Scotland the brave?
This week’s publication of a 650-plus page document detailing the case for Scottish independence ahead of next September’s vote contained a host of economic data to back up the arguments. What became clear, as shown in these charts, is that the North Sea revenues are vital to Scotland’s prospects of standing on its own two feet, but also pretty important to the UK Treasury given that oil revenues result in a higher total tax take per person from Scotland than the rest of the UK.
Water world
As the water companies prepare to submit their business plans for the 2015-2020 regulatory review period, it is worth casting an eye over what happened last time around. The water and sewerage companies asked for, on average a 2.4 per cent increase above inflation in water prices over the 2010-2015 period. They were given an average 0.5 per cent by the regulator Ofwat. Although the price rises were less than they had hoped, all three listed players still managed to grow dividends over the period as the chart shows. But it is worth noting that the best of the dividend growth came from Pennon, who was also awarded the highest price rises.
Aussies declare war on A$
The Australian economy is in trouble. Goldman Sachs reckons it will be the only developed market to slow in 2014, with growth almost halving to just 2 per cent. Weak Chinese demand is hurting the country’s mining industry, but the comparatively strong Aussie dollar is holding back progress elsewhere. As low as 60 US cents in 2008, it topped 110¢ a few years later and, after a brief flurry last month, the Australian central bank has had some success in talking down the currency back toward 90¢. A further fall would stimulate exports and "achieve balanced growth in the economy.” Federal Reserve tapering might do to the job for them.
Stock Ratings of a Small-Cap Broker
This chart perfectly demonstrates why brokerage research should always be read with a hefty pinch of salt – especially if the research is from the designated ‘house’ broker. WH Ireland, a small-cap brokerage with headquarters in the City and an office in Manchester, publishes research on a total of 75 stocks, of which 61 are corporate clients. Every company bar one –or 98.6 per cent of its coverage universe – is rated either ‘Buy’, ‘Speculative Buy’, or ‘Outperform’. Just one stock is rated ‘Market Perform’, and none are currently rated ‘Underperform’ or ‘Sell’. Larger brokerage houses and investment banks may not devote much coverage to Aim’s smaller ventures, but they’re generally more impartial; investment bank Espirito Santo, for example, covers 412 stocks, of which 39 are investment banking clients. Roughly 50 per cent of the stocks in Espirito’s coverage universe are rated ‘Buy’, 30 per cent are ‘Neutral’, and 20 per cent are ‘Sell’.
