Bucket Shops are Back

I recently saw an advertisement on Twitter for a company, who shall remain nameless, offering to trade “fractional shares”. That means instead of buying a whole one share of expensive stocks such as Google (Alphabet) and Amazon which cost more than a thousand dollars, you can buy a fraction of a share. They offer an App which provides this with zero commission trading and CFD trading on 20% margin or less (i.e. you don’t need to put down the whole amount). What immediately sprang to mind when I read the advertisement was the provision of trading by “bucket shops” in the USA in the early 1900s.

I can do no better than to quote a Wikipedia description: “As defined by the U.S. Supreme Court, a bucket shop is an establishment, nominally for the transaction of a stock exchange business, or business of similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in”. See https://en.wikipedia.org/wiki/Bucket_shop_(stock_market) for more background.  They were outlawed in many US states, but if you wish to get some understanding of how they operated it’s worth reading a book called Reminisces of a Stock Operator by Edwin Lefèvre, which was possibly a pseudonym for stock market speculator Jesse Livermore. It was published in 1923 and is still readily available as it’s a book worth reading by any stock market investor.

The company advertising this new trading facility claims to be authorised by the Financial Conduct Authority (FCA) and be based in London although they also have operations and authorisation elsewhere. Their web site makes it clear that 76% of retail investors lose money when trading CFDs with them. It takes a very smart operator, as Jesse Livermore was, to make money in bucket shop operations and he soon moved on to bigger things. When stock markets are buoyant, as they have been of late, inexperienced punters get suckered into share speculation which is really gambling and most are likely to lose money.

The FCA really needs to monitor and regulate such operations a lot more closely.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Objections to Pay at Diploma and the Cost of Zero Carbon

My previous blog post covered the subject of criticism by Slater Investments of many current pay schemes. That at Diploma (DPLM) is a typical example. But at their Annual General Meeting yesterday, which I unfortunately was unable to attend in person as a shareholder, there was a revolt.

The votes cast as disclosed in an RNS statement today were 20% against their new Remuneration Policy and 44% against their Remuneration Report. I voted against both of them of course personally. The board has acknowledged the concerns of shareholders and they will consult further with shareholders plus provide an update within six months.

What is wrong with their remuneration scheme? First pay is simply too high. Over £1 million last year for the CEO when profits were only £62 million and that does not include any LTIP benefits as he is recent joiner. But the CFO got £1.6 million in total. The CEOs pay scheme includes base salary, pension, short term bonus of up to 125% of base (90% achieved) and an LTIP that awards up to 250% of base salary. The Remuneration Report consists of 14 pages when Slater suggests a maximum of two would be sensible. I could go on at length of this subject but in essence the remuneration scheme at Diploma is simply unreasonable and too generous. It displays all the faults that Slater complained about.

I have previously criticised the Government’s commitment to achieving net zero carbon emissions on the grounds of cost. Well known author Bjorn Lomborg has published a good article on this subject in the New York Post. Almost no Governments making similar promises are willing to publish any real cost-benefit analysis. The only nation to have done this to date is New Zealand: the economics institute that the government asked to conduct the analysis found that going carbon neutral by 2050 will cost the country 16% of GDP. If the small nation follows through with the promise, it will cost at least US$5 trillion with negligible impact on temperatures. Just imagine what the cost will be in the UK, for a much bigger economy! See this article for more information:  https://nypost.com/2019/12/08/reality-check-drive-for-rapid-net-zero-emissions-a-guaranteed-loser/

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Should Companies, their Investors and Bankers Adopt Some New Year Resolutions?

Environmental concerns are all the rage at present. Indeed it’s become a new religion verging on paranoia. Some people believe that the world is going to become impossible to live in after a few more years, or that seas will rise enough to submerge many major cities. They ascribe the cause to global warming caused by rising CO2 emissions from the activities of mankind. Even if we are not all wiped out, the impact on the economy could be devastating due to mass migration and the costs imposed by decarbonising all energy production, food production and transport.

