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MAKE IT, KEEP IT, SPEND IT 5 SEPTEMBER 2025 | ISSUE 1276 | £4.75
Why wealth taxes don’t work 
Page 12
OPINION P23
Pakistan: the 
Vietnam of 
South Asia
ANALYSIS P24
Britain is 
dicing with a 
debt crisis 
PLUS 
Food and forests 
in the Baltics 
TRAVEL P32
MONEYWEEK.COMBRITAIN’S BEST-SELLING FINANCIAL MAGAZINE
Soaking the rich
moneyweek.com 5 September 2025 
5 September 2025 | Issue 1276 Britain’s best-selling financial magazine
Rayner caught out by stamp duty 
Deputy prime minister and 
housing secretary Angela 
Rayner (pictured) has 
referred herself to the 
prime minister’s ethics 
adviser, having 
admitted to 
underpaying stamp 
duty on the purchase 
of an £800,000 flat in 
Hove, East Sussex, says 
Jim Pickard in the Financial 
Times. Rayner claims lawyers 
at the time of the purchase had advised her to pay 
£30,000, as per the standard rate of stamp duty, 
instead of the £70,000 she should have paid if the 
Hove flat had been deemed a second property, as 
per new legal advice she has been given. The 
confusion is centred around the status of a house in 
her constituency in Greater Manchester, where 
Rayner is registered for council tax. However, 
following her divorce from her husband, she put 
her stake in that property into a trust for the benefit 
of one of her sons, who is disabled, but her children 
still live in the house under what she had described 
as a “nesting arrangement”. The Conservative 
leader Kemi Badenoch called for her dismissal.
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From the editor...
Did you sell in 
May and go away 
this year? I do hope 
not, because we 
have often pointed 
out that seasonal investing 
is nonsense. The notion that 
stocks are weaker between May 
and September is thought to 
have arisen because Victorian 
investors used to spend the 
spring and summer shooting 
p(h)easants on their country 
estates, so far fewer people 
were putting money into 
the stockmarket. 
But any seasonal dips between 
1 May and St Leger’s Day, when 
you are supposed to return to the 
market, have been outweighed by equities’ 
tendency to rise most of the time. As far 
as British stocks between 1970 and 2023 
are concerned, the return from being in 
the market between September and April 
only would have beaten the return from 
September to September in 25 years. Yet 
holding for the full year would have done 
better in 28 years. Factor in dividends 
accumulating over the summer, and the 
success rate of summer investing would 
have been worse. 
The cruellest month
This year, moreover, was a particularly 
poor year to count on a summer lull. Since 
early April, when Donald Trump paused 
his tariff programme and markets regained 
confidence, the FTSE 100 has jumped by 
15%, and the S&P 500 by 26%. In both 
cases half the gains came after 1 May. 
What’s more, the outlook for anyone 
re-entering the market after a soaring 
summer is hardly auspicious. September 
is the cruellest month for equities on Wall 
Street – over the past 75 years it has been 
the weakest month for the S&P 500. And 
sorrows are coming in battalions. 
The appeals court’s ruling that Trump’s 
tariffs are illegal is a further reminder of 
the president’s tendency to pick fights with 
the establishment and the many likely 
legal battles ahead, fomenting further 
uncertainty. His attempt to have Lisa 
Cook, a member of the Federal Reserve 
Board of Governors, sacked bodes ill for 
the independence of the central bank: 
President Nixon’s pressure on the Fed 
helped contribute to the surge in inflation 
of the 1970s (see page 5). 
The US administration’s shift towards 
statism (see pages 6 and 16) is another 
reason why MoneyWeek’s 
columnist and expert on 
Argentina, Bill Bonner, sees 
America drifting into Peronism 
(see page 38). The AI bubble, 
meanwhile, has kept inflating 
(see pages 6 and 14).
On the home front, there is 
mounting concern over rising 
bond yields and an incipient 
debt crisis (see pages 4 and 24). 
As Max notes, the government’s 
track record hardly inspires 
confidence, but we can expect 
things to come right once it 
has departed. In the meantime, 
the notion of a wealth tax has 
come around again (see page 
12). Many developed economies 
 had one in the 1990s, but now only 
a handful do so, a sure sign they are 
counterproductive. As H.L. Mencken 
said, “for every complex problem 
there is an answer that is clear, simple, 
and wrong”.
The case for gold, meanwhile, remains 
clear, simple and right. It has just jumped 
past a new record peak of $3,500 an 
ounce, fuelled by demand for a store of 
value amid sticky inflation, low growth, 
debt and political turmoil. Gold investors 
also know that financial markets tend 
towards complacency “until the last 
possible moment”, says economist Paul 
Krugman, when potential problems 
become impossible to ignore. It’s a summer 
bet worth sticking with.
“For every complex problem there is an 
answer that is clear, simple and wrong”
Good week for:
Pop star Taylor Swift has announced her engagement to American 
football player Travis Kelce. After a two-year courtship the Kansas City 
Chiefs player proposed with a diamond ring estimated to be worth up 
to $5m, according to People.com. The couple have a combined net 
worth of almost $1bn, made up largely from Swift’s $850m fortune. 
An animated film about a Korean pop girl group who hunt monsters 
in their spare time has become the most-streamed film on streaming 
platform Netflix, says Variety. KPop Demon Hunters, featuring the 
character of Rumi (pictured), voiced by US actress Arden Cho, has 
been watched 236 million times. It is believed to have earned 
between $18m and $20m in its opening weekend.
