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Investing for a weak pound: sterling is at two-year lows against the dollar and could fall again but can you take advantage?

The pound has been weakening against especially the dollar but also other major currencies for over a decade now. Recent falls have exacerbated that trend…

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The pound has been weakening against especially the dollar but also other major currencies for over a decade now. Recent falls have exacerbated that trend and many analysts expect it to continue deep into 2023 and even then the consensus view is that the pound sterling will remain in the doldrums for the foreseeable future.

For investors, a weaker pound can be a negative development but it can also represent opportunities. Hedging an investment portfolio against long term currency dynamics that are almost impossible to predict is sensible risk management. It is also relatively simple to do so.

gbp usd chart

Source: Yahoo Finance

More active investors might actively target gains by buying and selling assets with currency dynamics in mind.

Here we’ll look at the recent downward trend of pound sterling and the outlook for the next year or two as well as outline how investors can take simple steps to protect their portfolio value from currency movements or capitalise from them.

Pound sterling in decline

Sterling yesterday fell to a two-year low against the dollar and has been been in a multi-year pattern of decline against the world’s reserve currency since 2007. The most recent plunge in the pound against the dollar, down from £1/$1.420 in late May to £1/£1.156 in early September has led to a sell-off of British assets including gilts that could deepen the slide.

The government’s borrowing rates have reached their highest level since 2014 after two-year gilts suffered their worst month since 1986, driving up the cost of borrowing. Yesterday, the Treasury was selling a £2 billion bond maturing in 2046 at a rate of 3.367% cent, its highest interest rate in eight years.

The UK’s financial strength is perceived as being set to weaken with expectations the new Conservative prime minister will be forced into higher borrowing to fund measures to alleviate the cost of living crisis. As a result, markets now expect the Bank of England’s base interest rate to peak at 4.25% next year to offset the inflationary side-effects of more spending.

The Times summarises the market’s attitude towards the pound and UK Ltd with:

“Data this week showed foreign investors sold off a near-record amount of gilts in July worth £16.6 billion, with hedge funds also ramping up bearish bets against UK government debt.”

 

The pound is also not only falling against the dollar, though it is the currency it has lost most ground to. A leading measure of trade-weighted sterling, which reflects the pound’s value against a basket of other leading currencies, also fell to the lowest in a year.

Kit Juckes, chief foreign exchange strategist at Société Générale, summed up the gloom surrounding the pound with:

“Sterling’s support is waning. The UK economy is in recession, the balance of payments is catastrophic and more or faster rate hikes won’t do much to restore confidence.”

Will the pound sterling weaken further and might it recover in future?

The pound’s weakness against the dollar, a trend first established by the UK’s sluggish recovery from the 2007-09 financial crash, then reinforced by Brexit and the economic impact of the Covid-19 pandemic, has been compounded by the aggressive approach to raising rates being taken by the US Federal Reserve.

Solid recent economic data out of the USA has seen markets price in the Fed raising interest rates by another 0.75% to 3% to 3.25% when it meets later this month. Fed funds futures indicate about a 77% chance of such an increase.

Analysts at Capital Economics have warned that the pound could slip to a record low of $1.05, with higher interest rates unable to support the value of the currency as the dollar surges. That would extend the pound’s losses against the dollar, currently around 14%,  to over 22% since the beginning of this year.

A recent research briefing released by Morgan Stanley outlined the expectation of the investment bank’s analysts that the pound will remain under pressure against the dollar until somewhere around the middle of next year. And they don’t expect a strong recovery after that.

The bank’s researchers also don’t think Bank of England interest rate rises will support the pound as they are not expected to meaningfully exceed those of other major central banks and trail the Fed’s. Morgan Stanley analysts believe the only two factors that will significantly influence the relative strength of the pound are the UK economy’s growth prospects and broader investor sentiment.

However, against the euro the pound has been relatively flat for most of the year. It is down a little over 2.5% after the most recent weakening but Europe has its own economic troubles weighing on the single currency. Any bet on the euro against the pound will likely come down to which economy, Brexit Britain or the single market, fares less poorly over the next couple of years and the outlook doesn’t look especially positive for either.

