Henderson Global Investors Media Releases

News alert: Henderson Strengthens Asia Platform

2013-05-22T11:00:00Z

Henderson Global Investor’s c.£12.7 billion Property Business has appointed Tony He as Director of Property, China Consultancy.

Tony, who will be principally based in Henderson’s Beijing office, will utilize his excellent experience and expertise in promoting the development of Henderson’s investment management franchise in China, for both domestic and international investors, in addition to facilitating the delivery of the existing PRC development projects. He will co-operate closely with Henderson‘s Asia Pacific Property team and will explore relationships with local developers and financial institutions for Henderson to expand the property business in China.

Tony joins from Tesco Property, China, where he worked as a finance director and was involved in the launch of Tesco’ property business in China. Prior to Tesco, he worked for developer - Sun Hung Kai property – in and Hutchison Whampoa, both in China.

Chris Reilly, Director of Property, Asia, said: “Tony has built up a wealth of experience across the Asia Pacific market over the past twenty years and joins Henderson with a strong track record. The experience, expertise and network that he brings will significantly strengthen our capabilities in the region as we endeavour to source capital and financing throughout the region, in line with our ambitious growth plans.

“Our team in place in Asia now boasts the full range of essential skills including fund management, investment, development, asset management and finance. We are fully equipped to apply these skills to our existing portfolio, while also scoping the market for new investment opportunities.”

Tony He added: “I am delighted to be joining Henderson Global Investors and very much look forward to working with such an aspirational team. I believe that my market intelligence and extensive experience will be able to support the Business across a wide range of innovative opportunities, through financing, structuring and new product development.”

Press enquiries

Henderson Global Investors
Gemma Bradley, Associate Director of PR, Property
T: +44 (0)20 7818 4441
E: gemma.bradley@henderson.com

Henderson Press Office
T: +44 (0) 20 7818 4222
E: pressoffice@henderson.com

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Repo markets and the proposed financial transaction tax

2013-05-22T11:00:00Z

The European Commission’s financial transaction tax proposal on most equity, debt and derivative transactions is currently the subject of hot debate and negotiations between the 11 eurozone member states and participants in the financial markets. One area of the industry that seems particularly vulnerable to even the smallest levy is the securities lending and repo* markets because of a combination of low margins, large volumes and repeated transactions. According to data provider Markit, at any one time there are $15tn shares and bonds out on loan around the globe, and a further $12tn on offer.

Securities lending involves a transfer of shares or bonds to another party (the borrower) who will give the lender collateral in the form of cash, bonds or shares. The borrower will pay the lender a fee periodically for the loan and will return the securities upon demand or at maturity. The process acts as a source of income for the lenders, typically pension funds and insurance companies, while it assists borrowers such as hedge funds, investment banks and other brokerages in their short selling, hedging and settlement activities among others.

Given that collateral is essential for the efficiency and stability of financial systems, there needs to be a market in which it can be priced, mobilised and moved efficiently around the system. While increased regulations on how collateral is employed are a welcome move, the current proposals make for an uncertain future for the securities lending market, which could shrink, at a time when regulators are proposing higher levels of collateral for derivative transactions — ie, more securities lending.

*Repo: a repurchase agreement where the seller of a security agrees to buy it back from a buyer at a later specified date.

These views may differ from those of Henderson fund managers. The information should not be construed as investment advice. Before entering into an investment agreement pleasee consult a professional investment adviser.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

UK temporary inflation fall boosts second-half economic prospects

2013-05-21T11:30:00Z

CPI inflation was expected to fall in April because of lower petrol prices and a favourable Budget base effect but the outturn of 2.4% was below a projection here of 2.6% (also the consensus forecast). The chart shows a revised profile incorporating the modest good news in today’s release. Inflation is projected to rebound to a peak of 3.3% in June before falling back to average 2.8% during the second half of the year.

Suggestions that today’s news marks the start of a new favourable trend are unconvincing:

Price expectations balances in business and consumer surveys are in the middle of their ranges in recent years, during which inflation has consistently overshot the 2% target.

Import prices have yet to respond fully to sterling weakness since late 2012.
Wholesale petrol prices are rising again. The drag effect on annual inflation will reverse even assuming stable pump prices.
A continued revival in economic momentum during 2013 may encourage more firms to raise prices, given modest spare capacity and below-average margins.
Stronger monetary growth since late 2011 should begin to exert upward pressure from late 2013, based on Friedman’s average two-year lead from money to prices.

The recent inflation fall, nevertheless, has improved economic prospects for the remainder of the year by giving a further boost to real money supply expansion.

The new CPIH inflation measure incorporating owner-occupiers’ housing costs fell to 2.2% in April. Such costs, however, are supposedly rising at an annual rate of only 1.0%. This is difficult to reconcile with other information: the CPI index of actual rents increased by an annual 2.6% in April, while the deflator for imputed rents in the national accounts climbed 5.7% in the year to the fourth quarter of 2012.

These views may differ from those of Henderson fund managers. The information should not be construed as investment advice. Before entering into an investment agreement please consult a professional investment adviser.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

News alert: Henderson lets units to Nike and Ladbrokes at Manchester Fort

2013-05-21T11:00:00Z

Henderson Global Investors, on behalf of its c.£1.07 billion UK Retail Warehouse Fund, has signed Nike at Manchester Fort Shopping Park. The sports retailer has taken a new 10 year lease on the former 7,300 sq ft Peacocks unit with plans to begin trading in the summer. Nike represents a great addition to the already strong retail line up, including Outfit, Marks and Spencer and Next. It provides an ideal location for Nike which will benefit from the strong footfall and calibre of existing tenants.

It follows another letting to Nike at another of the Funds’ assets earlier this year at Craigleith Shopping Park, Edinburgh and represents a shift in strategy for the sports retailer who has entered the retail warehouse market this year.

George Stratton, Out of Town Retail at CBRE, said: “We believe these deals demonstrate the growing confidence in the retail warehouse market and highlight the demand for high quality stores. Nike continues to be one of the more active retailers at present and we look forward to continuing to work with them to deliver their pipeline aspirations.”

Michael Neal, fund manager for the Henderson UK Retail Warehouse Fund, said: “This is the second letting to Nike across the Fund’s portfolio within as many months. It illustrates that quality retail warehousing of the type held by the Fund continues to be attractive to both established occupiers and new entrants alike, and is letting up fast.

"Nike is the latest in a series of new lettings at Manchester Fort that has included both M&S and H&M taking occupation thereby enhancing the tenant mix, driving footfall and increasing dwell time.”

Morgan Williams and Wilkinson Williams acted as letting agents on behalf of Henderson. CBRE acted for Nike.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Still a nation of shopkeepers?

2013-05-21T11:00:00Z

It was Adam Smith in his 'Wealth of Nations' published in 1776 who referred to Great Britain as 'a nation of shopkeepers' and it is a phrase that has remained very relevant to the UK economy ever since. Today, retail continues to be a major contributor to the nation's gross domestic product (GDP) and is still the country's largest service industry, employing more than three million people. Retail has always been a dynamic business but with routes to market changing so rapidly, consumer expectations and shopping trends shifting and the industry becoming increasingly intertwined with technology and distribution, will Mr Smith's famous words need a 21st century refresh — to clarify retail is no longer just about shops?

Whilst a recent Zolfo Cooper report on the UK's 10 fastest growing retailers, clearly demonstrates the importance of a multi-channel offer there is no denying that physical stores remain a cornerstone for growth within that strategy. Aldi are reported as the UK's fastest growing retailer with recent sales up around 30% increasing market share in this highly competitive category. It plans to open 40 further stores in 2013. Other retailers within the list include discounters, Pound World and 99p stores ranking 4th and 9th respectively, their growth heavily dependent on store acquisitions. Yet in 10th position is Charles Tyrwhitt with just 20 physical stores and 70% of revenues on-line. Today's retail jobs may not all be in shops and the literal take on Smith's famous phrase somewhat outdated, but there is no denying the importance of this dynamic and rapidly evolving industry within our economy.

Michael Neal, Director of Property at Henderson Global Investors

These are fund manager views at the time of writing and may differ from those of other Henderson fund managers. The information should not be construed as investment advice. Before entering into an investment agreement please consult a professional investment adviser.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Weekly wrap: GDP growth: Japanese joy, European gloom

2013-05-21T09:00:00Z

Wrap up - last week

GDP growth: Japanese joy, European gloom

Continuing the upward momentum, most key equity markets made strong gains but again it was Japan that stole the limelight with a 3.6% rise for the week. Weaker eurozone data led investors to anticipate further monetary easing measures from the European Central Bank, driving the German 10-year bund yield lower (prices higher). Conversely, Japanese and US 10-year government bond yields rose. The US dollar reached a four-year high against the yen, and the gold price fell 4.2% during the week owing to US dollar strength.
The round-up of US economic indicators included better-than-expected retail sales figures – up 0.1% in April against predictions of a 0.3% fall; improving consumer confidence – a six-year high in May’s release; and slowing inflation – which fell to a two-year low in April. Debate intensified over how long the US Federal Reserve (the Fed) will continue to support the markets; the President of the Federal Reserve Bank of Philadelphia suggested that the Fed should taper its asset purchases this year. As many analysts expected, the euro area economy contracted by 0.2% quarter-on-quarter (qoq) in the first quarter of 2013. Germany disappointed with anaemic GDP (gross domestic product) growth of only 0.1% qoq while France slipped into recession, shrinking by 0.2%. Eurozone inflation for April slowed to 1.2% yoy but European car sales in April rose for the first time in 19 months as demand grew in Germany and Spain.
In Japan, preliminary government data showed that first quarter real GDP increased 0.9%, or 3.5% in annualised terms, bettering the 2.7% rise predicted by analysts. Also lifting market sentiment was news that Japanese consumer confidence improved for the fourth month in a row.

Shaping the markets – this week

Shanghai Surprise: will there be improvement for China’s manufacturing sector?

US investors will look to the April existing home sales report (Wednesday), for further signs of the robustness of US housing; a similar rise to March’s 4.92m monthly sales is expected. Additionally, the new home sales report (Thursday) may show a rise of 425,000 according to market consensus. The Federal Open Market Committee meeting minutes (Wednesday) could shed more light on the debates surrounding the inflation outlook and the pace of the Fed’s asset purchases. Durable goods orders for April (Friday) could take on a much more upbeat tone; analysts are expecting a rise of 1.7% month-on-month (mom) compared with a 5.8% fall in March.

Key European data releases include the May initial purchasing managers indices (PMIs) for France and Germany and the euro area (Thursday), which will probably show continued weakness in both manufacturing and services sector activity. Eurozone consumer confidence for May (also Thursday) is unlikely to show a significant change (-22.3 in April). At the end of the week, the second estimate of Germany’s Q1 GDP (first estimate +0.1%, qoq) may confirm that the weak performance was driven from falling investment. Germany’s IFO business climate survey may also support the downbeat outlook. Elsewhere, UK consumer prices index (CPI) inflation (Tuesday) could potentially slow further owing to lower food and petrol prices. The second estimate of UK Q1 GDP (Thursday) is also scheduled.
Finally, in Asia, it is hoped that Japanese exports for April (Tuesday) will build on recent strength (+1.1% year-on-year in March). Over in China, the health of the manufacturing sector is gauged with the release of the May HSBC Flash Manufacturing PMI (Wednesday); the April reading came in at 50.4, signalling only a slight improvement in manufacturing activity.