Bad week for:
Musician Sting is being sued by his former Police bandmates over 
alleged lost royalties for their hit song Every Breath You Take. 
Guitarist Andy Summers and drummer Stewart Copeland claim they 
have never been paid for their writing contributions. The song was the 
biggest US single of 1983, fifth best-selling of the decade and earns 
money from being sampled on P Diddy’s 1997 hit I’ll Be Missing You. 
Sting, who is being sued under his legal name Gordon Sumner, receives 
£550,000 a year in royalties for that song alone, says The Sun. 
Britain’s last local currency has disappeared. The Lewes pound was created 
17 years ago in East Sussex, following the collapse of US investment bank 
Lehman Brothers as a way to encourage local spending, says The Sunday 
Times. However, shops have stopped accepting the notes, which had 
become a nuisance, while card payments have proliferated.
Andrew Van Sickle
editor@moneyweek.com
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Sellers in May are supposed to return to the
market on St Leger’s Day, 13 September this year
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 5 September 2025 moneyweek.com
Markets4
This year’s “unusually good run” for 
beleaguered British shares shows “there is 
life in the old dog yet”, says Katie Martin 
in the Financial Times. True, the FTSE 
100’s 10% year-to-date gain isn’t sending 
anyone’s portfolio into the stratosphere. But 
it beats the 6% rise on the Stoxx Europe 
600 index. Meanwhile, America’s S&P 500 
is broadly flat in sterling terms this year 
because of the falling value of the dollar.
 
Fading financial centre
The City of London has fallen a long 
way from the hegemonic position that it 
occupied at the dawn of the 20th century, 
when its stock exchange was worth “as 
much as the New York and Paris” bourses 
combined, says The Guardian. Even local 
investors have seemingly given up, with just 
6% of UK pension scheme assets allocated 
to British equities, compared to 53% as 
recently as 1997. London’s boosters point 
to the capital’s generous dividend yields, 
with the FTSE All-Share yielding 3.6%, 
substantially more appealing than the 
S&P 500’s 1.6%.
But an economic model that prefers cash 
payouts to investing in the futuremoney 
can’t buy you happiness, 
but it can reduce 
stress and anxiety, 
help you live longer 
and allow you to do 
more fun stuff, which 
sounds suspiciously like 
happiness to me.”
Comedian Geoff Norcott, 
quoted in The Times
“The AI revolution will 
make the mediocrity crisis 
even worse. Artificial 
intelligence is mediocrity 
memeified, magnified and 
mummified.”
Bloomberg columnist 
Adrian Wooldridge
“The avoidance of taxes 
is the only intellectual 
pursuit that still carries 
any reward.”
John Maynard Keynes, 
quoted in The Oldie
“Wealth – any income 
that is at least $100 
more a year than the 
income of one’s wife’s 
sister’s husband.”
H.L. Mencken quoted 
in Australia’s news 
magazine B&T
“There’s no other 
profession – architect, 
teacher, doctor, 
journalist – where 
60,000 people will 
shout that you 
should lose your job, 
that they want you to 
lose your job. But our 
profession is so well paid 
that we accept this.”
Pep Guardiola, 
Manchester City football 
manager, quoted in GQ 
Money talks
16 Best of the financial columnists
The US is 
turning 
Chinese
Gillian Tett
Financial Times
Software 
industry is 
safe from AI
Dan Gallagher
The Wall Street Journal
Will Xi’s 
bet on tech 
pay off?
Editorial
The Economist
Big Pharma 
will win the 
price war
Druin Burch
The Spectator
“Free-market evangelists might spin in their graves” at recent moves 
by the US government, says Gillian Tett. Wall Street broker turned US 
commerce secretary Howard Lutnik last week defended the government’s 
purchase of a 10% stake in chipmaker Intel, and suggested it might also 
buy stakes in the likes of Lockheed Martin, a firm heavily reliant on 
military contracts. It has also bought a 15% stake in rare-earths producer 
MP Materials, while providing it with a guaranteed price floor. Other 
commodity groups are lobbying for similar support. It may be that with 
China controlling most of the mining and processing of rare earths, the 
White House is “deeply worried about national security in general, and 
rare earths in particular”, but it is part of a huge shift to a “mercantilist, 
state-run vision of capitalism”. Trump’s advisers say they have no choice 
in a world where China is “using state-run capitalist policies”, but “fear 
and greed” also play a part. No firm wants to incur the wrath of Trump; 
most executives think they can profit from the shift. Investors today need 
to view US assets through this lens. As horrified onlookers see it, instead 
of China becoming more like the US, the US is looking more Chinese. 
Artificial intelligence can already do a lot, and will likely be able to do a 
lot more in future, but “killing” the $1.2trn global software industry is 
unlikely to be one of them, says Dan Gallagher. Businesses spend more 
on software than just about any other tech, but the industry faces threats 
not just from AI, but global economic uncertainty, which has hit IT 
spending. But if software stocks have slumped recently and if AI tools are 
“changing the game” for software development, the fact is that “highly 
complex software applications running mission-critical tasks won’t be 
simple to replace”, particularly those running on sensitive data. The real 
opportunity is likely to come from systems incorporating multiple AI 
chatbots that can operate across different software applications, which 
no one has “cracked yet”. For now, huge firms simply aren’t about to 
get an AI start-up to run their back offices. “Stumbles” by AI firms will 
strengthen the case. OpenAI faced a barrage of criticism following the 
GPT-5 launch, with users complaining about inaccurate answers. 