For UK-based investors, it’s the pound’s strength, or lack of it, against the dollar that will almost certainly present the more significant risks and opportunities over the next year or two.

The Australian dollar, heavily influenced by the price of commodities that the Antipodean country is a major exporter of, could also be an interesting currency play when it comes to investment exposure. Its economic growth is expected to hold up relatively well into next year with commodity prices expected to remain heightened.

The yen might also stage some form of recovery after recent weakening.

growth expectations

Source: Bloomberg/Morgan Stanley/Pound Sterling Live

How a weak pound affects your investments

In total, the pound has lost 14% against the dollar this year, which translates into a 14% adjusted return for UK-based investors who hold dollar-denominated assets like Wall Street-listed stocks. If these losses extend over coming months, as some analysts expect, holding dollar-denominated assets will prove even more lucrative for pound-denominated investors.

How does the pound weakening against the dollar deliver currency-adjusted returns for investors in dollar-denominated assets outside of the dividends or non-adjusted capital growth?

If a UK-based investor bought into a dollar-denominated asset, for example shares in Apple, when the pound was worth $1.35 at the start of the year, a single share, worth $182.01, would have cost £134.82. If the investor sold that share, theoretically trading at the same dollar price, they would get back £158.27. The Apple share price has since dropped to $157.96 which currently translates to £137.36 for a small gain in adjusted terms. That’s despite the fact the share price has seen its dollar value fall by around 13% this year. A USA-based investor selling an Apple share bought in January would realise a loss of 13% on their cash balance. A UK-based investor would realise a gain of 1.88%, minus currency conversion fees.

Pound-denominated stocks listed in London that earn a significant amount of their revenues in other currencies, especially the dollar, can also similarly benefit from a weaker pound. When dollar-denominated revenues are converted back into pound sterling, they are more than they would have been if the pound had been stronger, boosting the bottom line.

That’s why the FTSE 100, which includes many big multinational companies like miners, oil and gas companies and international consumer goods groups, has usually historically risen when the pound weakens. However, the equation can be a complex one as overall investor sentiment around the UK can counterbalance the positive impact of currency movements for FTSE 100 companies. Over the last several days of August, when the pound was weakening, the FTSE 100 also fell.

Should you invest for a weak pound?

Currency dynamics, the strength of the world’s major currencies, are notoriously hard to predict with a long term horizon. Within a range, economists can be relatively confident the U.S. economy will outperform the UK economy for growth over the next couple of years. Over 10-20 years it’s a lot harder due to so many unknown factors.

For example, when the pound first dropped against the dollar in the wake of the international financial crisis, nobody was aware Brexit was on the horizon. The start of what could have been a new strengthening of the pound against the dollar in 2013/14 suddenly gave way to a new bear trend when the Brexit referendum was announced by David Cameron’s government. It was then of course subsequently reinforced by the shock result of that referendum for the UK to vote to leave the single market.

While most have their opinion on how Brexit Britain will fare economically over the next 10-20 years, nobody knows. If things go well, the pound could well strengthen again in the future. It could also weaken further.

The lack of reliability of long term currency movement forecasts means investors would be unwise to build an investment portfolio heavily slanted towards taking advantage of a stronger or weaker pound. But it is wise to balance a portfolio’s currency exposure in a way that is designed to neutralise long term dynamics by hedging different scenarios against each other.

That may sound complicated but all it really means is making sure an investment portfolio has exposure to a range of different currencies and not just pound sterling. Or even dollar, euro, AUS or yen-denominated assets.

More experienced investors who take a hands-on approach to their investments might consider more actively shifting currency exposure in their portfolio to try to capitalise on trends like the pound weakening against the dollar now. They would simply buy more dollar-denominated assets before cycling back into those denominated in other currencies when they felt the current trend had played out.

For most investors, such an active approach may not suit. However, more general currency movement hedging doesn’t have to be complicated.

How to hedge against currency movements

Whether you invest directly yourself, through a workplace pension, or both, you should be able to relatively simply hedge the future pound-denominated value of your investments against trends such as a weakening pound. Most investors hold the majority of their investments through funds, which might be actively managed or passive index trackers.

