30th December 2024

Key Highlights:

?? Britain becomes safe haven for foreign investors

?? In H1 2024, the UK attracted $2 billion in fintech investment, surpassing all European countries combined

?? Andy Bell sells ￡18m worth of AJ Bell shares

?? MGA Alps appoints new managing director

UK Macroeconomics

30 December 2024: FCA set to respond to Starmer call for growth

-?????????? Prime Minister Sir Keir Starmer has asked key regulators, including the FCA, to propose reforms to drive business growth, with ideas due by mid-January

-?????????? The FCA and other regulators are encouraged to reduce red tape and support investment while maintaining their independence

-?????????? The FCA highlighted recent measures like overhauling listing rules, reforming retail investor information, and launching an AI innovation lab

-?????????? Future initiatives include reforms for secondary capital raising, creating a market for private company shares (PISCES), and streamlining regulations

-?????????? The initiative aligns with Labour’s goal to revive the economy and tackle stagnation by encouraging pro-business regulatory changes

27 December 2024: Britain becomes safe haven for foreign investors

-?????????? The UK has experienced a significant boost in Foreign Direct Investment (FDI), with a record 69% of investors intending to invest in the country in 2024

-?????????? Greater London has emerged as Europe's leading investment region, recording 359 FDI projects in 2023, a 20% increase from 2022

-?????????? Rachel Reeves, the Chancellor, is actively promoting Britain as a stable investment destination, emphasizing fiscal stability and a renewed commitment to business partnerships

-?????????? The government has introduced new initiatives like the National Wealth Fund and British Growth Partnership to attract and support international investment, with ￡27.8 billion allocated to catalyze private investment in key growth industries

-?????????? Investors are showing increased confidence in British assets, with financial markets responding positively and the UK paying less to borrow compared to other countries like France, Germany, and the US

26 December 2024: UK economy to outperform Europe in next 15 years, says consultancy

-?????????? Centre for Economics and Business Research (CEBR) forecasts that the UK will outperform its European counterparts like Germany, Italy, and Spain over the next 15 years, maintaining its position as the world’s sixth-largest economy

-?????????? The UK is projected to narrow the economic gap with Germany. By 2039, Germany’s economy will be only 20% larger than the UK’s, compared to the current 31% gap

-?????????? The CEBR predicts a long-term trend growth rate of 1.8% for the UK despite short-term weakness driven by tax hikes and recent economic stagnation under Labour’s government

-?????????? The US is expected to remain the world’s largest economy, followed eventually by China, though CEBR notes China’s reign as global leader will likely be short-lived due to structural and demographic challenges

-?????????? The UK is set to rise to 21st place in global GDP per capita rankings by 2039, just behind Germany and Sweden, with Luxembourg, Ireland, and Switzerland continuing to dominate the top spots

24 December 2024: Investors call for UK government to reform defined benefit pensions

-?????????? Asset managers are urging the UK government to prioritize reform of the ￡1.2 trillion defined benefit (DB) pension system to unlock billions for investment in infrastructure and growth sectors

-?????????? Experts suggest that reforms could release up to ￡100 billion in the next 12–24 months, accelerating investments in real estate and infrastructure, with a 5% allocation potentially raising ￡50 billion

-?????????? Proposals include incentivizing DB schemes to invest in UK infrastructure and scale-up companies by offering benefits such as zero Pension Protection Fund (PPF) levies for specific allocations

-?????????? Industry insiders advocate for allowing companies to safely extract funding surpluses from DB schemes, potentially encouraging higher investment risk-taking and aligning with government goals to boost productive finance

-?????????? With most DB schemes closed to new members, a shift to riskier assets may be viable given recent funding improvements. The Department for Work and Pensions is reviewing responses to a consultation, with decisions expected in the coming months

24 December 2024: UK Received More Fintech Funding than All Europe Combined, says Innovate Finance

-?????????? In the first half of 2024, the UK attracted $2 billion in fintech investment, surpassing all European countries combined, making it the second-largest market after the US

-?????????? While the current investment climate is strong, Roberto Politano of Innovate Finance noted that changes could emerge in 2025

-?????????? The new UK government is aligning its industrial strategy with fintech growth, embedding recommendations from Innovate Finance in its future plans

-?????????? Politano emphasized the importance of a unique value proposition, thorough market research, and collaboration with other industry players to achieve success

-?????????? The US remains a critical market for fintechs, with Politano advising founders to establish a presence there if targeting the market

UK Wealth Management

30 December 2024: Clients could be wary of investing in 2025, say advisers

-?????????? A Wesleyan poll revealed that 91% of advisers expect higher market volatility in 2025, driven by UK inflation and Bank of England interest rate decisions

-?????????? Nearly 25% of advisers predict more than 40% of clients may avoid investing in real assets due to market uncertainty

-?????????? Over 50% of advisers anticipate clients at or near retirement will postpone or adjust their plans due to volatility concerns

-?????????? To mitigate volatility, 40% of advisers plan to shift clients’ portfolios toward bonds, while 25% favor ‘smoothed’ funds to cushion against market fluctuations

-?????????? Advisers aim to provide tailored strategies to navigate volatility, with some turning to specialized funds like Wesleyan’s With Profits Growth Fund for smoother market exposure

24 December 2024: Impax share woes highlight SJP’s power over asset managers

-?????????? St James’s Place (SJP) pulled its ￡5.2bn Sustainable and Responsible Equity fund and earlier ￡9.9bn Global Quality Unit Trust, significantly impacting Impax Asset Management

-?????????? Impax’s share price dropped 23% in one day and remains at its lowest level since March 2020, with a 50% year-to-date decline

-?????????? The loss of SJP mandates will cut annual revenues by ￡12.7m, approximately 7.5% of Impax’s total yearly income

-?????????? Impax’s global funds underperformed in a tech-driven market, prompting SJP’s shift toward a more diversified and value-oriented strategy

-?????????? SJP’s focus on fees and value for money, driven by consumer duty regulations, may lead to further scrutiny and mandate losses for other asset managers

24 December 2024: Andy Bell sells ￡18m worth of AJ Bell shares

-?????????? AJ Bell founder Andy Bell sold 7.5 million shares in the company, reducing his stake from approximately 21% to 18.7%

-?????????? The share sale was conducted through an accelerated bookbuild with Deutsche Numis as the sole bookrunner, raising around ￡28 million at a price of 375 pence per share

-?????????? Following the sale, Bell will continue to hold 77,305,271 ordinary shares in AJ Bell, and the remaining shares will be subject to a 90-day lock-up period

-?????????? The sale occurred against a backdrop of strong company performance, with AJ Bell reporting a 47% increase in pre-tax profit to ￡61.4 million and a 27% revenue increase to ￡131.3 million in the first half of the financial year

-?????????? Bell, often described as a DIY investment pioneer who co-founded AJ Bell in 1995, continues to have significant business interests, including chairing Applied Nutrition and supporting the new Everton stadium project

UK Insurance Broking

24 December 2024: MGA Alps appoints new managing director

-?????????? MGA Alps has appointed a new managing director, Michelle O’Reilly, with the aim of enhancing its leadership team and driving growth

-?????????? The new director brings extensive experience in the insurance sector, having held various senior roles in previous organizations

-?????????? This appointment is part of MGA's strategy to strengthen its position in the market and improve operational efficiency

-?????????? The company is focused on expanding its product offerings and enhancing customer service under the new leadership

-?????????? MGA's leadership believes that the O’Reilly will play a crucial role in achieving its long-term business objectives

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Sources: Financial Times, The Straits Times, Rankia Pro, Citywire, Financial Planning Today, Finance Magnates