AI chatbots may have swiftly “disrupted high-school term papers. 
Replacing billion-dollar software systems won’t come so easily.”
Xi Jinping is “fixated on beating the West in new technologies” and 
China’s growing prowess in this field owes much to the Communist 
Party’s “conveyor belt of innovation, which takes ideas developed in 
state-run labs and universities and turns them into commercial products”, 
says The Economist. Chinese firms already dominate areas including 
EVs and lithium batteries, and are fast taking the lead in emerging fields 
such as humanoid robots and developing new industries such as flying 
taxis. However, this model comes with costs. As much as 2% of GDP 
goes towards subsidising industries, and the state’s growing role has led 
to the collapse of private venture capital. The “pay-off” is also becoming 
increasingly unclear. Total factor productivity has stalled, efforts to 
build clusters of expertise have failed and there is “severe overcapacity” 
in many industries, including EVs. Foreign governments are increasingly 
resistant to Chinese imports, and some technologies – such as humanoid 
robots – don’t yet have a clear market. In creating world-class firms, 
China has accrued “vast and unsustainable” debts, and the poor return 
on investment may soon lead the conveyor belt to “grind to a halt”.
Health secretary Wes Streeting has “picked a fight” with Big Pharma, 
seeking to lower prices, but it’s not clear why he thinks he can win, says 
Druin Burch. Eli Lilly, for example, has paused British sales of its weight-
loss drug, Mounjaro, and when they resume next month they will do so at 
almost triple the cost. The trouble is, the existing deal did have problems. 
Two decades ago, public health body Nice decided that £25,000-£30,000 
was a reasonable sum to spend per quality-adjusted life year, for example. 
But the figure has stayed the same despite inflation. The result is that firms 
increasingly aren’t bothering to ask for their new drugs to be approved in 
Britain. Globally, the British market is small, but NHS centralisation helped 
with bargaining power. Now, however, Donald Trump is asking why the 
US, the biggest market in the world, should spend by far the most on drugs. 
He is insisting that pharma match the lowest prices they offer to other 
developed countries. That might explain why Britain is struggling to cut a 
deal – the industry couldn’t afford to extend the same offer to the US. It’s 
all very well Streeting railing against Big Pharma, but the game has 
changed. If we want drugs, “we are going to have to pay for them”. ©
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moneyweek.com 5 September 2025 
17 Best of the blogs
The economics 
of the awokening
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iea.org.uk
In 2014, I predicted that 
“woke” – or what I called then 
“political correctness” – was 
going to get a lot worse, says 
Kristian Niemietz. “And so it 
did.” The use of the term “white 
privilege” in the literature 
has almost doubled, for 
example. “White supremacy”, 
“Islamophobia”, “transphobia” 
and “intersectionality” have 
more than doubled. “Racism” 
rose only one-and-a-half-fold, 
but from an already much 
higher base. Other people have 
found similar results. But why? 
My argument was that 
woke beliefs had become what 
economists call “positional 
goods” –in other words, status 
symbols. These needn’t be 
physical goods – the flaunting 
of “high-status opinions” is just 
as much a form of conspicuous 
consumption as is the “flaunting 
of Rolex watches”. I predicted 
an “accelerating status-
thecritic.co.uk
Science fiction has long warned 
about intelligent computers 
taking over the world, says 
Robert Hutton. But it didn’t 
prepare us for what we’ve got: 
computers that “just make 
stuff up”. Barely a week goes 
by without someone sharing a 
story of an AI chatbot providing 
false information – lawyers who 
have used AI citing non-existent 
cases in court, for example.
Farming’s productivity boom
project-syndicate.org
European regulators tend to be 
too scared of downside risks, so 
they overregulate and stifle 
innovation, while their US 
counterparts tend to be more 
laissez faire, says Raghuram 
Rajan. AI is a case in point. The 
EU enacted the world’s first 
comprehensive AI regulation in 
2024, establishing strict 
safeguards. EU firms have little 
presencein the industry. Those 
“leading the charge” are rather 
US-based firms, that for now at 
least face little in the way of red 
tape and regulation.
The US approach brings its 
own risks. A whole system 
might blow up because of a 
rogue product – think subprime 
mortgages. Each approach 
comes with trade-offs. But the 
world might benefit from having 
the two different approaches. 
US chatbots can thrive in a 
relatively unregulated 
environment, experimenting 
and scaling quickly. But once 
they seek a global presence, 
they will run into Europe’s 
stricter standards. The result 
will, ideally, be a world with 
more and safer innovation. The 
world is best served if US and 
European regulators keep 
seeing their roles differently.
signalling arms race”, in which 
people would try to “out-woke” 
each other in competitive 
displays of high-status opinions. 
This is what was behind the 
“Great Awokening”. 
A similar theory was 
put forward by writer Rob 
Henderson. He says that, in 
the past, members of the upper 
classes would display status 
through luxury goods. But as 
this is now considered vulgar, 
elites signal their status via 
luxury beliefs instead – a belief 
that confers a high status on 
those who hold it, but because 
of their wealth they are shielded 
from the consequences should 
such ideas become actual policy. 
The fashionable slogan 
“Defund the police”, for 
example, would predictably 
lead, if implemented, to an 
explosion of crime, which 
would particularly badly affect 
poor neighbourhoods. But the 
people advocating it don’t care 
as they are largely insulated 
from the impact of the ideas 
they inflict on everyone else. 