If you are investing through a workplace pension scheme, or in the process of selecting one, you should have several choices available to you. Some of those may be very UK-centric and invest only or predominantly in pound-denominated assets like the FTSE 100 index or an actively managed selection of London-listed shares.

Most will have a more international flavour and exposure to a range of developed markets, especially the USA. Simply make sure you choose a workplace pension fund that offers diversified currency exposure to assets denominated in different currencies.

If you are investing directly through a SIPP, ISA or private pension through a general fund, you should take the same approach. And if you more actively create your own portfolio through a combination of active and passive funds and individual shares, simply make sure your choices spread currency risk.

If you are willing to take on more risk and bet the pound remains weak against the dollar, you could target more dollar-denominated assets like Nasdaq or S&P 500 tracker funds or actively managed funds invested in the U.S. market.

The post Investing for a weak pound: sterling is at two-year lows against the dollar and could fall again but can you take advantage? first appeared on Trading and Investment News.

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Team undertakes study of two-dimensional transition metal chalcogenides

Two-dimensional materials, like transition metal dichalcogenide, have applications in public health because of their large surface area and high surface…

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Two-dimensional materials, like transition metal dichalcogenide, have applications in public health because of their large surface area and high surface sensitivities, along with their unique electrical, optical, and electrochemical properties. A research team has undertaken a review study of methods used to modulate the properties of two-dimensional transition metal dichalcogenide (TMD). These methods have important biomedical applications, including biosensing.

Credit: Nano Research Energy, Tsinghua University Press

Two-dimensional materials, like transition metal dichalcogenide, have applications in public health because of their large surface area and high surface sensitivities, along with their unique electrical, optical, and electrochemical properties. A research team has undertaken a review study of methods used to modulate the properties of two-dimensional transition metal dichalcogenide (TMD). These methods have important biomedical applications, including biosensing.

 

The team’s work is published in the journal Nano Research Energy on November 23, 2022.

 

The team’s goal is to present a comprehensive summarization of this promising field and show challenges and opportunities available in this research area. “In this review, we focus on the state-of-the-art methods to modulate properties of two-dimensional TMD and their applications in biosensing. In particular, we thoroughly discuss the structure, intrinsic properties, property modulation methods, and biosensing applications of TMD,” said Yu Lei, an assistant professor at the Institute of Materials Research, Shenzhen International Graduate School, Tsinghua University.

 

Since graphene was discovered in 2004, two-dimensional materials, such as TMD, have attracted significant attention. Because of its unique properties, two-dimensional TMD can serve as the atomically thin platforms for energy storage and conversion, photoelectric conversion, catalysis, and biosensing. TMD also displays a wide band structure and has unusual optical properties. Yet another benefit of two-dimensional TMD is that it can be produced in large quantities at a low cost.

 

In public health, reliable and affordable in vitro and in vivo detection of biomolecules is essential for disease prevention and diagnosis. Especially during the COVID-19 pandemic, people have suffered not only from the physical disease, but also from the psychological problems related to extensive exposure to stress. Extensive stress can result in abnormal levels in biomarkers such as serotonin, dopamine, cortisol, and epinephrine. So, it is essential that scientists find non-invasive ways to monitor these biomarkers in body fluids, such as sweat, tears, and saliva. In order for health care professionals to quickly and accurately assess a person’s stress and diagnose psychological disease, biosensors are of significant importance in the diagnostics, environmental monitoring, and forensic industries.

 

The team reviewed the use of two-dimensional TMD as the functional material for biosensing, the approaches to modulate the properties of TMD, and different types of TMD-based biosensors including electric, optical, and electrochemical sensors. “Public health study is always a major task in preventing, diagnosing, and fighting off the diseases. Developing ultrasensitive and selective biosensors is critical for diseases prevention and diagnosing,” said Bilu Liu, an associate professor and a principal investigator at Shenzhen Geim Graphene Center, Shenzhen International Graduate School, Tsinghua University.

 

Two-dimensional TMD is a very sensitive platform for biosensing. These two-dimensional TMD based electrical/optical/electrochemical sensors have been readily used for biosensors ranging from small ions and molecules, such as Ca2+, H+, H2O2, NO2, NH3, to biomolecules such as dopamine and cortisol, that are related to central nervous disease, and all the way to molecule complexities, such as bacteria, virus, and protein.

