Finally, we are on the edge of easing the lockdown. According to the government announcements, shops and businesses could start their activities as long as they maintain social distancing. Although the government’s own scientists warned against the decision, I can see why the government is desperate to do so. Now it’s totally up to us, how we look after ourselves and stay healthy.
I have been suffering from an eye infection since Tuesday. It is very uncomfortable staring at the screens, reading and writing. I will try to keep the article short and very specific.
The UK market was up by 2.5% over the last 7 days while the banking industry was flat. My portfolios once again outperformed the market, up by an average of 3.2% last week.
|7-Dayy Return||1-Year Total Return||PE Ratio|
|United States Market||2.7%||11.5%||15.9x|
- According to an FT report, Top-rated companies including Disney, Apple and ExxonMobil have borrowed a trillion dollars in five months to boost their balance sheets against the coronavirus-induced economic downturn. Boeing, Oracle and AT&T also raised big lump sums, $25bn, $20bn and $12.5bn respectively. I am surprised to see Apple on the list. Is Apple’s $207 billion-dollar pile a myth?
- On Wednesday, Mike Pompeo declared that Hong Kong wouldn’t be considered autonomous from China which means no special treatment under the US law. This move threatens to overturn the many economic and legal agreements the United States has with Hong Kong separate from the central government in China. It is almost like a seal of approval to China’s new security law to Hong Kong and cooled off some hot air between the two nations.
- Trump published a series of Tweets regarding the postal vote fraud, without any proof as usual, and Twitter put a Fact Check label on Tweet. He started complaining against the social media networks that they are biased against him. Then Twitter hid his tweet regarding killing the rioters on the ground of spreading violence. Then the “big child” signed an executive order to narrow protections for social media platforms. The US president seeks to change the law that gives Twitter and others immunity from lawsuits. If you are not forgotten the Facebook and Cambridge Analytica scandal revealed how social media networks put him in power. Now, just a few months away from another election, he is starting a new fight! The Twitter share price dropped about 10% since Tuesday.
- On Friday, Chancellor Rishi Sunak confirmed that he will gradually withdraw the job retention scheme over the next five months and that businesses will start paying 20% of the wage bills for their furloughed staff by October. Taxpayers have been paying £14bn a month to 8.4 million workers since March. He also announced another payment to the self-employed workers. However, businesses, like hospitality sectors, are worried about retaining staff and paying the minimum wage when the companies are yet to open.
Unfortunately, I believe that we are going to see a mass of job losses near the end of the scheme.
- While riots are engulfing the different US cities, protesting the unlawful killing of a black man under police protection, the number of US job losses passed 40 million last week. The unemployment rate is now 14.7%, up from 4.4% in March. Although many businesses are trying to restart normal life, social distancing in restaurants and cinemas, slow-moving queues at the supermarkets and airports; sadly, this would leave millions of people unemployed indefinitely in the US, UK and other countries.
- You probably heard about Facebook acquiring 9.9% for $5.7 billion of India’s biggest mobile network Jio. Now both Google and Microsoft are interested in Reliance Jio platforms, which offer a number of services; like JioMoney, JioCloud, Jio Apps, JaiSaavn (music streaming), Jio TV, JioCinema, JioChat, JioMart (online grocery delivery services), and JioMeet (video-conferencing platforms) beside the core telecom and broadband services. In different news, Google is also discussing buying a stake of about 5% in Vodafone Idea, the second-largest telecom operator in India, according to Financial Times. Aha… India’s telecom market is hotting up!
- Crown Prince Mohammed bin Salman, has already spent at least $8bn investing in US and European blue-chip companies, including BP, Royal Dutch Shell, Total, Boeing, Citigroup, Disney and Facebook, in the first three months of the year. It has also led an investor group that has agreed to buy Newcastle United, the English football club, for £300m. Now, the kingdom has transferred an additional $40bn of its foreign reserves to the Public Investment Fund to finance further investments/acquisitions to take advantage of the pandemic hit companies. Someone is busy doing business, right?