This article is not going to attempt to analyse whether global warming is a major threat, or what its causes might be, but simply what the reaction of companies, their investors and their bankers should be. Should company directors adopt a New Year’s resolution to divest themselves of all activities that might result in CO2 generation? Should investors who hold shares in such companies sell them and invest in something else, and should bankers stop lending money for projects such as creating new oil production facilities.

Even outgoing Bank of England Governor Mark Carney gave some dire warnings in a BBC interview a couple of days ago.  He suggested that the world will face irreversible heating unless firms shift their priorities soon and that although the financial sector had begun to curb investment in fossil fuels the pace was far too slow.

What do oil companies or coal miners do if faced with such rhetoric?  There is clearly a demand for their products and if one company closes down its activities then other companies will simply move in to take advantage of the gap. There will be a large profit incentive to meet the demand as prices will likely rise if some producers exit the market.

Companies also have the problem that they cannot close down existing facilities, or move into new markets such as wind or tidal energy in the short term without incurring major costs.

Famous investor Warren Buffett does not think they should do much at all. He has suggested that even if Berkshire’s management did know what was right for the world, it would be wrong to invest on that basis because they were just the agents for the company’s shareholders. He said “this is the shareholders money” (see FT article on 30/12/2019).

So long as the law of the land says it is OK to exploit natural resources even if they generate CO2, and the shareholders support a company’s activities then company directors should not be holding back he suggests.

But I suggest shareholders have other things to consider whether they believe in global warming or not. Investors clearly face a risk that even if they are happy to invest in coal mines, the Government might legislate directly or indirectly to put them out of business. As a result of Government policies in the UK, the amount of coal produced and consumed in the country, particularly for power generation has been going down. It’s now only about 5% of electricity generation, largely replaced by natural gas usage (with lower CO2 emissions) and renewables such as wind-power and hydroelectricity. Forget trying to get planning permission for any new coal-fired power stations even if very cheap coal can be imported.

As an investor, clearly divestment from coal mining and coal consumption is a worldwide trend in most countries with a few exceptions such as China. So any wise investor might simply look a few years ahead and take into account this trend. Investing in declining industries is always a bad thing to do. However well managed they are, companies operating in such sectors ultimately decline in profitability as revenue falls and competitors do not exit as the management has only expertise in that sector and won’t quit.

Investment is also not about what you believe but about other people believe because other people set the share prices of companies, not you. You might think that global warming is simply not true, but if the majority of investors believe it then they will sell the shares in companies that are involved in CO2 generation and drive down the share price. This is surely already happening to some extent with major oil companies. Shell and BP are on low p/e ratios no doubt because they are seen as having little future growth potential. You can of course become a contrarian investor if they become cheap enough but that is a risky approach because clearly these companies are facing strategic challenges.

Investment managers are divesting themselves of holdings in oil companies so as to please their investors. Both the managers and the investors have been subject to propaganda that has told them for the last few years that oil is bad and consumption needs to be reduced. They are unlikely to take a contrary stance. Once a religion becomes widespread, you have to follow the believers or be branded a heretic, whether the religion has any basis in reality or not.

There are not trivial sums involved. The Daily Telegraph suggests that UK shareholders are some of the most vulnerable in the world with about £95 billion invested in fossil fuel producers. If you consider that CO2 needs to be reduced, and choose your investments accordingly, then you need to exclude not just coal, oil and gas producers but a very large segment of the economy. All miners and metal producers are big energy consumers mainly from fossil fuels, and engineering companies likewise. And then one has to consider the transport sector and the producers of trains, planes and automobiles. Even producers of electric vehicles actually use large amounts of energy to build them although much of that is consumed in other countries such as China. Food production and distribution also consume large amounts of energy, and building does also. For example cement production uses enormous amounts of fossil fuel and actually generates about 8% of global CO2 production for which there is no viable alternative.

There are actually very few things in the modern world that don’t consume energy to produce them. That production can be made more efficient but decarbonising the economy altogether is simply not viable.