 

The research team determined that despite the remarkable potentials, many challenges related to TMD-based biosensors still need to be solved before they can make a real impact. They suggest several possible research directions. The team recommends that the feedback loop assisted by machine learning be used to reduce the testing time needed to build the database needed for finding the proper biomolecules and TMD pairs. Their second recommendation is the use of a feedback loop assisted by machine learning to achieve the on-demand property modulation and biomolecules/TMD database. Knowing that TMD-based composites exhibit excellent performance when constructed into devices, their third recommendation is that surface modifications, such as defects and vacancies, be adopted to improve the activity of the TMD-based composites. Their last recommendation is that low-cost manufacturing methods at low temperature be developed to prepare TMD. The current chemical vapor deposition method used to prepare TMD can lead to cracks and wrinkles. A low-cost, low-temperature method would improve the quality of the films. “As the key technical issues are solved, the devices based on two-dimensional TMD will be the overarching candidates for the new healthcare technologies,” said Lei.

 

The Tsinghua University team includes Yichao Bai and Linxuan Sun, and Yu Lei from the Institute of Materials Research, Tsinghua Shenzhen International Graduate School and the Guangdong Provincial Key Laboratory of Thermal Management Engineering and Materials, Tsinghua Shenzhen International Graduate School; along with Qiangmin Yu and Bilu Liu from the Institute of Materials Research, Tsinghua Shenzhen International Graduate School, and the Shenzhen Geim Graphene Center, Tsinghua-Berkeley Shenzhen Institute & Institute of Materials Research, Tsinghua Shenzhen International Graduate School.

 

This research is funded by the National Natural Science Foundation of China, the National Science Fund for Distinguished Young Scholars, Guangdong Innovative and Entrepreneurial Research Team Program, the Shenzhen Basic Research Project, the Scientific Research Start-up Funds at Tsinghua Shenzhen International Graduate School, and Shenzhen Basic Research Project.

 

##

 

About Nano Research Energy 

 

Nano Research Energy is launched by Tsinghua University Press, aiming at being an international, open-access and interdisciplinary journal. We will publish research on cutting-edge advanced nanomaterials and nanotechnology for energy. It is dedicated to exploring various aspects of energy-related research that utilizes nanomaterials and nanotechnology, including but not limited to energy generation, conversion, storage, conservation, clean energy, etc. Nano Research Energy will publish four types of manuscripts, that is, Communications, Research Articles, Reviews, and Perspectives in an open-access form.

 

About SciOpen 

 

SciOpen is a professional open access resource for discovery of scientific and technical content published by the Tsinghua University Press and its publishing partners, providing the scholarly publishing community with innovative technology and market-leading capabilities. SciOpen provides end-to-end services across manuscript submission, peer review, content hosting, analytics, and identity management and expert advice to ensure each journal’s development by offering a range of options across all functions as Journal Layout, Production Services, Editorial Services, Marketing and Promotions, Online Functionality, etc. By digitalizing the publishing process, SciOpen widens the reach, deepens the impact, and accelerates the exchange of ideas.

 


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Climate-Change Lockdowns? Yup, They Are Actually Going There…

Climate-Change Lockdowns? Yup, They Are Actually Going There…

Authored by Michael Snyder via The End of The American Dream blog,

I suppose…

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Climate-Change Lockdowns? Yup, They Are Actually Going There...

Authored by Michael Snyder via The End of The American Dream blog,

I suppose that we should have known that this was inevitable.  After establishing a precedent during the pandemic, now the elite apparently intend to impose lockdowns for other reasons as well.  What I have detailed in this article is extremely alarming, and I hope that you will share it with everyone that you can.  Climate change lockdowns are here, and if people don’t respond very strongly to this it is likely that we will soon see similar measures implemented all over the western world.  The elite have always promised to do “whatever it takes” to fight climate change, and now we are finding out that they weren’t kidding.

