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The Appliance of Life Science Looks Exciting for this On-the-Nose Medical Explorer.

by Malcolm Stacey

Hello, Share Troopers. Previously, I’ve written on the huge potential of life science companies which explore antibodies and antibody substitutes in the fight against serious conditions like cancer. Allow me to put another such firm before you. Tiziana Life Sciences plc (TILS) is biotechnology outfit which uses antibodies to find new treatments for inflammatory diseases and cancers.

The company has just announced good news which sent the share price alight this week. The company has demonstrated that antibodies administered through the nose show promising results. The antibody, called Foralumab proved itself to be well tolerated in all sizes of dose.

I’m thick so can’t undertones the words from the company, but you may fare better. So here they are. ‘Importantly, the treatment showed significant positive effects on the biomarkers for activation of mucosal immunity, which is capable of inducing site-targeted immunomodulation to elicit anti-inflammatory effects.’ So now you know.

Apparently, this new data is consistent with the findings of numerous pre-clinical studies. This latest project was conducted at Harvard Medical School in the USA. A pretty prestigious venue, wouldn’t you agree? Nearly 30 volunteers took part. Examination of the patients showed positive immune effects.

The hope is that Foralumab might in the future be used to treat neurodegenerative diseases, including multiple sclerosis. There is now much more incentive to push on with further studies. So there is more work to be done before we reach the licensing stage. Nevertheless, the firm is pretty excited by the results. And so is the city as the share price rose by a third on the news. And when the penny drops that jolly trend could continue.

As usual with medical pioneers, investors take the risk of treatments always under strict scrutiny to fall at the last fence. And there’s rarely any dividend paid. But the rewards, especially for the treatment of serious conditions can be immense, both financially and in terms of moral satisfaction.

And now let’s celebrate the company’s success in the Punter’s Return.

View the article on ShareProphets website here

Open Orphan (ORPH) CEO Cathal Friel Presentation at Shares London

Open Orphan CEO Cathal Friel Presentation at Shares London. Cathal provides an update of companys business plans for 2019-2020.

IMC Exploration Group Plc Mineral Resource Estimate

JORC-compliant Inferred Mineral Resource Estimate on IMC’s licence area at Avoca, Co. Wicklow, Ireland (PL 3850) 

CSA Global Pty Ltd (CSA Global) has completed a Mineral Resource Estimate (MRE) for IMC’s Avoca[GA1]  historic mine site project located in Co. Wicklow, south-east[GA2]  Ireland.

The sample density has allowed the MRE to be classified as an Inferred Resource and is reported in accordance with the JORC Code (2012).  The classification of the MRE was carried out taking into consideration the volumes of the spoil heaps, the nature and spacing of the sampling and density data.  The MRE is presented below.

Inferred Mineral Resource estimate (all tonnages reported with no cut-off grade applied)

Spoil Heap Tonnes (kt) Cu (%) Pb (%) Zn (%) Au (g/t) Ag (ppm)
Forest of Gold 2 0.57 4.31 0.83 5.2 64
Tigroney Lower East 19 0.44 0.68 0.37 0.6 13
Tigroney North 158 0.18 0.12 0.04 0.1 3
Subtotal (Tigroney East) 178 0.29 0.62 0.20 0.7 11
Mt Platt 852 0.13 0.37 0.12 0.2 7
Cronebane 841 0.13 0.43 0.16 0.4 10
TOTAL 1,871 0.14 0.42 0.14 0.3 9

Source: CSA Global (2019)

The MRE is based on data from 14 sample pits, dug with an excavator and reflecting representative vertical intervals throughout the spoils’ heaps.

Samples were taken from each sample pit sample stockpile and used to calculate an in-situ bulk density of 1.59t/m3 (assumed to be a wet bulk density). The total tonnage of dumps in Tigroney East, Mount Platt and Cronebane was calculated at 1.871 million tonnes.

