I am sure you are as excited as I am that the lockdown is gradually coming to an end. Boris Johnson is expected to announce his strategy for easing the coronavirus lockdown, hoping to pave the way for a swift economic fightback.
Last week I was busy redesigning my website. I hope you will now find it easier to navigate, with a better colour schema, faster load time for mobile devices, and finally, larger images for a better view. I am grateful to Hasin Hayder for helping me with some of the coding issues, and Terry Vaughan and Steven Coverdale (both are from the UK Stock Market Investors Club group) for giving their honest feedback.
The UK market was up 2.1% over the past 7 days with the Oil and Gas industry up 4.9%. My portfolios outperformed the market at an average of 3.6%.
|7-Day Return||1-Year Total Return||PE Ratio|
|United States Market||2.6%||0.7%||14.6x|
|UK Oil and Gas||4.9%||-30.7%||5.1x|
Due to time constraints, I hardly had the time to study and write a detailed article this week, so I will keep it short and simple.
- The Bank of England said that the pandemic crisis will push the UK economy into the deepest recession in 300 years, with the output plunging almost 30 per cent in the first half of the year. The central bank forecasted that the UK’s unemployment rate was most likely to rise to 9% in 2021, which is a higher rate of joblessness than the 2008-2009 financial crisis.
- As tensions between the US and China eased, the global markets rose on Friday, despite mounting pressure from the economy and job losses. “Both sides agreed that good progress is being made on creating the governmental infrastructures necessary to make the agreement a success,” Lighthizer and Mnuchin said. Then Trump put water on all hope for a deal, saying “I’m very torn,” in an interview on Fox News.
- The UK government’s plan for a two-week quarantine period for all travellers arriving in Britain has raised concerns among the airline and aviation industry. As well as travel companies, UK airports are also suffering from a low number of flights. London Gatwick, UK’s second-biggest airport, was hoping to restart flights by the end of the month after a few troublesome weeks. Virgin Atlantic said it was closing its operations just days after British Airways, Gatwick’s second-biggest carrier, also threatened to walk away from its operations at the airport. BA owner IAG also said that Heathrow’s third runway is now “impossible” due to the financial crisis. Now this quarantine restriction will bring more misery to the industry.
- The technology-heavy Nasdaq index turned positive for 2020 on Thursday, boosted by gains in the share prices of companies such as Amazon, Microsoft and Netflix, which have fared well during the Covid-19 lockdown. In my opinion, the tech shares will keep rising as we will be working remotely for the foreseeable future, even if the lockdown is eased in the coming weeks. Facebook and Google have already extended working from home to 2021.
- While cloud-based tech companies are firing on all cylinders, it’s not a good time for the disrupting tech startups. Uber planned to cut 3,700 jobs and permanently close 180 service centres, while Oyo, an £8 billion startup, is in the process of making up to 200 UK staff redundant while the majority of its workforce is furloughed. The company has raised over $3bn to date, much of it from the world’s biggest venture capital fund worth $100bn.
My Portfolio Summary
My portfolios are recovering nicely, both of them were up by 3.8% and 3% last week. As I already mentioned, both portfolios outperformed the UK market. Let’s look at some of my positions’ weekly updates.
- Metro Bank (LON:MTRO) was the worst performer of the week. Despite a positive first-quarter trading update, it dropped by more than 10%. However, The Times reported that Jaime Gilinski, a Colombian billionaire, has increased his stake from 6% to 9%. I hope it will bring some stability to the bank which has been miserable for a while, dropping more than 95% from its all-time high.
- There was a double blow for BT (LON:BT.A) investors, as it cancelled its dividend for the first time since 1984 to put billions into its fibre investment. Meanwhile, two significant competitors announced a merger to challenge the UK telecoms market. Telefonica, the owner of O2, and Liberty Global, the owner of Virgin Media, agreed to a £31bn merger. It would be a two-way fight between BT and EE against Virgin Media and O2. While these companies will have bigger slices of the market, the end-user will lose for lesser available options.
- Smith and Nephew (LON:SN.) was the top performer of the week. It was up by 10% week-on-week, despite revenue having slumped by 7% last quarter. I have almost recovered my Smith & Nephew losses due to the pandemic. I was also happy to receive its dividend last week, one of the few FTSE 100 companies still paying a dividend.
- S4 Capital shares also rose last week as Sir Martin’s advertising firm boosted first-quarter revenue by 17% and gross profit by 22%. During the first quarter, the London-listed company completed its merger with Latin America-based digital content agency Circus Marketing. Its acquisitions of Biztech and Indian digital agency White Balance are expected to complete in the coming quarter. It has a low Beta and low debt-to-equity ratio.
- Both Royal Dutch Shell (LON:RDSB) and BP (LON:BP) were up by more than 5% as the oil price seems to stabilise. I am planning to invest in RDSB in the coming weeks as we start working gradually in the coming weeks and the demand for oil will grow.
My Freetrade portfolio was also up by 3.3% last week. Thanks to JD.com and other tech companies, the whole portfolio is up by more than 3%.
- China’s second-biggest e-commerce website, JD.com was up by 13% after the trade talks between the US and China had an initial positive commentary from the top negotiators.
- Both AMD and Microsoft were up more than 5% week-on-week.
- I took a position on JD Sports in the previous week (Week 18), and it was up by 5.8% last week.
- Walt Disney was also up by 3.5%, despite the operating income falling nearly 40% year over year, from $3.8 billion to $2.4 billion. There is some good news for Disney and its investors. Subscribers for ESPN+ and Hulu ended the quarter at 7.9 million and 32.1 million, respectively, bringing Disney’s total subscribers to 73.5 million, which shows the company is joining the worldwide streaming elite. Shanghai Disneyland will reopen on May 11.
- Last week I increased my Pfizer position by a little while and took new positions at Highland Gold Mining and Apple. Gold price is still expected to grow and Highland Gold Mining has confirmed that the production and sales volumes were unaffected by the coronavirus (COVID-19) pandemic in an update in April.
- I am sure I don’t have to introduce you to Apple. I have been planning to buy an Apple share for a while, but a lack of fraction share purchase on Freetrade stopped me. However, the share trading platform enabled the feature on my account last week, and I bought £300 worth of Apple shares (1.2 shares).
- I am also planning to take positions in Starbucks, Alphabet and Facebook. Starbucks’ share price should go up as the cafes are poised to open gradually. At the same time, as we won’t be returning to our offices just yet, this means our dependence on cloud computing (G Suite, Amazon AWS, Microsoft Office 365, etc.) will continue.
I have been working in website development and search engine optimisation for a while, and have worked for a number of the world’s top brands for several years. Fortunately, the pandemic has not interrupted my day-to-day work, and I am able to continue my work full-time from home.
I know it’s not been an easy time for many of us. Some have had to take either a pay cut or have been furloughed by their employers. If you are a freelancer, it is even worse.
This weekend I decided to dedicate my free hours to help others. If you are planning to set up a website to promote your business, or the website is not performing well, please leave a comment or use the contact form. I can give you some useful suggestions and resources.
It would be 100% free of charge, no strings attached.
I am sure lockdown will be relaxed soon, but we should not get complacent about coronavirus just yet. Please keep maintaining social distance and stay home as much as you can. Your safety is in your hands. We are very close to victory and we can’t lose the battle now.