Week 07: Coronavirus (again), HS2, Recession Fear & Portfolio Update

Background

The spike in coronavirus deaths, shuffle in the UK government cabinet with the chancellor of the exchequer’s resignation and the eurozone growth slow down were the main talks of the town during the week.

Market Summary

  • All the European markets rose at the beginning of the week. However, they lost steam by the end of the week on the news of a steep increase in coronavirus cases in China. Only FTSE 100 closed in red, by 0.80% week-on-week.
  • Sajid Javid
    Sajid Javid’s resignation as the chancellor of the exchequer was the biggest surprise during PM Boris Johnson’s cabinet shuffle. PM appointed ex-investment Goldman Sachs banker Rishi Sunak (Sajid’s ex-depute) as the new chancellor.
  • PM gave a green signal to the High Speed 2 (HS2) rail project which will approximately cost £106 billion. He also announced £5 billion to improve bus and cycle links. Late last week, newspapers reported that China Railway Construction Corporation (CRCC), which is one of the world’s largest contractors and owned by the Chinese government, has offered to complete the project in just 5 years and save billions during discussions with UK officials.
  • Germany’s economy is flatlining, as a slowdown in spending and exports wipes out the growth. On an annual basis, the German economy only grew by 0.6% during 2019, Destatis adds. That’s a very weak result, as Europe’s largest economy struggles to handle trade tensions, changes in the auto industry, and a slowing European economy.

My Portfolios

My share trading portfolio dropped slightly this week, just 0.20%, performed better at the FTSE 100. Evraz (Lon: EVR), Smith & Nephew (Lon: SN.) and Meggitt (Lon: MGGT) – all dropped by more than 2% week-on-week.

I feel there is an opportunity to invest in suppliers of HS2 after reading about the news. I dug some old articles on late night Monday and took a punt on Kier Group (Lon: KIE) on Tuesday morning. Its share price has dropped by 80% in the last 12 months due to all the PFI scandals. Anyway, I thought there is no way, Kier will drop further as over the last few weeks the share price was going up. By Friday, the price was up by more than 20%. I went against my gut feelings and sold Kier Friday late evening.

Kier Group Share Price
Kier Group Share Price

Earlier this week Plus500 (Lon: PLUS) released its robust preliminary results on 12th Feb – however, there was no visible change in the day-to-day price. However, on Friday, it dropped sharply due to a downgrade by Berenberg, from “BUY” to “HOLD”. I took the opportunity to top up my Plus500 position using the investment and profit from Kier sale. Plus500 has better stability and offers a high 5.72% yield.

On the other hand, my SIPP profile dropped more than 2% WoW due to BP (Lon: BP) ex-dividend date and GSK’s (Lon: GSK) restructure uncertainty.

Freetrade Portfolio

I didn’t do any trading on my Freetrade portfolio last week. However, I received two free shares of Perpetual Income & Growth Investment Trust (Lon: PLI) and Boohoo (Lon: BOO) from Freetrade. I published an article earlier today about my personal experience with the app and why I am referring it to my friends.

By the end of the week, my Freetrade portfolio is up by £25 (about 3%), from £12. Microsoft (NASDAQ: MSFT) dropped midweek after Amazon managed to block the JEDI project. A judge has temporarily halted work on the JEDI contract until the court can hear AWS protest.

Bezos 1 vs Trump 0 🏆

Other News

The former Woodford Income Focus is set to re-open on Thursday under new management after a four-month period where investors have been unable to buy or sell their holdings. Aberdeen Standard, which has taken over the running of the £253 million fund, has now laid out its new investment principles, revealing its top 10 holdings and fee structure.

Woodford Income Focus vs ASI Income Focus
Woodford Income Focus vs ASI Income Focus

In a quick glance, you can see how much risk Woodford was taking with investors money. He went for high dividend AIM stocks which ultimately crashed his success to the ground. However, ASI Income Focus has a diverse portfolio with stable and secured stocks. It is good to see Mondi (Lon: MNDI) and Babcock International (Lon: BAB) in the list, they are in my “wannabuy” wishlist.

Conclusion

My Kier gamble went very well last week, and it brought me a quick 20% profit. It shows the benefits of taking a calculated decision by staying well informed. What are your investment strategies? Which are your favourite companies, and why? I welcome you to share your opinion, advice and tips with our fellow readers and me.

Keep calm and continue learning!

NB: I am nowhere near being a qualified financial adviser. This article is merely my personal view and shared purely for educational purposes.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.