An average sample grade for Cu (%), Pb (%), Zn (%), Au (g/t) and Ag (g/t) was assigned to each spoil heap based upon the sample grades from the relevant pit(s).

Mineralogical testing is ongoing and results will be reported when they become available.

There is further potential to increase the tonnage and grade of the MRE by conducting further investigations including basal topography surveying as well as the investigation of other spoil heaps present in the area, particularly at West Avoca.

IMC is to establish an environmental clean-up operation to remove metals from the existing mine waste at the project site.

IMC’s Chairman, Eamon O’Brien, commented, “The Mineral Resource Estimate for our spoils and tailings project in Avoca, Co. Wicklow is of great significance. There is further potential to increase the tonnage and grade, not only on this site but also on other spoil heaps within IMCs licence areas.  The scale of this opportunity at Avoca is transformational for IMC and its shareholders.  The Mineral Resource Estimate is a significant development and further validates the Company’s strategy.  Work continues and the Directors believe this represents an exciting time for the Company and its shareholders.”

Consent to release the report dated September 2019 “JORC compliant Inferred Mineral Resource Estimate on IMC’s licence area at Avoca, Co. Wicklow, Ireland (PL 3850)”, announcing the Mineral Resource, was given by David Williams, Principal Resource Geologist at CSA Global Pty Ltd.

Eamon P. O’Brien,
Executive Chairman,

Dublin, 10th September 2019 
The Directors of IMC, after due and careful enquiry, accept responsibility for the contents of this announcement.

REGULATORY ANNOUNCEMENT ENDS.

Contact Details:

Kathryn Byrne: +353 85 233 6033
IMC Exploration Group plc
Graham Atthill-Beck: +44 20 7464 4091 / +44 750 643 4107 / +971 50 856 9408 / Graham.Atthill-Beck@kbrl.co.uk
Brinsley Holman: +44 20 7464 4098 / Brinsley.Holman@kbrl.co.uk
Keith, Bayley, Rogers & Co. Limited

Catenae Innovation (CTEA) – Trading Update

Catenae (AIM: CTEA), the AIM quoted provider of digital media and technology, announces that, following the announcement  released by the Company on 18 July 2019, despite its investment and sales initiative, revenue in the second half of its financial year will be below management expectations. The Company’s targeted sectors are depressed with a reluctance to commit to investment, especially in the wider context of the economic slow-down and current political uncertainty with regards to Brexit.

Consequently, losses for the year will be higher than expected. However, given the recent corporate restructuring and a resultant significant lowering of overheads, the Board is confident in the future of the business.

The Company continues to carefully manage its working capital position and will need to raise further capital in the near future. Further announcements will be made in due course. 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014. The person who arranged for release of this announcement on behalf of the Company was Guy Meyer, Interim Chief Executive Officer of the Company.

 

For further information:

  Catenae Innovation Plc

  Guy Meyer

Tel: 020 7929 7826

 

  Cairn Financial Advisers LLP, Nominated Adviser

  Liam Murray / Jo Turner

 

Tel: 020 7213 0880

 

  Turner Pope Investments (TPI) Limited, Broker

  Andrew Thacker

 

Tel: 020 3621 4120

 

 

 

Open Orphan (ORPH) CEO Cathal Friel tells Alan Green why he expects 40 percent growth year on year

Open Orphan (ORPH) CEO Cathal Friel tells Alan Green why he expects 40 percent growth year on year.

Open Orphan (ORPH) currently trades on just 1x revenues & a market cap of just £15m. CEO Cathal Friel tells Alan Green why he expects to see his company, into which he’s invested £2m of his own cash, grow by some 40% year on year, reach a market cap of some £50m and pay a dividend to investors in year 2. Cathal also discusses the high margins the business model will throw off, the wealth of talent now on the Open Orphan board, plus he provides key takeaway points for investors.

ECR Minerals (ECR) Directorate Change

Directorate Change

ECR Minerals plc (LON:ECR), the precious metals exploration and development company, announces that the ECR board of directors (the “Board”) has agreed to accept the resignation of Sam Garrett as a non-executive director of the Company with immediate effect.

