America's banks are expecting sterling to plummet next year after its meteoric rise to near $2 this autumn, believing Britain's growth surge to be well past its sell-by-date, says the Daily Telegraph .
Goldman Sachs has advised sophisticated investors take out a "short" position against pound on the derivatives markets as its top trade for 2007, a bet the currency will fall.
"The UK remains the largest current account deficit country in Western Europe, with a substantially overvalued currency - about 13% on a trade-weighted basis," said the bank in a client note.
Jens Nordvig, a Goldman Sachs currency strategist, said the credit cycle was turning as the Bank of England finished raising rates, ending the yield premium over European investments which has made UK bonds so attractive.
Lehman Brothers is even more bearish on Britain, warning in its global outlook for 2007 the glory days of UK dynamism are drawing to a close, says the paper.
STANDARD LIFE helped propel Britain to third in the world flotations league this year – behind China and Russia – as global initial public offerings (IPOs) soared to a record high, reports the Scotsman.
Figures released jointly by Ernst & Young, Dealogic and Thomson Financial show from January to November 2006, $227bn (£116.2bn) was raised in 1,559 IPOs – a 36% jump on the $167bn raised in the whole of 2005.
In October and November alone deals to the value of $76bn were recorded internationally – more than 50% higher than the total value of all IPOs in 2003.
Britain raised $18.6bn in domestic capital in 2006, an increase of 151% compared with 2005, when $7.4bn was raised. The largest domestic IPO in 2006 was Standard Life's in July, raising proceeds of more than $4.4bn, followed by Debenhams', raising $1.9bn.
ONE OF the City's biggest fund management groups is calling for the creation of a UK stock market index, to complement the current FTSE All-Share index, which has become dominated by international companies, says the Guardian.
F&C Asset Management believes a specific UK stock market index would help fund managers who are trying to a invest only in British companies.
It is making its call following an analysis of the FTSE All-Share, which is used by major investment houses as a benchmark for the UK market.
F&C argues companies such as BP and Shell are so international they should be grouped with rivals such as Exxon and other oil majors listed on other exchanges.
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