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Ken Baksh – January 2023 Investment Monthly

Independent Investment Research

JANUARY 2023 Market Report

Investment Review

During the one-month period to 31st December 2022, major equity markets, as measured by the aggregate FTSE All – World Index, fell, by over 1.5%, taking the year-to-date loss to 19.3%, in $ terms. Chinese equities and related emerging market indices were relatively stable while the tech-driven NASDAQ dropped 5.6% on the month to finish down 33.54% on the year. The UK larger cap indices remained broadly unchanged over the year The VIX index fell, finishing the period at a level of 21.89.
Government Fixed Interest stocks also fell over the month, capping a very poor year The UK 10-year gilt ended the month on a yield of 3.16% with corresponding yields of 3.77%, 1.94% and 0.25% in USA, Germany, and Japan respectively. Speculative and lower quality bonds, also, fell in price terms. Currency moves featured a strong Yen. Commodities were mixed on the month, while over the full year energy and selected agricultural products significantly outperformed industrial metals such as copper, aluminium and iron ore.

Monthly Review of Markets 

Global Equities fell modestly over December by 1.56% extending the full year decline to 19.31%. Most major indices declined although Chinese and related indices significantly outperformed. The NASDAQ index fell 5.64%, taking the twelve months fall to drop to 33.54% for this tech-driven universe of stocks. The FTSE 100 was one of the few indices to remain in positive territory over the year, for well documented reasons. The VIX index finished the year at a level of 21.89, a twelve month gain of 27.12%. This move reflects the degree of risk aversion compared with the” relative calm” of December 2021 (medical, geo-political and economic!), although the current level is far from “panic” territory.

UK Sectors
Sector moves were mixed over the month. Resources (commodity prices), insurance (solvency issues) and pharmaceuticals (corporate action) were amongst the month’s leading sectors, while telecoms, property, travel and retailers were major fallers. The FTSE100 outperformed the All-Share Index again ending the year about 4% ahead of the wider market index. By IA sectors, UK active unit trusts significantly underperformed benchmark indices, trackers etc, over calendar 2022, with small company funds about 20% behind the benchmark indices. Income based funds finished the year “just” down 1.7%. “Balanced” funds, by IA definitions, fell by about 10%, before fees etc over the full year. (Source: Trustnet December 31st, 2022).

Fixed Interest

Major global government bonds fell in price terms over December, the UK 10-year yield for instance finishing the month at a yield of 3.66%. Other ten-year government bond yields showed closing month yields 3.89%,2.56% and 0.41% for US, German and Japanese debt respectively. Special mention should be made of the Japanese Government bond where, the yield control process was “tweaked” late in the month. UK corporate bonds also fell, though finishing the year about 5% ahead of the government bond index in price terms and even more in total return metrics. Speculative bond prices also fell in December, to yields around 5% at the year end. More “cautious” UK balanced funds and so called 60/40 funds experienced very poor returns during 2022, as the period of global equity weakness was, somewhat unusually, accompanied by disappointing gilt returns.
Check my recommendations in preference shares, selected corporate bonds,fixed interest ETF’s , zero-coupons, speculative high yield etc. A list of my top ideas from over 10 different asset classes is also available to subscribers.

Foreign Exchange
Over the month, the Japanese “policy change” was one of the major FX events, causing the Yen to appreciate by 4.5% and 5.4% against the Pound and US Dollar respectively. Elsewhere the Chinese Yuan continue to appreciate now dropping below 7 to the US Dollar. Recent currency moves have helped the sterling adjusted Japanese equity index outperform the S&P on one- and three-month bases, and finish the year, just 1.2% behind the US on a full year basis

Apart from a sharp fall in the natural gas price, most commodities had a quiet month in seasonally low volumes. Over the full year, the Bloomberg total and ex-agric indices rose by 27.9% and 15.45%, in dollar terms, respectively substantially outperforming most bonds and equities for well documented reasons.

