Planning a bank holiday weekend getaway? The Kames equities team present their investment destination guide.

 

Spain – Allan Clarke

Spain’s got a lot to offer itself for the European holiday maker. Fabulous weather and great beaches? Of course. But for investing? While it’s easy to write it off alongside its southern European brethren let’s try to be a bit more constructive…

The past 12 months have seen two bouts of political turmoil within Spain: the antagonistic Catalan independence referendum, and the replacement of the Prime Minister after a vote of no confidence. So with inevitable questions about the strength of the post-crisis domestic recovery it’s probably worth focussing more on those Spanish companies with leading global franchises for investment ideas. One investment opportunity would particularly suit the holidaymaker flying to Spain this year – a summer of strikes by French air traffic controllers and some airline staff mean it’s a miracle the plane ever takes off. But at least the software behind the airline’s booking, passenger management and departure control is likely to be in reliable hands, with Amadeus’ leading market position powering a significant part of the airline sector.

And what to do in Spain once you realise that the outfit you packed isn’t quite right for the blistering 45 degree heat experienced this year? Well, how about heading along to Zara for some shopping at Inditex’s ubiquitous retail chain.

Conclusion: Sun. Sea. Sand. Shopping. Software Solutions… Sorted.

Norway – Allan Clarke

If you’ve had your fill of Danish hygge, and you just can’t get your head around Swedish lagom, then maybe it’s worth a trip to see what’s going on in the third, but no means least, Scandinavian country: Norway. And it turns out the Norwegians have plenty to be happy about, what with stunning fjords, beautiful mountains, fabulous hiking, incredible skiing and, well let’s be honest… oil.  This won’t have the makings of a cheap trip though – by the time you rent your car (electric of course, just like the locals), don your Helly Hansen gear and head north you might be wishing you’d opted for that trip to Turkey after all. Maybe best to indulge in some local confectionary to improve your mood, and come to your own conclusion as to whether Norway’s Kvikk Lunsj (“Quick Lunch”) really is the best four-fingered chocolate bar in the world.

Conclusion: if oil installations and fish farms aren’t your thing and the expenses are starting to add up, then probably best to forget about finances for a while. Focus on the stunning scenery. Relax on a cruise. Take some time out. Enjoy yourself. Have a break. Have a Kvikk Lunsj.

Italy – Michael Nicol

With mountain lakes in the North, rich historic sites in the middle and wonderful beaches in the South, Italy truly has everything for the tourist. The Italian equity market? Not so much.

Constant political change, high government debt and Italian 10 year bonds at near post Euro record levels, 150bps higher than Germany, Italy has proven to be a volatile place to invest in 2018. The equity market helped by improving economic fundamentals had a good first four months of 2018. The market then returned to the familiar uncertain future as a result of political change and fears of economic policy harming the recovery from the financial crisis, now over ten years old but still being felt.

Verdict: One for the adventurous (investment) tourist.

Greece – Michael Nicol

With rich historic sites in the North, glorious beaches in the middle and wonderful islands in the South, Greece truly has everything for the tourist. The Greek stock market? Yes, you guessed it, it has been an equity investor’s nightmare with the MSCI Greece Index now over 96% down from 2007 levels.

Greece prepares to end its third financial rescue of 86 billion euros ($ 101.38 billion) in August 2018. The country currently sits on a debt pile of about 180 percent compared to its gross domestic product (GDP) — the highest in the euro zone.

Verdict: Avoid for equity markets, nice place to go on holiday.

The UK – Douglas Scott – number one in staycations
Why go to the sun when you can stay here and have some fun……That big yellow thing in the Sky has been over staying it’s welcome and has even appeared in Scotland, why chase it! Have you seen where the pound is? things will cost you even more now when you get there, after a French air traffic control strike that has delayed you. Yes you will miss the culinary delights from abroad but what about a Feta and Slow Roasted Tomato Pasta Salad from Greggs or some Halloumi fries from Wetherspoon. At least Wetherspoon will serve you a beer that is a proper size. For those with the Far East in mind just download the Just Eat app! Your staycation can help support the lacklustre UK economy. The downside of staying in the UK is that you will not meet a German in Speedos that you can talk to about the World Cup, on the plus side Politicians disappear for a few weeks – many however sadly return.
The US – Carolyn Bell

The US equity market is riding high, supported by tax cuts, record low unemployment and small business optimism that has rarely been stronger.  There’s a lot to like from an investment perspective.  The US has always been the entrepreneur’s friend and if you choose to touch down in San Francisco you’ll find it a buzzy, happening place.  If you want to wear flowers in your hair though, you’d be better to head south to Venice Beach, where the snake-charmers are just about keeping Snapchat at bay from gobbling up the real estate.  Worried about climate change?  Consider San Diego, which has been named one of the few cities in the world where you need neither air-con nor heating – though if you’re heading there from Britain you may want to offset your air miles.  If you’ve got more of an empire state of mind – especially as we head into autumn – go see the ‘glittering crowds and shimmering clouds’ of New York.  Whether you want to see Trump Tower is up to you.  Either way brace yourself when you pull out your Amex – the US$ has rarely been more expensive for the Brit on tour.  So best not supersize!

