I wanted to start this article with something positive and special, and it didn’t take me long to find what I was looking for. If you stayed (or spent most of your time) at home last week, and clapped for a minute on 26th March at 8 pm to show your love and appreciation for the NHS, take a bow. Let’s start!
As the coronavirus misery continues, both in people’s lives and the financial markets, there is no shortage of news to cover in the last few weeks. Each piece of news is more distressing than the previous one. I never thought I’d have to cover so much when I decided to start writing my weekly blog. Damn, what a mistake! 😢😢😢
|7 Day Return||1 Year Total Retun||PE Ratio|
|UK Online Retail||1.1%||-11.8%||18x|
The market in the UK is up 5.9% over the past 7 days with the Online Retail industry up 1.1%. My Portfolios outperformed the market up an average of 8.2%.
- Probably the biggest news in the financial market came from the US. The leaders from both floors agreed and signed a $2tn stimulus package to combat the coronavirus. The package includes one-off “helicopter money” cheques of up to $1,200 for individuals, an extra $600 a week in unemployment insurance for those without work, and a $450bn bailout fund for US businesses, states and cities, among other provisions.
- Back at home, Chancellor of the Exchequer Rishi Sunak also announced financial aid for self-employed workers. Self-employed workers can apply for a grant worth 80% of their average monthly profits to help them cope with the financial impact of the coronavirus. However, the money sent by HMRC won’t arrive directly into bank accounts until June!
- The European Central Bank has unveiled plans to buy an extra €750bn of bonds and issued a “no limits” commitment to defend the eurozone on Wednesday night in response to the worsening economic and financial turmoil caused by the coronavirus pandemic.
- Despite a record 3.28 million Americans filing for unemployment benefits, all major markets including S&P500 and FTSE 100 rallied between Tuesday and Thursday. This is the highest gain ever for some stock markets.
- However, the bad news kept coming from every direction. There was a huge death rise (more than 900 in a day) in Italy, Top key government figures, including PM Boris Johnson, Health Secretary Matt Hancock and Chief Medical Officer Professor Chris Whitty – all tested found positive for coronavirus, and the US surpassed both China and Italy as the country with the most cases of coronavirus. All this dragged the markets down on Friday.
- Although the government has decided to take care of all employees for at least three months, high street business collapses have not stopped. Rent-to-own firm Brighthouse and restaurant chain Carluccio’s are on the verge of going into administration, putting about 5,000 jobs at risk.
- However, there was positive news. Donald Trump and Xi Jinping had a phone conversation, and China offered to help the US government fight the pandemic. Trump said “We are working closely together. Much respect!” I don’t believe a single word he says, I am just hoping this will take some of the bitterness away.
My Portfolio Summary
All three of my portfolios recovered well until Friday’s crash. Still, by the end of the week, they were better than the previous week. Both my share dealing and SIPP portfolios outperformed the FTSE 100 consecutively two weeks in a row. Yesss!
- Let’s start with the worst-performing share – Royal Mail (Lon: RMG). It dropped about 18% on Friday after it published a business update regarding the coronavirus and steps the company is taking to survive. The Board cancelled the final dividend and suspended guidance for 2020-21 and beyond, and delayed their UKPIL transformation plan and profit warning for GLS. It is a nightmare situation to be an RMG investor right now. Last week RMG’s share price dropped 11%, despite the rest of the market being in positive territory. Everyone was hoping that things would change once the transformation plan has started, but now it’s delayed, too.
- The second worst-performing share was BT Group (Lon: BT.A). It made positive gains a couple of weeks ago, but week-on-week it tanked by 5%. BT already has a number of ongoing issues, but in addition to this, the coronavirus has stopped all sports events, including the Champions League. BT has spent billions of pounds on broadcasting rights. Now, BT might face legal actions if it does not refund subscribers. A typical Sky subscription plus sport is at least £40 a month, whereas BT costs at least £25 per month. You can read here how I saved more than £720 by switching from Virgin to Sky.
- Despite a downgrade by Citigroup, from ‘Buy’ to ‘Neutral’, EasyJet (Lond:EZJ) was up until the last day of the trading last week. According to Citigroup, both IAG and EasyJet do not require imminent capital. In the end, it dropped slightly (less than 1%) week-on-week.