Oil and gas, corn soya and uranium showed above average returns, while industrial metals copper, aluminium and iron ore declined in price terms. Despite record inflation levels and geo-political volatility, gold remained virtually unchanged over the year, in dollar terms.

Over the recent month, there have been few major changes to economic growth projections, with most commentators pointing to the “management” of the US slowdown, nature and timing of the Chinese re-opening and the Russia/Ukraine conflict as being key determinants of forward-looking estimates.
At the same time, key data inflation indicators (headline rates, factory gate and commodity prices, shipping rates,) suggest that headline price growth is set to slow in coming months, although labour compensation developments must be watched carefully.
More volatility is expected in oil prices as western countries impose restrictions on Russian oil.

Recently announced inflation indicators showed November headline CPI of 7.0%, lower than estimates, while the core inflation rate rose by 6.0%. The November PCE,the Fed’s preferred inflation metric rose at an annualised rate of 4.7%,down from 5% in October, but still over double the Fed target. Third quarter preliminary GDP growth of 2.6%, annualised, while higher than estimates concealed a weaker consumer component offset by a strong trade balance. Recent consumer sentiment indicators (November composite PMI for example), retail sales, housing activity, construction figures and the Empire States Survey back this up, showing declining trends into recent weeks. Anecdotal evidence from leading retailers reported a shift of consumer behaviour spending less on discretionary items such as electronics and furniture and more on food. The Fed’s own forecasts expect GDP growth of 0.5% for 2023, and core PCE growth of 4.8% and 3.5% respectively for 2022 and 2023
At it’s final 2023 meeting on 14th December, the Federal Reserve raised its benchmark policy rate by 50 basis points and signalled its intention to keep squeezing the economy next year as central banks on both sides of the Atlantic enter a new phase in the battle against inflation. The new target range is 4.25% to 4.5%. The median estimate for the fed fund rate by the end of 2023 rose to 5.1%. Latest Fed projections below

US midterm election results showed the Republicans narrowly taking control of the House of Representatives while the Democrats retained the Senate, a situation which could minimise more extreme policies, but also thwart some of Biden’s ambitions. Donald Trump has vowed to return in 2024, although the Republican Party is far from united at the current time and the risk of personal indictment is not negligible.

The European Central Bank raised interest rates by half a percentage point on December 16th taking the deposit rate to 2%, while also warning that inflation would remain above 2% for a considerable time meaning it would have to keep up rate hikes. The simultaneous announcement that the ECB would start QT from March reinforced the more “hawkish” message from the meeting. In a more detailed presentation than previous meetings, Christine Lagarde differentiated US inflation more driven by an overheating economy and tight labour market, and the ECB price levels, more driven by soaring energy and food costs.
European GDP growth estimates have stabilised over the recent period, and indeed one or two sub-country third quarter releases have been marginally above expectations e.g Germany. The

December flash Eurozone PMI released on December 18th rose to 48.8, an improvement, compared with November.
Current ECB staff projections foresee economic growth of 3.4% for calendar 2022 and a “shallow and short recession” over the current period., taking the likely full year 2023 figure to around +0.5%. Inflation and fuel shortages remain key determinants
November Eurozone inflation, just released, of 10.0% was lower than expected. At the ECB meeting (above) 2023 inflation projections were raised to 6.3%

The GDP figures, shown below (source: CLSA, CEIC) show 2022 and 2023 growth projections for the Asia excl Japan region. Growth in 2023 is likely to slow slightly amid weakening domestic and external demand after 2022, the fastest since 2012, but overall, the situation still compares favourably by international comparison The reasons include a “better” Covid experience, selective commodity exposure, tourism, continued FDI Investment (especially China related) and better initial fiscal situations (compared with late 90’s for example) and limited direct connections with the Russia/Ukraine situation. The forecasts do not assume a total easing of Chinese covid rules.
Headline inflation of around 5% currently (core 3%) also compares favourably and is expected to drop to nearer 4% by end 2023 led by commodity disinflation.

