History Repeats Itself
As Russia launched a full-scale invasion of Ukraine, the world held its breath. The war has already had profound and dramatic consequences, as my colleagues across Morningstar’s EMEA offices helped to explain. Oil rose above $100 a barrel, while, in London, senior editor James Gard looked at the European funds with exposure to Russia. In Ukraine itself, all the evidence of conflicts past is there. Destruction, misinformation and an accompanying war of words between international leaders all suggest things will have to get a lot worse before they get better.
Among the organisations feeling the knock-on effect of war in Ukraine were big companies. British Airways (IAG) has been banned from Russian airspace and runways after the UK government said Russian national airline Aeroflot was forbidden from touching down in British airspace. According to the Institute of Export & International Trade, the UK is the fourth-largest investor in Ukraine, and over 170 UK businesses have presences or an exposure in the country. They include BP (BP), Shell (RDSB), GSK (GSK), British American Tobacco (BAT), Next (NXT), and Marks & Spencer (MKS).
Chernobyl is Back in Focus
The hit series Chernobyl was a TV highlight in 2019, but sadly the drama surrounding the now-decommissioned disaster site has become reality once more. The Chernobyl exclusion zone is a strategic asset currently occupied by Russian troops, being fewer than 100 miles from the Ukrainian capital Kyiv. Spending serious amounts of time in the area poses a serious health risk, but you might say that, at the moment, that is just one of many.
The Pandemic Will End This Year (Supposedly)
The Covid-19 pandemic will end in 2022. That is the view of US vaccine producer Moderna, which this week said annual booster shots would be needed to keep the illness at bay in future. In other good news for the company, it also reported its first annual profit.
A Rate Hike Rethink is Afoot
As my colleague Fernando Luque pointed out this week, the consequences of Putin’s actions in Europe could force a major rethink on a raft of rate hikes. At a time of widespread emotional distress, keeping cool heads is hard enough. Keeping the economy and inflation cool is a wholly different task, and will demand not a few difficult decisions. Watch this space.
You Should Limit Your Fun to 5%
Readers could be forgiven for feeling that the very word “fun” was a jarring one this week, but behind this article on portfolio construction lay a serious and unfunny point. Investing can be very enjoyable, but it’s important not to devote too much space in your portfolio to riskier bets. Know your limits: a “play portfolio” isn’t for everyone, so if it’s too much stress, it’s one to avoid.
Google Has a Human Rights Conundrum
Shareholders have filed no fewer than 11 proposals at Alphabet (GOOGL) around data privacy, racism and the environment, among others. However, because Alphabet’s dual share class structure, it is next to impossible for investors to earn a majority. So why file at Alphabet at all? In this video with Morningstar Canada editor Ruth Saldanha, Sarah Couturier-Tanoh, manager of corporate engagement and advocacy at SHARE, explains why she has filed one of the resolutions.
Food Delivery Companies are Yet Young
In a revealing comparative analysis of food delivery companies’ positioning for the future, senior editor James Gard teased out the nuances of this capital intensive world, where profits are low and expectations are high. This week, Just Eat (TKWY) was the trading at the biggest discount in the Morningstar universe of rated stocks, but is it a buy? It is among the oldest of the delivery companies gone public, but that is barely saying anything. The days of delivery companies are yet young.
Hargreaves Has Big Plans
Hargreaves Lansdown (HL) announced an overhaul of its wealth management business this week, to the chagrin of investors, who did not take news of a suspended special dividend well at all. That precipitated HL’s largest-ever share fall. I’ve written some thoughts about the company’s future in my editor’s column this week, so take a look if you are interested in the issue of financial advice.
China is Stamping Out Crypto
China is doing its level best to crack down on people fundraising for new cryptocurrency products. The country’s government is now imposing fines and jail sentences on citizens falling foul of the rules, which have been subject to a “new interpretation” by the Chinese Supreme Court.
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