Markets in numbers

World equities	Index	% 1W	% YTD
S&P 500 Composite	1667.47	2.1	16.9
Dow Jones Industrials	15354.40	1.6	17.2
NASDAQ Composite	3498.97	1.8	15.9
FTSE 100	6723.06	1.5	14.0
Euro STOXX 600	308.72	1.2	10.4
Nikkei 225	15138.12	3.6	45.6
Hang Seng	23082.68	-1.0	1.9
Benchmark government bonds	Yield	1W /bp	YTD /bp
US Treasury - 10 year	1.90	4.9	15.3
UK Gilt - 10 year	1.88	-0.1	6.8
German Bund - 10 year	1.32	-4.1	1.5
Japanese JGB - 10 year	0.80	10.1	0.8
Credit indices	Yield	1W /bp	YTD /bp
IBOXX £ Non-gilts All maturities	3.65	1.6	-21.6
ITRAXX Crossover 5 Year (MID)*	389.92	0.2	N/A
Volatility index	Index	% 1W	% YTD
CBOE PX Volatility - VIX index	12.45	-1.1	-30.9
Commodities	Index	% 1W	% YTD
Brent Oil ($/Barrel)	104.18	2.0	-5.6
Gold Bullion $/ Troy Oz	1364.24	-4.2	-17.9
Currencies	vs $	vs £
¥	102.97	156.4
$		1.52
Euro	1.282	1.182

Source: Thomson Reuters Datastream as at close of markets 17 May 2013. *Spread in basis points. A basis point (bp) is one hundredth of a percentage point (0.01%), here measuring the change in yields on fixed income assets. Past performance is not a guide to future performance. Past performance is not a guide to future performance.

Chart of the week

Source: Thomson Reuters Datastream. S&P 500 Composite and FTSE Eurofirst 300, price indices, weekly data from 16 May 2008 to 17 May 2013.

Important Information:
Performance data quoted represents past performance and is no guarantee of future results. An investor cannot invest directly in an index. This document has been produced based on Henderson Global Investors' research and analysis and forecasts are either consensus or the view of Henderson's investment professionals. Any forecasts should not be relied upon as a true indicator of future market performance. All figures are sourced by Henderson Global Investors unless stated otherwise.

Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. Issued in the UK by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management Limited (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), Henderson Alternative Investment Advisor Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Why UK 2013 growth of 2% remains achievable

2013-05-20T15:30:00Z

A post in December suggested that UK GDP would grow by about 2% in 2013. This was based partly on a simple forecasting rule-of-thumb that judges prospects for the coming calendar year to be “good” if both real money growth and share prices are higher than a year before. This condition was met at the end of last year for the first time since December 2005. Historically, growth has averaged 4.1% in years following such a signal – see the earlier post for details.

The current consensus is for growth of only 0.8% this year, according to the Treasury’s monthly survey of forecasters. 2% expansion is, on the face of it, out of reach. Current official statistics show that GDP in the first quarter was only 0.4% above the 2012 level. This implies that it would need to rise at a 4.1% annualised rate over the remaining three quarters to produce full-year growth of 2% (assuming an equal increase in each quarter).

Such arithmetic, however, is misleading because it ignores the potential for upward revisions to current official data. Quarterly GDP changes over 2009-11 (i.e. three years) have so far been revised up by an average of 0.18 percentage points since first reported. Assume that the initial estimates since the first quarter of 2012 are upgraded by the same amount. The first-quarter level of GDP would then be 0.8% above the 2012 level, rather than 0.4%. The economy would need to expand by “only” 3.0% annualised over the remaining three quarters to produce a full-year increase of 2%.

A further reason for retaining the 2% full-year forecast is the possibility of an outsized second-quarter GDP rise. Based on current official information, the March level of GDP was 0.25% above the first-quarter average*. Construction output was hit by poor weather in early 2013 and is likely to bounce back in the second quarter – a return to fourth-quarter activity would raise GDP by 0.35 percentage points relative to its March level. If the rest of the economy expands by 0.1% per month, GDP could rise by 0.8% this quarter (i.e. 0.25 carryover effect plus 0.35 construction boost plus 0.2 trend growth).

A 0.8% second-quarter gain, combined with the suggested upward revisions to earlier data, would imply a required growth rate of 2.6% annualised during the second half of 2013 in order to achieve 2% expansion for the year.

The suggested scenario would involve GDP growth of 2.6% between the fourth quarters of 2012 and 2013. This is not unrealistic: GDP rose by 2.4% in the year to the third quarter of 2010 and recent money supply expansion has been faster than in 2009-10.

*Based on actual industrial and construction data and the official assumption for March services output incorporated in the preliminary first-quarter GDP estimate.
These views may differ from those of Henderson fund managers. The information should not be construed as investment advice. Before entering into an investment agreement please consult a professional investment adviser.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Weekly wrap: GDP growth: Japanese joy, European gloom

2013-05-20T15:00:00Z

Wrap up - last week

GDP growth: Japanese joy, European gloom

Continuing the upward momentum, most key equity markets made strong gains but again it was Japan that stole the limelight with a 3.6% rise for the week. Weaker eurozone data led investors to anticipate further monetary easing measures from the European Central Bank, driving the German 10-year bund yield lower (prices higher). Conversely, Japanese and US 10-year government bond yields rose. The US dollar reached a four-year high against the yen, and the gold price fell 4.2% during the week owing to US dollar strength.
The round-up of US economic indicators included better-than-expected retail sales figures – up 0.1% in April against predictions of a 0.3% fall; improving consumer confidence – a six-year high in May’s release; and slowing inflation – which fell to a two-year low in April. Debate intensified over how long the US Federal Reserve (the Fed) will continue to support the markets; the President of the Federal Reserve Bank of Philadelphia suggested that the Fed should taper its asset purchases this year. As many analysts expected, the euro area economy contracted by 0.2% quarter-on-quarter (qoq) in the first quarter of 2013. Germany disappointed with anaemic GDP (gross domestic product) growth of only 0.1% qoq while France slipped into recession, shrinking by 0.2%. Eurozone inflation for April slowed to 1.2% yoy but European car sales in April rose for the first time in 19 months as demand grew in Germany and Spain.
In Japan, preliminary government data showed that first quarter real GDP increased 0.9%, or 3.5% in annualised terms, bettering the 2.7% rise predicted by analysts. Also lifting market sentiment was news that Japanese consumer confidence improved for the fourth month in a row.

Shaping the markets – this week

Shanghai Surprise: will there be improvement for China’s manufacturing sector?

US investors will look to the April existing home sales report (Wednesday), for further signs of the robustness of US housing; a similar rise to March’s 4.92m monthly sales is expected. Additionally, the new home sales report (Thursday) may show a rise of 425,000 according to market consensus. The Federal Open Market Committee meeting minutes (Wednesday) could shed more light on the debates surrounding the inflation outlook and the pace of the Fed’s asset purchases. Durable goods orders for April (Friday) could take on a much more upbeat tone; analysts are expecting a rise of 1.7% month-on-month (mom) compared with a 5.8% fall in March.

Key European data releases include the May initial purchasing managers indices (PMIs) for France and Germany and the euro area (Thursday), which will probably show continued weakness in both manufacturing and services sector activity. Eurozone consumer confidence for May (also Thursday) is unlikely to show a significant change (-22.3 in April). At the end of the week, the second estimate of Germany’s Q1 GDP (first estimate +0.1%, qoq) may confirm that the weak performance was driven from falling investment. Germany’s IFO business climate survey may also support the downbeat outlook. Elsewhere, UK consumer prices index (CPI) inflation (Tuesday) could potentially slow further owing to lower food and petrol prices. The second estimate of UK Q1 GDP (Thursday) is also scheduled.
Finally, in Asia, it is hoped that Japanese exports for April (Tuesday) will build on recent strength (+1.1% year-on-year in March). Over in China, the health of the manufacturing sector is gauged with the release of the May HSBC Flash Manufacturing PMI (Wednesday); the April reading came in at 50.4, signalling only a slight improvement in manufacturing activity.

Markets in numbers

World equities	Index	% 1W	% YTD
S&P 500 Composite	1667.47	2.1	16.9
Dow Jones Industrials	15354.40	1.6	17.2
NASDAQ Composite	3498.97	1.8	15.9
FTSE 100	6723.06	1.5	14.0
Euro STOXX 600	308.72	1.2	10.4
Nikkei 225	15138.12	3.6	45.6
Hang Seng	23082.68	-1.0	1.9
Benchmark government bonds	Yield	1W /bp	YTD /bp
US Treasury - 10 year	1.90	4.9	15.3
UK Gilt - 10 year	1.88	-0.1	6.8
German Bund - 10 year	1.32	-4.1	1.5
Japanese JGB - 10 year	0.80	10.1	0.8
Credit indices	Yield	1W /bp	YTD /bp
IBOXX £ Non-gilts All maturities	3.65	1.6	-21.6
ITRAXX Crossover 5 Year (MID)*	389.92	0.2	N/A
Volatility index	Index	% 1W	% YTD
CBOE PX Volatility - VIX index	12.45	-1.1	-30.9
Commodities	Index	% 1W	% YTD
Brent Oil ($/Barrel)	104.18	2.0	-5.6
Gold Bullion $/ Troy Oz	1364.24	-4.2	-17.9
Currencies	vs $	vs £
¥	102.97	156.4
$		1.52
Euro	1.282	1.182

Source: Thomson Reuters Datastream as at close of markets 17 May 2013. *Spread in basis points. Past performance is not a guide to future performance.

Chart of the week

Source: Thomson Reuters Datastream. S&P 500 Composite and FTSE Eurofirst 300, price indices, weekly data from 16 May 2008 to 17 May 2013.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Are attractive equity yields becoming harder to find?

2013-05-20T14:00:00Z

The prevailing low interest rate environment is driving investors to search for income-generating assets. The resulting increased demand for bonds has led to a fall in bond yields and since last year, risk appetite for equities has improved. Given that many equity markets have rallied considerably since last year, we are often asked whether it is still possible to find good yield opportunities in equities. The answer is yes - equities remain good value and yields remain significantly above many other asset classes.

An easy criticism of this simple comparative yield measure is that currently low 10-year government bond yields and interest rates are abnormal and instead, they should be compared to historical equity yields. On this basis equity yields are reasonable, if not as cheap as they have ever been. A more considered way of looking at equity yields might be to compare the number of companies that have attractive yields over time. Figure 1 shows the percentage of stocks yielding more than 4% in Asia and the US is roughly in line with historical averages, except in times of financial crisis. In Europe, yield opportunities have increased significantly in number, for example over 140 European stocks now yield over 4% compared with only 50 in 2005.

Figure 1
Comparison of income opportunities across regions

Source: Société Générale, Factset. MSCI indices, as at 28 March 2013. Yields may vary and are not guaranteed. Past performance is not an indicator of future performance.

Why has dividend growth been stronger than economic growth suggests it should be?

There are several reasons why this is occurring. Dividend growth is normalising - as a result of the financial crisis, some companies have cut dividends or stopped paying them altogether, but are now restarting dividends as they have paid down debt and restructured their businesses. Another factor is that many companies are growing for structural reasons and have continued to grow through the crisis. Complementing these trends is the fact that stronger demand for bonds has increased the availability of cheap credit for companies with safe balance sheets, which is also allowing companies to reduce interest costs and improve cash flows.

Stronger dividend growth can also signal a return of business confidence, and combined with the current low yield environment, markets appear to be rewarding dividend growth and greater shareholder returns. This is encouraging companies to increase dividends. For example, the S&P 500 Dividend Aristocrats Index, which measures the performance of large cap, blue chip companies that have increased dividends consistently each year over the past 25 years or more has returned 58.8% over the last three years and 14.9% year-to-date, outperforming the broader S&P 500. (Source: Thomson Reuters Datastream as at 30 April 2013. Total returns in US dollars).

