I’ve been judging a beauty parade, but I hasten to add that no bikinis were involved. Four leading investment firms were competing for the mandate to manage a charitable endowment – and offering insights into the way professional stock-pickers see the world. First, despite (or if you’re a disciple, because of) the madness of Donald Trump, any portfolio designed for even a moderate-risk UK investor will be heavily weighted towards US tech and consumer stocks. On the other hand, none of the pitches said anything about China or other previously fashionable emerging markets. And their lack of enthusiasm for pure UK equities (as opposed to London-listed multinationals) was impossible to disguise.
In one sample list, the only domestic businesses were the housebuilder Persimmon; the Yorkshire-based food manufacturer Cranswick; London Metric, which owns distribution warehouses; and as a proxy for everything else, the London Stock Exchange itself. In another, grouped by global themes such as ‘automation’ and ‘ageing’, there were no UK companies at all.
Of course every sensible UK portfolio will include, for low-risk income, a portion of our own government’s debt. But the lesson of this contest was that, despite so much rhetoric about the need to attract capital into high-growth British ventures, British institutional investors don’t see merit, reward or patriotic duty in making that happen. And let’s face it, we’re all too hypnotised by America.
Kim’s IT crowd
Speaking of which, Trump’s eagerness to please Vladimir Putin has distracted attention from the favour he’s done for another world-class psychopath, namely Kim Jong-un of North Korea. By announcing the creation of a ‘crypto strategic reserve’, the US president has boosted the prices of Bitcoin, Ethereum and other cryptocurrencies, while fuelling the belief that future crypto prices will be underpinned by the US Treasury as a major buyer. And that must have caused Pyongyang’s portly Supreme Leader to hug himself with glee.
Why? Because a notorious hacker group called Lazarus, believed to operate under the Kim regime’s sponsorship, has just pulled off a $1.5 billion theft of Ethereum from Bybit, a crypto exchange in Dubai. And at least five other heists by North Korean cyber-bandits netted more than $650 million last year. Much of the loot will have helped to fund Kim’s nuclear weapons programme.
The hackers’ modus operandi, I gather, often involves ‘fake IT workers’ who secure remote jobs with western institutions in order to siphon crypto funds. It would serve Trump right if the team hired to build his strategic reserve all turn out to be Kim’s cousins.
Leasehold must go
I’m glad to see Labour’s housing minister Matthew Pennycook taking up the cause of leasehold reform that was unfinished business for our editor in his former political life. Despite the ‘vested interests with deep pockets’ – pension funds, property companies and urban estates – that impeded Michael Gove’s mission to abolish the feudal vestige of leasehold property in England and Wales, Pennycook has promised to do so within this parliament.
He aims to replace it with ‘commonhold’, in which flat-owners will become freeholders who co-operate to manage common parts. I happen to have a close view of this debate, since I live in a flat which is commonhold in all but name (long leasehold and shared freehold under our own management) but own a second one that has all the characteristics of bad leasehold: remote commercial freeholder, unhelpful managing agent, soaring service charges and diminishing lease values. All strength to the Pennycook campaign.
Back to the 1930s
Chatting to a group of northern industrialists, I hear from one about skilled jobs he’s had to cut in response to increased employer national insurance costs and from another about impending orders for gun barrels and military vehicle armour. Rearmament, we learned at school, was what dragged the 1930s economy out of the doldrums. If the world were less dangerous today, the catalyst of public spending would be far better directed – for maximum ‘multiplier’ impact on economic growth – towards broadband and public transport, electric vehicle charging networks and small nuclear power stations.
As it is, a spate of defence orders will counterbalance some of the damage so far done by Labour to employment and investment prospects, at least in that sector. Thinking back to my comment last week about deep troubles ahead for the automotive industry – and to another lesson from the second world war – before long we may see failed car factories repurposed to build missiles. History doesn’t repeat itself, Mark Twain is supposed to have said, but it often rhymes.
Another day in court
When I wrote recently that there are no big characters in banking these days, I had forgotten Jes Staley, the combative former JP Morgan executive and Barclays boss who in 2023 was banned by the Financial Conduct Authority from senior jobs in financial services and fined £1.8 million for misleading regulators about the nature of his relationship with the convicted sex offender Jeffrey Epstein. I suspect most of the City had forgotten Staley too, but he’s back in the spotlight this week, appealing against the FCA ruling in a tribunal that will revisit more than 1,000 emails between him and Epstein and take evidence from, among others, the Bank of England governor Andrew Bailey.
The hearing is certainly a fiesta for high-paid lawyers – and only Staley can judge whether, at 68 and with limited re-employment prospects, it’s worth a final bid to clear his name. Frankly I can’t help feeling he’d be better off driving an Uber.
Comments