The Board intends to appoint a replacement non-executive director as soon as is practicable.

MARKET ABUSE REGULATIONS (EU) No. 596/2014

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (MAR). Upon the publication of this announcement via Regulatory Information Service (RIS), this inside information is now considered to be in the public domain.

FOR FURTHER INFORMATION, PLEASE CONTACT:

ECR Minerals plc

Tel: +44 (0)20 7929 1010

David Tang, Non-Executive Chairman

Craig Brown, Director & CEO

Email:

info@ecrminerals.com

Website: www.ecrminerals.com

WH Ireland Ltd

Tel: +44 (0)161 832 2174

Nominated Adviser

Katy Mitchell/James Sinclair-Ford

SI Capital Ltd

Tel: +44 (0)1483 413500

Broker

Nick Emerson

ABOUT ECR MINERALS PLC

ECR is a mineral exploration and development company. ECR’s wholly owned Australian subsidiary Mercator Gold Australia Pty Limited has 100% ownership of the Avoca, Bailieston, Creswick, Moormbool and Timor gold exploration licences in central Victoria, Australia and the Windidda Gold Project in the Yilgarn Region, Western Australia.

ECR has earned a 25% interest in the Danglay epithermal gold project, an advanced exploration project located in a prolific gold and copper mining district in the north of the Philippines. An NI43-101 technical report was completed in respect of the Danglay project in December 2015 and is available for download from ECR’s website.

ECR’s wholly owned Argentine subsidiary Ochre Mining has 100% ownership of the SLM gold project in La Rioja, Argentina. Exploration at SLM has focused on identifying small tonnage mesothermal gold deposits which may be suitable for relatively near-term production.

Cadence Minerals (KDNC) Macarthur Minerals (TSX-V: MMS) Joint Venture Partner FE Limited Releases High Grade Iron Ore Assay Results for the Strelley Project in the Pilbara Region of Western Australia

Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note the announcement today from Macarthur Minerals (TSX-V: MMS) (“Macarthur”) that its Joint Venture Partner Fe Limited (“FEL”), has has released assay results from a recent field trip to the Strelley Project in the Pilbara Region of Western Australia. 

During FELs recent reconnaissance trip to the Strelley Project in the Pilbara, samples were taken from the outcropping Banded Iron Formation (“BIF”) continuing along strike from the previously mined Abydos iron ore project owned by Atlas Iron.

In addition, an aerial review of the geological mapping and photography in the south-eastern corner of the tenement shows a continuation of the marker chert found adjacent to the mineralised outcropping gossan (surface expression of the host VMS mineralogy) in the VentureX Sulphur Springs copper deposit to the south.

Field work has been planned to look for gossans or signs of similar mineralisation occurring within the Strelley Project in the Pilbara in the week beginning 9th September 2019.

Cadence Minerals Holding in Macarthur

Cadence holds approximately 9.8% of the issued equity interest in Macarthur, which is an Australian mining exploration company focused primarily on iron ore, nickel, lithium and gold in Western Australia. It also has a lithium project in Nevada, USA.

About FE Limited

FE Limited (ASX: FEL) is a listed mineral exploration Company that holds or has rights or interests in various projects and tenements prospective for battery metals, copper, iron ore, gold and base metals located in Australia. The Company is focused on the exploration of battery metal projects. In March 2019, FEL entered into an agreement to acquire the Pippingarra Lithium Project and the Marble Bar Lithium Project (Project) from Mercury Resources Group Pty Ltd. These areas complement the tenement portfolio of Macarthur Minerals, establishing an 1800 square kilometre exploration footprint in the important Lithium and Gold region of Western Australia.

On May 14, 2019 Macarthur announced it had entered into an exclusive option agreement with FE Limited (ASX: FEL), for FEL to acquire an interest of up to 75% in the tenements held by Macarthur’s wholly owned subsidiary Macarthur Lithium Pty Ltd (“MLi”).