A further example of this trend is since last year we have seen companies across a wide range of sectors announce special dividends, including cyclical businesses such as UK media group ITV, which announced a £156 million special dividend on higher annual revenue and profits. This was closely followed by insurer Standard Life, which has paid its shareholders a special payout amounting to a total of £302 million, in addition to its ordinary dividend. According to Capita Registrars, which monitors UK dividends, 2012 was a record year for special dividends with £6.8billion paid out to shareholders. Special dividends are not only prevalent in the UK. US-based casino operator Las Vegas Sands, which also operates in Macau and Singapore paid a $2.75-per-share special payment in December, and is also considering another special dividend this year.

What is the outlook for dividends in developed markets?

We think US and UK dividend growth is normalising and is likely to be more in line with earnings growth going forward. On this basis, the prospects for dividend growth among developed countries looks the strongest in the US - manufacturing is picking up, there are ongoing signs of recovery in the housing sector, and shale gas discoveries are benefiting some companies and consumers. In Europe, dividend growth has disappointed with sectors such as telecoms and utilities have cut dividends, although many other sectors have restarted dividend payments and the outlook is improving.

While Japanese companies have not had a strong dividend culture, there are signs this may be changing. For example, we recently added Japanese telecom group NTT (Nippon Telegraph & Telephone Corp.) to the fund because NTT’s management appears to be more return focused than other Japanese corporations, and has a strong commitment to grow dividends (current yield is just under 4%). More dividend growth from Japanese companies, especially from exporters could be in store, given the depreciation of the yen against other major currencies.

In conclusion, equity dividend yields have not compressed to the extent that we have seen in the bond markets and we continue to find many attractive income opportunities across both sectors and geographies.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Citywire: Henderson tech stars sell out of social media plays

2013-05-20T14:00:00Z

Citywire, 17 May 2013

Ian Warmerdam and Stuart O'Gorman have decided to take profits on positions in Facebook and LinkedIn to allow them to focus the Henderson HF Global Technology fund on the internet retail market. To read the full article, please click here

Citywire content is proprietary and confidential to Citywire Financial Publishers Ltd (“Citywire”), and may not be reproduced or transmitted in any form or by any means without prior permission. Citywire excludes any liability arising out of its use.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

News alert: Henderson launches US Student Housing Fund

2013-05-20T11:00:00Z

Henderson Global Investors is engaging with investors on the launch of a US Student Housing Fund. The business has announced plans for a new institutional investment opportunity targeting the US student housing market. The Henderson Student Housing Fund will invest in high quality by-the-bed student housing properties across target markets within the US, and has a current active pipeline of attractive investments.

Through the core-plus fund, the firm will target already-built properties associated with public universities with a minimum of 15,000 students. Henderson also will put an added focus on schools with Division I sports programs, such as football or basketball.

One of Henderson’s investment criteria for the fund is that less than 25 percent of the housing that’s provided for the university will be ‘by-the-bed’ or ‘purpose-built’ housing. The vast majority of the investments will be in off-campus properties that are within walking distance of the university.

Through the fund, Henderson is looking at two strategies: to invest in properties with joint venture partners and to invest 100 percent in the properties while using a third-party manager to run the day-to-day operations of the assets. For direct investments, third-party specialist campus property manager, Greystar, will be used for on-site management. Joint venture investments will be made in partnership with best-in-class student housing owner/operator, Pierce Education Properties, L.P., who will be responsible for the day-today management of those properties. Henderson’s experienced in-house asset managers will supervise the property management activities of both Greystar and Pierce.

AJ Richard, Director of Portfolio Management, Henderson North America, said: "Henderson believes the student housing sector possesses strong near-term demand/supply characteristics and is attractively priced relative to other sectors. By aligning with specialist student housing operators, Henderson is well positioned to access investment opportunities and deliver strong performance for its investors."

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Investment opportunities abound in emerging markets

2013-05-20T11:00:00Z

Emerging markets equities have had a bit of a bumpy ride in recent years. During the last three years the asset class has underperformed US equities by a significant margin and has registered a similar performance to Europe despite the fact that the latter was at the epicentre of almost every negative tail risk event. However, looking at the returns of a broad index often reveals just one half of the story. If one goes a step further it is easy to notice that there was a very big divergence in the emerging markets returns on every level — be it countries, industries, or companies.

It is interesting to note that commodities and commodity related investments, one of the cornerstones of the emerging markets story of the past decade and a big part of the benchmark index, have been one of the main drags on performance. In US dollar terms, the energy and materials sectors of the MSCI emerging markets index have declined by 10% and 18% in the three years to May 2013. At the same time, there have been plenty of opportunities for an investor to generate sizable returns in more defensive and consumer related industries. For example, the food, beverage and tobacco sector is up around 70% and the pharmaceuticals part of the index has advanced by 47% in US dollar terms. It is clear that this story of dispersion in performance profiles offers good opportunities to boost returns but at the same time it demonstrates that active allocation and security selection should be a big part of the investment process.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

News alert: Henderson Global Investors and Palmira acquire logistics park in Winsen an der Luhe, Germany

2013-05-17T12:00:00Z

Henderson Global Investors and Palmira Capital Partner have acquired a logistics park in Winsen an der Luhe, Germany on behalf of the Henderson German Logistics Fund. The asset was acquired from a fund managed by Captiva Capital Management. The purchase price has not been disclosed. It represents the fifth acquisition for the Fund following assets in Bad Durkheim, Elmenhorst near Hamburg, Herrenberg near Stuttgart and Bruchsal in South Germany.

The asset which was completed in 2010, is situated in the south of Hamburg and consists of one building with over 12,300 sqm of logistic space and over 600 sqm of office space. The park is certified ‘DNGB gold’ for sustainability. The anchor tenant Dedon is a worldwide operating company specialized in luxurious outdoor furniture. The remaining term of the lease is eight years.

Thorsten Kiel, Manager of the Fund said: “This acquisition was an excellent fit for our Fund which targets existing schemes with strong covenants and secure leases already in place.”

The Henderson German Logistics Fund is a partnership between Henderson’s German Property Business and Palmira Capital Partner, a specialist in logistic real estate acting as Investment Advisor to the Fund. Consulting firm REAG advised Henderson and Palmira on technical matters. All other aspects were managed by law firm Graf von Westphalen.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Yield-generating property acquisitions

2013-05-16T12:00:00Z

Within the Henderson UK Property Unit Trust we have been keen to place cash within the portfolio into long-income, well-let properties and have been carefully looking for off-market deals. Following last month’s £11.5 million purchase of an industrial site in Rugby let to GE Converteam for 10 years, we recently completed on three further deals:

Cardiff: We have purchased a £19.25m cinema complex in the centre of Cardiff, principally let for 20 years to Cineworld, the UK’s second-largest cinema operator. The yield at 7% represents extremely good value in an increasingly popular sector. The building, which comprises a 15-screen cinema, a casino and two ground floor bar/restaurant units, is very well-located adjacent to the newly-extended St David’s shopping centre that attracted over 36 million visitors last year, and its 2,500 space car park.

Footfall should also be helped by the property’s close proximity to a new John Lewis store (the second largest outside of London), Cardiff’s 7,500 capacity Arena, the City’s central rail station and the local bars and restaurants. In addition, Admiral, the car insurance provider, is building a substantial new office development opposite to house 2,500 employees.

There are numerous asset management plays that we plan to implement both inside and outside of the property, which should enable us to drive value.

Cineworld, Cardiff

Sidcup: Another addition to the portfolio is an £8.5m retail warehouse in South East London let to DFS for 17 years at an attractive yield of 7.2%. In a strong retail location, the property benefits from excellent transport links with both the M25 and M20 easily accessible from the A20. We believe this acquisition provides good value from a strong-income backed return, supported by a very strong covenant.

London: 31 Clerkenwell Close is a newly-developed £5.7m freehold office building situated in the heart of the Clerkenwell office market, which is a London sub-market dominated by continued growth in the tech and media sectors. Occupied by a creative agency called Brothers and Sisters, the 6.2% yield generated from this off-market deal reflects very good value in today’s hot London market. Road and public transport links are excellent with rail and underground connections running from Farringdon station. The property and surrounding area should benefit considerably from the opening of London’s Crossrail in 2018, which will link 37 of the City’s rail stations, with Farringdon becoming a network hub.

In anticipation of further cash flows into the fund we have a further pipeline of stock, which we believe will continue to boost yield and performance. We continue to position the portfolio towards prime properties with strong tenant covenants, buying assets for the strength of income and focusing on robust businesses on long leases.

Marcus Langlands Pearse, co-manager of the Henderson UK Property Unit Trust

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Equities at risk from weaker hedge fund demand

2013-05-16T11:15:00Z

Yesterday’s post cited improved investor sentiment as a reason for near-term caution on prospects for equities and other risk assets. A change in positioning as sentiment has shifted from excessive pessimism in late summer 2012 to moderate optimism now has been a key driver of recent market strength.

Equity hedge funds, in particular, now appear to have relatively high market exposure, suggesting that other investor groups will need to take up the baton if recent gains are to be extended. Exposure can be estimated by examining the sensitivity of the HFRX daily equity hedge return index to the MSCI World index. The beta measured over a 30-day rolling window rose from 0.13 in September 2012 to 0.48 last week – not far from a peak of 0.54 reached in June 2011 before a big decline in stocks.

The suggestion of bullish hedge fund positioning is supported by the latest Merrill Lynch survey, showing weighted net equity exposure of 45%, a seven-year high.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Can we rely on China’s official statistics?

2013-05-16T11:00:00Z

For a country the size, state of development and complexity of China, the speed with which they produce certain statistics, such as quarterly gross domestic product (GDP) growth, is surprising. In fact, some analysts have gone so far as to question the fundamental accuracy of the numbers themselves.

There are a number of reasons for questioning the integrity of the data. Some claim that the highly top-down political system and China's once-in-a-decade leadership change may have increased pressure on Communist Party officials to report strong numbers. China’s legacy of a state-controlled economy may be poorly set up to accurately gauge and measure the burgeoning and evolving consumer demand and importantly, the service sector where output is less about measurable goods. Economists worry that the numbers fail to reflect the new economic reality, or rather that they reflect political imperatives. However, China’s National Bureau of Statistics does not make it easy for independent outsiders to cross-check its work.

So, how do we, as fund managers, get around this issue? We look at the trends in macro data but rather than relying on ‘official’ government statistics, we prefer to use lower level data, such as power consumption growth, refinery throughput and manufacturing purchasing managers’ index (PMI) surveys to assess the strength of economic growth. Meanwhile, across all emerging markets, auto sales provide a useful barometer of consumer demand.

By combining several alternative data sources and importantly, continuously meeting many companies, we are able to form a composite picture of the overall economy.

Charlie Awdry is manager of the Henderson China Opportunities Fund

The views represented here are those of the fund manager at the time of writing and should not be construed as investment advice. Before entering into an investment agreement consult your own professional investment adviser.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Global Snapshot May 2013 is available now

2013-05-15T16:00:00Z

Financial markets were in a positive mood in April. Further supportive central bank action in the form of aggressive new quantitative easing plans from the Bank of Japan, positive developments in Cyprus and the appointment of both president and prime minister in Italy ensured the upbeat sentiment outweighed further weakness in economic data and mixed corporate earnings.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Should equity investors take profits?

2013-05-15T13:00:00Z

The indicators followed here were giving a positive signal for equities and other risk assets in late summer 2012:

Global real narrow money expansion was rising, suggesting an economic pick-up from late 2012 – see here.
A global “double-lead” indicator calculated here from OECD country leading indicator data had turned up, supporting the monetary forecast – here.
A large gap had opened up between global real money expansion and industrial output growth, implying “excess” liquidity available to flow into markets.
Central banks were easing policies and signalling more to come
Investors were unduly pessimistic about economic prospects and positioned defensively.