For investors, it’s a minefield if they wish to be holier than thou and claim moral superiority. There may be some simple choices to be made – for example why support tobacco companies where their products clearly kill people? But as an ex-smoker, I am more concerned about future Government regulation that will kill off or substantially reduce their business which is why I am not invested in tobacco companies.

Company directors, investors and bankers do not need to make moral choices. New year resolutions are not required. They just need to look to the future and the evolving regulatory environment and the court of public opinion.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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NMC Health Attacked and Open-Ended Funds Holding Illiquid Assets

Yesterday Muddy Waters, the same organisation who recently attacked Burford Capital, published a highly negative report on NMC Health (NMC). The share price fell 33% on the day. Muddy Waters, and owner Carson Black, are effectively saying the accounts of NMC are fraudulent. A quick review of their report suggests the key issues are undisclosed related-party transactions, the purchase of assets at wildly inflated prices and the under-reporting of debt.

As with other similar “shorting attacks”, the dossier is long and complex enough to make any quick analysis of whether it is all true, or whether some of it is true, or whether the whole thing is a fiction, impossible to resolve. NMC published a fairly brief statement this morning saying the company had already responded in the past 12 months to many of the allegations but they suggest the claims are “unfounded, baseless and misleading, containing many errors of fact, and will respond in detail in due course”.

NMC run hospitals and other healthcare services in the United Arab Emirates (UAE) and elsewhere. It is registered in England and holds its AGMs in London.

This is what I had to say about such shorting attacks in a previous article: “One of the problems in most shorting attacks is the mixture of possibly true and false allegations, which the shorter has not even checked with the target company, along with unverifiable claims and innuendo. The shorter can make a lot of money by such tactics while it can take months for the truth or otherwise of the allegations to be researched and revealed. By which time the shorter has long moved on to other targets. Shorting is not wrong in essence, but combining it with questionable public announcements is surely market manipulation which is covered by the law on market abuse”.

I still think those who publish allegations that are likely to move share prices should at least give the company the opportunity to comment on the accuracy of the allegations before they publish. A few days grace should suffice with possible suspension of the shares until the allegations are investigated by the company and the FCA.

Readers will no doubt be aware of the problem of open-ended investment funds holding illiquid assets such as property or private equity shares. Investors of funds can sell their shares on a daily basis, but the fund manager who has to meet such redemptions cannot sell the assets of the fund to do so in any sensible time frame. They may hold some cash but if a stampede for the exit occurs then they cannot hope to meet the demand and hence have to close the fund to redemptions.

The Bank of England have published a Financial Stability Report that suggests such funds are creating a systemic risk and unfair outcomes for investors. They make various suggestions to solve the problem which includes making redemption notice periods reflect the time need to sell the required portion of a fund’s assets. For property funds this might mean many months delay. They also suggest a pricing mechanism to impose discounts on those investors who want a quick exit, but that might simply encourage investors to dump their holdings sooner rather than later, thus exacerbating a “run” on the fund.

Are these suggestions workable? I doubt it and they would certainly be confusing for retail investors. Why introduce such complexity when the answer is simply to ban open-ended funds from holding more than a very limited proportion of illiquid assets. Investors have a good alternative in investment trusts which have no such problems.

The Bank of England’s Report is present here: https://www.bankofengland.co.uk/-/media/boe/files/financial-stability-report/2019/december-2019.pdf (see page 75 for the coverage of open-ended funds).

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Edinburgh IT Fires Manager and Grant Thornton Fined

The Edinburgh Investment Trust (EDIN) has fired fund manager Invesco. This company is an equity income trust focused primarily on the UK, although it also has an objective to increase the Net Asset Value per share in excess of the growth in the FTSE All-Share Index. But in the last few years it has signally failed to achieve that objective. According to the AIC it has fallen behind the sector average in growth in net asset value per share in all of the last year, the last 3 years and the last five years. In the last year alone the total return was 7.0% versus 15.6% for the sector. In other words, it’s a pretty abysmal record.