Henderson’s theory does 
not fit the survey evidence very 
well. The people who hold 
high-status opinions are not 
necessarily very rich. That’s 
bad for his theory, but not for 
the “high-status opinions” 
theory because “high status” 
need not mean being rich. There 
are different kinds of status 
hierarchy. Woke progressives 
see themselves as part of a moral 
elite – morally superior to other 
people because they are able to 
think in systemic terms.
The theory could be 
disproved if it could be shown 
that high-status opinions are 
not strongly correlated with 
each other. But they are. If 
someone you meet has the right 
opinion about capitalism being 
inherently evil, for example, 
you can be pretty sure what 
their opinions are about 
decolonisation, crime, climate 
change, transphobia and so on. 
“High-status opinions usually 
come as a big package deal.”
The problem is that most 
people do not understand 
what AI is. All AI chatbots are 
capable of doing is generate 
plausible sentences based on 
calculations of what the next 
word in a sentence is likely to 
be. That is in itself an amazing 
achievement. But plausible 
sentences are not accurate 
ones. If we understand that, 
fine. But a lot of people don’t. 
The situation is reminiscent 
of an experiment in the 1960s, 
where humans interacted with 
a conversation-simulating 
piece of software, Eliza, much 
less advanced than today’s AI. 
The software was obviously 
unintelligent. But that didn’t 
stop people interacting with it as 
if it were. In short, the problem 
with AI might not be with the 
technology itself. It is with what 
is “located between the screen 
and the chair”. 
Fear humans, 
not chatbots
The trade-offs 
in regulation
bloomberg.com/opinion
When we think about technological advances, what tends to come to mind are such things as the 
internet, smartphones and AI, says Javier Blas. But recent years have seen a dramatic and overlooked 
“productivity revolution” in farming. Over the past century, crop yields have exploded. In 1975, rice 
farmers around the world harvested an average of 2.4 metric tonnes 
per hectare. By 2000, the yield was 3.8 tonnes. Today, it’s 4.7 tonnes. Other crops, from corn 
to soybean to wheat, have also seen massive gains. Without this boon, food prices would be 
significantly higher, and larger swathes of the world would regularly go hungry, with implications 
for political stability. These gains can be sustained and extended. The key is ensuring farmers 
have plentiful access to credit, so they can invest in modern machinery, fertilisers and pesticides. 
Irrigation is also essential, which demands public investment. Public money should also be 
channelled into research to improve seeds and genetically engineers variants able to tolerate both 
less rainfall and flooding. All this shows that fears that climate change would lead to food shortages 
were overblown. “Modern agricultural methods will save the day.”
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The banner is a Rolex watch for the educated classes
The problem is not the computer
Funds18
The sale after 17 years of the 
last of the government’s 
stake in NatWest has led some 
to claim that this was good 
news for the banking sector. 
The stock overhang has been 
removed and the sale has got 
the state off its back, they say.
Don’t count on it. Instead, 
this could herald open season 
for the government on the 
UK’s banks, meaning higher 
taxes, more regulation and the 
endorsement of new crackpot 
compensation schemes 
dreamed up by disgruntled 
consumers and grievance-
chasing lawyers. 
More insidious still is the 
cunning plan by Reform to 
save £35bn by the Bank of 
England (BoE) ceasing to pay 
interest on deposits held at the 
central bank by UK lenders. 
This proposal is so deluded 
that, almost inevitably, the 
government will adopt it.
The banks would seek to 
mitigate the loss of income by 
removing their deposits from 
the BoE and either investing in 
short-term gilts or lending to 
the private sector at whatever 
interest rate they could get. 
The former would bring down 
yields in the short term, helping 
the government to finance its 
borrowing requirement, the 
latter would reduce private 
sector borrowing costs. The 
snag is that the BoE would lose 
control of market interest rates.
● The six-month bidding war between Tritax 
Big Box Reit and Blackstone for Warehouse 
Reit has ended with Tritax withdrawing its 
offer shortly after the Takeover Panel said it 
would hold an auction to resolve the contest. 
Blackstone’s 115p per share bid (including a 
final dividend) had been accepted by 35.6% 
of shareholders as of 29 August. The offer 
requires 50% acceptance by 10 September to 
become unconditional.
● Investors in Gore Street Energy Storage 
have voted against a proposal by activist 
investor RM Funds to oust its chair and 
another member of the board. However, the 
battery energy-storage fund has appointed 
one new director and plans to add another 
next year to refresh the board as it battles 
investor anger over a weak share price, a 
large discount to NAV and a recent dividend 
cut. RM Funds, which owns about 6% of the 
shares, said the 30% of votes cast in favour of 
its motion showed “considerable 
shareholder frustration with the status quo” 
and that the chair should still resign. 
● In other renewables news, Bluefield Solar 
Income and NextEnergy Solar reported a 
4.3% and 3.6% decline in NAV for the quarter 
ended 30 June, largely as a result of lower 
price forecasts as seen in results from other 
renewable-energy funds lately. Foresight 
Environmental Infrastructure and Foresight 
Solar sold their stakes in the Lunanhead 
battery-storage project in Scotland, at a price 
in line with its recently reduced carrying 
value, and are considering options for their 
other battery projects. Investors in VH Global 
Energy Infrastructure voted for a three-year 
run-off and sale of its portfolio of assets in 
Europe, Texas and South America, with cash 
to be returned as the fund winds down.
