For now, the International Monetary Fund (IMF) meeting in Peru hasn’t resulted in much. Growth estimates were cut by a little, Russia and Syria were discussed, and emerging market participants, in particular, expressed their ‘Fed fatigue’ (the Fed is shorthand for the Federal Reserve, which works like the Bank of England in deciding US interest rates) and a wish that the US would get on with it and raise interest rates.
Instead, we’ve been reminded that investing isn’t just about emerging markets, it’s about individual companies too, and the surprises they can spring on us.
Firstly, Glencore, a FTSE 100 company and no stranger to controversy, has become a takeover target following over-indebtedness allied to the ongoing fall in commodity prices. Secondly, we’ve had the VW saga (I’m sure Leonardo Di Caprio will come up with a better title in the film it’s rumoured he’ll be making on the subject). VW has owned up to cheating on diesel emissions tests and the cost of the potential fines, penalties and class action suits that could occur are eye-watering.
On the face of it these are just stock-specific issues but it was pointed out to me recently that both companies’ fortunes could affect the wider markets. Glencore started life as a commodity trader and few commodities today are untouched by this link. As most new cars are sold on finance these days and the contracts are based on the resale value after three years, what the value of VW diesel cars will be in this time must also be a concern. Are they too big to fail? Possibly.
As for November, there are a couple of things to watch out for: the UN climate change meeting in Paris comes first, the goal of which is to reach a legally binding agreement from all nations.The governor of the Bank of England, Mark Carney, has waded in on the debate recently, pointing out the risks to the financial markets and economies. So it may well get back on the agenda of companies, which have been more focused on their own survival for the past few years.
We’ve [FundCalibre] just launched a ‘Responsible Investing’ sector, consisting so far of four elite-rated funds. Each has a differing mandate but they are all looking for companies that act responsibly and generate profits. These funds are EdenTree Amity UK, First State Asia Pacific Sustainability, Rathbone Ethical Bond and Standard Life Investments UK Ethical Equity.
The end of November always ends in a frenzy of excitement too, with the 21st-century phenomenon that is Black Friday. This is the day after Thanksgiving and the start of the Christmas shopping season, with huge discounts to attract bargain hunters. It is so-called as retailers traditionally operated at a financial loss (‘in the red’) from January to November, and Black Friday (27 November this year) indicates the point at which they begin to turn a profit or go ‘in the black’. We can expect more wrestling over 50-inch TVs and websites crashing.
If that’s not your scene, you could look at investing in the retail sector. Rathbone Global Opportunities has Visa, Mastercard and Amazon among its top 10 holdings. AXA Framlington Global Technology has Apple and Visa, while closer to home Schroder Recovery has put its faith in Tesco coming good.