The company is appointing Majedie Asset Management as the new manager. This is what the company had to say about the reason for the change: “As detailed in the Interim Results announcement also published today, the Company has experienced another period of weak investment performance. This extends the period of underperformance relative to the Company’s benchmark to over three years and is a major disappointment for the Board as well as our shareholders. The Board understands that all good conviction fund managers experience periods of underperformance and a focus on long-term results requires shareholders sometimes to bear bouts of relative weakness especially during times when the fund manager’s style is out of favour. However, your portfolio has suffered from a number of stock specific issues: that is to say large falls in prices of stocks held in the portfolio, the cause of which is specific to each stock rather than resulting from broad market movements. Collectively these stocks have been a significant contributor to the weak performance of the Company and increasingly has led the Board to question the effectiveness of the investment process”.

These are the top ten holdings in the trust: BP, British American Tobacco, Legal & General, Next, Shell, Tesco, BAE Systems, Roche, British Land and Derwent London.

Comment: Firing an investment manager does not happen very often, but certainly the board of the company seems to have given the manager quite long enough to show that improvement was taking place. Shareholders will question whether they allowed the underperformance to go on way too long.

Grant Thornton has been fined £650,000 by the Financial Reporting Council (FRC) after identifying various failures in an audit on an unnamed company in 2016. They refuse to disclose which company was involved.

Grant Thornton has been involved in a number of poor or defective audits, such as at Patisserie Holdings, Vimto, Globo and Salford University. The FRC claims that “We promote transparency and integrity in business” on its web site so why should we not be told the company concerned? It is surely not in the public interest to conceal the name of the company. They clearly still have a “cultural” problem about how they handle investigations.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Why Shareholders Have Little Influence

There was an article in The Times newspaper this morning by Mark Atherton which covers the subject of shareholder voting and the nominee system. I am quoted as saying “The nominee system needs a total rewrite to reflect modern reality and restore shareholder democracy”.

As is pointed out in the article, only 6% of private shareholders vote the shares they own. This is mainly because of the obstruction of the nominee system. The US system is not perfect but they get 31% of shares voted. Everyone agrees that ensuring shareholders in public companies return votes for General Meetings is important. This ensures good corporate governance and “shareholder engagement”. But very few people, and hardly any institutional investors, actually attend such meetings in person. So most votes are submitted via proxies.

Fifty years ago most shares were held in the form of paper share certificates which meant two things: 1) All shareholders were on the register of the company with a name and address recorded and 2) All shareholders would be issued with a copy of the Annual Report and a paper proxy voting form. This ensured a high turnout of votes.

Due to the growth of on-line trading via “platforms” and the “dematerialisation” of shares in Crest, most shares held by “direct investors” (see below for indirect holdings) are now held in electronic form. For retail investors this means a very high proportion are held in pooled nominee accounts. This has resulted in very low numbers of investors actually voting the shares that they “nominally” own. The problem is that the nominee system obstructs both the information flow to investors and their ability to vote easily and quickly.

For institutional investors the turn-out is higher – typically above 60% but such investors often have a low interest in the outcome so tend to vote in support of all the resolutions. Institutions suffer from the “agency problem”, i.e. they are commonly not owners in their own right and thus may have other motives. For example, they may not have the same interest in controlling the pay of directors in companies which has got out of hand of late for that reason. They are keen to retain access to management which can be made difficult if they oppose management proposals or pay.

The nominee system as operated in the UK also undermines the rights of shareholders, creates major problems when stockbrokers go bust (as they regularly do) simply because of the legal uncertainty of who owns the shares. The “pooled” nominee system is particularly dangerous because it means that it is impossible to know who owns which shares in a company.

The nominee system also undermines shareholder democracy (i.e. the influence of shareholders on companies). When every direct investor was on the share register of a company, under the Companies Act one has the right to obtain the register so as to write to all shareholders to raise your concerns or invite support or resolutions (e.g. if a requisition to remove or add directors has been submitted). This is now almost impossible to do as the register simply contains mainly a list of nominee names and the nominee operator will not pass on communications to their clients. The other problem associated with the current system is that it makes it very difficult for even the companies themselves to communicate with their own shareholders.