The 5.5% official GDP growth target for 2022 will clearly be missed, with some investment banks now forecasting below 3%. Official data shows weakening trends in consumer spending, fixed asset investment and construction activity while more recent “live” tracking data e.g., mobility, cement production and electricity use also showed subdued economic activity. In addition, very weak trade data was released mid-December. The major historic negative issues of a very restrictive anti-Covid policy and major disruption within the property market have now been supplemented by increasing US restrictions on the production/export of certain key electronic products. Rising unemployment, particularly amongst younger people is becoming an economic and increasingly political issue.
At the time of writing a property “rescue” package has been implemented, while on the Covid front, various relaxation measures are taking place to alleviate some of the issues above. The removal of the quarantine requirement for inbound travellers from January 8th signals the end of the zero-Covid system that transformed China’s relationship with the outside world. However, increasing domestic
health pressures and re-imposition of certain international covid restrictions create an uncertain environment,at the time of writing.

The Japanese economy contracted 1.2% on an annualized basis during the third quarter of 2022, missing forecasts of 1.1% growth, and considerably weaker than the 4.6% expansion recorded during the second quarter. This was the first down quarter of the year reflecting weak domestic consumption, a slowdown in business investment and an acceleration in imports. Estimates for the full year seem to fall mainly within the 1.5%-2.0% band. Inflation, while still well below international peers, rose by 3.7% in November, the highest in 41 years, driven by currency weakness. Headline CPI is expected to remain around this level in coming months through a combination of import prices and elevated consumer expectations
The Bank of Japan changed its yield control policy towards the end of December surprising many investors and causing immediate drops in bond prices and gain in the Japanese Yen. Although denied by the BOJ,there is growing speculation that Japan may ease back on its ultra-loose monetary policy in spring 2023 when the BoJ leadership changes.

Within the UK, live activity data (e.g December Gfk data) continues to show a weaker overall trend, especially within the services sector. According to this survey, released 16th December, covering the mid-month period, consumer confidence remains very low (near 50 year low), amid the cost-of-living crisis. Unemployment, however, is still at a relatively low level.
According to ONS statistics, GDP fell by 0.3% between the second and third quarters, slightly more than expected, and leaving the economy 0.8% below the “pre pandemic” level. The saving ratio was 1.8% during the quarter.
Inflation continues to rise, the November CPI and RPI readings registering hikes of 10.7% and 14.0% respectively.
Kantar and the ONS both reported food/grocery prices rising about 15% year on year as well as turkey/egg shortages. Bloomberg’s Breakfast Index has jumped more than 21% in the 12 months to November 2022!

The PSBR is deteriorating again, largely as a results of rapidly rising interest (index linked) payments and expectations of higher public sector pay and state pensions. The most recent “official” figure showed November PSBR at £22 billion, much larger than forecast and the largest since monthly records began in 1993, according to the ONS. Current tentative estimates are that borrowing will come in at £175 billion in 2022/2023 nearly £50 billion higher than the 2021/2022 total
Despite some relief with the recent energy price package, until April at least, (but not other utilities-see below), shop price inflation, greater Council Tax “freedom”, upward interest/mortgage rate pressure, falling house prices, accelerating rents, insolvencies/evictions, legacy Brexit issues and, strike activity, will continue to be headwinds and the outlook for economic growth over coming quarters is highly uncertain. Both the Bank of England as well as the OBR and now the OECD are expecting recessionary conditions for an extended period

Experts at consultancy EY-Parthenon reported that company profit warnings had jumped from 51 to over 86 over the third quarter of 2022 citing increasing costs and overheads as the main reason, especially in consumer facing businesses. Another report from Begbies Traynor, Latest Red Flag Alert Report for Q3 2022 – 07:00:07 19 Oct 2022 – BEG News article | London Stock Exchange quoted that over 600,000 business were already in severe financial distress.
Monetary policy has tightened from a 0.1% interest rate in December last year to the current level of 3.5% warning that further hikes are likely. Markets are expecting rates to be above 4.0% by mid-2023.