Short positions... Tritax backs out of Warehouse battle
“The sector has performed 
very well and valuations have 
risen but earnings have grown 
faster than the market,” he says. 
“When we started, 12 years ago, 
the sector was trading on a 15% 
discount to the broader market; 
nowit’s on 12 times earnings or 
11 times excluding the data-
service companies such as Visa 
and Mastercard. This is a 30% 
discount to the market.”
Financials have been widely 
distrusted by investors since the 
2008 financial crisis, but “banks 
have been forced to clean up 
their act and a lot of risk has been 
shifted off-balance sheet. The 
financial system has much more 
capital and liquidity, household 
and corporate balance sheets have 
seen a significant strengthening, 
yet the sector remains unloved.”
The sector would benefit 
from lower interest rates and 
lighter-touch regulation in the 
US and Europe. “We believe it 
would take a severely negative 
macroeconomic scenario 
to end the sector’s relative 
outperformance,” says Brind.
PCFT is trading at a 5% 
discount to net asset value 
(NAV). It offers the chance to 
redeem at NAV every five years, 
and the latest redemption cut 
the market cap by more than 
40% to £350m. Fees have been 
reduced and a revised dividend 
policy pays 4% of NAV yearly. 
An equally compelling 
investment worth considering is 
Polar Capital’s Global Insurance 
Fund, which has returned 
98% over five years and 223% 
over ten.
UK banks are no bargain
The proposed merger between the 
Hansa and Ocean Wilsons investment 
trusts – which are both effectively 
controlled by the Salomon family – is 
“deeply flawed and unfair”, says US 
value investor Arnhold, which holds 
a stake of roughly 3.1% in Ocean 
Wilsons. Under the deal, investors 
in Ocean Wilsons will receive shares 
in Hansa in a ratio determined by the 
two trusts’ respective NAVs. Arnhold 
argues that this is “destructive to 
shareholders of Ocean Wilsons” since 
Hansa trades at a large discount to 
NAV. They would be better off if Ocean 
Wilsons were liquidated and the cash 
returned to them, says Arnhold, which 
is urging shareholders to vote against 
the plan on 12 September. Hansa 
has called the criticisms “inaccurate 
and misleading”.
 5 September 2025 moneyweek.com
Activist watch
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The stimulus to monetary 
growth would create a spiral 
of rising inflation and a 
weakening currency, with 
the Bank of England and 
government powerless to stop 
it. Banks would be trebly hit: by 
the loss of revenue, the boom 
leading to bust with multiple 
insolvencies, and by the lower 
valuation of their shares in 
foreign currency terms.
Investors should instead 
consider the Polar Capital 
Global Financials Trust (LSE: 
PCFT). Almost 90% of trust’s 
assets are invested outside the 
UK: 40% in banks (JPMorgan 
is the largest holding at 7%), 
18% in insurance and 38% 
in financial services such as 
Mastercard and Visa. The 
portfolio has returned 19% 
over one year, 54% over 
three and 118% over five. 
Since NatWest, Lloyds and 
Barclays have all performed 
considerably better than that, 
now might be a good time to 
switch out of UK financials and 
into PCFT. 
Reduced exposure
Nick Brind and George 
Barrow, the trust’s managers, 
have significantly reduced 
their exposure to banks in the 
recent years – their allocation 
to the sector was 59% of the 
portfolio three years ago and 
49% two years ago. “Some 
banks are great businesses,” 
says Brind, “but we see better 
opportunities elsewhere.”
The sector faces severe political risks. Switch into this global financials trust instead
Nigel Farage’s cunning plan for bank reserves will harm UK lenders 
Max King
Investment columnist
Investment focus20
 5 September 2025 moneyweek.com
The television drama Succession ended two years 
ago, but the fictional squabbling of the Roy family 
reflects how many family firms – where a family or 
the founder retains a major stake – are still viewed. 
Sometimes that view would not be far from the truth 
– families and founders do indeed sometimes treat 
their firms as their “own little fiefdoms” and minor 
investors can end up being “treated poorly”, says Tom 
Wildgoose, head of equities at Sarasin & Partners. 
Family ownership can also, however, give rise to 
“pride in building the business in a long-term and 
sustainable way”, which means staff and customers 
are treated well. Here we consider why you may want 
to have some family firms in your portfolio, as well as 
how to distinguish the good from the bad.
Benefits of family ownership
Perhaps the most obvious benefit of family ownership 
is that “you’ve got a group of people who are 
extremely committed to the company and its long-
term survival”, says Gerrit Smith, manager of the 
Stonehage Fleming Global Best Ideas Equity Fund. 
Unlike institutional investors, who tend to sell at 
the first hint of trouble and are reluctant to get 
involved with the company’s daily operations, 
families “are less concerned with every fluctuation 
in the firm’s share price, or quarterly twist and 
turn”. Instead, they “care more about doing what is 
strategically right for the business”.
This is important because professional managers 
tend to focus too much on the short term, say George 
Godber and Georgina Hamilton, managers of the 
Polar Capital UK Value Opportunities Fund. The chief 
executive of a FTSE 100 company stays in post only 
for an average of around five years, so they have no 
financial incentive to make long-term investments that 
might only pay off in ten – all the more so if making 
the investment means cutting profits for the next year 
or two, which is the time frame over which the market 
usually judges a company’s performance.