The full release can be found at: https://web.tmxmoney.com/article.php?newsid=8859988162115155&qm_symbol=MMS

Cadence CEO Kiran Morzaria commented; “Macarthur’s JV partner Fe Limited has returned significant iron ore results from rock chip sampling at the Strelley Project. We look forward to further developments.”

This news release is not for distribution to United States Services or for Dissemination in the United States. 

– Ends –

 

For further information:

Cadence Minerals plc                                                    +44 (0) 207 440 0647
Andrew Suckling  
Kiran Morzaria  
   
WH Ireland Limited (NOMAD & Broker)                                 +44 (0) 207 220 1666
James Joyce  
James Sinclair-Ford  
   
Novum Securities Limited (Joint Broker)                                 +44 (0) 207 399 9400
Jon Belliss  

 

 

Qualified Person

Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information contained in this announcement. Kiran holds a Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School.

  

Forward-Looking Statements:

Certain statements in this announcement are or may be deemed to be forward-looking statements. Forward-looking statements are identified by their use of terms and phrases such as ”believe” ”could” “should” ”envisage” ”estimate” ”intend” ”may” ”plan” ”will” or the negative of those variations or comparable expressions including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth results of operations performance future capital and other expenditures (including the amount. nature and sources of funding thereof) competitive advantages business prospects and opportunities. Such forward-looking statements reflect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors.  Many factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions competition environmental and other regulatory changes actions by governmental authorities the availability of capital markets reliance on key personnel uninsured and underinsured losses and other factors many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. The Company cannot assure investors that actual results will be consistent with such forward-looking statements.

 

BigDish plc (DISH) Further re Issue of Equity

BigDish Plc (LON: DISH), announces that, further to the announcement released by the Company on 22 August 2019, the requisite regulatory approvals in relation to the issue of the 13,812,920 ordinary shares to certain Pouncer shareholders (“Deferred Consideration Shares”) as part of the acquisition agreement were not obtained and as a consequence, the Company has withdrawn the application to admit the Deferred Consideration Shares to trading on the London Stock Exchange.

The Company will now submit a new application for 10,391,472 new ordinary shares of the previously unsuccessful application of the 13,812,920 ordinary shares, which have received the requisite regulatory approvals to be admitted to trading on the London Stock Exchange. Admission of the balance of the remaining 3,421,448 ordinary shares, which are still subject to regulatory approvals, will be sought at a later date.

Application has been made for 10,391,472 new ordinary shares of no par value to be admitted to trading which is expected to occur on or around 11 September 2019 (“Admission”).

Total Voting Rights

Following Admission, the Company’s enlarged issued share capital will be 348,950,355. The total number of voting rights in the Company is therefore 348,950,355. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA’s Disclosure Guidance and Transparency Rules.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION EU 596/2014 (“MAR”)

 

Enquiries:

Zak Mir, Digital Communications Officer +44 (0) 7867 527658
Jonathan Morley-Kirk, Non-Executive Chairman +44 (0) 7797 859986

jmk@bigdish.com

 

Notes to Editors

BigDish Plc is a London Stock Exchange listed food technology company that operates a yield management platform for the restaurant industry, including a mobile App.

The Company helps restaurants in the UK fill their spare capacity and optimise their revenues through smart and dynamic discounts. Consumers can access these via the BigDish App and website platforms. Restaurants pay BigDish a fee per diner seated.

BigDish is fully committed to delivering shareholder value to its stakeholders through this model and is actively seeking to expand across the UK. An expansion strategy has been outlined which divides the UK into territorial target areas.

Cadence Minerals (KDNC) Auroch Minerals (ASX: AOU) To Kick Off Extensional Drilling at Saints Nickel Project.

Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note the announcement today from Auroch Minerals Limited (ASX: AOU) (“Auroch”) that it has received all permits and access required to commence its maiden drilling programme at the recently-acquired Saints Nickel Project (Saints), located approximately 65 km northwest of Kalgoorlie and 7 km east of the Goldfields Highway.  The Department of Mines, Industry Regulation and Safety (DMIRS) has approved both Program of Work (PoW) applications relating to drilling programmes on M29/245 and M29/246 that comprise the Saints Project.

Cadence Minerals Holding in Auroch

Cadence currently owns approximately 6.5% of the equity in Auroch Minerals, which is an exploration company targeting principally zinc, cobalt and lithium.

Highlights:

  • Approvals granted (PoWs) for the upcoming diamond drilling programme at the Saints Nickel Project
  • 3,000m drilling contract awarded to Topdrive Drillers Australia, a well-respected Australian drilling company with drilling experience in the Saints region
  • Drilling targeted to grow the current Saints nickel resource (total JORC (2012) Mineral Resources of 1.05Mt @ 2.00% Ni, 0.20% Cu & 0.06% Co) through drill testing of postulated extensions along strike and/or down-plunge of the known nickel sulphide mineralisation
  • Drilling expected to begin within the next two weeks with preparations well advanced

The full release can be found at: https://www.investi.com.au/api/announcements/aou/6a72f46c-1c9.pdf 

Cadence Minerals CEO Kiran Morzaria commented: “Under the guidance of Aidan Platel and his team, the Auroch investment case continues to build. With high quality drilling targets already identified at Saints, we look forward to the initial results.”

– Ends –

 

For further information:

Cadence Minerals plc +44 (0) 207 440 0647
Andrew Suckling  
Kiran Morzaria  
   
WH Ireland Limited (NOMAD & Broker) +44 (0) 207 220 1666
James Joyce  
James Sinclair-Ford  
   
Novum Securities Limited (Joint Broker) +44 (0) 207 399 9400
Jon Belliss

 

Qualified Person

Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information contained in this announcement. Kiran holds a Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School.

 

Forward-Looking Statements:

Certain statements in this announcement are or may be deemed to be forward-looking statements. Forward-looking statements are identified by their use of terms and phrases such as ‘‘believe’’ ‘‘could’’ “should” ‘‘envisage’’ ‘‘estimate’’ ‘‘intend’’ ‘‘may’’ ‘‘plan’’ ‘‘will’’ or the negative of those variations or comparable expressions including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth results of operations performance future capital and other expenditures (including the amount. nature and sources of funding thereof) competitive advantages business prospects and opportunities. Such forward-looking statements reflect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors.  Many factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions competition environmental and other regulatory changes actions by governmental authorities the availability of capital markets reliance on key personnel uninsured and underinsured losses and other factors many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. The Company cannot assure investors that actual results will be consistent with such forward-looking statements. 

Ken Baksh September 2019 Market Report

During one-month period to 31st August 2019, major equity markets registered quite sharp falls. The FTSE ALL-World Index dropped by 3.62% over the period, though still up by 12.2% since the beginning of the year. The VIX index rose sharply by 34.8% to end the period at 18.45. Fixed interest products mostly rose in price terms leaving significant amounts of global government debt (approx. $17 trillion) on negative yields. Sterling was slightly weaker but the main monthly FX movers were in the Asian area. Precious metals rose in price terms while iron ore suffered a sharp decline.