- An FTSE 100 constituent reshuffle is due in June. This time, it going to be huge, and it looks like there is a number of companies, EasyJet (LON:EZJ), Carnival (LON:CCL), Centrica (LON:CNA) and Meggitt (LON:MGGT), awaiting to lose their positions in the index. Except for Centrica, all three are the victims of the COVID-19 pandemic. On the other hand, Avast (LON:AVST), Homeserve (LON:HSV), GVC (LON:GVC), and ConvaTec (LON:CTEC) are set to replace them in the FTSE 100. I didn’t hear about ConvaTec before this news, it is a medical products and technologies company. I have been investing heavily lately tech and pharma companies. I will add ConvaTec to my watchlist 😉
- Finally, the Premier League teams have agreed to restart the season from 17th June, to prevent more than £500m in losses from broadcasting and sponsorship revenues. The remaining matches will be broadcasted by Sky, BT, Amazon and BBC. This will be the first time, any Premier League match will be live on free-to-air television though the BBC since the competition started in 1992. Probably, you don’t know I support Chelsea, we need to secure our position to qualify for the Champions League next year directly. #KTBFFH
Main Portfolio Summary
My main portfolio, hosted on IG.com, was up by 3.9%, while the SIPP portfolio was flat, only increasing by 0.6% last week.
- EasyJet was the clear winner last week. The budget airline stock was up by 22% despite dropping 7% on Friday. While experts are predicting that the travel industry won’t be regular until 2023, EasyJet is getting ready for business. It has already announced job cuts and plans to fly a few planes. With a low PE ratio of 8.34, it is still a bargain compared to the airline industry and the UK average. However, the industry will be very different when it starts in June.
- Banking stocks have been the most frustrating ones for me for ages. This week Lloyds (LON:LLOY) was up by 6.2% while Metro Bank (LON:MTRO) was down by 2.7%. On Friday, Metro Bank joined another 16 lenders, including fintech startups, like Starling Bank and Tide to offer SME Bounce Back Loans, from £2000 to up to £50,000 to pandemic hit companies.
- Both Meggitt (LON:MGGT) and Legal & General (LON:LGEN) were up by more than 5%. Demotion from FTSE 100 might bring a negative impact on Meggitt as the companies are given access to a tracker or exchange-traded funds (ETFs) that only follow the index of the UK’s top companies.
- Another week, another acquisition for Sir Martin Sorrell. Last week, S4 Capital (LON:SFOR) acquired Latin American data analytics group Digodat, which is working for clients like Google and Intercorp. MightyHive will merge with the Digodat team of 50 data specialists. On different news, it looks like he is also trying to open offices in Australia according to some recruitment advertisements. I was too young when he started his WPP regime, it looks like he is following a different path for S4 Capital (as he already mentioned many times). Instead of acquiring closely geo-located companies, and spreading them all over the world, he is acquiring or establishing offices everywhere and connecting them. I guess in the new world of marketing, that is the way to go.
- GlaxoSmithKline (LON:GSK) is in talks with governments to back a manufacturing expansion to produce 1 billion doses of vaccine efficacy boosters, or adjuvants, next year for use in Covid-19 treatment.GSK is working on its Covid-19 vaccine with the French drugmaker Sanofi. The US last week secured almost a third of the first 1bn doses planned for AstraZeneca’s experimental Covid-19 vaccine by pledging up to $1.2bn. If the discussion is fruitful, it would be a massive win for GSK.
My Freetrade portfolio was up by 3.2% last week, thanks to JD Sports, Bank of America and William Hill.
- Last week, I mentioned that I sold my position at JD.com as the Chinese companies are facing a potential delisting from the US exchanges. On Tuesday, the government announced that it will allow limited testing of Gilead’s Remdesivir on coronavirus patients. I bought Gilead (NASDAQ:GILD) shares using the fund that came from JD.com sale. It is already 5% up!
- Despite a 30% rise over the past month, I am still upbeat about William Hill (LON:WMH). It is still 34% lower than its 52-week high price. Football, especially the Premier League is its biggest cash-earning product. I expect the price to go up as the Premier League is about to start and the high street betting shops are due to open soon.
