Equity themes Investment ViewPoints |
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22/02/2011 O Canada! 07/10/2010 Is BP back for good? 09/07/2010 Is it time to flex your portfolio muscle with a barbell strategy? 26/08/2009 Summer round-up 22/06/2009 Food for thought - retail stocks |
18/02/2009 Mining stocks |
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.
7 October 2010 - Is BP back for good?
As the rumours about BP swirled last week, investors’ attention was once again firmly focussed on the oil and gas sector. How will Bob Dudley, BP’s new chief executive, handle the challenge? Will BP bring back its famous and beloved dividend sooner than expected?
Speculation from investors triggered a rally in the share price, which prompted many clients to sell their BP holdings. On Wednesday 29 and Thursday 30 September, BP was the most frequently sold stock by Barclays Stockbrokers clients.
The initial rush to sell (capitalising on the buoyant share price) was swiftly followed by a shift to purchasing. Does this mean that investors are once again pursuing BP for their portfolios?
BP was not the only oil and gas player to take centre stage. First up, Encore Oil, which was the most traded stock on Monday 4 October. On Monday, Encore announced it had discovered an impressive amount of oil in the North Sea, leading to a 13% increase in its share price. Clients responded by trading heavily; Encore Oil accounted for 6.8% of all trades on Monday, 70% of which were purchases.
Other high-octane trading levels were demonstrated in Gulf Keystone Petroleum, Rockhopper, Nighthawk Energy and Regal Petroleum.
We have also seen huge interest in the mining sector. Red Rock Resources was extremely popular on Monday 27 September, when their share price gained nearly 80% to reach a record high. This rally in share price came after a tip in the Mail on Sunday and a revaluation of its gold and mineral interests in Australia, Columbia and Kenya.
Solomon Gold tells a similar story. The Brisbane-based gold company recently produced strong results after a gold sampling project, which led the stock to occupy the top spot on Thursday 23 September and 15% of all trades that day.
Our clients are on the pulse when it comes to the oil and gas and mining sectors. To keep up with the stock trading trends, visit our top ten trades webpage, which is updated daily.
You might also be interested in finding out more about Oil & Gas – read our recent Oil & Gas Sector Focus
This is the trend of the moment; can you pick the next one?
Remember that the value of shares can fall as well as rise and you may get back less than you invested.
9 July 2010 - Is it time to flex your portfolio muscle with a barbell strategy?
Over the past two months, a variety of economic, political and environmental events have had a notable impact on the financial markets. The uncertainty of the UK political outlook overlapped the Greek sovereign debt crisis, which was swiftly followed by the BP oil spill disaster. More recently, there has been unwelcome news around the issue of ECB support and growth rates have slowed in both China and Europe.
These news flows in combination have contributed to the debate on the spectre of a possible double dip for the global economy gaining momentum. While the sceptics are quick to stoke the fire of such fears, optimists still point to other robust economic data and fly the flag for a continued global recovery.
This is one of the discussions raised in the latest edition of Barclays Wealth’s macro economic overview Compass - it suggests that investors might want to prepare themselves for both outcomes (or what they refer to as a bi-modal world) and consider adopting a “barbell” investment strategy.
To the uninitiated a Barbell strategy adopts the approach of running a portfolio heavily weighted to two areas. It is traditionally used in bond portfolios, where the portfolio is heavily weighted to both very short term maturities and long term bonds but has little exposure to bonds with maturities in-between these two extremes.
Compass adopts this strategy to illustrate how Barclays Wealth is suggesting investors might choose to tackle the current economic situation. It highlights indicators that cause concerns that the economic recovery is stalling and that this could be the precursor to a double dip recession. However, Barclays Wealth research also anticipates strong equity growth over the coming months and therefore suggests clients remain invested in the stock market.
The research also indicates that over the next 12 months out performance is anticipated in two areas. Firstly the traditional recovery plays (or growth stocks) due to strong corporate profitability and secondly the corporate property sector, which will benefit as companies start to expand. It also flags two areas that will be fundamental beneficiaries from recovery in the industrial sectors, namely commodities and emerging market economies. Therefore Compass suggests equity investments in these areas would make up one end of the barbell.
However, if a double dip does materialise the decline may be sudden and the only assets that are likely to hold up are government bonds, so Compass suggests that the other end of the barbell is used to counterbalance the stock market element of their portfolio with investment in government bonds used as a contingency should the recovery go into reverse.