Over in the UK, residents of Oxfordshire will now need a special permit to go from one “zone” of the city to another.  But even if you have the permit, you will still only be allowed to go from one zone to another “a maximum of 100 days per year”

Oxfordshire County Council yesterday approved plans to lock residents into one of six zones to ‘save the planet’ from global warming. The latest stage in the ’15 minute city’ agenda is to place electronic gates on key roads in and out of the city, confining residents to their own neighbourhoods.

Under the new scheme if residents want to leave their zone they will need permission from the Council who gets to decide who is worthy of freedom and who isn’t. Under the new scheme residents will be allowed to leave their zone a maximum of 100 days per year, but in order to even gain this every resident will have to register their car details with the council who will then track their movements via smart cameras round the city.

Are residents of Oxfordshire actually going to put up with this?

[ZH: Paul Joseph Watson notes that the local authorities in Oxford tried to ‘fact check’ the article claiming they’re imposing de facto ‘climate lockdowns’, but ended basically admitting that’s exactly what they’re doing...]

I never thought that we would actually see this sort of a thing get implemented in the western world, but here we are.

Of course there are a few people that are loudly objecting to this new plan, but one Oxfordshire official is pledging that “the controversial plan would go ahead whether people liked it or not”.

Ouch.

Meanwhile, France has decided to completely ban certain short-haul flights in an attempt to reduce carbon emissions…

France can now make you train rather than plane.

The European Commission (EC) has given French officials the green light to ban select domestic flights if the route in question can be completed via train in under two and a half hours.

The plan was first proposed in 2021 as a means to reduce carbon emissions. It originally called for a ban on eight short-haul flights, but the EC has only agreed to nix three that have quick, easy rail alternatives with several direct connections each way every day.

This is nuts.

But if the French public accepts these new restrictions, similar bans will inevitably be coming to other EU nations.

In the Netherlands, the government is actually going to be buying and shutting down approximately 3,000 farms in order to “reduce its nitrogen pollution”

The Dutch government is planning to purchase and then close down up to 3,000 farms in an effort to comply with a European Union environmental mandate to slash emissions, according to reports.

Farmers in the Netherlands will be offered “well over” the worth of their farm in an effort to take up the offer voluntarily, The Telegraph reported. The country is attempting to reduce its nitrogen pollution and will make the purchases if not enough farmers accept buyouts.

“There is no better offer coming,” Christianne van der Wal, nitrogen minister, told the Dutch parliament on Friday.

This is literally suicidal.

We are in the beginning stages of an unprecedented global food crisis, and the Dutch government has decided that now is the time to shut down thousands of farms?

I don’t even have the words to describe how foolish this is.

Speaking of suicide, Canada has found a way to get people to stop emitting any carbon at all once their usefulness is over.  Assisted suicide has become quite popular among the Canadians, and the number of people choosing that option keeps setting new records year after year

Last year, more than 10,000 people in Canada – astonishingly that’s over three percent of all deaths there – ended their lives via euthanasia, an increase of a third on the previous year. And it’s likely to keep rising: next year, Canada is set to allow people to die exclusively for mental health reasons.

If you are feeling depressed, Canada has a solution for that.

And if you are physically disabled, Canada has a solution for that too

Only last week, a jaw-dropping story emerged of how, five years into an infuriating battle to obtain a stairlift for her home, Canadian army veteran and Paralympian Christine Gauthier was offered an extraordinary alternative.

A Canadian official told her in 2019 that if her life was so difficult and she so ‘desperate’, the government would help her to kill herself. ‘I have a letter saying that if you’re so desperate, madam, we can offer you MAiD, medical assistance in dying,’ the paraplegic ex-army corporal testified to Canadian MPs.

“Medical assistance in dying” sounds so clinical.

But ultimately it is the greatest lockdown of all.

Because once you stop breathing, you won’t be able to commit any more “climate sins”.

All over the western world, authoritarianism is growing at a pace that is absolutely breathtaking.

If they can severely restrict travel and shut down farms today, what sort of tyranny will we see in the future?

Sadly, most people in the general population still do not understand what is happening.

Hopefully they will wake up before it is too late.

*  *  *

It is finally here! Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.