Godber and Hamilton point to Morgan Sindall as 
an example. Founder John Morgan still owns a large 
chunk of the shares, making him the second-largest 
shareholder. This has given him the incentive and 
power to get the firm to make investments in its social-
partnership and urban-regeneration businesses. An 
ordinary CEO “simply wouldn’t have done” this. The 
company is now set to reap significant rewards from 
this forward-thinking behaviour and spending, as 
these areas provide a source of future growth.
Michael Field, chief European market strategist 
at Morningstar, agrees that a family with “skin in 
the game” in the form of a large stake can help hold 
management to account, especially when it comes 
to using funds in an efficient and productive way. 
Executive short-termism is a problem, but a lack of 
accountability can also lead to the opposite issue 
– what Field calls “empire building”. Even when a 
company has few opportunities for investment-led 
growth, chief executives may go on a buying spree or 
make other dubious investments rather than distribute 
the cash to investors, in the hope of increasing their 
Put all thoughts of squabbling heirs to one side – the truth is that it makes sense to invest in firms 
that are controlled by families. Matthew Partridge suggests some of the best to buy now
pay and prestige. Family owners, in contrast, “may 
depend on the income they get from their dividends to 
survive”, so they will want to ensure the firm’s money 
isn’t just wasted. Family ownership can, then, help 
ensure the firm is run in the interests of all investors – 
including those interested in a regular income.
Smith notes that the same incentives that make 
family firms put reins on executives eager to buy other 
firms also makes them more focused on “one, or just a 
few, areas of business”. This increased concentration 
gives them an edge over more bloated conglomerates, 
that can come to lack purpose. 
Overall, there is “a huge amount of academic 
research suggesting that family-owned companies 
tend to outperform their rivals”, notes Wilfrid Craigie, 
a senior investment analyst at Asset Value Investors. 
Craigie points to work by the now-defunct Credit 
Suisse Research Institute, which compiled a list of 
the top 1,000 family firms (defined as a firm where 
a family or the founder owns more than 20% of the 
shares or voting rights). They found that, between 
2006 and 2022, family-owned firms beat the market 
by an average of about 3% per year, even when 
adjusting for the sectorin which a company operated. 
Smaller firms did particularly well.
It’s not all smooth sailing
Despite the evidence that family firms deliver better 
returns on average, Craigie emphasises that, in 
many individual cases, they also come with 
drawbacks. One of the most obvious is that family 
influence means outside shareholders have “less 
power to influence the company’s direction”. 
What’s more, there have been many cases where 
the family hasn’t acted in the best interests of other 
shareholders. In the worst-case scenarios, such 
companies can be treated “as something of a piggy 
bank for the family controlling them”.
Field agrees that family ownership can be a 
“double-edged sword” because family-controlled 
firms may not have the same consideration for 
minority shareholders that typical public companies 
do. He notes a number of controversies where 
family owners floated their company to raise cash, 
then “stood by as the share price fell, using it as an 
opportunity to buy back the outstanding shares at a 
much lower price, with the result that the minority 
shareholders lost out”. 
Family firms, in general, may also “not be as 
professionally run as other firms, and lack the 
transparency and communication that you would 
expect from companies of their size”. Field cites 
the examples of SGS in Switzerland and Bureau 
Veritas in France, two family-owned testing and 
inspection firms, as being far worse than their 
British rival, Intertek, when it came to transparency 
and communication. This has a knock-on impact 
on how some family firms are viewed and valued by 
the market.
This last point is particularly crucial. The market’s 
“mistrust” of family firms means that, even if the 
controlling family isn’t behaving badly, the perception 
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Why it pays to keep 
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“Between 
2006 and 
2022, family-
owned firms 
beat the 
market by an 
average 
of about 3% 
per year”
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that they are not being fully straightforward can 
have a devastating impact on a company’s share 
price. Field points to the catering company Sodexo, 
which removed its outsider CEO and installed 
Sophie Bellon, the daughter of the company’s founder, 
in his place. Although the move “wasn’t necessarily 
a bad idea in itself”, the company’s shares fell on 
the news because “markets were sceptical about the 
idea of a family owner installing themselves as CEO 
without a proper global search”.
How the outlook differs globally
The nature of family ownership tends to differ from 
country to country. James Harries and Blake Hutchins 
of Troy Asset Management note that the US has 
many “amazing family businesses that have become 
multi-million, or even multi-billion-dollar firms”. 
There is also “a rich tradition of well-run family firms 
in the Nordic countries, especially in Sweden”, while 
continental Europe, too, has many successful, multi-
generational, family-run firms, says Craigie. 
But in countries such as France, many family 
firms are structured to minimise the tax their 
owners have to pay (an important consideration 
given the country’s wealth taxes). “So you end up 
with very complex cascading structures where one 
holding company owns a stake in another holding 
company.” The market generally doesn’t welcome 
the complexity of such structures, so they tend to 
trade at a “discount to the discount”, says Craigie. 
Many European family-owned companies “have 
managed to survive for multiple generations” – 
sometimes for as many as five, six, or even seven – 
those in Asia have more problematic attitudes toward 
stewardship. In that case, “as sad as it is to say, the 
old cliché about the second and third generation 
squandering what the first generation built up might 
have a ring of truth to it”, something that also applies 
to Latin America.
