‘Big Tobacco’ eyes E-cigarettes

e-cigarettes could expand by 7,500%

The development of electronic nicotine-delivery systems (ENDS), or e-cigarettes, is arguably the most disruptive innovation in consumer products over the past century and the market potential is substantial. Today, the global market stands at just over US$3bn in annual revenue, which puts ENDS’ market share at a mere 0.5% of the US$670 billion global cigarette industry. However, estimates suggest that the potential market for ENDS could eventually expand to US$225 billion in annual sales, nearly 75 times greater than today.

ENDS attracted roughly 250 firms to the playing field by 2012 and, unsurprisingly, explosive consumer demand is drawing the attention of larger corporations. We expect market consolidation to accelerate as ‘Big Tobacco’ becomes more comfortable with the regulatory environment.

David Sealy, Director, The Boston Company Asset Management

Source: The Boston Company Asset Management

The development of electronic nicotine-delivery systems (ENDS), or E-cigarettes, is arguably the most disruptive innovation in consumer products over the past century and the market potential is substantial. Today, the global market stands at just over US$3bn in annual revenue, which puts ENDS’ market share at a mere 0.5% of the US$670 billion global cigarette industry. However, estimates suggest that … read more

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Deflation: the spectre at the feast

China may be on the brink of becoming a deflationary influence on the world. In the wake of the global financial crisis China embarked on a credit-fuelled investment boom, the like of which the world has never seen. Total credit in the economy grew by some $11 trillion in the period of five years from 2009 (equivalent to the combined GDP of Germany, Japan and Canada), with much of this being financed by an unofficial shadow banking system which has very little rigour as to credit quality. .

Iain Stewart, Portfolio Manager, Newton

China may be on the brink of becoming a deflationary influence on the world. In the wake of the global financial crisis China embarked on a credit-fuelled investment boom, the like of which the world has never seen. Total credit in the economy grew by some $11 trillion in the period of five years from 2009 (equivalent to the combined … read more

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The week that was…

In the week ending 10th April, what stole the financial headlines?

The emerging markets dominated headlines as fears of a sustained Chinese economic slowdown refused to abate. Meanwhile, rhetoric with regards the tapering of the US quantitative easing programme continued apace. In its March release, the US Federal Open Market Committee indicated that “economic activity will expand at a moderate pace and labour market conditions will continue to improve gradually”. On that note, the health of the US economy remained high on the agenda. US employment data released on 4 April showed the US added 192,000 jobs in March – this added credence to the belief economic data had been hit by poor weather over the winter months. The US unemployment rate remained unchanged at 6.7%.

All data mentioned above sourced from the US Federal Reserve and US Department of Labor.Headline Hotlist & World/ Asset Returns Source: The BNY Mellon Investment Strategy and Solutions Group (“ISSG”) as at 11/04/14. ISSG is part of The Bank of New York Mellon.

The emerging markets dominated headlines as fears of a sustained Chinese economic slowdown refused to abate. Meanwhile, rhetoric with regards the tapering of the US quantitative easing programme continued apace. In its March release, the US Federal Open Market Committee indicated that “economic activity will expand at a moderate pace and labour market conditions will continue to improve gradually”. On … read more

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The rise of CoCo issuance continues…

CoCo bond issuance

We suspect there has been some indiscriminate buying of CoCos as investors have been attracted by the high coupons. We believe CoCos are mispriced and therefore fundamental credit analysis is key. Some fixed income investors may not appreciate the risks associated with CoCos as these bonds have blurred the lines between bonds and equities.

April LaRusse, Insight Investment

We suspect there has been some indiscriminate buying of CoCos as investors have been attracted by the high coupons. We believe CoCos are mispriced and therefore fundamental credit analysis is key. Some fixed income investors may not appreciate the risks associated with CoCos as these bonds have blurred the lines between bonds and equities. April LaRusse, Insight Investment    

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The week that was…

In the week ending 3rd April, what stole the financial headlines?

The world’s financial headlines continued to focus on Russia, its annexation of Crimea and the possible economic ramifications of sanctions from the West. Meanwhile, emerging markets also remained firmly on the agenda. Elsewhere, the US economy added 192,000 jobs in March, according to the US Department of Labor, suggesting underlying growth remains strong and that much of the winter slowdown was a result of bad weather.

Headline Hotlist & World/ Asset Returns Source: The BNY Mellon Investment Strategy and Solutions Group (“ISSG”) as at 04/04/14. ISSG is part of The Bank of New York Mellon.

The world’s financial headlines continued to focus on Russia, its annexation of Crimea and the possible economic ramifications of sanctions from the West. Meanwhile, emerging markets also remained firmly on the agenda. Elsewhere, the US economy added 192,000 jobs in March, according to the US Department of Labor, suggesting underlying growth remains strong and that much of the winter slowdown … read more

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Taxing times for Japan

The consumption tax rise and why this time it’s different

In 1997 the Japanese government engaged in fiscal retrenchment and raised the consumption tax from 3% to 5%. Soon after the policy came into force, there was a recession and a sharp increase in Japan’s government debt-to-GDP ratio. Japan was about to enter a 15-year period of deflation – the timing was terrible. If only the underlying economy had been stronger, it might have been different.

But this time around we believe it is different. There is momentum behind the Japanese economy and there is significant political capital invested in the move by Prime Minister Shinzo Abe and his government. We expect it to work and we expect to see the positive effects of the tax rise in the coming quarters.

Miyuki Kashima, BNY Mellon Japan’s head of Japanese equity investments

 

In 1997 the Japanese government engaged in fiscal retrenchment and raised the consumption tax from 3% to 5%. Soon after the policy came into force, there was a recession and a sharp increase in Japan’s government debt-to-GDP ratio. Japan was about to enter a 15-year period of deflation – the timing was terrible. If only the underlying economy had been … read more

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The week that was…

In the week ending 27th March, what stole the financial headlines?

High level talks were ongoing between Russia, the US and the EU as Crimea continued to dominate international politics. Meanwhile, speculation over the timing of the end of Fed’s quantitative easing programme continued apace following suggestions by Chair Janet Yellen an interest rate rise could happen sooner than expected. The Fed began ‘tapering’ in December. Elsewhere, emerging markets hit the headlines, with geopolitical tensions at the forefront of many investors’ minds.

 

Headline Hotlist & World/ Asset Returns Source: The BNY Mellon Investment Strategy and Solutions Group (“ISSG”) as at 28/03/14. ISSG is part of The Bank of New York Mellon.

High level talks were ongoing between Russia, the US and the EU as Crimea continued to dominate international politics. Meanwhile, speculation over the timing of the end of Fed’s quantitative easing programme continued apace following suggestions by Chair Janet Yellen an interest rate rise could happen sooner than expected. The Fed began ‘tapering’ in December. Elsewhere, emerging markets hit the … read more

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Is the market listening to a different tune?

S&P 500 Negative & Positive Pre-announcements: 5 years

Since the second quarter of 2010, US negative earnings preannouncements have far outweighed positive ones. Yet the S&P 500 has barely stuttered. Through debt-fuelled share buybacks and other means, corporates are doing their best to mask the true underlying picture.

James Harries, Investment Manager, Newton

Since the second quarter of 2010, US negative earnings preannouncements have far outweighed positive ones. Yet the S&P 500 has barely stuttered. Through debt-fuelled share buybacks and other means, corporates are doing their best to mask the true underlying picture. James Harries, Investment Manager, Newton

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