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Challenging conditions?

29 May 2005 Angelo Coppola

Quentin Smith, from OMAM in the UK, says that this was due to a number of key players warned of challenging conditions, and as concerns over growing levels of bad loans hit the banking sector.

First quarter GDP growth was revised down to 0.5% from an initial estimate of 0.6% as manufacturing contracted and consumer spending slowed. Annual growth slowed to 2.7%, the lowest since the fourth quarter of 2003.

Record consumer debt, a stagnant housing market and declining exports have curbed growth over the last six months and put at risk the Chancellor of the Exchequer’s 3.5% growth forecast for 2005.

Over the week the All-Share gained 0.5%, led by a gain of more than 2% in the midcap index, while the FTSE 100 advanced just 0.3% and smaller companies gained over 1%.

The strongest sector gains came from utilities and resources, while the laggards included consumer staples and telecoms.

Britain’s largest telecommunications company Cable & Wireless (+2.9% to 134¼p) reported its first annual profit in four years after cutting costs and said that severe price competition is still hurting sales.

The company is more than half way through its three year restructuring plan and is facing increasing competition in the UK and the Caribbean. C&W is countering this with job cuts and endeavours to exploit demand for high speed internet services in Britain.

Man Group (+6.7% to 1314p), the world's largest hedge fund manager, reported a 10% rise in annual profit as it increased assets to $43bn and made more money from individual investors who pay higher fees.

Man took steps to calm investors’ fears about hedge fund losses, saying that despite the asset class having a poor year, it continues to attract new investors.

Performance fees fell by 50% to $119m, ahead of estimates of around $80m, while net fund inflows totalled $4.5bn, down from $7.3bn the previous year.

Quick Polls

QUESTION

The second draft amendments to Regulation 28 will allow retirement funds to allocate up to 45% of their assets to SA infrastructure, with a further 10% for rest of Africa; but the equity & offshore caps remain unchanged. What are your thoughts on the proposal?

ANSWER

Infrastructure? You mean cash returns with higher risk!?!
Infrastructure cap is way too high
Offshore limit still needs to be raised
Who cares… Reg 28 does not apply to discretionary savings
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