Tyler Durden Fri, 12/09/2022 - 06:30

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First-ever social responsibility report of Chinese enterprises in Saudi Arabia incorporates BGI Genomics projects

On December 1, 2022, the Social Responsibility Report of Chinese Companies in Saudi Arabia was officially launched, which is the first such report released…

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On December 1, 2022, the Social Responsibility Report of Chinese Companies in Saudi Arabia was officially launched, which is the first such report released by the Contact Office of Chinese Companies in Saudi Arabia. BGI Genomics projects in the Kingdom have been incorporated into this report.

Credit: BGI Genomics

On December 1, 2022, the Social Responsibility Report of Chinese Companies in Saudi Arabia was officially launched, which is the first such report released by the Contact Office of Chinese Companies in Saudi Arabia. BGI Genomics projects in the Kingdom have been incorporated into this report.

This event was attended by around 150 representatives of Chinese and Saudi enterprises, Saudi government officials, experts in the field of sustainable development, CCTV, Xinhua News Agency, Saudi Press Agency, Arab News and other media professionals. This Report presents the key projects and best practices of Chinese enterprises to fulfil their social and environmental responsibilities while advancing the Kingdom’s industry development.

Chen Weiqing, the Chinese ambassador to Saudi Arabia, said in his video speech that the Report highlighted Chinese enterprises’ best practices in serving the local community, safe production, green and low-carbon development and promoting local employment. The release of the Report helps Chinese enterprises in the Kingdom to strengthen communication with the local community, laying a stronger foundation for future collaboration.

Epidemic control and accelerating post-COVID 19 recovery

BGI Genomics has been fulfilling its corporate social responsibilities and worked with the Saudi people to fight the COVID-19 epidemic.

In March 2020, Saudi Arabia was hit by the pandemic. The Saudi government decided to adopt BGI Genomics’ Huo-Yan laboratory solution in April 2020. At the forefront of the fight against the epidemic, the company has built six laboratories in Riyadh, Makkah, Madinah, Dammam and Asir within two months, with a total area of nearly 5,000 square meters and a maximum daily testing throughput of 50,000 samples.

By the end of December 2021, BGI Genomics had sent 14 groups of experts, engineers and laboratory technicians to Saudi Arabia, amounting to over 700 people, and tested more than 16 million virus samples, accounting for more than half of the tests conducted during this period. The company has successfully trained over 400 qualified Saudi technicians, and all laboratories have been transferred to local authorities for the operation.

In the post-epidemic era, the Huo-Yan laboratories can continue to make positive contributions to public health, working with local medical institutions and the public health system to make breakthroughs in areas such as reproductive health, tumour prevention and control, and prevention.

Enhancing genomic technology localization and testing capabilities

In July 2022, BGI Almanahil and Tibbiyah Holdings, a wholly owned subsidiary of the Saudi Faisaliah Group, announced a joint venture (JV) to establish an integrated, trans-omics medical testing company specializing in genetic testing.

This JV company will help improve Saudi Arabia’s local clinical and public health testing and manufacturing capabilities, promote the localization of strategic products that have long been imported, contribute to the implementation and realization of the Kingdom’s Vision 2030 roadmap, and significantly enhance local capacity for third-party medical testing services as well as local production of critical medical supplies.

BGI Genomics attaches great importance to fulfilling its corporate social responsibility and has released its social responsibility report for four consecutive years since 2017. Since its establishment, the company has always been guided by the goal of enhancing health outcomes for all, relying on its autonomous multi-omics platform to accelerate technological innovation, promote reproductive health, strengthen tumour prevention and control, and accurately cure infections, and is committed to becoming a global leader in precision medicine and covering the entire public health industry chain.

The company will continue to work together with all stakeholders to contribute to the Kingdom’s Vision 2030 and the Belt and Road Initiative and looks forward to growing with our partners.

 

About BGI Genomics

BGI Genomics, headquartered in Shenzhen China, is the world’s leading integrated solutions provider of precision medicine. Our services cover over 100 countries and regions, involving more than 2,300 medical institutions. In July 2017, as a subsidiary of BGI Group, BGI Genomics (300676.SZ) was officially listed on the Shenzhen Stock Exchange.

 


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