Investors in a Catch-22
vote against the plans, with joint founder Nick Train echoing Cumming’s ‘forced seller’ comments. He told The Times last week: “The fact is the company is not offering a perpetuity guarantee that current Unilever plc shareholders will never suffer from any future change in Dutch tax policy.”
Despite the backlash from some investors, Unilever says it is still confident it would gain approval. It insists that the proposals were not related to Brexit and argues that simplifying the company will make it easier to sell and buy assets and improve governance.
However, the planned relocation deals a big blow to the UK’S status as a financial centre and a forced exit threatens immediate damage to the shares while exposing investors to the risk of Dutch taxation. The vote is due to be held on October 25 and 26.
Just when investor fears of a market correction are gathering pace, shares on the world’s biggest stock exchange hit an all-time high last week.
It’s a familiar Catch-22 for investors: just when they want to move to a more defensive position for their savings, the market puts on a blazing display of strength – the traditional late cycle fling that no-one wants to miss out on.
In the US the bull market run hit a new high last week and is now the longest in the history of the S&P 500 Index. Reflections on the 10th anniversary of the Lehman Brothers collapse and growing political concerns in the UK with talk of a general election and/or second referendum to resolve the appalling Brexit impasse have added to the mood of investor unease.
According to Hargreaves Lansdown, investor confidence in the UK stock market has plunged to the lowest level recorded in its regular survey of clients, which began in 1995.
Hargreaves surveys around 500 clients a month to create an index and September’s 58-point reading is one point below its previous low of 59, recorded in November 2016, shortly after the Brexit vote and the month Donald Trump was elected US president. It’s lower than readings produced in the months of the financial crisis, the eurozone crisis, and the bursting of the dotcom bubble.
Confidence has dropped since the EU referendum was announced in February 2016, with the index averaging 75 since then, compared to 98 over the prior decade.
Before the financial crisis, the index had produced an average reading of 103 over 10 years. But who dares losing out on a late cycle rally – and one in the UK fueled by a falling pound as the needle points ever more towards ‘no deal’?
A Unilver revolt
is gathering pace, with fund managers joining
the ranks