Gaurav Narain, principal adviser at the India 
Capital Growth Fund, is blunt about the 
shortcomings of Indian firms. High taxes and poor 
governance meant that, until recently, they were 
notorious for founders and family owners using 
dubious transactions between separate parts of their 
business empire to divert money from the pockets of 
both shareholders and the taxman. What’s more, due 
to the relatively large size of many Indian families, 
“the number of family members involved kept 
increasing to the point where you didn’t know who 
was calling the shots”.
The good news is that such attitudes are 
changing. Narain points out that many Indian 
tycoons are educating their children outside the 
country. This new generation of Indian business 
leaders, who are now playing major roles in their 
family companies, are “trying to incorporate the 
best practices of the US and elsewhere when it comes 
to corporate governance”. This means having a 
strong board and getting professional managers as 
executives, “with the family members providing 
strategic direction rather than being in charge of the 
Continued on page 22
“When 
deciding which 
firm to invest 
in, one of the 
most important 
things to watch 
out for is the 
quality of 
governance”
The Roy family might not be the best model, but family-ownership is generally good for investors
Investment focus22
 5 September 2025 moneyweek.com
day-to-day management”. Indian family firms are 
hence “now very well-run businesses”.
Similarly, Craigie notes that over the past few 
decades, sprawling European conglomerates have 
started to rationalise and simplify their structures. 
This process is by no means complete, but the pace 
of change is quickening, possibly helped by the fact 
that countries such as Germany, the Netherlands 
and France have abolished their wealth taxes. 
As well as making family firms easier to manage, 
these changes have helped unlock a lot of the value 
hidden away in the web of interconnected holdings, 
as well as reducing the discount the market applies to 
such entities.
What investors should look for (and avoid)
There is a strong consensus that, when deciding 
which family firm to invest in, one of the most 
important things to watch out for is the quality 
of the firm’s governance. Like Narain, Craigie 
thinks the best situation is where there is a division 
of labour between family members and professional 
executives. In an ideal world, such firms “would be 
run by professional managers, with the rights 
of minority shareholders protected, while the 
family provides more of a long-term ethos”. He also 
likes to see evidence that the company is allocating 
capital efficiently.
Another key factor in judging the strength of 
governance within a family firm is transparency, says 
Field. This can be demonstrated by the documents 
they produce and “the level of detail they go into 
about their business in terms of revealing numbers and 
strategy”. If a family-run firm proves as transparent as 
its peers, that is a good sign. However, if it isn’t willing 
to get into much detail about how their business is 
doing, then that is a definite “red flag”.
Investors should also be particularly wary of 
investing in family-run companies that have been 
rocked by “incidents in the past or various scandals”, 
says Field. At the same time, it could be worthwhile 
to buy into a family-run company that is genuinely 
“trying to take positive action to improve the 
quality of its governance”. Of course, deciding 
whether the change is genuine involves some work, 
as it is easy for firms to come out with rhetoric 
claiming they are trying to change “without doing 
anything meaningful”.
In short, “you need to check to see the exact steps 
that they are actually taking”, says Field. Increasing 
the number of independent, non-family members on 
the board of directors would be a positive step, for 
example. Or changing divisions or moving away from 
certain unprofitable business areas. One positive sign 
that a company has moved on from a scandal is if “it 
is able to demonstrate properaccountability by having 
heads roll in the boardroom”, even if that means 
family members lose out.
Continued from page 21
“One sign 
a firm has 
moved on 
from scandal 
is if heads 
roll in the 
boardroom” 
The best investments to buy now
AVI Global Trust (LSE: AGT) invests in lots 
of family-owned companies, as analyst 
Wilfrid Craigie believes they fit the fund’s 
mandate of “investing in durable, growing 
businesses at deeply discounted 
valuations”. The trust’s top five holdings 
include Vivendi (controlled by the Bolloré 
family), News Corp (Murdoch family), and 
D’Ieteren Group (D’Ieteren family). The AVI 
Global Trust, run by Joe Bauernfreund (see 
page 30), has outperformed comparable 
investment trusts over the last one, three 
and five years, and trades at a discount of 
6.4% to net asset value. The ongoing 
expense ratio is just 0.87%. 
Craigie thinks D’Ieteren Group (Brussels: 
DIE) is “a real crown jewel”. Even after more 
than doubling its revenue and growing its 
adjusted earnings fivefold from 2019 to 2024, 
it trades at only 12.6 times 2026 earnings, a 
multiple that should increase if the company 
follows through on plans to float subsidiary 
Belron, in which it owns a 50% stake.
Another investment trust with a strong 
family focus is the India Capital Growth 
Fund (LSE: IGC). Principal adviser Gaurav 
Narain estimates that the majority of 
companies in the portfolio are family-
owned, including the two largest, Dixon 
Technologies and Skipper. The fund has 
returned an average of 15.3% a year since it 
was set up in 2011 and has outperformed 
other India trusts over the past five years. It 
trades at a discount of around 6% to net 
asset value and has an annual management 
charge of 1.25%. 
Narain is particularly bullish about 
PI Industries (Mumbai: PIIND). It has built up 
a great reputation with global companies 
because, unlike many rivals, it respects 
intellectual property rights. The decision by 
the Singhal family to professionalise the 
management has also helped the firm grow 
earnings by roughly 20% a year.
As stated in the main story, George 
Godber and Georgina Hamilton of 
Polar Capital are big fans of Morgan Sindall 
Group (LSE: MGNS), a UK-based 
construction and regeneration group that 
“epitomises” the type of founder-driven 
firm that is able to deal with challenges as 
they arise. Morgan Sindall has seen its 
revenue grow by half between 2019 and 
2024 and is expected to keep growing 
strongly. Income investors are now reaping 
the rewards of this growth, with the 
dividend increasing more than sixfold 
during this period. Morgan Sindall trades at 
13 times 2026 earnings and pays a dividend 
yield of 3.4%.
