Our Weekly Newsletter
Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.
Investors “too quick to write off UK market”
Ben Seager-Scott, head of multi-asset funds at Tilney, claims that investors might be selling their UK equity funds too quickly, despite the bleakness of the short-term outlook in the FTSE. He adds that both the UK market and economy are naturally cyclical, so have clearly suffered during the Covid-19 crisis with markets priced accordingly. Seager-Scott concludes that while the UK market could outperform when we do have sustained global economic recovery, he highlights that it could be some time before this happens. (From FT Adviser, 28 October 2020)
Loan “holidays” extended to six months after new English lockdown
The FCA has confirmed that mortgage, loan and credit card borrowers will be able to seek further repayment holidays after the government’s announcement of a second national lockdown. Announced on 2nd November, the financial regulator has set out a similar package of measures for users of consumer credit and has also instructed banks to extend payment deferrals to mortgage borrowers for up to six months. Borrowers who have already taken a full six-month payment holiday this year and need further help will have to speak to their lenders to agree an alternative form of “tailored support”. (From Financial Times, 2 November 2020)
Furlough pushes two million Brits below minimum wage
The number of people in the UK earning below the minimum wage at the height of the first lockdown reached two million, new research from the ONS has revealed. The elevated levels of people on lower earnings was triggered by a high proportion of the UK workforce being furloughed in April 2020. The figures also point to the scale of the impact the pandemic has had on the most vulnerable in society, with those in the lowest paid jobs five times more likely to have suffered income falls as a result of their employer not topping up their reduced furlough pay. (From The Guardian, 3 November 2020)
Majority of current accounts are not free
More than 60% of leading bank accounts have fees or require customers to pay in hundreds of pounds a month. Analysis of Britain’s 48 most popular accounts shows that 29 have either a monthly fee of up to £24 or require customers to pay in as much as £1,750 a month. The figures highlight how banks have had to cut benefits and increase fees to combat reduced net interest income as a result of the low interest rate environment. Negative interest rates would likely squeeze banks’ profits further, possibly prompting them to increase charges even more. (The Times, 1 November 2020)
Buyout public markets increases listing appetite among tech start-ups
Strong activity in the IPO market and the rise of SPACS is prompting tech start-ups to give greater consideration to going public. Private tech companies are dropping traditional concerns over intense regulatory scrutiny and high costs as reasons to avoid listing. These firms are increasingly looking to new ways to raise funds due to reduced investment appetite among venture capital and private equity firms. The strong performance of technology equities throughout the pandemic has also prompted privately held tech start-ups to progress plans to gain access to public markets. (From Private Equity News, 4 November 2020)