January 2012 e-Viewpoint
Welcome to the first e-Viewpoint of 2012 and may we take this opportunity to wish you all the very best for the New Year.
The problems in the eurozone continue to haunt markets, with Standard & Poor's rating agency downgrading no fewer than nine European countries last Friday. Luckily, both Italy and Spain had managed to raise capital earlier in the week with successful bond auctions, but the future doesn't look as rosy as it will be harder for all these countries to pay down their debt now. European bond markets and subsequently the European equity markets may be overshadowed by this for some time.
On a brighter note, with the Chinese Year of the Dragon fast approaching, we take a closer look at China to see if any fire can be breathed into investment opportunities.
Market View – China Focus
Following a torrid 2011, when the MSCI China fell around 18%, many investors may be reluctant to buy China right now. But the sell off means that Chinese equity valuations are currently pretty low, not only compared with the market's own history, but also compared with other markets in the Asia region. With the exception perhaps of consumer staples, all sectors are cheap, suggesting investment opportunities today which could reward well in the long term.
We firmly believe that China's growth story is intact. In the short term, economic growth has visibly slowed as export demand from Europe and the US remains sluggish, but it is still likely to be in the high single digits, which will be the envy of developed markets again this year.
The Chinese consumer is still relatively strong and the government has acted very sensibly, firstly to try to cool off overheating sectors and then more recently in its willingness to stimulate the economy with VAT reforms and the easing of bank lending restrictions. With inflation starting a downward trend, monetary policy is likely to ease, which should be a positive for equity markets.
There are some stumbling blocks in the way, of which investors should be aware. The once-in-a-decade leadership transition will create some policy uncertainty and the market isn't immune to the problems in Europe, which means volatility will probably continue. A long-term investment in a Chinese equity fund could reward investors willing to take the risk.
The end of the 2011/2012 tax year is nearing
The ISA season has well and truly started with many of our investors once again looking to invest in income-yielding funds such as Invesco Perpetual High Income, Newton Global Higher Income and the M&G Global Dividend funds.
Last month we mentioned the Northern 2 VCT as a an option for more adventurous investors looking for income alternatives and it has proved popular. The VCT's O Share top up is currently available and yielding 9.7% on the net cost of investment. However, the early bird bonus closes on 6th February, so anyone wanting to take advantage of this should do so as soon as possible. For more information on this product, click here.
We've also seen a number of our clients taking advantage of the new Junior ISA to put some money aside for their grandchildren. The majority have so far invested in our Aggressive Junior Easy ISA. Click here to access our JISA application form or here to view our portfolio recommendations.
Your next new and improved Viewpoint magazine will arrive on your doormat in the middle of February. It will include application forms for both this tax year and next tax year.
Benefits of re-registration
At Chelsea we are continually trying to improve the service we offer. One way we can do this for you is by moving your funds to our fund supermarket, powered by Cofunds. By doing this you could take advantage of extra services such as:
- Free switching on over 1,700 funds
- Online dealing for ISAs and non-ISAs
- Telephone dealing ISAs and non-ISAs
- Cash Reserve facility
- Twice-yearly consolidated valuation statement, with our fund commentary
Thousands of our clients have now re-registered their investments and are enjoying the benefits.
To re-register, simply click on this link to download the form or email us on a list of your investments to info@chelseafs.co.uk and we will complete the forms for you.
Would you be a case study?
Almost every week we are approached by journalists from the national newspapers, asking to talk to clients of Chelsea Financial Services about their chosen investment in a particular market or fund. After a short telephone conversation, and arranging for a photograph to be taken with your spouse or partner or family, the journalist then uses this information to illustrate their story in the personal finance section. If you would like to be a case study, please contact our new Head of Communications, Sam Slator, and she will talk you through what is required and take a note of your details. If you are interviewed by a journalist we will send you £50 of Marks & Spencer vouchers as a thank you for your time. Sam Slator's telephone number is 020 7384 7322 and her email address is sams@chelseafs.co.uk
If you have any questions or would like further information please call us on 020 7384 7300.
Important Notice
Past performance is not necessarily a guide to the future. The value of investments and the income from them can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. ISAs, Bonds, Unit Trusts and VCTs should be regarded as medium to long term investments. Chelsea Financial Services offers an execution-only service. If you require investment advice you should contact an expert adviser. Tax assumptions are subject to statutory change and the value of tax relief (if any) will depend upon your individual circumstances.
Chelsea Financial Services plc is authorised and regulated by the Financial Services Authority.