The current message from the same indicators is more ambiguous:

Global real money growth has moderated since late 2012 though remains at a level historically consistent with solid economic expansion.
The double-lead indicator has also declined – see below.
Global real money expansion remains above output growth but the gap has narrowed, suggesting a less favourable – but not unfavourable – liquidity backdrop.
Central banks are still easing but may scale back further stimulus in response to better economic news and market buoyancy.
Many but not all investors are optimistic and constructively positioned.

The judgement here, therefore, is that a reduction in exposure to equities and other risk assets is warranted currently and a shift to defence should be considered if the real money / output growth gap closes.

The global double-lead indicator fell further in March and is starting to diverge negatively from real money expansion – see chart. Real money has recently led industrial cycle turning points by an average of six months and the lead indicator by five months. The forecasting approach here places greater weight on monetary trends but both measures suggest that the acceleration phase of the cycle – during which equities typically do best – is ending.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Eurozone output rise consistent with "monetarist" forecast

2013-05-14T12:00:00Z

Posts since last summer (e.g. here) argued that the Eurozone economy would bottom out in autumn 2012 and revive into 2013, based on a recovery in real narrow money from spring 2012. Economic improvement has been held back by an unwarranted appreciation of the euro – driven by US / Japanese devaluationist policies – but is now evident in industrial output data.

Output for the first quarter as a whole was up by 0.2% from the fourth quarter, while March’s reading was 1.4% above a trough reached in November. The six-month change has recovered to zero and should turn positive in April / May, rising further during the second half in lagged response to faster real money expansion – see chart.

Consistent with country-level monetary developments, the recovery to date has been led by Germany and the Netherlands, with output falling further in France, Italy and Spain in the first quarter.

As previously discussed, recent much-improved monetary trends across the periphery suggest a stabilisation in output in the second quarter followed by a second-half recovery. Germany should continue to lead the upswing but France should underperform and Dutch prospects have deteriorated.

These views may differ from those of Henderson fund managers and Henderson Global Investors’ official view. The information should not be construed as investment advice. Before entering into an investment agreement please consult a professional investment adviser.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Indonesia: Cautious at a macro level

2013-05-14T12:00:00Z

Currently our Indonesia weighting is broadly in line with the benchmark (approximately 3% weighting in the MSCI All Country Asia Pacific ex-Japan index). This is based solely on a few attractive stocks we like, such as Telkom Indonesia (C.2.4% weighting), although at the aggregate level we believe that relative valuations are less attractive in Indonesia and the combination of value and yield is less compelling. We, therefore, intend to maintain a broadly neutral position in the near term.

Whilst gross domestic product (GDP) growth has remained resilient, with a 6.0% expansion in the first quarter of 2013 (year-on-year), it was the slowest pace of growth in more than two years, with the fall in commodity prices contributing to weaker exports. Although this has been somewhat offset by strong domestic demand, the mooted rise in subsidised fuel prices could dent consumption and precipitate an upward inflationary environment. In addition, as we move towards the 2014 Presidential elections there is a danger that policy reform momentum could slow, a reason why S&P recently moved Indonesia’s outlook to stable from positive. Therefore, we remain cautious at a macro level but maintain our bottom up approach to identify names that display attractive valuations, strong balance sheets and attractive yields.

Note: Reference to individual companies or any securities should not be construed as a recommendation to buy or sell the same.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Hold the fries please

2013-05-14T11:00:00Z

One in four adults in the UK is now obese and experts suggest this may rise further. However, the tides are turning and healthy eating is on the up. The market for healthy foods and more nutritional information on packaging has been boosted by the growing obesity epidemic. In the US, influential people such as Michelle Obama have been endorsing a more healthy lifestyle. Many large food chains are responding to this change in demand by expanding their products lines to incorporate a healthier alternative. Coca-Cola now has a low calorie alternative for almost all of its drinks and does not market to children under 12 years old. Wal Mart has cut the cost of fruits and vegetables by $2.3bn, which has meant an increase in sales and their profits. This is a response to changing attitudes towards diet and a survey shows that the majority of consumers think it is important for food companies to offer healthy alternatives in their offerings.

There is a fear that these corporations will look towards less developed markets where demand for fast foods is still growing. McDonald’s argues that the introduction of healthy alternatives has actually meant a rise in overall demand for both its healthy and less healthy options. There have been calls for more severe measures to be taken, including taxes on fizzy, sugary drinks in the same way as smoking. In the UK, doctors are asking for a 20% experimental tax, which they say could create £1bn of revenue to help fund weight management programmes.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

News alert: Henderson hires two Portfolio Managers to drive retail portfolio value, strengthening French Platform

2013-05-14T10:00:00Z

Henderson Global Investor’s c. €15 billion Property Business has hired Paul-Eric Perchaud and Julien Chaperon to strengthen its French team. Both will be based in Paris, working across Henderson Property’s French retail portfolio and report into Ara Adjennian.

Paul-Eric has joined as Portfolio Manager with responsibly for asset management at Henderson’s two latest editions to its French Shopping Centre portfolio - “Grand Quétigny Shopping Gallery” in Quétigny, Dijon (Burgundy) and “Ile Napoléon” in Mulhouse-Illzach (Alsace). He joined from Unibail-Rodamco where as Senior Operating Manager, he was responsible for a c. €1 billion French shopping center portfolio including Carré Sénart, Carroussel du Louvre and Palais des Congrès de Paris.

Julien has also joined as Portfolio Manager and will take responsibility for assets within the Herald Fund Portfolio, including Centre Sud in Le Mans and Plein Air in Le Blanc Mesnil. Julien joins from Klepierre, where he was responsible for the management of over €1 billion assets including French, Central European and Nordic shopping centers.

Ara Adjennian, Retail Director in France, said: “The team in place now boasts a wealth of experience across the retail sector including fund management, investment, development, asset management and leasing. We are now fully equipped to apply these skills to our existing portfolio, adding value at all levels from development to tenant engineering, for the benefit of our clients, while also scoping the market for new investment opportunities.”

Press enquiries
Associate Director, PR, Property
Gemma Bradley
+44 (0) 20 7818 4441
gemma.bradley@henderson.com

Henderson Press Office
+44 (0) 20 7818 4222
pressoffice@henderson.com

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Weekly wrap: Special FX: Dollar/yen breaches ¥100 level

2013-05-13T17:00:00Z

Wrap up - last week

Special FX: Dollar/yen breaches ¥100; three central banks join the rates cutting fray

Market momentum continued last week, with the S&P 500 and Dax ascending to new highs and the FTSE closing above 6,600 for the first time since 2007. There was a ‘Nirvana’ moment in the Japanese market as the yen broke through the psychological ¥100 barrier versus the dollar for the first time in four years; the Nikkei responded by reaching a five-year high. ‘Abenomics’, the aggressive blend of policies advocated by Japan’s new prime minister, continues to raise expectations for further yen weakening and improving Japanese corporate profits. Japanese government bonds sold off sharply last week; the prices of US and German 10-year debt also ended lower (yields higher).

It was an interesting week for monetary policy, with three more central banks – Australia, Poland and South Korea – cutting interest rates by 25 basis points, mirroring the European Central Bank and Reserve Bank of India’s reductions the previous week. But it was a different story in the UK: the Bank of England (BoE) left its policy unchanged, while investors grew more anxious that the US could begin tapering its asset purchases. US initial jobless claims (for employment benefits) appeared to confirm an improving employment trend. In Germany, factory orders rising 2.2% (March, month-on-month; m-o-m) suggested Europe’s largest economy had put its recent soft patch behind it, while UK industrial output rose more than expected in March. In China exports climbed 14.7% in April, while imports surged 16.8%, generating a significant trade surplus of around US$18bn for the month.

Shaping the markets – this week

Party starter or party pooper? Eurozone growth data; King’s ‘swan song’ as BoE Governor

After a strong performance from equities last week, investors will be wondering whether European data might dampen the party mood. Eurozone industrial production comes to the fore on Tuesday, swiftly followed by the initial reading of first quarter euro area economic growth on Wednesday – a small contraction of 0.1% quarter-on-quarter (q-o-q) is expected. Hopes are pinned on Germany to manage a 0.3 % q-o-q return to growth after declining -0.6% in the prior quarter. In the UK, the BoE’s outgoing governor, Sir Mervyn King, will give his last Quarterly Inflation Report press conference (Wednesday). Also mid-week, UK labour data is anticipated to show unemployment staying low, but earnings growth fading.
In the US, the April advance retail sales report (Monday) is expected to show headline sales declining 0.3% m-o-m, pulled down by gasoline station sales. Wednesday brings US manufacturing data in the shape of the Empire State survey, with analysts anticipating modest expansion in May. On the same day industrial production data may show a 0.2% decline m o m from March’s reading of 0.4%. The NAHB’s index of homebuilder sentiment is due on Wednesday and housing starts and building permits are scheduled for Thursday. Consumer prices index inflation (also Thursday) is expected to drop 0.2% m-o-m in April, driven again by declining energy prices.

In Asia, investors will be hoping that Japan’s new policies are feeding through to Japanese GDP growth (Thursday): analysts expect a rise of 0.7% q-o-q for the first quarter (preliminary reading).

Markets in numbers

World equities	Index	% 1W	% YTD
S&P 500 Composite	1633.70	1.2	14.6
Dow Jones Industrials	15118.49	1.0	15.4
NASDAQ Composite	3436.58	1.7	13.8
FTSE 100	6624.98	1.6	12.3
Euro STOXX 600	304.99	1.3	9.1
Nikkei 225	14607.54	6.7	40.5
Hang Seng	23321.22	2.8	2.9
Benchmark government bonds	Yield	1W /bp	YTD /bp
US Treasury - 10 year	1.85	11.1	10.4
UK Gilt - 10 year	1.88	15.5	6.8
German Bund - 10 year	1.36	13.6	5.6
Japanese JGB - 10 year	0.70	13.3	-9.3
Credit indices	Yield	1W /bp	YTD /bp
IBOXX £ Non-gilts All maturities	3.63	10.0	-23.2
ITRAXX Crossover 5 Year (MID)*	374.39	0.2	N/A
Volatility index	Index	% 1W	% YTD
CBOE PX Volatility - VIX index	12.59	-2.0	-30.1
Commodities	Index	% 1W	% YTD
Brent Oil ($/Barrel)	102.11	-2.4	-7.5
Gold Bullion $/ Troy Oz	1423.47	-3.0	-14.4
Currencies	vs $	vs £
¥	101.79	156.3
$		1.54
Euro	1.297	1.183

Source: Thomson Reuters Datastream as at close of markets 10 May 2013. *Spread in basis points. Past performance is not a guide to future performance.

Chart of the week

Source: Thomson Reuters Datastream, Fathom Consulting, Nikkei 225 Stock Average and USD/JPY exchange rate, daily data from 10 May 2007 to 10 May 2013.

Important Information:
Performance data quoted represents past performance and is no guarantee of future results. An investor cannot invest directly in an index. This document has been produced based on Henderson Global Investors' research and analysis and forecasts are either consensus or the view of Henderson's investment professionals. Any forecasts should not be relied upon as a true indicator of future market performance. All figures are sourced by Henderson Global Investors unless stated otherwise.

Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.
Issued in the UK by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management Limited (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), Henderson Alternative Investment Advisor Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services.

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Video: Japan's ultra loose monetary policy

2013-05-13T17:00:00Z

Matthew Beesley, head of global equities talks to FTfm about how Japan’s ultra-loose monetary policy is changing the investment environment in Asia and beyond.