Autumn Statement
On 17th November, Chancellor Hunt told a sombre House of Commons that a massive fiscal consolidation including £30 billion of spending cuts and £25 billion of tax rises was needed to restore Britain’s credibility and tame inflation. The OBR said they expected the economy to shrink 1.4% and not regain pre -pandemic levels until 2024.Inflation was expected to remain over 7% next year.
While many of the proposals had been leaked, and the market reaction was muted (first objective achieved!), there were a few positive surprises (e.g help for NHS and education) and several negatives.

Looking Forward
Given the scope for geo-political, economic uncertainty from known factors summarized above plus the “black swan” allowance for unknown developments, plus the valuation risks, more prominent in certain asset classes than others, the first message for 2023, should be diversification, and the second should clearly be scale your positions according to your risk profile.
Looking back at 2022, and comparing my view last December, published on January 1st, 2022, with the outcome.
2022 Hindsight…5 1/2 out of 7 Correct….2 very close!
• “Bonds will underperform equities”- correct .Gilts massively underperformed the FTSE100 and world equities.
• Overweight UK, correct especially FTSE 100.
• Underweight USA/overweight Japan…..correct in local currency terms..but in £ adjusted terms,I missed by 1.2%!…Moral..watch FX and use hedging where appropriate.
• Reduce “other Pacific”..correct… significantly helped by Chinese weakness.FT Asia dropped 19%.
• Overweight Europe-correct..came right towards end of year.Eurostoxx £ adj (-6.8%versus world -9.2%).
• “Avoid gold”-Gold rose by 0.47%, in dollar terms, in 2022, outperforming base metals but underperforming oil.
• Overweight renewables and infrastructure…correct…all showing absolute returns of about 15% in total return over the year compared with a 9.2% decline in sterling adjusted world equities.
Enough of the history…now looking to 2023, my strategic thoughts, ten of them, would be
KEN’S TEN-2023
• Keep an overweight position in renewable/infrastructure, especially in investment trust (page 21).
• Favour value over growth generally-trade has further to run.
• Stay neutral/overweight in UK equities relative to your benchmark (page15).
• Overweight Far East,including China,Japan and other Asia (pages 16-19).
• Start switching large cap to small cap-valuation/performance.
• Start diversifying away from strong dollar.
• Overweight uranium relative to your commodity benchmark (page 21).
• Amongst UK sectors overweight telecom, health equipment, defence, tobacco and energy (pages 13-14),”not too ESG friendly,I am afraid”.
• Amongst UK sectors underweight luxury, motor related, most capital goods, consumer brands and food retail (pages 13-14).
• Within UK Fixed Interest prefer corporate bonds, preference shares, and zeroes to conventional gilts (page 21)-start rebuilding some fixed interest exposure,especially for cautious and balanced risk profiles.

For equities generally, the two medium term key questions will be when rising interest rates eventually cause equity derating/fund flow switches, government, corporate and household problems, and how the rate of corporate earnings growth develops after the initial snapback. Going forward, withdrawal of certain pandemic supports, uncertain consumer and corporate behaviour and cost pressures are likely to lead to great variations by sector and individual company. Investors will need to pay greater than usual attention to the end 2022 figures and accompanying forward looking statements.
Market Arithmetic