Barclays Stockbrokers clients who want to know more about Barclays Wealth’s strategy should read Compass and can join the client conference call on 15th July. (Login and go to the Market News and Data section)
Please bear in mind that the value of equities, ETFs and managed funds can fall as well as rise and you may get back less than you invested. Such investments are not for everyone and if you are uncertain as to their suitability to your own investment needs, please seek independent financial advice.
Investors who want to implement a similar strategy to that described above may want to consider the following investments.
For the equity element of the barbell, investors could consider investing in Exchange Traded Funds (ETFs) such as:
- iShares MSCI World (IWRD) - for global stock market exposure
- iShares FTSE 100 (ISF) - for exposure to the UK market
- iShares S&P 500 (IUSA) - for exposure to the US market
For the government bond end of the barbell strategy, investments that could be considered include:
- iShares Citigroup Global Government Bond (SGLO)
- iShares FTSE UK ALL Stocks Gilt (IGLT)
- Managed funds from the IMA UK Gilt Sector
Perhaps a barbell strategy could be the work out your portfolio has been looking for?
26 August 2009 - Summer round-up: Five essential investment strategies
As the summer draws to a close, it is a good time to and take stock of your portfolio in preparation for the remainder of the year – the final stretch of the ‘noughties’. In this summer round-up Investment ViewPoint, we reflect on the key market events of 2009 so far and discuss five essential areas for consideration as you plan your investment strategy for the rest of the year and beyond.
Click here to read the full Investment ViewPoint: Analysis
22 June 2009 - Food for thought, taking Stock in retail
UK retail sales unexpectedly dropped in May for the first time in three months.
The 0.6% decline from April, caught economists cold where many predicted that like for like sales would increase 0.3% on the previous month.
However, when examining the opportunities in the sector, first impressions may be deceiving. Whilst clothing, textiles and footwear retailers and department stores experienced a 1.4% monthly sales decline, the food stores sector experienced a 0.3% growth, according to the office of national statistics.
So are there opportunities in UK food retail?
Sainsbury’s now has more than 18.5m customers visiting its stores each week, and has continued to build on its first quarter growth by reporting that total sales had risen by 7.6%, in the 12 weeks to 13 June. This week, the group unveiled ambitious growth plans to raise £445m capital through new share issues and a convertible bond offering, the group aims to use this capital to increase store space by 15% over the next two years.
Tesco reported underlying annual pre-tax profits of £3.13bn, an improvement of 10% on the previous year, and the highest on record for a UK retailer. At that time it said its sales topped £1bn a week for the first time. The business attributed a large part of this growth to the fact that one in three of its customers now purchase from its discount product lines launched in September, keeping shoppers from shifting to lower-cost rivals Aldi Group and Lidl.
Morrison’s, which recently reported a 7.3% rise in first quarter sales in May, also unveiled ambitious growth plans stating that it will hire 5,000 people this year as its grocery stores expand and train more staff to become butchers, bakers and fishmongers. The Prime Minister mentioned Morrison’s hiring plans, as his office unveiled a 500 million-pound plan to counter UK unemployment, last week.
So, should the economic recovery unfold as predicted, the growth plans laid out by the main UK food retailers could have investors well placed to capitalise on share price growth.
26 May 2009 - Taking a 'staycation'?
The first summertime recession of the 21st century is set to bring some profound changes to travel trends when it comes to planning this years holiday for many UK households.
With the credit crunch still biting, unemployment rising and the pound still relatively weak against the Euro & the US Dollar, many UK holiday makers look set to abandon their overseas plans, opting instead for a cheap and cheerful holiday at home, or 'staycation'. It would seem even the film industry elite are feeling the pinch with the attendance to this year ’s Cannes Film Festival down 20-30% on last year.
In the 12-month period to March 2009, the number of visits abroad by UK residents decreased by 6 per cent when compared with the 12 months to March 2008, from 70.2 to 66.0 million.*
Looking forward,Sterling is beginning to see an upside from a 12 month low against both the Euro and the US Dollar and we are expecting to see increased numbers of European and American tourists visiting the UK, resulting in an additional boost to the tourism and retail industries here.
But will this be enough to stimulate the UK economy significantly and have a material impact on retail sales figures in the UK or indeed drive up the value of the pound against its European and US counterparts?
If you are interested in tracking the effect of the 'staycation' on the performance of the UK travel and leisure sector then login to our Research Centre, click on 'Stock Tools', go to 'Heat Maps' then choose 'Travel & Leisure' from the drop down list. From there you can track share price movement of all companies in this sector and click through to detailed information on these companies - everything from price data, company fundamentals and Directors Deals to the latest Sharecast news, all available instantly.