Video: Matthew Beesley talks to FTfm

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Is the tide turning in Brazil?

2013-05-13T16:00:00Z

Last year, the Brazilian government’s intervention in various sectors led to heightened uncertainty for corporations, resulting in the postponement of pro-growth investments that are vital if Brazil’s economic growth is to recover in 2013. In the utilities sector, the government made changes to concession terms aimed at reducing electricity prices, whilst in the banking sector, public banks were forced to lower loan rates, squeezing the profitability of the private banks. There was even pressure placed on the Brazilian central bank to extend the interest rate cutting cycle, despite worrisome inflation data. This government interference caused uncertainty for investors and a fall in private sector investment, culminating in sluggish gross domestic product growth of 0.9% last year. The forecast for 2013 is that private sector investment could be the ‘swing’ factor for the economy.

2013 has begun with some signs of positive change in Brazil. The government has recognised that investments by the private sector are needed in order to spur an economic rebound. The government has re-examined its policies with respect to privatisations and has increased the rates of return offered to private investors. This has prompted a marketing drive to attract investors ahead of infrastructure concession auctions due later in the year. Importantly, having offered paltry returns in the last round, the finance ministry has indicated that more attractive returns will be on offer this time. In addition, there has been recognition that rising inflation is a problem. To this end, April saw the central bank raise interest rates from the record low level reached last year. Given the scale of the cuts in the past, coupled with loose fiscal policy (the use of government revenue collection and expenditure to influence the economy), this should not be viewed as an impediment to a reacceleration of growth.

The long-term outlook for Brazil is compelling. The country is resource-rich and has favourable long-term demographic trends (e.g. rising disposable incomes). However, the government has often created problems that have held Brazil back from reaching its full potential. The tide may be turning as the incremental changes described above indicate that the government is becoming more open and conciliatory with the private sector in order to promote investment. The hosting of the next World Cup and Olympic Games provides imposing deadlines that ensure progress has to be made. These events and the recent appointment of a Brazilian to head the World Trade Organization show the country will be in the spotlight like never before in the coming years. It is up to the politicians to ensure that an improving economic picture is part of that display.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Weekly wrap: Special FX: Dollar/yen breaches ¥100 level

2013-05-13T16:00:00Z

Wrap up - last week

Special FX: Dollar/yen breaches ¥100; three central banks join the rates cutting fray

Market momentum continued last week, with the S&P 500 and Dax ascending to new highs and the FTSE closing above 6,600 for the first time since 2007. There was a ‘Nirvana’ moment in the Japanese market as the yen broke through the psychological ¥100 barrier versus the dollar for the first time in four years; the Nikkei responded by reaching a five-year high. ‘Abenomics’, the aggressive blend of policies advocated by Japan’s new prime minister, continues to raise expectations for further yen weakening and improving Japanese corporate profits. Japanese government bonds sold off sharply last week; the prices of US and German 10-year debt also ended lower (yields higher).
It was an interesting week for monetary policy, with three more central banks – Australia, Poland and South Korea – cutting interest rates by 25 basis points, mirroring the European Central Bank and Reserve Bank of India’s reductions the previous week. But it was a different story in the UK: the Bank of England (BoE) left its policy unchanged, while investors grew more anxious that the US could begin tapering its asset purchases. US initial jobless claims (for employment benefits) appeared to confirm an improving employment trend. In Germany, factory orders rising 2.2% (March, month-on-month; m-o-m) suggested Europe’s largest economy had put its recent soft patch behind it, while UK industrial output rose more than expected in March. In China exports climbed 14.7% in April, while imports surged 16.8%, generating a significant trade surplus of around US$18bn for the month.

Shaping the markets – this week

Party starter or party pooper? Eurozone growth data; King’s ‘swan song’ as BoE Governor

After a strong performance from risk assets last week, investors will be wondering whether European data might dampen the party mood. Eurozone industrial production comes to the fore on Tuesday, swiftly followed by the initial reading of first quarter euro area economic growth on Wednesday – a small contraction of 0.1% quarter-on-quarter (q-o-q) is expected. Hopes are pinned on Germany to manage a 0.3 % q-o-q return to growth after declining -0.6% in the prior quarter. In the UK, the BoE’s outgoing governor, Sir Mervyn King, will give his last Quarterly Inflation Report press conference (Wednesday). Also mid-week, UK labour data is anticipated to show unemployment staying low, but earnings growth fading.

In the US, the April advance retail sales report (Monday) is expected to show headline sales declining 0.3% m-o-m, pulled down by gasoline station sales. Wednesday brings US manufacturing data in the shape of the Empire State survey, with analysts anticipating modest expansion in May. On the same day industrial production data may show a 0.2% decline m o m from March’s reading of 0.4%. The NAHB’s index of homebuilder sentiment is due on Wednesday and housing starts and building permits are scheduled for Thursday. Consumer prices index inflation (also Thursday) is expected to drop 0.2% m-o-m in April, driven again by declining energy prices.
In Asia, investors will be hoping that Japan’s new policies are feeding through to Japanese GDP growth (Thursday): analysts expect a rise of 0.7% q-o-q for the first quarter (preliminary reading).

This article has been produced based on Henderson Global Investors’ research and analysis. The information is made available to clients only incidentally. Unless otherwise indicated, the source for all data is Henderson Global Investors. Any reference to individual companies is purely for the purpose of illustration and should not be construed as a recommendation to buy or sell or advice in relation to investment, legal or tax matters. Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. Tax assumptions may change if the law changes, and the value of tax relief will depend upon individual circumstances.

Markets in numbers

World equities	Index	% 1W	% YTD
S&P 500 Composite	1633.70	1.2	14.6
Dow Jones Industrials	15118.49	1.0	15.4
NASDAQ Composite	3436.58	1.7	13.8
FTSE 100	6624.98	1.6	12.3
Euro STOXX 600	304.99	1.3	9.1
Nikkei 225	14607.54	6.7	40.5
Hang Seng	23321.22	2.8	2.9
Benchmark government bonds	Yield	1W /bp	YTD /bp
US Treasury - 10 year	1.85	11.1	10.4
UK Gilt - 10 year	1.88	15.5	6.8
German Bund - 10 year	1.36	13.6	5.6
Japanese JGB - 10 year	0.70	13.3	-9.3
Credit indices	Yield	1W /bp	YTD /bp
IBOXX £ Non-gilts All maturities	3.63	10.0	-23.2
ITRAXX Crossover 5 Year (MID)*	374.39	0.2	N/A
Volatility index	Index	% 1W	% YTD
CBOE PX Volatility - VIX index	12.59	-2.0	-30.1
Commodities	Index	% 1W	% YTD
Brent Oil ($/Barrel)	102.11	-2.4	-7.5
Gold Bullion $/ Troy Oz	1423.47	-3.0	-14.4
Currencies	vs $	vs £
¥	101.79	156.3
$		1.54
Euro	1.297	1.183

Source: Thomson Reuters Datastream as at close of markets 10 May 2013. *Spread in basis points. Past performance is not a guide to future performance.

Chart of the week

Source: Thomson Reuters Datastream, Fathom Consulting, Nikkei 225 Stock Average and USD/JPY exchange rate, daily data from 10 May 2007 to 10 May 2013.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Chinese / Japanese money numbers: more of the same

2013-05-13T14:40:00Z

Chinese monetary trends continue to suggest a dull economic outlook. Japanese trends suggest modest economic improvement.

Six-month growth in Chinese real narrow money M1 has been broadly stable since mid-2012 at slightly below the long-run average – see first chart. Weaker performance in 2011 and the first half of 2012 correctly foreshadowed a significant economic slowdown. Current growth is consistent with stable but slightly below-par economic expansion – in line with the official goal.

Chinese real broad money M2 is rising faster but, as in other countries, the narrow measure appears to be more closely correlated with future spending. The consensus focuses on M2 and credit measures, partly explaining recent overoptimism about economic prospects.

Six-month growth rates of Japanese real M1 and M3 have firmed over the past year but remain within recent historical ranges and are unexceptional by international standards – second chart. A significant further pick-up may be needed to support expectations of faster economic expansion implied by current stock prices.

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Spare a thought for the high street as you sip your latte this morning

2013-05-13T11:00:00Z

Coffee: the finest organic suspension ever devised. It's got me through the worst of the last three years. I beat the Borg with it. (Star Trek: Voyager, "Hunters")

I do love a coffee. And it turns out I’m not alone. There appears to be no limit to how much we enjoy having it flowing through our veins. It is estimated in 2012 there were around 15,500 coffee outlets in the UK producing a £5.8 billion turnover. That’s a lot of lattes, skinny flat whites and double macchiatos. And possibly quite a few cakes and pastries too. Coffee and café culture has grown arms and legs and put enough caffeine into them to help them run and run. If you think of where you grab your breakfast, and resultant coffee; where you meet a friend late morning; where you do the coffee round to bring into the office – these operators are ever more savvy about positioning themselves as conveniently as possible so they are your house of choice! Costa Coffee is the fastest growing of the operators, adding 183 UK outlets over 2012 and having a current total of around 1,550. Coffee is achieving a current growth rate seven to eight times that of the British economy (she types, in between sipping her espresso).

That means a lot of small, convenient coffee shops, kiosks, and interestingly from our portfolios’ perspective, coffee ‘pods’ on the car parks of retail warehouse parks. Unfortunately it doesn’t mean they are much of a replacement for areas with struggling retail. The rising high street vacancy rates means that these operators expect landlords to drop their rents where they are interested and even if the coffee industry grows to exceed 20,000 outlets by 2017, they will not be the saviour of particular dying high streets that the UK has not yet found a worthwhile Plan B for.

Ainslie McLennan, Director of Property at Henderson Global Investors

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UK banks still cutting savings rates, widening margins

2013-05-10T15:50:00Z

UK quoted mortgage rates were little changed in April but rates offered on new fixed-rate bonds continued to plunge, according to Bank of England data released today. Banks, in other words, continue to widen margins.

Two-year fixed-rate bonds now offer only 1.90%, down from 3.24% in June 2012, just before the introduction of the funding for lending scheme. The decline of 1.34 percentage points (pp) compares with reductions of 1.00 and 0.87 pp in rates on two-year fixed-rate mortgages at 90% and 75% loan-to-value (LTV) respectively – see first chart.

Margins have also widened on floating-rate products. The average standard variable rate has actually risen by 0.12 pp since June 2012, even though banks are paying 0.57 pp less on instant-access deposits offering a bonus.

Wider bank margins are desirable to strengthen balance sheets and support future lending but the punishment being meted out to savers – with official approval – is brutal.

The second chart shows that a yawning gap has opened up between the dividend yield on the FTSE all-share index and the rate on two-year fixed-rate bonds. Retail buying of equity funds, unsurprisingly, has picked up, though currently remains modest: IMA figures show a net inflow of £3.8 billion in the six months to March, up from £800 million in the prior half-year.

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Henderson Global Technology Webcast: 17th May 10:00am BST

2013-05-10T11:20:00Z

A BrightTALK ChannelPlease note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Video: Introducing the Henderson Core Multi-Asset Solutions range

2013-05-10T05:23:00Z

Investors have become much more risk aware following the global financial crisis, which has highlighted the need to diversify across asset classes and regions to help spread risk and reduce the impact of market volatility. Moreover, with interest rates remaining at or around record lows, income generation has become increasingly important at a time when investors and intermediaries are also focusing on fund fees and charges.

With this in mind, the Henderson Core Multi-Asset Solutions range has been launched to address the needs of both financial advisers and their clients. Bill McQuaker, Head of Multi-Asset, explains the key characteristics of this range of four lower cost multi-asset portfolios each with an income bias, which are expertly managed to defined risk (volatility) targets.