The European Central Bank continues to err on the cautious side regarding economic projections, Mario Draghi giving strong hints of further help at the end July ECB meeting. At the time of writing Germany appears to be on the brink of a recession and calls for fiscal loosening are increasing. Political events have featured ECB appointments along with further signs of discontent in Germany and France, renewed Spanish election speculation and further Italian coalition division. US market watchers continued to grapple with ongoing tariff discussions (China, Mexico -and prospectively Europe,Japan), Federal Budget concerns, Iranian sanctions, Venezuela, North Korean meeting stalemate and Trump’s personal issues (Mueller, etc). US economic data has indicated a solid consumer trend although relatively buoyant first quarter GDP growth figures did include a large element of inventory building. Corporate results/forward looking statements have taken on a more cautious tone, especially related to tariff developments (actual or rumoured). Official interest rates were reduced 25bp on July 31st to a range of 2.0%-2.25% much as expected, and the accompanying statement left the door open for further adjustment.  In the Far East, China flexed its muscles in response to Trump’s trade and other demands. Recent data releases pointed to 6.2% quarterly GDP growth, in line with lower expectations and featuring a relatively strong consumer contribution. Japanese economic growth was downgraded slightly to 0.8%, mainly on a weaker trade performance. The recent Upper House election result confirmed the LDP current strong position while at the Bank of Japan meeting, the current easier fiscal stance was reconfirmed. The VAT change, yet not confirmed, and further QE measures in line with major trading partners are being hotly debated. Relations between Japan and South Korea deteriorated.

 

The UK continued to report somewhat mixed economic data with stable  developments on the government borrowing side, poor corporate investment , inflation a little higher than expected, weak relative GDP figures and deteriorating property sentiment, both residential (esp London) and commercial (especially retail).Business and market attention, both domestic and international, is clearly focussed on ongoing BREXIT deliberations under new Prime Minster ,Boris Johnson. Both the Chancellor and Bank of England Governor have made frequent references to the unsettling effects of any unsatisfactory Brexit outcome, as have a growing number of business leaders and independent academic bodies. The actual situation remains very fluid, and many options are still possible at the time of writing, including a time extension, while there remains a non-zero probability of a “no-deal”.  Economic and corporate figures will inevitably be distorted over coming months, and it would not be a complete surprise if Uk entered a technical recession by the end of the third quarter. 

 

Aggregate world hard economic data continues to show 2019 expansion of around 3.0%, although forecasts of future growth continue to be reduced the leading independent international organizations. There appears to be a growing chorus of further action on the fiscal front e.g. infrastructure spending, as other instruments e.g interest rates may have limited potential from current levels. Fluctuating currencies continued to play an important part in asset allocation decisions, volatile sterling being a recent example, while some emerging market currencies have been exceptionally volatile e.g. Turkey. Movements in the $/Yuan are also taking on increasing significance

 

Equities

Global Equities fell 3.62% over August, the FTSE ALL World Index now showing a gain of 12.2% since the year end, albeit following the very weak last quarter of 2018. The UK broad and narrow market indices, both fell by 4% to5% over the period, lagging world equities in both local and sterling adjusted terms by about 5% and 10% respectively, since the beginning of 2019. Asia, excluding Japan, and Emerging Markets showed the largest monthly falls. The VIX index rose a hefty 34.8% to a level of 18.45, but still down 27.4% down 46.1% since the beginning of the year. 

 

UK Sectors

Sector moves over August 2019 reflected relative outperformance by traditional defensive stocks in the areas of pharmaceuticals, telecoms and utilities, while oil and gas, mining and life stocks featured some double-digit price declines. Over the eight -month period, pharmaceuticals are showing an absolute gain of 19.4% while the worst performing UK sector, banking, is nursing a loss of 7.8%

 Fixed Interest

Gilt prices rose 3.05% over the month, the 10-year UK yield standing at 0.32% currently.  Other ten-year yields closed the month at US, 1.5%, Japan, -0.32%, and Germany, -0.52%.  UK corporate bonds rose by over 1.7% in price terms ending August on a yield of approximately 2.42%. Amongst the more speculative grades, there were small yield falls for US High Yield although emerging market bonds fell in price terms. Floating rate bonds remained unchanged while the favoured convertible bond play gave up some of July’s sharp gain.  See my recommendations in preference shares, convertibles, corporate bonds, floating rate bonds etc. A list of my top thirty income ideas (many yielding around 6%) from over 10 different asset classes is available.