The high cost of postage also now frustrates communication with shareholders except for very wealthy organisations or individuals. The Companies Act has really not been updated to reflect the modern digital world and the reality of how markets operate and how shares are now held and traded via electronic platforms. It needs a total rewrite to reflect modern reality and restore shareholder democracy.

Many investors and savers now hold shares indirectly via their interest in pension funds, insurance funds or mutual funds of various kinds (OEICS etc).

At the end of 2014, and based on “beneficial” ownership, the Office of National Statistics indicated that individuals held 11.9% by value of shares listed on the LSE. That compares with 16.0% held by pension funds, insurance companies and other financial institutions. But 53.8% of shares were held by foreign investors, which presumably would also be mainly held by institutions. Direct ownership had been falling for many years but seems to have increased somewhat lately perhaps due to more interest in “self-select” ISAs.

Institutions do suffer from the “agency” problem mentioned above and the underlying investors have little influence over the actions of the investment managers. Indeed one problem with funds is that investors often know little about what the fund is invested in – see the recent problems at the Woodford Equity Income Fund for example which most holders of the fund simply did not know about until it was too late. Pension funds are even less “transparent”. This results in perverse outcomes. For example a trade union pension fund might have no influence on the affairs of companies in which the fund is invested even though that might be of very direct interest to the union members.

Mark Atherton suggests investors in funds should have the right to influence how fund managers vote the shares in the fund. But how to enable underlying investors in funds to influence how the fund manager votes their shares, or otherwise influences a company, is an exceedingly complex and difficult problem. Funds can own interests in hundreds of companies and have hundreds of thousands of underlying investors. The latter are never likely to understand or take a close interest in the affairs of individual companies held by a fund. One reason they are investing in funds is so they can ignore the details and rely on the fund manager to look after corporate governance issues.

Even direct investors often don’t bother to vote because they don’t wish to spend time considering the issues or filling out the forms. Making it easier to do the latter by providing on-line voting systems would help but would only be a partial solution. Some collective representation of private investors (such as by organisations such as ShareSoc) might be one answer. Investors would simply give ShareSoc a standing mandate to represent them. But that is currently impossible because of the nominee system as the investors cannot appoint proxies themselves – only the nominee operator can do so.

Clearly it would help to encourage direct investment rather than reliance on funds. This would reduce investors costs (intermediation costs take a very high proportion of investment returns in public companies). Note that the risk of amateur investors underperforming the professionals should be discounted. Professional fund managers mostly perform no better than a monkey with a pin and many funds are now “tracker” funds that simply follow an index. Tracker funds are particularly problematic regarding shareholder democracy as they have no interest in influencing management whatsoever. Their share trading is solely influenced by the market, not by their views on the merits of the company or its management.

The UK, although we have one of the largest stock markets in the world, has very poor legal and operational systems for recording and representing shareholder interests. This probably has arisen from our tendency to stick with Victorian traditions when we were the leader in such matters. The Companies Act, which was last revised in 2006, still primarily assumes paper processes with rather half-baked additions to support digital systems. Stockbrokers have avoided regulation and as a result have implemented electronic nominee systems that protect their own interests rather than that of their clients in ensuring shareholder rights and democracy.

Major reform is needed!

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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The Political Manifestos and their Impacts on Investors

Here are some comments on the manifestos of the major political parties, now that they are all available. I cover specifically how they might affect investors, the impact of tax changes and the general economic impacts. However most readers will probably have already realised that political manifestos are about bribes to the electorate, or to put it more politely, attempts to meet their concerns and aspirations. However in this particular election, spending commitments certainly seem to be some of the most aggressive ever seen.