UK Equities continue to remain a relative overweight in my view, based on several conventional investment metrics (see above), longer term underperformance since the Brexit vote, style preference (value overgrowth) and international resource exposure although be aware of the numerous domestic headwinds I have highlighted above.
Value should be favoured over growth, and the FTSE 100 favoured over the FT All-Share. Apart from the style drift, remember that the non-sterling element of leading FTSE 100 companies and sectors is relatively high
By sector, Oil and Mining equities continue to benefit from above average yields, strong balance sheets, dollar exposure and secular demand e.g copper,lithium, cobalt for electronics, construction, electric vehicles etc. Current moves regarding Chinese re-opening the economy would be another positive for this sector.
Remain overweight in pharmaceuticals and health equipment, expect more corporate activity
Telecom-moving to overweight this area after many years of disappointment. Valuations are attractive, many tariffs have an element of index linking, windfall tax risk is low and sector consolidation is increasing.
Defence-a relatively small stock market sector in UK terms but increased global defence spending, negative PMI correlation, high barriers to entry and corporate activity will continue to lift this specialist area.
Tobacco-ESG factors aside, there is undoubted value in this sector (both major UK stocks yield around 7%). Negative correlation with PMI’s and emerging market volume growth still strong.
Banks may enjoy some relative strength from rising interest rates, but continue to monitor the recession/loan growth and default risks. These mixed trends were very evident in the recent third quarter figures. Preference Shares as well as ordinary shares have attractions in this area

Utilities- underweight in non-renewable utility stocks which may suffer from consumer and government pressures, and no longer trade on yield premia, especially against the backdrop of higher gilt yields. Infrastructure may fare better than distribution.
Housebuilders and real estate-expect depressed activity and remember that the rising interest rates have not yet been fully factored into bricks and mortar property yields. Industry data and anecdotal news from both housebuilders and REIT’s suggest further weakness to come.
Retailers are in general suffering from a combination of falling sales and rising costs and clear trends in consumers “trading down” are apparent. Anecdotal evidence shows a clear switch in consumer spending away from discretionary items such as electronics, furniture and certain clothing items. Certain on-line operations e.g Asos additionally are suffering from an element of post-Covid comparison. Food retailers are additionally facing stiff competition from discount “disruptors”. The British Retail Consortium expects another tough year for the sector looking for sales growth of just 2.3% to 3.5% i.e., volume declines.
Luxury Goods-Currently highly rated in stock market terms but could be vulnerable, in recessionary conditions and seem to have a strong correlation with property prices, which are expected to decline. However, renewed Chinese interest may help sector.
Domestic Breweries/pubs etc are having a hard time with stalling consumer’s expenditure, supermarket competition and rapidly rising costs.
In general, extra due diligence at stock level more generally will be required as I expect a growing number of profit warnings and downbeat forward looking statements. See the EY and Begbies statements on page 7 above.
However, takeover activity is also clearly increasing with, for example, private equity snapping up UK-listed companies at the fastest pace for more than twenty years. Foreign takeover, stake building is also increasing, current weak sterling being a factor, with Vodafone under scrutiny by a French (who already have BT interest!) investor. Biffa (waste management),MicroFocus(technology),Aveva(software) and RPS(professional services) have all succumbed to foreign takeovers in recent months, much by “strong dollar” American or Canadian organizations.


also remain an overweight in my view, although my recent comment re hedging may “nuanced “now following the extreme currency weakness and surprise intervention/policy change. The prospective price/book ratio of 1.19 is attracting interest of corporate and private equity buyers, while the prospective yield of 2.6% is above the world average and compares very favourably with USA (1.7%). Corporate governance is rapidly improving with diverse boards, reduction of cross holding, higher dividends etc. There are clear signs that inward investment attracted by the pro-growth, pro-deregulation agenda and relatively low costs (average Japanese annual wage $30000 compared with $75000 USA) is increasing. The political agenda is likely to include a more active defence policy,and a shift in income distribution more in favour of middle-class households. Private equity stake building interest in Toshiba and growing activity in the property sector (discount on a discount in a cheap currency) demonstrate the search for value in Japan. Investors may wish to remove currency hedges.
On a valuation basis (see table above) the forward PE multiple of 11.8 is at a considerable discount to the world, and especially US average (15.8) and certain Japanese investment trusts yield more than UK peers, with generally stronger balance sheets and significant cash holdings.