 

Foreign Exchange

The Japanese Yen was one of the main features during August, rising against all major currencies largely for perceived safe haven reasons. The Chinese Renminbi fell by nearly 4% against the US Dollar, the biggest monthly slide in 25 years.

 

Commodities

A generally weaker period for most commodities on global growth concerns, although gold and some other precious metals rose. Iron ore was a particularly weak feature dropping over 27% during the month.

 

Looking Forward 

Over the coming months, geo-political events and Central Bank actions/statements meeting, will continue to dominate news headlines and market sentiment, in my view. To some extent, the slower economic growth forecasts that are appearing, will inevitably lead to some scale-back in corporate profit projections, although there may be offsetting fiscal and monetary effects. With growing numbers of government bond yields in negative territory, calls for more fiscal action will intensify.

 

 US watchers will continue to speculate on the timing and number of further interest rate moves during the 2019/2020 period while longer term Federal debt dynamics, election debate and trade” war” winners/losers (a moving target) will affect sentiment. Corporate earnings growth will be subject to even greater analysis after a buoyant 2018, amidst a growing list of obstacles. Additional discussions pertaining to North Korea, Russia, Ukraine, Iran, and Trump’s own position could precipitate volatility in equities, commodities and currencies. In Japan market sentiment may be calmer after recent political and economic events although international events e.g. exchange rates and tariff developments, will affect equity direction. Economic data,has,if anything, been better than expected, a rare event at the moment!  There is increasing speculation that China may announce more stimulative measures and key $/Yuan exchange rate levels are being watched closely. European investment mood will be tested by generally weakening economic figures and an increasingly unstable political backdrop

 

Hard economic data (especially final GDP, corporate investment, exports) and various sentiment/residential property indicators are expected to show that UK economic growth continues to be lack-lustre and any economic upgrade over current quarters appear extremely unlikely. The UK Treasury and the MPC have both produced rather negative economic medium-term projections, whatever the Brexit outcome!  It is highly likely that near term quarterly figures (economic and corporate) will be distorted (both ways), and general asset price moves will be confused, in my view, by a mixture of currency development, political machinations, international perception and interest rate expectations

 

In terms of current recommendations, 

Depending on benchmark, and risk attitude, first considerations should be appropriate cash/hedging stance and the degree of asset diversification (asset class, individual investment and currency).

An increased weighting in absolute return, alternative income and other vehicles may be warranted as equity returns will become increasingly lower and more volatile and holding greater than usual cash balances may also be appropriate, including some outside sterling. Both equity and fixed interest selection should be very focussed. Apart from global equity drivers e.g. slowing economic and corporate growth and limited monetary response levers, there are many localised events e.g. Brexit, US elections, tariff discussions, political uncertainty, that could upset many bourses, still relatively close to recent record levels.

 

 

  • I have kept the UK at an overweight position on valuation grounds. Full details are available in the recent quarterly review. However, extra due diligence in stock/fund selection is strongly advised, due to ongoing macro-economic and political uncertainty. Sterling volatility should also be factored into the decision, making process.  
  • Within UK sectors, some of the higher yielding defensive plays e.g.  Pharma, Telco’s and Utilities have attractions relative to certain cyclicals, though watch regulatory concerns, and many financials are showing confidence by dividend hikes and buy-backs etc. Oil and gas majors may be worth holding despite the outperformance to date. Remember that the larger cap names such as Royal Dutch and BP will be better placed than some of the purer exploration plays in the event of a softer oil price. Mining stocks remain a hold, in my view (see my recent note for favoured large cap pooled play). Corporate activity, already apparent in the engineering (GKN), property (Hammerson,Intu), pharmaceutical (Glaxo, Shire?), packaging (Smurfit), retail (Sainsbury/Asda), leisure (Whitbread,Greene King), media (Sky), mining (Randgold) is likely to increase in my view, although the Government has recently been expressing concern about overseas take-overs in certain strategic areas.

