuticals, consumer staples and telecoms have continued to perform well against a backdrop of negative growth in other more aggressive and cyclical sectors. The rationale for this is straightforward, even in an economic downturn; the demand for basics remains the consumer’s priority.

The graph below shows the performance of defensive sectors last year relative to the market.

Past performance is not an indicator of future returns

So what should you look out for?

See our latest StockWatch for ideas and inspiration
Login to the Research Centre to read the latest Barclays Wealth Signpost

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23 January 2009 - Time to invest in the US?

Further to our ViewPoint on the 14 January ‘Is the US recovery imminent?’ (see below) we published a web poll to gauge your views on investing in the US market:

11% of respondents believe the US market is currently good value
24% believe it has growth potential in 2009
39% thought it was too volatile to invest yet
And 26% felt investing in the US would not deliver returns this year.

Barclays Wealth research predicts growth of over 15% in the S&P 500 in 2009 and a further 9.3% in 2010 – Login to the Research Centre to read the latest Barclays Wealth Signpost.

Obviously, no one can know with certainty what will happen but if you consider that there are good growth opportunities in the US you may want to consider the iShares S&P 500 (IUSA) which offers you exposure to the top 500 US blue-chip companies.

ETFs are traded like shares and may not be for everyone. They closely track the performance of an index and as such their value can go down as well as up and you may get back less than you invested.

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14 January 2009 - Is the US Recovery imminent?

When the US sneezes, the rest of the world catches a cold, which illustrates the global dominance of the US market. So the impact of the credit crunch and economic slowdown in the US has been the principal factor in causing a global recession. The US entered recession very rapidly, and pundits are speculating that the exit could be just as rapid. This is due mainly to the significant fiscal stimulation packages put in place by the Bush presidency and the vast public expenditure and economic support programmes being established by Obama. Hence, there is widespread speculation that the US will emerge from recession in 2009.

Given that stock markets predict future value, commentators expect the US principal equity index, S&P 500, to rise significantly this year. Barclays Wealth Research suggests it will be 15% in 2009 and a further 9% in 2010. Download the latest Signpost for more detail – to do this login to your account and select the 'Signpost' link within the Barclays Wealth Insight box under the Research centre tab. Of course, no one can guarantee if and when any recovery will kick in but if you want to diversify your portfolio with access to the US market in order to benefit from the chance of the predicted growth, you may be interested in either of these products.

Please remember that if you are in any doubt when selecting your investments, you should seek independent investment advice as you could lose money as well as gain.

S&P 500 iShare (IUSA)
Find out more about other ETFs

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09 January 2009 - Darkest before dawn?

As we begin 2009 facing recession and many well known high street retail brands disappearing, could there be some truth in the adage that it is “darkest before dawn”? No-one knows how long the recession will last but if you’re anticipating an imminent recovery in the UK, then the iShares FTSE 100 could be for you. Alternatively Covered Warrants allow you to leverage your upside with limited risk; you can lose no more than your initial investment. Please remember the value of investments can fall as well as rise.

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