China gets precious
Demand for gold in China, which overtook India as the largest global buyer last year, will increase by around 25 per cent over the next four years as the country’s middle class gets ever wealthier, according to the World Gold Council (WGC). China accounted for about 28 per cent of global demand last year, as buyers piled in subsequent to April’s price falls, while consumer demand is expected to ratchet up to at least 1,350 metric tonnes by 2017. The report by the WGC also said that by the end of last year, around 1,000 tonnes of gold may be linked to financing deals in China, in which commodities including copper are used as collateral for credit amid the country’s tight credit restrictions.
Lloyds listing
TSB up for grabs
Despite the recent fall-away in equity values, it’s appears likely that Lloyds Banking Group (LLOY) will launch the initial public offering (IPO) of TSB in the middle of next month, in expectation that it will be listed on the London Stock Exchange on May 19th. It’s been reported that Lloyds is pinning a book value of between £1.5bn and £2bn for the banking network, but in the event that Lloyds fails to secure its desired pricing terms, it is expected to unload 30 per cent of TSB’s shares at the time of the IPO - rather than the 50 per cent originally planned.
Overcooked overdrafts
Hard to credit
The news just keeps getting worse for the UK credit industry. Regulators have announced that bank customers were paying too much for their overdrafts and, in some cases, were left in perpetual debt by their easy availability. The Financial Conduct Authority (FCA) is to investigate the £8bn market further over the summer and could impose new rules to prevent abuses. That comes on top of a commitment by the FCA to review the UK's £150bn credit card market.
Buyers’ market
7% solution
There’s been more fevered activity in the UK housing market. Sellers have been raising average asking prices in some London boroughs by more than 7 per cent in a month, according to property website Rightmove. Average asking prices in the UK are up by 7.3 per cent on this time last year – the biggest annual rise since October 2007. Analysts at EY (Ernst & Young) predict a similar rate of increase over the next 12-months, before the rate of increase falls to 4.2 per cent in 2016. But the EY analysts think that, contrary to warnings over a gathering housing bubble, the increase in gross mortgage lending has largely been financed by an increase in repayments by existing borrowers.
Can’t buy me Lodz
GSK accused (again)
GlaxoSmithKline (GSK) has denied that it has a problem with corruption after new bribery allegations emerged in Poland. The latest allegations come on top of charges made against the UK pharmaceuticals giant in China and Iraq. GSK said that it has already disciplined an employee in connection with claims that it bribed Polish doctors to promote its asthma drug Seretide. A criminal investigation has been instigated, while the public prosecutor’s office in Lodz said that it has found evidence to support claims of corrupt payments.
The fiducial network
Money changers
Social media leviathan Facebook is set to launch a service which would allow members to make payments and store their money via its social network. It’s been reported that Mark Zuckerberg’s brainchild is looking to establish partnerships with London-based 'fin-tech' companies focused on online money transfers, and has sought regulatory approval in Ireland for the service, with a decision expected within weeks. It doesn’t represent a radical step given that it already has the right to make some in-house transactions in the US. According to the Irish Times it moved $2.1bn worth of transactions in 2013.
Re-emerging markets
Value trumps growth
The recent volatility in markets has dented faith in growth plays, with emerging markets the unlikely beneficiaries. A BoA/Merrill Lynch survey of fund managers published this week revealed that the majority believe that the US is the most overvalued equity market in the world, with many of the respondents turning their focus back toward emerging markets. The survey also showed that investor sentiment towards growth stocks deteriorated in April, with 40 per cent of those surveyed believing that value stocks will outperform growth stocks over the next 12 months.