EMERGING MARKETS-Very difficult to adopt a “blanket” approach to the region even in “normal times”, but especially difficult now, with so many different COVID, commodity, sectoral mix, debt, geo-political and increasingly natural disaster variables. See chart below The IMF recently warned that several emerging nations could disproportionately suffer from a combination of COVID and adverse reaction to “tapering” by developed counties e.g., FX/Interest rate pressures. Six countries have already defaulted during the pandemic, and the IMF is currently in various stages of bail-out discussions with Pakistan,Argentina,Zambia,Sri Lanka,Ghana,Tunisia and Egypt.

Within the emerging/frontier universe I continue to have a relatively positive view on Asia. The economic fundamentals were discussed on page 16 above, and the forward-looking multiples and dividend growth metrics appear relatively attractive in a global context. Any move by China to open more fully after their severe Covid lockdown, would of course additionally help. Exposure to the entire area can be achieved through a number of ETF’s and also investment trusts currently on discounts

If a country-by-country approach is adopted, I have a longer-term positive view on Vietnam
where, the nation is supported by positive demographics, with a population of near 100 million, an emerging middle class, and a recipient of strong foreign direct investment. Qualconn,an Apple supplier, Intel(semi-conductors),Lego and Samsung(mobile phone plant)

have all recently invested in new capacity in the country. Other big names moving chunks of production from China to Vietnam include Dell and HP (laptops), Google(phones)and Microsoft (Games Consoles) The economy is expected to grow at around 6.5% this year (7.7% Q2 2022) and approximately 6% in 2023 while current inflation is running at about 3.5%. One more rate hike of 50bp towards the end of the first quarter should mark the end of the tightening cycle. On a relatively low prospective PE based on forecast earnings growth over 20%, Vietnamese equities appear good value.
India, although quite highly rated and a major oil importer, warrants inclusion in a diversified portfolio, and is currently receiving some fund flows from “overweight” Chinese portfolios. Indonesia, the last of my current Asian ideas benefits from a commodity boom, strong domestic market, low debt, relatively stable currency, forecast 5% GDP growth and 5% inflation

Caution is required in many South American markets with poor COVID-19 situations, deteriorating fiscal balances, weak investment, low productivity (see below) and governments in a state of transitioning e.g Brazil. However, some stock market valuations currently appear interesting in the region, which, so far, has been relatively unaffected by events in Ukraine. Commodity exposure, deglobalization beneficiary, valuation and recovery from a very low-level account for some year-to-date stock

market relative out- performance. Many of these countries also raised interest rates at an earlier stage, allowing relative currency strength, compared with say the Euro,Yen or Sterling.

selected bonds.

COMMODITIES– Gold spiked to over $2000 in March, a recent high, when Russia invaded Ukraine, but has since fallen about 10%, although of course, remaining reasonably stable in many local currency terms. Central Banks have been aggressively topping up their holdings during 2022.The longer-term prospects for more cyclical plays, however, continue to look brighter. Increased renewable initiatives, greater infrastructure spending as well as general growth, especially from Asia, are likely to keep selected commodities in demand at the same time as certain supply constraints (weather, labour and equipment shortages, Covid, transport) are biting. Current relaxation of the Chinese Covid policy, may provide a boost to base metals.
• Wheat and other grain prices have fallen from the levels reached following the Russian invasion of Ukraine, but the current grain shipment complications, planting/harvesting schedules within the region and extreme global meteorological conditions are expected to lead to further price volatility. If the conflict is prolonged it will affect millions of people living in such places as Egypt, Libya, Lebanon Tunisia, Morocco, Pakistan and Indonesia that could have political consequences. There has been renewed interest in agricultural funds as well as the soft commodities themselves.
URANIUM-I remain positive on the outlook for nuclear energy (stable base load,carbon-friendly,government U-turns,high energy output) while being aware of some of the well know issues(time, cost and waste disposal).Uranium is expected to experience a material market deficit over the next few years (estimates range between 10% and 30% of global demand).Nearly half of current world mined supply comes from Kazakhstan/Russia. The current price of 50 cents per pound could easily rise to 60c to 70c,as a result of geopolitical tension and a sharply rising cost curve. Apart from capital good companies exposed to the reactor construction/maintenance, I strongly recommend some exposure to my favoured investment trust.