Please note: Henderson Core Multi-Asset Solutions should be bought in conjunction with an attitude to risk tool as part of the financial advice process. These funds are, therefore, designed to be bought by advised clients only.

Please note that the media centre and links from it are solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

A "monetarist" case for UK optimism

2013-05-09T10:30:00Z

Rather than “flatlining”, the British economy has been regaining momentum since late 2011. This trend is obscured in official GDP statistics by various special factors – North Sea production weakness, an extra bank holiday and the Olympics. Adjusting for their effects, the quarterly change in output has risen from -0.1% in the fourth quarter of 2011 to 0.0%, 0.1%, 0.2%, 0.2% and 0.3% in the first quarter of 2013 – a clear upward trend.

Recent numbers, moreover, probably understate economic improvement because official first estimates of growth tend to be revised up during recovery periods. Quarterly GDP changes since the start of 2009 have already been revised by an average of +0.15%. So the current estimate of a 0.3% increase in underlying output in the first quarter of 2013 may reflect “true” expansion of about 0.5%.

The recent growth revival is no surprise to economists of a “monetarist” persuasion. The Friedmanite rule is that the real or inflation-adjusted money supply leads demand and activity by about six months. Economic weakness in 2011 was foreshadowed by a contraction from mid-2010 in real broad money, as measured by non-financial M4, comprising physical cash and sterling deposits held by households and non-financial firms. The six-month change in real money, however, turned positive in late 2011 and rose further in early 2012, signalling a stronger economy from the second half.

Why has real money growth revived? Part of the story is a slowdown in inflation after a 2011 spike driven by a combination of higher VAT, strong global commodity prices and the lagged impact of exchange rate weakness.

Nominal money trends, however, have also improved, despite continued weakness in bank lending. This may partly reflect the Bank of England’s QE programme but, interestingly, the recovery began before gilt purchases were restarted in October 2011. QE may have had a much smaller impact than the Bank claims: its operations may have substituted for gilt purchases by banks, which were under strong pressure to raise their liquidity ratios – such buying has similar monetary effects. QE has boosted banks’ reserves, allowing them to meet liquidity targets without expanding their gilt holdings.

A less-discussed reason for faster money growth is the effort by banks to restructure their liabilities to reduce reliance on non-deposit and overseas funding. The repayment of such funding can lead to an expansion of domestic deposits included in the money supply. An example would be an overseas investor using funds returned by a UK bank to buy a UK corporate bond at issue – a fall in banks’ overseas liabilities would then be matched by a rise in corporate deposits. The ongoing shift in bank funding sources may partly explain why money growth has remained solid despite the suspension of QE in November 2012.

Real non-financial M4 rose at an annualised rate of 2.1% in the six months to March. The composition of growth is encouraging, with strength focused on cash and instant-access deposits – these components, which constitute narrow money M1, are more likely to be related to future spending. Real non-financial M1 increased by 5.4% annualised in the latest six months.

Sectorally, corporate money holdings are expanding faster than those of households. Corporate liquidity has a closer relationship with the economic cycle – similar increases historically have presaged stronger investment and hiring, with a resulting rise in wage incomes lifting consumer spending.

Some commentators claim that companies are holding more money because of a lack of profitable investment opportunities and as a precaution against cash flow problems, given the difficulty of accessing bank credit. It is certainly plausible that the desired ratio of bank deposits to borrowing has risen as a result of the recession and more restrictive credit conditions. The actual ratio, however, has climbed by more than two-fifths in the four years since the economy bottomed, reaching a new high in data extending back to 1998 – this is unlikely to be fully explained by rising precautionary liquidity demand.

There is, moreover, no sign of any breakdown in the relationship between corporate money growth and the economy. The “soft patch” in 2011 was preceded by a contraction of real corporate liquidity. Recent economic improvement has occurred on schedule following a liquidity revival in 2012. Six-month growth in real corporate M4 holdings was 5.7% annualised in March and reached 7.9% in January – the highest since 2007.

Monetarist optimism on economic prospects contrasts with “creditist” pessimism, based on the idea that a pick-up in bank lending is a precondition of stronger growth. This notion, however, is at odds with historical evidence that, while money leads the economic cycle, credit is a coincident or lagging indicator. In the US, the Conference Board includes bank business loans and consumer credit in its lagging economic index.

This lagging relationship suggests that bank lending will revive as growth continues to strengthen during 2013. There are already hopeful signs, such as a rise in unused sterling credit facilities in the six months to March – the first such increase since 2007. A credit pick-up, in turn, would provide additional support for monetary expansion.

The monetary foundations for a sustainable economic recovery are in place. The Bank of England should avoid further policy experimentation and focus on achieving its inflation target while allowing banks to operate in a stable regulatory environment.

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Transatlantic relations: could the US and EU reach a bilateral trade agreement?

2013-05-08T11:00:00Z

Since early March, the US and the European Union and have been involved in the preliminary stages of free trade negotiations, dubbed the Transatlantic Trade and Investment Partnership (TTIP). A significant agreement would result in the largest ever bilateral trade agreement, as the two economies together account for about half the world’s gross domestic product (GDP) and nearly one third of world trade. As tariffs between the two parties are actually already quite low (less than 3% on average), the focus will be on the convergence of regulatory systems as well as issues of security and consumer protection.

A successful outcome to these negotiations would provide a significant fillip to both economies. The European Commission estimates that between 0.5% and 1% could be added to GDP, with exports to the US increasing by an additional €187bn. Given the current economic environment, this would appear to be an irresistible inducement to reach an accord. However, hurdles remain. Trade spats have occurred between the two blocks in the past, notably in relation to agricultural and aviation subsidies. Matters are also complicated by the numerous European parties concerned, some of whom will be pushing for their own self-interests. At the moment, the willpower does seem to be there to reach an agreement, but the passage of time, and the associated turnover of administrations, could prove the greatest hindrance.

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Weekly wrap: Reserve Bank of Australia cuts interest rates to record low

2013-05-07T16:00:00Z

Wrap up - last week

Red Letta day for markets: Italy toasts new coalition; ECB pleases with rate cut; US jobs cheer

Global equities had cause to celebrate last week after political tensions eased in Italy, US jobs data surprised to the upside, and as the European Central Bank (ECB) and Federal Reserve (Fed) maintained their accommodative monetary policies. European equities were supported by the ECB’s decision to lower its main interest rate by 25 basis points to a record low of 0.5%, with ECB President Mario Draghi promising the central bank stood "ready to act if needed". Italian bond yields fell below 4% for the first time since late 2010 after Prime Minister Enrico Letta’s ‘grand coalition’ won its first confidence vote. UK equities also had a positive week, helped by data that suggested UK manufacturing was recovering following a sombre first quarter. The Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) rose to 49.8 in April (a reading above 50 indicates growth).
In the US, the S&P 500 Index powered above the psychological 1,600 mark to a new record high despite some disappointments earlier in the week. US construction spending dropped 1.7% in March, the Institute for Supply Management’s manufacturing index slipped back from 51.3 to 50.7 in April and private sector employment figures (ADP) were below forecasts at 119,000 last month. But at the end of the week, non-farm payrolls trumped expectations, with 165,000 jobs created in April, and the unemployment rate fell to 7.5%. At its latest meeting the Fed provided further reassurance to the markets, stating it would "increase or reduce" the pace of its government bond purchases depending on the outlook for the job market and inflation.
It was a subdued week for Asia, however, where markets were closed for Golden Week (Japan), and Labour Day (China). China’s official manufacturing PMI fell to 50.6 in April from 50.9 in March, led by a slump in new export orders – providing a bumpy week for industrial commodities.

Shaping the markets – this week

Reserve Bank of Australia cuts interest rates to record low; no rate cut expected by Bank of England

It is a busy week for central banks with meetings for the Reserve Bank of Australia, National Bank of Poland, Norges Bank, Bank of Korea and the Bank of England. At the time of writing the Australian central bank has cut its benchmark rate by 0.25% to 2.75% in efforts to counter the effects of a slowing economy, in particular weaker growth in the mining industry.

In the US, initial jobless claims are expected to rise slightly from 324k in April to 334k for the week ending 4 May. On Friday, the Monthly Budget Statement is released. Market analysts are predicting a surplus of $106.5bn compared to a surplus of $59bn in April last year. Revenues have been above expectations lately and the change in tax laws at the start of the year should also help to increase receipts relative to last year. In the eurozone, French industrial production is released on Tuesday. There may be a slight fall of 0.3% month-on-month (m-o-m) in March as business surveys remain poor and point to weak demand prospects. German industrial production is expected to drop 0.1% m-o-m on Wednesday in line with a decline in economic sentiment surveys. On Thursday, the latest Bank of England Monetary Policy Committee meeting is not expected to result in any change to the bank rate or a change to the current asset purchase programme. On the same day, March UK manufacturing is likely to have fallen from 0.8% to 0.3% m-o-m due to adverse weather. On Friday, Italian industrial production is expected to show a continued slowdown in March as the political crisis peaked, causing a delay to investment decisions.
Elsewhere, Thursday may see an uptick in April Chinese consumer price inflation, from 2.1% to 2.3% year-on-year, driven by a gain in food prices.

Markets in numbers

World equities	Index	% 1W	% YTD
S&P 500 Composite	1614.42	2.0	13.2
Dow Jones Industrials	14973.96	1.8	14.3
NASDAQ Composite	3378.63	3.0	11.9
FTSE 100	6521.46	1.5	10.6
Euro STOXX 600	301.04	1.7	7.6
Nikkei 225	13694.04	-1.4	31.7
Hang Seng	22689.96	0.6	0.2
Benchmark government bonds	Yield	1W /bp	YTD /bp
US Treasury - 10 year	1.74	8.2	-0.6
UK Gilt - 10 year	1.73	3.9	-8.7
German Bund - 10 year	1.22	0.6	-8.0
Japanese JGB - 10 year	0.56	-3.1	-22.6
Credit indices	Yield	1W /bp	YTD /bp
IBOXX £ Non-gilts All maturities	3.53	-2.4	-33.3
ITRAXX Crossover 5 Year (MID)*	374.17	-55.9	N/A
Volatility index	Index	% 1W	% YTD
CBOE PX Volatility - VIX index	12.85	-5.6	-28.7
Commodities	Index	% 1W	% YTD
Brent Oil ($/Barrel)	104.63	2.0	-5.2
Gold Bullion $/ Troy Oz	1467.85	-0.7	-11.7
Currencies	vs $	vs £
¥	98.95	154.0
$		1.56
Euro	1.312	1.187

Source: Thomson Reuters Datastream as at close of markets 3 May 2013. *Spread in basis points. Past performance is not a guide to future performance.

Chart of the week

Source: Thomson Reuters Datastream, European Central Bank (ECB). ECB main refinancing rate. Monthly data from 30 April 2007 to 30 April 2013.

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Global monetary trends still suggesting solid expansion

2013-05-07T15:15:00Z

The global economy has strengthened in early 2013 – the six-month change in G7 plus emerging E7 industrial output rose from -0.2% in September 2012 to an estimated 2.4% in March (not annualised). This pick-up was predicted by faster global real narrow money expansion between spring and autumn 2012 – monetary trends lead activity by about six months, according to the “monetarist” rule.

The forecast here has been that global growth would moderate but remain respectable from spring 2013, reflecting a minor slowdown in real money expansion in late 2012 / early 2013. The six-month change in G7 plus E7 real money, however, edged higher again in March and is solid by historical standards – see first chart. The global economy, therefore, is unlikely to slow much over the summer. Incoming news, indeed, may beat current conservative expectations.