You could also look at the performance of individual stocks in this sector. Perhaps you think the 'staycation' might boost cinema visits, in which case you could analyse the share price movement of the likes of Cineworld Group (CINE) over any period from yesterday to the last 5 years using the Heat Maps. Or perhaps you think pubs may benefit? In which case, a stock such as Punch Taverns (PUB) may be of more interest.
Individual shares are not for everyone, you can lose money as well as gain
Or for the more opportunistic investor who is willing to take the higher risk and believes that Sterling could continue to strengthen in the coming months you can track the currency markets through FX on BARX from Barclays Stockbrokers.
* Source: National Statistics
01 May 2009 - Pandemic Economics
Mainstream news has been fully focussed this week on the outbreak of swine flu and it is interesting to consider just how much of an economic impact such an event may have and whether it could be good or bad for your portfolio’s health!
Global equity markets have wobbled as uncertainty about the spread of the virus caused increasing concern and the macro-economic ripples that the current crisis in Mexico is creating grew stronger. Should a pandemic develop it could have significant influence on economic factors such as the supply of commodities through to the effectiveness of a national workforce.
So what sectors of the economy would be hardest hit by swine flu? The obvious casualty would be tourism. As guidance issued to avoid those areas currently affected starts to restrict travel, holidaymakers may be more inclined to stay at home. If a prolonged pandemic did develop, watch out for reduced trade for airlines, tour operators and hotels – companies all within the Travel and Leisure sector.
On the flip side, pharmaceutical companies could well be economic beneficiaries of swine flu. Already a sector buoyed by resistance to the current recession, it’s fairly certain that pharma companies would see sales of flu remedies and related products soar if a pandemic erupted. Other retailers might see a halo effect here as sales of anything flu related, from handkerchiefs to alcoholic hand washes, see a boost. People are even starting to seriously consider face masks as an acceptable fashion accessory.
Read our Investment ViewPoint from 04 March where we looked at the importance of diversification in portfolios and profiled a selection of stocks in the Pharmaceutical sector.
So it makes investment sense to monitor the markets, observe how different industries react and consider which sector may end up in rude health or a value trough.
Keep track of the economic impact of swine flu through our Research Centre. From here you can follow the major market indices, read the latest financial news and track individual market sectors.
04 March 2009 - Diversification is still important for your portfolio’s good health
In the past week, we’ve seen the markets take another battering with the FTSE 100 dropping back down to lows similar to those seen late last year, losing around 6% of its value.
And although this is generally bad news for everyone’s portfolio for those who are overweight in some of the worse affected stocks and sectors, this will be all the more painful.
It all goes to emphasise the importance, for investors with a mid to long term investment horizon, to have a balanced portfolio and the key to achieving that – diversification.
Diversifying across asset classes is obviously important and you could consider adding Fixed Income, ETFs, Funds and Investment Notes to help diversify your portfolio.
Find out more about our full range of products
but investors shouldn’t forget to diversify within an asset class as well, none more so than equities. Many investors like to ensure that their equity investments are spread across sectors that have different dynamics in different market conditions.
Pharmaceutical companies could be the antidote to market volatility
The two UK pharmaceutical giants, AstraZeneca (AZN) and GlaxoSmithKline (GSK), are members of a very elite and exclusive club – they are among the seven stocks in the FTSE 100 that saw their share price rise over the course of 2008.
Pharmaceutical companies fit the defensive prescription well – demand for drugs remains steady no matter what happens in the wider economy. Drug companies are also generally highly cash generative and unlikely to cut their dividend payments, which adds to their appeal to investors, however, drug development in the early stage is expensive and are not always granted a licence to be sold, this can affect future projected profits.
Why don’t you think about diversifying your equity portfolio by considering the three stocks to watch that we have highlighted below - that may allow you to take advantage of this trend, remembering that selecting your own investments is not for everyone. You can lose money as well as gain.
Stocks to watch
Login to the Research Centre and enter the epic code into the 'Search Stocks' box to read the latest 'Barclays View' on these or any other stocks
Alternatively, why not login to the Research Centre and use our 'Stock Tools' to investigate the Pharmaceuticals and Biotechnology sector.
BTG (BGC)
The company recently completed a merger with Protherics and its investment case is now underpinned by more than £75m of recurring royalty revenues, a buoyant R&D pipeline and a strong cash position. The company also hopes to cut around £10m a year from its newly merged cost base. The company has 11 products in development.