- Other shares, including Legal & General (Lon:LGEN), Royal Dutch Shell B (Lon:RDSB), Meggitt Plc (Lon:MGGT) and Plus500 (Lon:PLUS) were up by more than 20% last week. It was nice to see that both LGEN and MGGT were up significantly, both of them are very stable companies and are showing good resistance during this calamity. However, on Friday, Meggitt cancelled its final dividend of 11.95 pence per share.
- Oil prices were up last week after the news emerged that Trump would pressurise the Saudis to come to an agreement with the Russians. Although Trump kept saying that cheap oil is good, I knew that he would change his stance very quickly. I mentioned exactly this about two weeks ago, and it seems that he read my post 😉
Once big brother the USA will rebuke the parties, they will start behaving. I am guessing this will happen sooner than everyone is expecting.
- Lloyds Bank (Lon:LLOY) share price was up more than 10%, but with the current uncertainty and a chance of recession, I am not overly hopeful about recovering my position anytime soon. However, the price is quite attractive right now. It is offering a dividend yield of 7.1% annually. I think a dividend cut is needed in order to preserve balance sheet strength in the coming months.
- BP (Lon:BP) was the best performing share, and was up by 26%, in my SIPP portfolio. I also received BP’s quarterly dividend on Friday, which was 8.418p or 10.5c per share. Considering the current low price and demand, I don’t think BP can keep paying the same dividend quarter after quarter. Given that the next ex-dividend date is 7th May, I believe we don’t have too long to wait to hear news regarding dividend cuts.
- Currently, my other SIPP portfolio shares, such as GlaxoSmithKline (Lon:GSK) and British American Tobacco (Lon:BATS), are showing good stability. Both of them have dropped around 16% since the beginning of the year. Use this chart to find out how other FTSE 100 shares have performed year-to-date.
There’s not much to share about my Freetrade portfolio. It is only up by 4% last week. All the shares were up by a margin last week, but due to my very small investment in this portfolio, total gain was negligible. Some of the “want to buy” stocks have risen very sharply if this continues next week, I might start investing in small positions. Here are a few stocks I am looking forward to acquiring in the coming weeks:
- American Express (NYSE:AXP) rose an astonishing 29% last week. With the highest unemployment rate in the US, Americans might start using their cards soon. However, it also raised the risk of loan defaults by cash-strapped consumers.
- I talked about Walt Disney (NYSE:DIS) last week, and it has gone up by about 15% since. However, it is still 35% away from where it started the year. We are hearing good news from China, especially after Wuhan was reopened after more than two months, and life is slowly returning to normal. Once the theme parks are opened, which account for 35% of Disney’s earnings, I expect the shares to catch up quickly.
- Facebook (NYSE:FB) is also trailing by more than 25% year-to-date. I am sure businesses are spending far less money on advertising right now, which means Facebook’s revenue will drop significantly. I am not going to buy now, but I am definitely interested in investing in the stock.
Even if you are not ready to invest a lump sum, you can always open a Freetrade account using a referral link and win a free share worth up to £200. While staying home is often boring, once you start learning about investing or financial freedom, the time will go very quickly. Leave a comment for a referral link.
Supermarket shelves are improving after the hoarding madness during the last few weeks. However, some reports from different councils have started to emerge reporting on an increase in food waste. This is directly related to buying too many bakery items and fresh vegetables. These food items have a very short shelf life, so please think twice before buying them in future. It is also nice to see that carbon dioxide emissions have decreased due to lockdowns all over the world. There is good news coming from different cities, too. The water of Venice’s canals is clearer due to the absence of motorised transport; thousands of endangered Olive Riley turtles are returning to Odisha’s beaches and laying eggs; and air pollution is down sharply in London, Cardiff and Bristol since the coronavirus shutdown.
Ah! At last Mother Nature has some time to heal herself. 🙏🙏🙏
The number 13 is often considered to be unlucky, I am sure that you know that. I don’t know the reasons why, and I am not going to research it. Time has not been very kind to us lately, I just hope and pray that all our tears and sorrows will be over by the end of this week.