Global real money expansion is lower than last autumn only because of a slowdown in the US – trends elsewhere have improved. As previously discussed, the US narrow money numbers may have been affected by the removal of unlimited insurance on demand deposits at the end of 2012, prompting a shift into interest-bearing deposits or repos. Lower US real money growth, in other words, may not signal a material deterioration in economic prospects.

The suggestion that US economic expansion will remain respectable is supported by the latest Fed survey of senior bank loan officers. The net percentage of banks tightening standards on business loans usually surges ahead of significant economic weakness but fell further in April, to the bottom of the historical range – second chart. (Note that the net percentage is plotted inverted. The Fed survey was suspended between 1984 and 1990, explaining the data break.)

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Video: RBS 'ready to privatise in a year'

2013-05-07T11:00:00Z

BBC News talks to Matthew Beesley regarding the possibility that RBS will privatise in a year.

BBC News: Matthew Beesley

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Investor confidence in Europe rests on Central Bank support

2013-05-07T11:00:00Z

On 2 May, European Central Bank (ECB) policymakers meeting in Bratislava lowered the main refinancing rate from 0.75% to a record low of 0.50%, with Mario Draghi, President of the ECB, commenting that “monetary policy will remain accommodative for as long as needed”. This widely anticipated decision, while already fairly priced in, helped to further boost sentiment towards European equities, despite recent problems with mixed US data, the gold market crash, and the Cyprus banking crisis.

This may not trigger the same level of strong performance from European equities as we saw in late 2012 and into the first quarter of 2013, following Mr Draghi’s decisive intervention to guarantee the European Central Bank (ECB) as lender of last resort. Nonetheless, consistent support from central banks has given capital markets a margin for safety that has helped to assuage investor fears, allowing investors to take note of the range of internationally diversified, high-quality companies that have been unfairly tarnished by the ‘European’ tag.

Nick Sheridan, manager of the Henderson Horizon Euroland Fund

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Stronger UK economy lifting credit prospects

2013-05-03T15:20:00Z

Today’s stronger services purchasing managers’ survey for April is further evidence in favour of the “monetarist” forecast here of solid UK economic growth in 2013, reflecting the lagged impact of faster real money supply expansion.

Monetarist optimism contrasts with “creditist” pessimism, based on the idea that a pick-up in bank lending is a precondition of a stronger economy. This notion, however, is at odds with historical evidence that, while money leads the economic cycle, credit is a coincident or lagging indicator. In the US, the Conference Board includes bank business loans and consumer credit in its lagging economic index.

This lagging relationship suggests that bank lending will revive as growth continues to strengthen during 2013. There are already hopeful signs, such as a rise in sterling unused credit facilities in the six months to March, the first such increase since 2007 – see chart. A credit pick-up, in turn, would provide additional support for monetary expansion.

The authorities, of course, will claim that a recovery in bank credit reflects the success of the funding for lending scheme and will try to argue that this recovery is driving a stronger economy, rather than vice versa.

The monetary foundations for a sustainable economic recovery have been laid. The Bank of England should avoid further policy experimentation and focus on achieving its inflation target while allowing banks to operate in a stable regulatory environment.

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Henderson Global Technology team takes on senior analyst

2013-05-03T11:00:00Z

Henderson Global Investors has strengthened its technology team with the hire of Graeme Clark as senior investment analyst. Graeme has over 13 years’ experience in technology equities, gained predominantly on the sell-side. Most recently he was at Jefferies International as senior analyst covering European software and IT Services. Prior to this he spent five years at Piper Jaffray, where he founded the software and IT services team which ultimately grew to a team of three analysts.

In addition, Niall Holleran, who joined Henderson in August 2012 as a trainee on the technology team has been promoted to research assistant. He will work alongside Graeme, investment analyst Ronan Kelleher and the funds’ managers Stuart O’Gorman and Ian Warmerdam. As part of this change, analysts Gordon Happell and Giles Tulloch have decided to leave Henderson.

Commenting on Graeme’s appointment and the team changes

Ian Warmerdam says, “It is testament to the regard in which the Henderson technology team is held that we have been able to bring Graeme on board. His experience in the technology sector, garnered pre and post the fabled dot com boom and bust era, together with his broader financial markets and analytical experience, will stand our clients in good stead.

“In addition, Niall has really made a strong impression on the team in his eight months here and thoroughly deserves the recognition in his promotion. I am confident that clients will be well served with Graeme and Niall’s hands on impact over the coming weeks and months.”

The five strong Henderson Technology team manages £2.57 billion* across a range of international clients.

*As at 31st March 2013

- Ends -

Notes to Editors

About Henderson Global Investors
Henderson Global Investors, wholly-owned by Henderson Group plc, is an international investment company with a strong reputation going back to 1934. Henderson manages £68.9 billion (as at 31 March 2013) assets on behalf of clients in Europe, Asia-Pacific and North America and employs approximately 1000 members of staff worldwide.

Clients include individuals, private banks, third-party distributors, insurance companies, pension funds, government bodies and corporate entities. As a pure investment manager Henderson offers investments across equity, fixed income and property as well as alternative products, such as private equity and hedge funds.

Graeme Clark: Biography
Graeme graduated in 1994 from the University of Edinburgh with honours degree in accountancy and business. He has a CFA UK Level 4 Certificate in Investment Management and is a member of the Institute of Chartered Accountants in Scotland (having trained with Ernst & Young).

Press enquiries
Henderson Press Team +44 207818 4222 / pressoffice@henderson.com

This press release is solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors.

Issued in the UK by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management Limited (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), Henderson Alternative Investment Advisor Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. Henderson Secretarial Services Limited (incorporated and registered in England and Wales, registered no. 1471624, registered office 201 Bishopsgate, London EC2M 3AE) is the name under which company secretarial services are provided. All these companies are wholly owned subsidiaries of Henderson Group plc (incorporated and registered in Jersey, registered no. 101484, registered office 47 Esplanade, St Helier, Jersey JE1 0BD). Telephone calls may be recorded and monitored.

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UK government may offer ‘fracking’ sweeteners

2013-05-02T11:00:00Z

When the UK’s energy and climate change committee announced on Friday that financial sweeteners such as cheaper energy bills or funding for community projects would be needed to overcome opposition to shale gas drilling, it acknowledged the potential contribution of shale to the UK’s battle against rising energy prices and dependence on volatile international energy markets. Plans for drilling have hitherto been met with concerns at the local level, given reports of side-effects linked to the hydraulic fracturing (fracking) process. Incidents of bad practice in shale gas drilling have been linked to ground, air and water pollution in the areas surrounding wells. While experts say that fracking is safe when properly conducted, the UK government realises that public perceptions about the process need to change.

The case of the US in recent years is perhaps the most useful example of the benefits of fracking; along with other measures, such as carbon dioxide-enhanced oil recovery, the process has opened up vast swathes of previously untapped oil and natural gas resources. In the process, the US energy sector has dramatically transformed, with some analysts predicting energy independence – the point at which exports exceed imports – within five years. The question now is whether this success is replicable in the UK, or indeed anywhere else, and whether a compromise can be struck between the government, the drillers, and local communities.

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Emerging attraction

2013-05-01T14:10:00Z

Emerging equities have continued to underperform developed markets so far in 2013 but relative monetary trends and valuations suggest that a buying opportunity is developing.

The first chart shows the ratio of MSCI’s emerging equity markets index to its developed markets index – a rise in the line indicates that emerging equities are outperforming and vice versa. This ratio is compared with real (i.e. inflation-adjusted) money supply growth in the Group of Seven (G7) major countries and seven large emerging economies – the “E7”*.

Monetary strength signals favourable economic prospects and liquidity support for markets. The chart shows a relationship between the relative performance of emerging equities and the gap between E7 and G7 real money growth. The index ratio peaked in late 2010 as the gap narrowed sharply, turning negative in early 2011. The glory days of emerging equities in 2009-10 and before the financial crisis, by contrast, occurred against the backdrop of relative monetary buoyancy.

An update in February suggested remaining cautious on emerging markets because E7 real money growth, while improving, had not yet crossed above G7 expansion. Emerging equities have since underperformed by a further 7% but the awaited cross-over has now occurred, based on March money supply data. Monetary trends have strengthened in most of the E7 countries and there have been similar or larger gains in smaller emerging economies not included in the aggregate.

Emerging markets, meanwhile, appear inexpensive: the price to earnings ratio based on forecast earnings over the next 12 months is 10.1 versus 13.2 for developed markets, according to I/B/E/S – second chart. The 23% discount is the largest since 2006.

*The E7 is defined here as BRIC (Brazil, Russia, India, China) plus Korea, Mexico and Taiwan.

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US GDP: When can we expect more bang for the buck?

2013-04-30T11:00:00Z

The US economy grew at an annualised rate of 2.5% (first estimate) in the first three months of 2013, below consensus expectations for a more robust 3.0%. Markets wobbled slightly on the news as investors feared that the ‘sequester’ (across-the-board budget cuts) and the delayed effects of January’s tax increases may be having more of an impact on the world’s largest economy than previously thought. Points that troubled investors included the reduction in Federal defense spending, and a seeming pause in business investment. Corporate spending on equipment and software (a rough proxy for business investment) moderated to 3% in the first quarter, having seen an 11.8% increase in the fourth quarter of 2012.

However, investors should not overlook some of the more positive signals from the report. Consumer spending rose at its fastest rate for more than two years (+3.2%) as the consumption of cars and other durable goods added to the expansion. Another rise in the construction sector, whose strength is crucial to the US recovery remaining on track, is also a positive takeaway.

The GDP data highlights the fact that we are still in a slow growth environment and this may be the case for some time to come. We believe that the US housing recovery is entrenched and should result in job creation. In a slow growth environment, companies that are steady growers, can compound their revenue growth into the future and have visibility of earnings should perform well. These companies encompass a variety of industries that share a number of common elements: high quality assets; gaining market share; increasing free cash flow; unleveraged balance sheets; innovative new products; and returning cash to shareholders in the form of dividends and share repurchases. Examples include discount retailers TJX Cos. and Wal-Mart, railroad operator Union Pacific and energy pipeline transportation company Kinder Morgan.

Tom Marsico and Coralie Witter are Co-Managers of the Henderson US Growth Fund

These are fund manager views at the time of writing and may differ from those of other Henderson fund managers and Henderson Global Investors’ official view. The information should not be construed as investment advice. Before entering into an investment agreement please consult a professional investment adviser.

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UK monetary trends signalling further economic improvement

2013-04-30T11:00:00Z

Better monetary trends from mid 2011 signalled the recent recovery in UK “underlying” economic growth. March monetary statistics suggest that this recovery will extend over the remainder of 2013.

Last week's post on the first-quarter GDP estimate contained a chart showing the quarterly change in “underlying” output, i.e. gross value added* excluding oil and gas production and adjusted for extra bank holidays and the Olympics. This quarterly change has risen from a low of -0.1% in the fourth quarter of 2011 to 0.0%, 0.1%, 0.2%, 0.2% and 0.3% in the first quarter of 2013. Far from “flatlining”, the economy has been gradually gaining momentum since late 2011.

The chart below shows the change in actual and underlying output over two rather than one quarters, comparing this with the six-month change in the real “Divisia”** money supply, including and excluding money holdings of financial institutions. Economic weakness in 2011 was foreshadowed by a contraction in the real money supply starting in mid 2010. The six-month change in real non-financial Divisia, however, turned positive in late 2011 and rose steadily during 2012, signalling an accelerating economic revival from mid 2012, allowing for typical half-year lead of money to activity.