ImmuPharma (IMM)
ImmuPharma has developed a drug called Lupuzor to treat lupus. This is an autoimmune disease – the body starts to attack itself – which affects around a million people around the world. It is an inflammatory disease that attacks multiple different organs and can be fatal. There is currently no cure or specific treatment for the disease. Immupharma signed a deal with the US company Cephalon at the end of last year granting them a worldwide license for the drug. The total deal could be worth up to $500m.
Neuropharm (NPH)
Neuropharm will announce results of the final stage of its trials of a low dose version of generic Prozac to treat autism in children this quarter (Q1 09). Research has shown that many of the behavioural difficulties associated with the condition are due to abnormally low levels of the neurotransmitter, serotonin. Prozac increases the levels of serotonin in the brain and it is hoped this will help autistic children’s brains to develop more normally. The company is targeting the US market where there is greater willingness to use drugs to treat behavioural problems in children.
18 February 2009 - Mining stocks in focus
Commodities continued to be at the forefront of investors’ minds with news of Rio Tinto’s controversial billion dollar cash injection from Chinalco, the state-owned Chinese aluminium company breaking last week. The Anglo-Australian group plan to raise $12.3 billion by selling stakes in a number of its mining assets to Chinalco and a further $7.2 billion by issuing a convertible bond to the Chinese company. The continued news in this sector has once again brought commodities to the fore with individual mining stocks often appearing in our top 10 traded stocks. View our latest top 10 buys and sells.
Many investors attempt to gain exposure to this sector through individual stocks like Rio Tinto (RIO) however opportunities do exist for more direct exposure to metals including aluminum and gold through Exchange Traded Commodities (ETCs).
Barclays Stockbrokers top 10 trades
Gold a wise mans gift
Find out more about ETCs
06 February 2009 - Not venturing out? Cocooning is back...
Consumers were supposed to be finished with ‘cocooning’, a term that emerged in the late 1980s to describe a focus on home life and entertainment that helped spur sales of everything from home theatre systems to iron skillets.Then about six years ago, business consultants declared that consumers were emerging from their cocoons to spend money on travel, restaurants and cars. As a result retailers and consumer product companies that serviced cocooners suffered. The global economic growth and emerging economies of the past six years led to income growth and greater disposable income, a period that we now know was unsustainable credit fuelled growth.Now the current recession is seeing a return in demand for family and home life products that fulfil the ‘cocooning’ phenomenon…So while you are in your cocoon, why don’t you think about your investment strategy and perhaps consider the three stocks to watch that we have highlighted below - that may allow you to take advantage of this trend.Please remember that selecting your own investments is not for everyone. You can lose money as well as gain.
Stocks to watch
Login to the Research Centre and enter the epic code into the 'Search Stocks' box to read the latest 'Barclays View' on these or any other stocks.
BSkyB (BSY)
BSkyB has benefited from the nesting phenomenon – rather than go out to bars and restaurants, people are now opting to stay at home. But they still want to be entertained so they sign up to Sky. The company said recently that it had grown to over nine million subscribers for the first time. Earnings are growing, the company has a stable cash flow, a good dividend yield and is managing to increase its market share.
British American Tobacco (BATS)
In times of crisis, fund managers typically tend to invest in tobacco companies. Even in a recession, smokers will still continue to buy cigarettes. British American has a good exposure to the emerging markets, which will be the key driver of growth for tobacco products in the coming years. They continue to cement their position as a global brand by recently acquiring both a Danish and a Turkish cigarette company.
Entertaining will be in the home and dining out will decrease. This is one reason why Domino’s Pizza (DOM) is a favoured stock, as pricier restaurant chains feel the pinch.
19 January 2009 - Are there alternatives to the Retail Gloom?
Retail sales figures were as gloomy as expected last week with reported pre-Christmas sales the worst for 14 years and high street retailers still under pressure. Even Tesco who despite announcing profits - like-for-like sales (excluding fuel) grew 2.5% in the seven weeks to 10-January in line with market forecasts – were reported negatively across the press. (“Tesco Christmas sales slowest since early 1990s” -Telegraph 13-Jan).
The news was expected and the outlook for the retail sector is currently poor. So what sectors are showing resistance to the down weight? Telecomms, pharmaceuticals and Healthcare look to be the most obvious defensive sectors.
Other winners could be the home and light entertainment sectors with Sky – the home entertainment giant poised to take advantage of the fact more people are staying in. Similarly bookmakers William Hill who last week said the gross win was 8% higher in the 11 weeks since October 20th than the corresponding period of 2007.
So it doesn’t all need to be doom and gloom, there might be some buying opportunities you just need to keep looking.
Need some inspiration?
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