France – Mark Peden

Revel in the feel-good factor with a visit to La Republique’s Riviera. Just as the post-Macron election victory party was starting to wind down Les Bleus gave the French another shot in the arm lifting the Jules Rimet Trophy for only the second time ever with victory in this summer’s football World Cup. Be sure to take plenty of cash though for all those exclusive Louis Vuitton handbags and Hermes silk scarves that are literally flying off the shelves. That, of course, is if you can get there. Best check out the few days that air-traffic controllers turn up for work so your flight can actually land!

Germany – Mark Peden

Perhaps best to wait a couple of months before heading off to Germany on holiday. The entire country is still in shock as it tries to come to terms with its football team, and holders, falling at the group stages of a World Cup finals for the first time. In fact even their normally agreeable politicians have started to quarrel with one another. Oktoberfest (which actually starts in September), with its legendary, beer-swilling spiegeltents will no doubt numb the pain though so best take to the autobahns then – with a designated driver of course!

Turkey – Mark Peden

Turkey is probably the cheapest holiday destination in the world right now with the recent collapse in the Lira. At one point in recent weeks it had almost halved in value against the US dollar since the beginning of the year. Take sufficient credit cards, notes and coins though because the banks will probably be too scared to open. Don’t be taking any loans out either though as an emergency, steep hike in interest rates looms to tackle the plunging currency. Shop, dine and be sure to spoil yourself as you take advantage of all these once-in-a-lifetime bargain basement prices.


Opinions and views from the Equities team at Kames Capital are not an investment recommendation, research or advice and should not be considered as such. Content discussing investment strategies and stocks is derived from and solely relates to the investment management activities of Kames Capital.

About the author

Allan Clarke is an investment analyst in our Equities team and is responsible for generating investment ideas for our European and global equity funds. He joined us in 2015 from PricewaterhouseCoopers, where he was a Manager in the Valuations team that specialises in the valuation of private companies and other unlisted assets. He has 12 years’ industry experience*. Allan has a first class honours degree in Business Studies and Accountancy from the University of Edinburgh and is a Chartered Accountant.

 

About the author

Michael Nicol is an investment manager with responsibility for European equities. He joined us in 2017 from Dundas Global Investors, where he was a Partner. Over his tenure, Michael has held a number of positions managing European equity funds including Midmar Capital LLP/Pengana Capital, Glasgow Investment Managers, Martin Currie, SVM Asset Management, PIMCO and Dunedin Fund Managers. Michael studied Business Studies at Robert Gordon University and has 36 years’ industry experience.

 

About the author

Douglas Scott is an investment manager in the UK Equities team with responsibility for managing several equity income funds. In addition, Douglas has analysis duties for the tobacco, real estate, telecoms, beverages and oil services sectors. He joined us in 2003 from Investec where he was a stockbroker specialising in the telecoms sector and, prior to that, worked for TRW and Abbey National in their UK equity teams. Douglas has a 1st Class Honours degree in Aeronautical Engineering from the University of Glasgow and a Diploma in Actuarial Science from Heriot-Watt University. He has 22 years’ industry experience*.

About the author

Carolyn Bell is an investment manager in the International Equities team, with responsibility for co-managing several funds. She also contributes to the idea generation process for our global equity portfolios. Carolyn joined us in 2014 after 5 years at Baillie Gifford where she worked on the North American equities desk as a generalist with additional sector coverage responsibility for technology and energy. She studied English at the University of Cambridge and has a Masters degree in Early Modern Studies from the University of Aberdeen. She has 10 years’ industry experience*.

About the author

Mark Peden is the architect of our global equity income strategy and has been the lead manager of the Kames Global Equity Income Strategy since its inception in 2011. European equities are his main area of research expertise where he has been analysing companies since joining the firm in 1992. Over his tenure Mark has held a number of positions and managed a range of both International and European equity funds. He graduated from the University of York and the University of California (Santa Barbara) with a BSc honours degree in Economics with Politics. He a CFA charterholder and is also an Associate member of the UK Society of Investment Professionals (ASIP). He has 26 years ’industry experience.*

*As at 30 June 2018.

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