Labour Party: I won’t spend a lot of time on this one as most readers of this blog will have already realised that financially it is very negative for the UK economy and for investors. It’s introduced with the headline “It’s time for real change”, but that actually seems to be more a change to revert to 1960s socialism than changes to improve society as a whole. It includes extensive renationalisation of water/energy utility companies and Royal Mail, part nationalisation of BT Group and confiscating 10% of public company shares to give to employees. It also commits to wholesale intervention in the economy by creating a £400 billion “National Transformation Fund”. That appears to include a commitment to revive declining industries, i.e. bail-outs of steel making companies one presumes.  It includes promises to invest in three new electric battery gigafactories and four metal reprocessing plants for steel and a new plastics remanufacturing industry “thus creating thousands of jobs”. This is very much old school socialism which expected that direct intervention in the economy could create new industries and new jobs, but it never really worked as Governments are inept at identifying where money should best be invested. Companies can do that because they have a keen interest in the return that will be made while civil servants do not.

The best comment on the BT proposals was in a letter to the FT by the former head of regulator OFTEL Sir Bryan Carsberg. He said his memory was clear about the shortcomings of BT before privatisation even if many other people do not remember. The lack of competition meant that the company had no incentive to improve efficiency or take advantage of new technological developments. Monopolies are always poor performers in essence.

Trade union law will have the clock turned back with a new Ministry of Employment Rights established. Incredibly there is a commitment to “introducing a legal right to collective consultation on the implementation of new technology in workplaces”. Clearly there are some Luddites in the Labour Party. The more one reads their manifesto, the more it reminds you of years gone by. This writer is old enough to remember the Harold Wilson speech on the “white heat of a scientific revolution” by which he intended to revitalise the UK economy. It only partly happened and at enormous cost. In the same speech he also said that there was “no room for Luddites in the Socialist Party” but that has changed apparently. The manifesto includes a very clear commitment to “rewrite the rules of the economy”. A rise in the minimum wage might also damage companies.

The cost of financing all the commitments is truly enormous, and that is not even taking account of the £58 billion just promised to restore pension commitments lost to some women due to rises in their pension age which is not in the manifesto. Taxes will need to rise substantially to finance all the commitments – that means increases in corporation tax which may damage business, and rises in capital gains tax to equalise it with income tax plus higher rates of income tax for high earners.

But the real damage to UK investors will be the wholesale intervention in the economy in the attempt to create a socialist paradise. And I have not even covered the confusion and contradictions in Labour’s Brexit policy which is downplayed in their manifesto.

Conservative Party: The other main parties are all focusing on Brexit so the Conservative’s title headline in their manifesto is “Get Brexit Done – Unleash Britain’s Potential”.  In comparison with the other parties it is relatively fiscally conservative with no major changes to taxation but some commitments on spending.

Many of their commitments, such as on longer-term social care funding, are subject to consultation but there are some short term increases in that, and for education, for the Police and for the NHS.

Immigration will be restricted by introducing an Australian-style points-based system. This might impose extra costs on some sectors of the economy, but may result in more investment in education/training and more capital investment. This might well increase productivity which is a major problem in the UK.

There is a commitment to invest £100 billion in additional infrastructure such as roads and rail. That includes £28.8 billion on strategic and local roads and £1 billion on a fast-charging network for electric vehicles. Compare that though with the cost of £81 billion now forecast in the manifesto for HS2 a decision on which is left to the Oakervee review.

It is proposed to “review and reform” entrepreneurs tax relief as it is not apparently meeting objectives. There will be further clampdowns on tax evasion and implementation of a Digital Services Tax already planned for 2020.

Reforms are planned to insolvency rules and the audit regime which must be welcomed, but details of what is planned are minimal. They also plan to “improve incentives to attack the problem of excessive executive pay and rewards for failure”. It will be interesting to see how that is going to be done in reality.

There is a plan to create a new independent “Office for Environmental Protection” which will introduce legal targets including for air pollution. This could be very expensive for both companies and individuals. The Government has already committed to a “net zero” carbon target by 2050 but Cambridge Professor Michael Kelly has said that the cost of decarbonising the economy has been grossly underestimated. He has suggested the cost should run into trillions of pounds. But again there are few details in the manifesto on how these commitments will be implemented in practice. Nobody really knows what is the real cost of such a policy.