 

  • Continental European equities are preferred to those of USA, for reasons of valuation, and Central bank policy, although political developments and slowing economic growth need to be monitored closely. I suggest moving the European exposure to “neutral “from overweight. European investors may be advised to focus more on domestic, rather than export related themes.  Look at underlying exposure of your funds carefully and remember that certain European and Japanese companies provide US exposure, without paying US prices. I have recently written on Japan, and I would continue to overweight this market, despite the 2017 and 2018 outperformance relative to world equities. Smaller cap/ domestic focussed funds may outperform broader index averages e.g. JP Morgan Japanese Smaller Companies and Legg Mason.FX will play an increasing role in the Japanese equity decision.
  • Alternative fixed interest vehicles, which continue to perform relatively well, in total return terms,  have attractions e.g. preference shares, convertibles, for balanced, cautious accounts and energy/ emerging/speculative grade for higher risk e.g. EnQuest,Eros. These remain my favoured plays within the fixed interest space. See recent note
  • UK bank preference shares still look particularly attractive and could be considered as alternatives to the ordinary shares in some cases. Bank balance sheets are in much better shape and yields of 6%-7% are currently available on related issues while a yield of 9.1% p.a., paid quarterly, is my favoured more speculative idea.
  • Alternative income and private equity names exhibited their defensive characteristics during 2018 and are still favoured as part of a balanced portfolio. Reference could also be made to the renewable funds (see my recent solar and wind power recommendations). Both stocks registered positive capital returns over 2018 on top of income payments of approx. 5%. And are still strongly recommended as is the new issue. Selected infrastructure funds are also recommended for purchase but be aware of the political risk. New issues in this area e.g. Aquila and JPM are likely to move to premiums.
  • Any new commitments to the commercial property sector should be more focussed on direct equities and investment trusts than unit trusts (see my recent note comparing open ended and closed ended funds), thus exploiting the discount and double discount features respectively as well as having liquidity and trading advantages. However, in general I would not overweight the sector, as along with residential property, I expect further price stagnation especially in London offices and retail developments e.g. (Hammerson, Intu). Subscribers may read more on this subject in my latest quarterly review. One possible exception to the sentiment above is the growing attractiveness of certain assets to overseas buyers.   The outlook for some specialist sub sectors e.g. health (PHP equity and bond still strongly recommended), logistics, student, multi-let etc and property outside London/South-East, however, is currently more favourable. Investors should also consider some continental European property plays e.g SERE. 
  • I suggest a very selective approach to emerging equities and would continue to avoid bonds. Although the overall valuation for emerging market equities is relatively modest, there are large differences between individual countries. It is worth noting that a number of emerging economies in both Asia and Latin America have shown first quarter 2019 GDP weakness even before the onset of any possible tariff effects. A mixture of high growth/high valuation e.g. India, Vietnam and value e.g. Russia could yield rewards and there are signs of funds moving back to South Africa on political change. Turkish assets seem likely to remain highly volatile in the short term and much of South America is either in a crisis mode   e.g. Venezuela, Argentina or embarking on new political era e.g. Mexico and Brazil. As highlighted in the quarterly, Chinese index weightings are expected to increase quite significantly over coming years, and there are currently large inflows into this area following the price weakness of 2018. One additional factor to consider when benchmarking emerging markets is the large percentage now attributable to technology. A longer-term index argument is also being made in favour of Gulf States, although governance issues remain a concern.

Full quarter report available to clients/subscribers and suggested portfolio strategy/individual recommendations will be available soon. Ideas for a ten stock FTSE portfolio, model pooled fund portfolios (cautious, balanced adventurous, income), 30 stock income lists, defensive list, hedging ideas, and a list of shorter-term low risk/ high risk ideas can also be purchased, as well as bespoke portfolio construction/restructuring. 

Feel free to contact    regarding any investment project.

 

Good luck with performance! 

 

Ken Baksh Bsc,Fellow (UK Society of Investment Professionals)

kenbaksh@btopenworld.com

 

2nd September 2019

 

 

 

    

 

 

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