Weekly outlook: UK GDP; Hargreaves results; fund groups report

The key events for UK wealth managers for the week starting 5 August

Monday 5 August

– HSBC interim results

AJ Bell investment director Russ Mould said: “HSBC’s shares have done precious little over the past year and even though the first-quarter numbers back in April were not bad at all the company has four strategic issues to address which could go a long way to shaping short- and long-term performance:

  • Although HSBC positions itself as a global bank, Asia generated 80% of 2018’s adjusted pre-tax profits and Hong Kong was core of that – which is interesting given the political unrest there at the moment;
  • The US operations are sub-scale and needs a re-boot;
  • Profit margins in the UK are pretty modest and the mortgage market remains very competitive;
  • And the investment bank – rather like its equivalent at Barclays – continues to soak up a lot of capital but without really generating the returns to justify the investment.”

– Service industry purchasing managers’ indices from the UK, Europe, Asia and the US

Tuesday 6 August

– Japanese wage growth data

– Reserve Bank of Australia interest rate decision

– US Jolts job openings survey

Wednesday 7 August

– Standard Life Aberdeen interim results

Mould said: “The big issues at SLA will be the fund flows and the dividend, where a strong rally in the shares suggests that the sceptics are giving up and maybe deciding that the target for a flat payment this year can be met after all.”

– Legal & General interim results

– Phoenix Group interim results

– FCA rules for existing funds on fund manager performance fees come into force

Fund groups must now clarify that where a performance fee is specified in the prospectus, it must be calculated based on the scheme’s performance after the deduction of all other fees. This is part of a package of measures which the watchdog has introduced to address weaknesses identified by its asset management market study.

– Interest rate decision from the Reserve Bank of New Zealand

– Halifax UK house price survey

– US oil inventory data

Thursday 8 August

– Hargreaves Lansdown final results

Hargreaves has been thrust into the spotlight in recent weeks for championing the Woodford Equity Income fund prior to its suspension on 3 June despite the warning signs over illiquidity. It has been reported that almost 300,000 customers of Hargreaves Lansdown have more than £1.6bn trapped in the fund.

In its last trading update in May, prior to the Woodford storm, the group reported net new business of £2.9bn for the four months to 30 April. Year to date new business was £5.4bn while its assets under administration hit £97.8bn.

Nick Train, who owns near 10% of Hargreaves, has a renewed conviction in the firm despite its recent controversy, having recently bumped up his holding. This comes after Hargreaves dropped the Lindsell Train UK Equity and Global Equity funds from its Wealth 50 citing conflict of interest issues related to Train’s Hargreaves holding.

– Interim results from Aviva

– Chinese trade figures

– Japanese Q2 GDP growth data

– Tritax Big Box Reit interim results

Friday 9 August

– Chinese inflation figures

– UK Q2 GDP growth data

The National Institute of Economic and Social Research (NIESR) and IHS Markit both believe that UK GDP fell from Q1 to Q2 and any sort of growth would therefore be seen as a good result.

Mould said: “The last quarterly drop was in Q4 2012 so if that has come to pass then the key issue will be whether it was just down to inventory liquidation following the build-up to the old Brexit deadline of 31 March – in which case we could bounce back ahead of the new 31 October deadline, especially as sterling’s latest slide could help exports – or something more malign, related to a global slowdown or weakness in global trade.

“If we do get a negative print then it only takes two in a row for a technical recession to be declared. Brexit is muddying the waters and the new Johnson administration seems keen to get spending to support growth, although it is yet to be made clear how such largesse will be funded.”

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