7th June 2013
1) Green shoots! The Markit/CIPS Services Purchasing Managers’ Index (PMI) suggests things are getting better. It hit 54.9 in May as the Independent reports. That is healthily above the magic 50 number. Even our often bearish economist Shaun Richards sees some glimmers of sunlight. Henderson’s Simon Ward says growth this year could be two per cent.
2) One to watch? Fancy buying a piece of the Foxton’s and with it big exposure to London property. Well Foxton’s owners private equity group BC partners has hired investment banks Credit Suisse, Numis and Canaccord to float the estate agency as thisismoney.co.uk reports. BC paid £360m amid much criticism for buying at the top of the market. It is expected to make £400m after a tortuous few years. The key for possible buyers – will it list at an attractive price with BC determined to maximise its value and is the London housing market likely to remain immune from property market travails elsewhere in the UK?
3) The next financial crisis. Gillian Tett, the Financial Times journalist who helped warn about the financial crisis, is warning that CDOs – credit default options – have ‘twitched back into life’. The financial vehicles are bundles of derivatives based on mortgages and other loans. They were a key feature of the crisis and helped the financial crisis become globally contagious. In this article Tett says this time around regulations might control the abuse of the product but not if investors desperate for yield start taking too many risks without the capital to back it. What can individual investors do? We think you may have to rely on regulators and politicians.
4) China’s PMI slipped below the magic 50 number as Reuters reported earlier this week the flash HSBC Purchasing Managers’ Index (PMI) for May fell to 49.6. Legal & General Investment Management also issued a note this week saying it is concerned about increasing Chinese debt.
5) Emerging markets funds saw the biggest outflows since October 2011, with emerging market equity funds losing $5.5bn and emerging market bond funds losing $1.5bn following fears that quantitative easing from the Fed could hit the global economy according to research firm EPFR.