There are though firm commitments to review the Fixed Term Parliament Act, to retain the “first past the post” voting system, to improve voter identification and reduce fraud, and to avoid Judicial Reviews being used to undermine political democracy. They also commit to review the workings of Parliament – this might lead to a written constitution which this writer thinks is sorely needed to avoid a repeat of recent events which led to gridlock in Parliament and allegedly partisan decisions by both the Speaker and the Supreme Court.

With promises not to increase income tax, VAT or National Insurance (a “triple-tax lock” in addition to the expensive triple lock on pensions which will be retained) this is generally a positive manifesto for most investors and apart from the issues mentioned above should be positive for the economy. A Conservative Government might also restore confidence in overseas investors which may well account for the recent pick-up in the stock market indices as the Conservatives look like they are heading for a significant majority. Such an outcome will also remove some of the uncertainty, if not all, over Brexit which will give more confidence to UK businesses to invest in the future.

In summary the Conservative manifesto is likely to please many and displease few (apart from those opposed to Brexit) so it could be seen as a “safe bet” to avoid any last-minute popularity reversal as happened at the last general election.

The minority parties are losing votes in the polls as they always do when a general election looms and the public realise that there are only two likely candidates for Prime Minister – in this case Jeremy Corbyn and Boris Johnson. Is that a question of whom the public trusts? This was an issue raised in one of the recent panel debates but I think nobody trusts any politicians nowadays. It is more a question of whom the voters personally like as regrettably hardly anyone reads the manifestos.

But here’s a brief view of the minority parties’ platforms:

Brexit Party: Their manifesto (or “Contract with the People” as they prefer to call it), is definitely sketchy in comparison with the two main parties and is many fewer pages in length. They want, unsurprisingly, a “clean-break Brexit”, and they want a “political revolution” to reform the voting system.

They would raise £200 billion to invest in regional regeneration, the support of key sectors of the economy, the young, the High Street and families. Note the traditionally socialist commitment to support “strategic industries”. The £200 billion would be raised by scrapping HS2, saving the EU contribution, recovering money from the EIB and cutting the foreign aid budget, although I am not sure that adds up to £200 billion.

They would scrap Inheritance Tax and scrap interest on student loans and cut VAT on domestic fuel which will all be quite significant costs. They also promise more investment in the NHS but so do all the other parties – at least there is a consensus on that point.

The Liberal Democrat Party:  They have clearly decided their vote winning approach will be a commitment to stop Brexit, i.e. revoke Article 50. They have a strong endorsement of “green” policies and propose a new tax on “frequent-flyers”. That might include Jo Swinson herself it seems as she has taken 77 flights in 18 months according to the Daily Mail.

Two unusual commitments are to legalise cannabis and freeze all train fares (rather like the freeze in London on bus and Underground fares which has resulted in a £1 billion deficit in TfL finances, but even more expensive no doubt).

Corporation Tax would revert to 20% and Capital Gains tax will be unified with income tax with no separate allowances so private investors would certainly be hit.

The Scottish Nationalist Party (SNP) are focusing on another referendum for an independent Scotland as usual, an unrealistic proposition as no other party is supporting that and it would be make Scotland much poorer, plus a ragbag of populist commitments. They clearly oppose Brexit.  As most readers will not find an SNP candidate standing in their local constituency I shall say no more on the subject. You can also go and read their manifesto on the web where it is easy to find all the party manifestos. Likewise for the Welsh and Irish leaning parties.

In summary, this election is somewhat of a no-brainer for investors unless they feel that the Boris Johnson version of Brexit is going to be very damaging for the UK economy, in which case they have a simple choice – vote LibDem or SNP as Labour’s position is too confusing. Alternatively they can play at “tactical voting” to get the party they want info power. There is more than one tactical voting web site to advise you which is the best alternative option but be wary – they seem to be run by organisations with a preconceived preference.

If readers consider I have missed out anything important from this analysis, please let me know.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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