UK FIXED INTEREST-selective exposure now recommended, especially for cautious/balanced risk mandates
The graph below plots the progress of the UK 10 year gilt yield, which is 3.66% at the time of writing. The two key things to note are firstly, the extremely low yields prevailing, just a year ago, partly reflecting a prolonged QE programme, and secondly the “panic” level reached at the end of September as domestic and international investors briefly took flight at the prospect of the short-lived Truss/Kwarteng mini budget proposals. Translating this into price terms, the I share all gilt index fell over 35% from the beginning of the year to late September before bouncing about 13% to current levels. This is huge volatility for an asset class often regarded as haven quality!
Having been negative on gilts for several years, I am now recommending gradually re-introducing selected fixed interest stocks to balanced portfolios, especially for cautious and balanced risk mandates.
Gilts themselves will have to contend with huge supply issues over coming quarters. While not falling as much as gilts and having completely different supply/demand dynamics, selected preference shares also fell to reach yield levels of approximately 7%, while good quality corporate bonds now offer yields around 6%. For the more adventurous, annual income yields around 10% and the prospect of capital gains are also are also offered on more speculative grades.

GLOBAL CLIMATE CHANGE remains a longer-term theme, and will be built into the many infrastructure initiatives, being pursued by Europe, USA, and Asia. The Russia/Ukraine conflict is accelerating the debate, and hopefully the action. There are several infrastructure/renewable investment vehicles which still appear attractive, in my view, combining well above average yields and low market correlation with low premium to asset value. The recent volatility in natural gas prices has highlighted both

risks and opportunities in the production and storage of energy from alternative sources. My favoured vehicles {solar,wind,storage and infrastructure) in the UK investment trust space have delivered capital returns of approx. 10% and additional dividend income of between 5% to7% over 2022 and are expected to continue to deliver healthy total returns.

The MSCI/IPD Property Index showed a sharp fall in the total return across all properties in October, the decline of 6.4% (-6.8% capital values, +0.4% income), taking the year-to-date return to -1.6% (capital -5.2%, Income +3.8%). The monthly decline accelerated the downward trend started in July this year, especially in Industrial

Properties. Rental growth however was positive at +2.4% in October..or 4.4% annualised for the ten month period
Several analysts are down grading their estimates for the sector following the rapid move in UK longer and shorter-term interest rates. Property asset valuations take time to materialise where there is a lag between balance sheet date and results publication in the listed area. Live traded property corporate bonds, however, have already moved sharply lower.
Quoted property giants British Land and Land Securities both reported deteriorating conditions witing their third quarter statements, expecting further valuation declines following rising yields.

Full asset allocation and stock selection ideas if needed for ISA/dealing accounts, pensions. Ideas for a ten stock FTSE portfolio. Stock/pooled fund lists for income, cautious or growth

portfolios are available. Hedging ideas, and a list of shorter-term low risk/ high risk ideas can also be purchased.
I also undertake bespoke portfolio construction/restructuring and analysis of legacy portfolios.
Independence from any product provider and transparent charging structure
Feel free to contact regarding any investment project.
Good luck with performance!
Ken Baksh Bsc,Fellow (UK Society of Investment Professionals)
2ndt January ,2023

Important Note: This article is not an investment recommendation and should not be relied upon when making investment decisions – investors should conduct their own comprehensive research. Please read the disclaimer.
Disclaimer: Opinions expressed herein by the author are not an investment recommendation and are not meant to be relied upon in investment decisions. The author is not acting in an investment, tax, legal or any other advisory capacity. This is not an investment research report. The author’s opinions expressed herein address only select aspects of potential investment in securities of the companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies’ regulatory filings, and consult a qualified investment advisor. The information upon which this material is based was obtained from sources believed to be reliable but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication and are subject to change without notice.The author may hold positions in any of the securities mentioned
The author explicitly disclaims any liability that may arise from the use of this material.

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