The British discount
A number of things have happened that made me think about the idea of the British discount. A fund manager came out and said that UK equities were cheap compared to their counterparts listed on other stock markets and would likely remain so for a long time.
There are a number of reasons why these companies may trade at a British discount:
- The London Stock Exchanges doesn’t have a reputation for high growth businesses in the same way that the New York Stock Exchange or NASDAQ does. Instead it has a preponderance of mining companies and similar firms
- UK pension funds are discouraged from purchasing stocks
- The UK doesn’t foster the kind of businesses that growth investors would want to invest in
- British banks don’t particularly want to invest in British businesses beyond property portfolios
- Management demonstrate short-termism in their investment approach, as does the banking system
- There isn’t a culture of retail share ownership
- The UK economy has numerous structural challenges, some of them self inflicted
The British discount goes beyond the stock market, but instead the very nature of the UK itself.
Indebted government
Government debt is ballooning and will continue to do so, yet productivity is stubbornly low meaning the bonds will be ever harder to pay off. Finally as the Liz Truss debacle showed even leadership shows the British discount.
The state Britain has been in
The ideas and concepts the British discount aren’t even new – most of them came from ideas in Will Hutton’s The State We’re In originally published in 1995.
The fund manager can be confident in the British discount to be long-lasting as he knows that neither the Labour Party or their Conservative Party counterparts had managed to address existing structural economic issues. Instead they managed to create new ones.
The British discount related content
- UK government debt to reach 310% of GDP by 2070s, fiscal watchdog warns | Financial Times
- Working class + populism
- The bond between British business and society has eroded | Financial Times – digital shareholder meetings
- Nick Train says UK equities could stay cheap ‘for a very long time’ | Financial Times
The State We’re In by Will Hutton
China
The Trajectory of China’s Industrial Policies – IGCC – Barry Naughton, Siwen Xiao, and Yaosheng Xu argue that most of the changes in Chinese industrial policy since the mid-2000s can be thought of as being part of a trajectory that seeks to build a policy/planning mechanism, and that shifts the ultimate objective of technology and industry policies from economics to security.
Consumer behaviour
Why Singaporean democracy is like a social media graph – Marginal REVOLUTION
Why the Toronto Zoo wants you to stop showing gorillas your phone | The Star
Aini on ‘stans’
Economics
Exclusive: China invites global investors for rare meeting as economy sputters | Reuters – keep Foreign investment coming which seems to be a desperate measure
FMCG
The WHO’s aspartame advice changes nothing for Coke, Pepsi | Quartz
Saudi Arabia’s Barn’s Coffee plans 25 outlets in Malaysia – Malaysia’s Premier Fine Foods plans to establish 25 outlets in Kuala Lumpur as its hub and expand operations to other Southeast Asian countries, including Brunei, Cambodia, Indonesia, Laos, Myanmar, the Philippines, Singapore, Thailand and Vietnam, in its aim to have 300 outlets in the next 10 years – interesting franchise coming out of Saudi Arabia
Germany
Germany’s first China strategy warns on asymmetric dependencies | Quartz – German large business is scuppering the German government at every turn – Germany warns companies to reduce dependence on China | Financial Times
Health
Intergenerational transmission of mental health problems – Marginal REVOLUTION – interesting how Norway were able to get positive results by early intervention in families where the parents had mental health disorders
Hong Kong
Are cities in Asia becoming better places to live? – its fascinating to see that Singapore isn’t in the top five and Hong Kong has fallen completely out of most liveable based on this data
How to
Delia Online | Official site with recipes, cookery school and how to videos
How to Use AI to Do Stuff: An Opinionated Guide
Indonesia
Innovation
Japan
Japan failed at social media – Matt Alt’s Pure Invention – is it failure to innovate or a failure to regulate US products I suspect the latter
Street Style in Tokyo: “Harajuku Is Like a Fashion Gallery With a Free Entrance” | Vogue – “In present-day Harajuku, there are probably more foreigners walking around than there are Japanese people. They used to be watchers of Harajuku fashion, but now they are players; it’s a new movement in the neighborhood. In this story, there are many Chinese and Korean individuals who seem to enjoy and carry forward the Harajuku fashion of the 1990s and 2000s, rather than simply copying it
Luxury
Burberry revenue growth weighed down by falling Americas sales | Financial Times
Marketing
Full article: ChatGPT, AI Advertising, and Advertising Research and Education – leading scholars and industry thinkers in our field and neighboring disciplines are actively examining and engaging in debates on AI technologies and their applications to advertising practices and effects. However, we have not imagined such powerful AI technologies as ChatGPT emerging and spreading in the general public so quickly. According to industry estimates, ChatGPT reached 100 million monthly users in the first two months after launch, which makes it the fastest-growing technology application in history, but web traffic has since peaked. ChatGPT and other generative AI technologies in this new phase of AI advancement are expected to completely transform the advertising business and research. More research is urgently needed to gain an understanding of the short- and long-term impacts of this new generation of transformative AI technologies on advertising across the micro, meso, and macro levels
Influence 100: In-House PR Budgets Slashed | Provoke Media – This year, our Influence 100 cohort control a combined spend of $3.7 billion, a drop of more than $1bn on last year’s figure of $4.8 billion and far below 2020’s dip to $4.2 billion, after being at $4.8 billion in 2019. The drop is largely down to a significant dip in the number of our Influence 100 managing top-end budgets. Last year the number who managed budgets of more than $100m was 25% (compared to 27% in 2021), while this year it is down to 17%. The number of CMOs and CCOs managing between $75 and $100m also dropped, from 12.5% last year to 10% (although this is on a par with 11% in 2021), and the next budget bracket, $50-$75m, also saw a drop from 17.5% to 13%, one percentage point lower than 2021. The proportion of communications leaders managing budgets of between $25m and $50m remained the same as last year, at 10%, and the only budget bracket that saw an increase was at the lower end, $10m-$25m, which shot up from 12.5% to 30% – unsurprising given the dip in advertising spend
Materials
Machine learning based design optimisation was used to create additive manufactured brackets for NASA instruments. They feel organic in nature, presumably because they the result of millions of virtual trials, rather like generations of biological evolution.
Media
TV producers wanted AI rights of extras forever, says union • The Register – makes sense when you think why the Screen Actors Guild and Writers Guild are on strike
Opinion | Fictional thriller by David Ignatius: The Tao of Deception – Washington Post – interesting return to serialised fiction
Security
UK response to Chinese spying ‘completely inadequate’, report finds | Financial Times
Vatican’s influence falters in Ukraine and across the region – Coda Story
David Ignatius on how the MSS routed the CIA’s network in China and the state of China at the present time.
Software
Artificial Intelligence – Platform wars | Radio Free Mobile
How do AI systems like ChatGPT work? There’s a lot scientists don’t know. – Vox – timely reminder of the way things have been for a decade or so since Google engineers didn’t get ‘RankBrain’ and the decisions it was making
Technology
With reported improvements in 3/4nm yield rates, Samsung sees increased possibility of customers returning – TSMC has been 10 percent growth in the last quarter, which must be a rich target for Samsung now they have their process right