Six-month real Divisia growth has stabilised since late 2012 but at a level historically associated with solid output expansion. The message is that economic momentum will continue to build through late 2013 (at least). The view here remains that 2013 will be the best year for the economy since 2006.

*Gross value added = gross domestic product excluding indirect taxes and subsidies.

**The Divisia measure combines the components of the M4 broad money supply using liquidity weights based on interest rates.

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News alert: Henderson and Palmira acquire distribution centre in Bruchsal, Germany

2013-04-30T10:00:00Z

Henderson Global Investors and Palmira Capital Partners, on behalf of the Henderson German Logistics Fund (HGLOF), have acquired a distribution centre in Bruchsal, Germany from a foreign investment Fund. The purchase price has not been disclosed but it represents a net initial yield of 11%. It represents the fourth acquisition for the Fund following assets in Bad Durkheim, Elmenhorst near Hamburg and Herrenberg near Stuttgart.

The asset is situated in an industrial park at motorway A5 between Heidelberg and Karlsruhe and consists of c. 8,000 sq m of distribution space with an additional c. 2,000 sq m of office space. An adjacent plot provides the opportunity for an extension of the existing buildings or the development of a new distribution centre.

The asset is leased to Spengler, one of the world’s largest manufacturers of automatic vending machines. There are 5 years remaining on the lease.

Henderson was advised by REAG, Ambiente and Graf von Westphalen

The Henderson German Logistics Fund is a partnership between Henderson’s German Property Business and Palmira Capital Partner, a specialist in logistic real estate acting as Investment Advisor to the Fund.

Henderson was advised by Jones Lang LaSalle and Ashurst LLP.

- ENDS

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Why Japanese bond investors may stay at home

2013-04-29T16:50:00Z

Lofty global bond prices partly reflect expectations of a wave of Japanese buying prompted by Bank of Japan (BoJ) suppression of domestic yields. The Japanese, however, may never arrive.

Japanese investors remained net sellers of foreign bonds and notes in the week before last, as they have been in 11 of the last 12 weeks – see first chart.

The suggestion is that they are about to pile into overseas bonds to escape lower domestic yields and a weakening yen. The real trade-weighted yen, however, is near the bottom of its historical range, having fallen by more than 20% over the last 10 months – second chart. Risk-averse Japanese investors are unlikely to judge it a good time to raise their foreign currency exposure.

The yield pick-up for accepting such exposure, moreover, has declined. JGB yields of all maturities are higher now than at end-March, before the 4 April BoJ announcement of expanded QE. The five-year benchmark yield has climbed from 0.13% to 0.24%, delivering a 0.57% capital loss (i.e. four years of yield). With five-year yields falling in the US (and elsewhere), the US / Japanese spread is almost back to the low reached in summer 2012, in turn suggesting that dollar / yen has overshot – third chart.

Global bond markets are at risk from a liquidation of speculative long positions opened in anticipation of the arrival of “greater fool” Japanese buyers.

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Weekly wrap: The UK economy avoids a triple dip recession

2013-04-29T15:30:00Z

Wrap up - last week

Weak manufacturing surveys in the US and Europe while the UK avoids a triple dip recession

Global equity markets closed the week higher. The Chancellor George Osborne breathed a sigh of relief as the UK avoided a triple dip recession. First quarter gross domestic product (GDP) growth achieved a better than expected 0.3% reading, driven by the dominant services sector which grew 0.6%. The UK government borrowed £120.6bn in the year to April, just £0.3bn lower than the previous year. Meanwhile, the Bank of England announced an extension to its Funding for Lending Scheme until the end of next year. The scheme provides banks with cheaper loans to incentivise more lending.
In the eurozone, unemployment in both Spain and France reached new record highs. Spanish unemployment surpassed six million while in France the number of jobseekers rose to 3.2m in March. Italy’s 10-year government bond yields dipped below 4% for the first time in almost three years as Enrico Letta, former deputy leader of the centre-left Democratic party, was nominated as the next prime minister in a move to end Italy’s political deadlock. Markit’s composite purchasing managers’ index (PMI) for the eurozone remained in contraction territory at 46.5 in April, unchanged from March, while in Germany, the Markit ‘flash’ composite PMI fell to 48.8 in April, a six-month low. This weakness in the eurozone’s services and manufacturing sectors, combined with a weak business confidence survey in Germany, has increased pressure on the European Central Bank to cut rates at their meeting later this week.
Elsewhere, in the US, Markit’s manufacturing PMI fell from 54.6 to 52.0. This was the slowest pace of growth for the sector in six months. More encouraging was US GDP, which grew at an annualised rate of 2.5% in the first quarter, driven by a 3.2% rise in consumer spending. In China, the preliminary HSBC manufacturing PMI fell from 51.6 to 50.5 in April, adding to concerns about the country’s economic recovery. The drop is due to a fall in export orders, indicative of weakening global demand.

Shaping the markets – this week

As the Fed focuses on QE, the ECB may consider a rate cut

In the US, pending homes sales data is released on Monday, an increase of 1.0% month-on-month in March is expected due to the spring selling season. On Tuesday, April’s Conference Board Consumer Confidence index is expected to remain relatively unchanged as macroeconomic data continues to weigh on sentiment. Wednesday brings the Institute for Supply Management’s (ISM) manufacturing survey and the Federal Open Market Committee (FOMC) rates decision. The ISM survey is likely to fall slightly as last month’s report suggested little upside to the current level. There are not expected to be any substantive changes to the Fed’s policy language or any change to rates at the May FOMC meeting. Friday’s employment report is likely to show nonfarm payrolls growth of around 150k following a lacklustre reading of 88k in March. No change to the unemployment rate is expected.

In the eurozone, Monday sees the latest reading of the European Sentiment Indicator, which is expected to show a second consecutive monthly decline as European PMIs have remained at low levels. On Tuesday, euro area inflation and unemployment are released. Inflation is likely to continue decelerating due to a fall in oil prices. Meanwhile, the euro area unemployment rate is expected to tick up to 12.1% due to rising unemployment rates in the eurozone periphery (Italy and Spain). UK manufacturing PMI on Wednesday is likely to show a modest rise from 48.3 to 48.5 in April helped by a general improvement in the weather. Market consensus is for a 25 basis point rate cut at the next European Central Bank meeting on Thursday. UK services PMI is expected to remain steady at 52.4 (Friday).
In China, the official manufacturing PMI is expected to move slightly lower on Wednesday, mostly due to seasonality.

Markets in numbers

World equities	Index	% 1W	% YTD
S&P 500 Composite	1582.24	1.7	10.9
Dow Jones Industrials	14712.55	1.1	12.3
NASDAQ Composite	3279.26	2.3	8.6
FTSE 100	6426.42	2.2	9.0
Euro STOXX 600	295.89	3.7	5.8
Nikkei 225	13884.13	4.3	33.6
Hang Seng	22547.71	2.4	-0.5
Benchmark government bonds	Yield	1W /bp	YTD /bp
US Treasury - 10 year	1.66	-4.2	-8.8
UK Gilt - 10 year	1.69	1.9	-12.2
German Bund - 10 year	1.21	-3.9	-8.6
Japanese JGB - 10 year	0.59	0.8	-19.5
Credit indices	Yield	1W /bp	YTD /bp
IBOXX £ Non-gilts All maturities	3.56	-4.4	-30.9
ITRAXX Crossover 5 Year (MID)*	430.07	-21.6	N/A
Volatility index	Index	% 1W	% YTD
CBOE PX Volatility - VIX index	13.61	-9.1	-24.5
Commodities	Index	% 1W	% YTD
Brent Oil ($/Barrel)	102.60	3.8	-7.0
Gold Bullion $/ Troy Oz	1477.60	5.3	-11.1
Currencies	vs $	vs £
¥	97.67	151.3
$		1.55
Euro	1.303	1.188

Source: Thomson Reuters Datastream as at close of markets 26 April 2013. *Spread in basis points. Past performance is not a guide to future performance.

Chart of the week;

Source: Office for National Statistics, UK GDP growth, quarter-on-quarter, Q1 2008 to Q1 2013.

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Video: Market is full of dichotomies

2013-04-29T10:00:00Z

Central banks are trying to manufacture growth via reflation and recovery in the economy but so far it only appears to be affecting asset prices. With current policy intervention not in the economics textbooks, John Pattullo explains why investors need to take a pragmatic approach to the markets and explains how the funds he co-manages are positioned in this environment.

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Money growth reviving in Eurozone periphery

2013-04-26T11:30:00Z

Eurozone monetary developments remain mixed, with broad money soft but narrow money strengthening. (Real) narrow money has historically been a much better leading indicator of the economy so this mix is judged here to be positive, cautioning against consensus gloom. Sluggish broad money, moreover, increases the probability of further ECB easing.

Broad money M3 fell by 0.1% in March, causing six-month growth to slip from 1.5% to 1.4%, or 2.8% annualised. Narrow money M1, by contrast, rose by 0.5%, pushing six-month expansion up from 3.1% to 3.6% – 7.3% annualised.

A geographical split is available for M1 (i.e. overnight) deposits, which comprise 83% of the aggregate. Eurozone-wide real M1 deposits (i.e. deflated by consumer prices) climbed 3.3% in the six months to March, or 6.7% annualised. This is the largest six-month increase since February 2010, when the Eurozone economy was expanding solidly – see chart. (M3, incidentally, was contracting in early 2010.)

Crucially, real M1 deposits are now expanding respectably in the periphery (i.e. Italy, Spain, Greece, Ireland and Portugal) – 2.7% in the latest six months versus 3.6% in the core. Periphery / core divergence warned of the “crises” of recent years but the gap is now the smallest since 2009. The six-month change was positive in all five peripheral economies in March.

The core / periphery distinction, indeed, is no longer helpful: the six-month change was stronger in March in Italy and Spain than in the Netherlands, Belgium and France – the latter still negative. German growth remains much the strongest of the major economies – 5.6%, or 11.5% annualised.

*Narrow money is held mainly for transactions purposes whereas broad money is dominated by savings deposits. Households / firms are likely to increase their transaction balances ahead of a rise in spending. Broad money can be unchanged or even fall, for example if there is a simultaneous shift of savings out of banks into markets, to the extent that this transfer is reflected in a contraction of banks’ balance sheets.

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Video: John Bennett makes the case for European equities

2013-04-26T10:32:00Z

John Bennett, manager of the Henderson European Focus Fund, talks about the global opportunity that comes with investing in Europe, and why experience matters.

He explains why investors need to reappraise their view of European equities and recognise that many companies listed in Europe are global companies with international revenues but trading at a discount to global companies listed elsewhere. He believes that too many funds are tied to what John calls ‘stranded Europe’ – domestic businesses such as telecommunications firms, utilities and some banks that generate the majority of their revenues from inside Europe.

John points out that the Henderson European Focus is a portfolio of typically 40 names unconstrained by the benchmark, which invests in ‘global Europe’, businesses with exposure to international markets. He also explains that his knowledge of investing through different market and economic cycles and the depth of experience in the wider European Equity team are a key advantage in delivering strong performance for the fund.

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Citywire: Consumption reform remains key to growth, says China manager

2013-04-26T10:00:00Z

Citywire, 17 April 2013

‘The past five years would have been an ideal time to restructure the Chinese economy,’ says Caroline Maurer, fund manager at Henderson Global Investors (Singapore).

But the European crisis put economic restructuring plans on hold, as the Chinese government took measures to limit its impact. ‘The government needed to prop up the economy in the short-term,' says Maurer, ‘so they didn’t implement reforms as early as investors were hoping for. The key task now is for the government to gradually push through reforms now.’

To read the full article on Citywire, please click here

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