- International Business Machines (NASDAQ:IBM) was up by 5.2%, and slowly reaching pre-coronavirus level. It is a fantastic stock to hold. It has a low PE ratio, just 12.37, compared to Microsoft (30.53), Amazon (116.66), Alphabet (28.83) and AMD (126.29). IBM also has an amazing dividend yield of 5.24% (forward dividend 6.52%). However, its net income has been unstable over the last few years. I would love to buy more shares, but it won’t make any major holding.
- Oh, dear! Beyond Meat dropped about 15% by Wednesday morning and ended up 11% dropped week-on-week, thanks to the late surge in stock price on Friday afternoon. However, according to Bloomberg News, Beyond Meat signed a deal with KFC and Pizza Hut (owned by YUM) to sell its products in China. This might be a mighty deal for the company to serve billions of hungry customers.
Last week, I mentioned that I was getting frustrated with the Freetrade platform because of a number of reasons, and was going to try the Trading212 platform. I opened an account on Tuesday and topped up my account. Both the website and mobile app have a lot of company information and trading data compared to Freetrade platform. Freetrade excels in simplicity, while Trading212 offers more options and better flexibility.
I used a referral link and received a free Under Armour (NYSE:UAA) stock. If you are still confused about choosing a trading fee-free platform or already using Freetrade app, you might want to try Trading212, too. Consider using my referral link to get a free share, worth up to 100 USD / 100 GBP or 100 EUR.
It is still the early days of my journey with Trading212. I will keep updating you with my experiences.
Anyway, I bought three stocks so far. High street food chain Greggs (LON:GRG), insurer Aviva (LON:AV.) and automaker Aston Martin (LON:AML).
- I am a fan of Greggs and I believe that once the shops are open, Greggs will recover very quickly. Greggs already offers a social distancing service, as it used to offer a very limited number of seats in their stores, and its food is primarily meant for takeaway. So it won’t lose any customers even if it enforces government rules. Additionally, who knows what the Greggs team is looking in the labs to launch next!
- I broke my own set of rules and took a very tiny position in Aston Martin. My aim is to make a quick profit and sell. Then top up my other tiny position in Aviva. AML already reached 9% profit for me last week. Another 10% to 15% to go before I will push the Sell button 🙂
- I am a fan of Legal & General, and I also believe that Aviva has the potential to recover to a pre-pandemic level. It is about 62% undervalued according to the Simply Wall St website. In April, it pulled off the final dividend due to the pandemic after BoE pressure despite life and general insurance sales were up by 28% and 3% respectively in the first quarter. It’s P/E ratio is just 4.11% and EPS growth was 67% in 2019.
Next Week’s Dividend Payments
Despite a number of dividend cancellations from top companies, I am still eligible for some dividends. My ultimate goal is to build a dividend-rich portfolio of investments for a secured future. So I decided to talk about the upcoming dividends (if any) every week.
|Company||Payment Date||Div Type||Div Yield||Div Amount|
|Legal & General||4 Jun||Final||8.85%||12.64p|
|Highland Gold Mining||5 Jun||Interim||6.12%||3.5p|
The Week Ahead
I will be following this list of reports taking place next week. For more information, check out the London Stock Exchange, NASDAQ, and other stock exchange websites.
|Full-Year Earnings||Half/Quarterly Earnings|
|Tue 2 Jun||Card Factory||Zoom|
|Wed 3 Jun||Wizz Air||Costco|
|Thu 4 Jun||Aveva|
|Fri 5 Jun||Marston’s|
Recently I came across a post from a Facebook group member, stating his dire investment losses. I was very shocked as I remember him planning to invest in NASDAQ blue-chip companies just two months ago. Upon asking, he mentioned that he opted out for a number of high-risk coronavirus-related stocks, and all of them are currently in Red. He showed his investment portfolio, and I have no idea about many of the stocks. I only heard about just two of the companies.
This is why it is important to plan an investment strategy and stick with it. A high-risk investment can go both ways, and we should never invest in risky investments that we can’t afford.