A promising European firm is 
EssilorLuxottica (Paris: EL), about a third of 
which is owned by the Del Vecchio family 
(descendants of Leonardo Del Vecchio, who 
founded Luxottica). Gerrit Smith particularly 
likes the fact that, although the family is not 
involved in day-to-day management, they 
“have helped give the firm a strategic focus, 
as well as a long-term plan”. EssilorLuxottica 
continues to enjoy strong growth, with 
sales more than doubling between 2019 and 
2024, which justifies the fact that it trades at 
37 times 2025 earnings.
Tom Wildgoose, head of equities at 
Sarasin & Partners, particularly likes 
AO Smith (NYSE: AOS), which makes water 
heaters. The firm was founded 150 years ago 
by Charles Smith and his descendants still 
own just under a fifth of the shares. 
Wildgoose praises the fact that the company 
has delivered “strong and steady financial 
results for many years”. The firm has grown 
sales at a rate of roughly 5% a year over the 
past five years, with normalised earnings per 
share growing by more than two-thirds 
during the same period and delivering 
returns on capital employed of more than 
20%. The stock trades at a relatively modest 
rate (for the US market) of 17 times 2026 
earnings, with a dividend yield of 1.97%.
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The future is bright for EssilorLuxottica under the Del Vecchio family
Opinion 23
moneyweek.com 5 September 2025 
A dominant military, political instability and a 
reliance on foreign aid and bailouts are hardly 
hallmarks of successful economies. Yet Pakistan’s 
stockmarket is booming. The Karachi Stock Exchange 
KSE-100 index has returned nearly 90% in the past 12 
months, compared with the FTSE 100’s 10%, dipping 
slightly in May when tensions escalated with India. 
Meanwhile, the Pakistani rupee has been relatively 
stable by past standards, down 4% over the year. 
Market sentiment towards Pakistan improved after 
it secured a new $7bn loan from the International 
Monetary Fund (IMF) last September and promised 
sweeping reforms, including raising gas and energy 
prices and expanding the tax base. The IMF deal has 
“significantly reduced the risk of any kind of near-
term balance of payments crisis or debt default”, says 
Gareth Leather from Capital Economics. 
“And by and large, the economy’s actually done 
quite well since then. So, foreign exchange reserves 
have recovered [and] exports are doing okay. The 
economy is broadly on the right track... I think [the 
equity market’s rise] reflects an easing of concerns that 
the worst-case scenarios are no longer likely.”
But the rally could also foreshadow a long-term 
bull market based on a sea change in economic 
management and potential. Thomas Hugger from 
Asia Frontier Capital believes Pakistan could become 
the “Vietnam of South Asia” owing to its large 
population, low salaries, and abundant natural 
resources such as gold and copper. “If the current 
government is really serious about it [reform], I think 
they could have the chance to become a mini-Vietnam, 
create a lot of jobs and… create a middle class, and 
that would be huge.” 
Still, Pakistan is navigating a rocky route to 
recovery, having narrowly escaped a sovereign debt 
default in 2023 with a temporary IMF deal and 
funding from Saudi Arabia, the United Arab Emirates 
and China. Pakistan owes China about $29bn, 
roughly 22% of its external debt. Some reforms, 
such as reducing import restrictions and removing 
energy subsidies, have increased inflation, which hit 
38% in June thanks to high food and petrol prices. 
Inflation eased to 28.3% in July and 27.4% in August, 
according to official data. 
Roller-coaster ride
Pakistan has a chequered history of boom-and-bust 
cycles, anaemic growth, poor income-tax collection 
and a large informal economy. “Debt accumulation 
has been overwhelmingly used to continue fostering 
a consumption-focused, import-addicted economy 
without investment in productive sectors or industry,” 
say Ammar Habib Khan and Zeeshan Salahuddin 
in a report for Tabadlab, a Pakistani think tank. 
“Consumption [via] imports continues to grow, 
while exports and remittances remain stagnant, thus 
shortening the boom cycle, leading to another bust 
and more inflation. This cycle repeats ad infinitum.” 
Furthermore, the military has enormous sway over 
the economy and politics. Any leader who falls foul of 
the military does not stay in the job very long. Former 
prime minister Imran Khan has been imprisoned 
since August 2023 on what he claims are trumped-up 
corruption charges. “The wild card is the army,” said 
Hugger. “They have their own interests, and that’s not 
normal and sometimes not in sync with the economy. 
If Pakistan is now serious about reform, 
it’s time to buy, says Maryam Cockar
They want to continue to live their great life… these 
army generals make a lot of money, and it costs a lot of 
money [for] the state, and that’s the issue here.”
Leather says the army is responsible for Pakistan’s 
political uncertainty and military coups, which 
have dragged on the “broader business environment 
and sentiment that foreigners have towards the 
country”. That is one of the reasons why the economy 
has performed so badly over the past few decades. 
However, nuclear-armed Pakistan may be too 
strategicallyimportant to the US and China to fail, 
which is a disincentive to reform for the government. 
Pakistan’s relations with both have warmed recently. 
Islamabad secured a 19% tariff on US goods, lower 
than India’s 25% (and now 50%), and an agreement 
to develop oil reserves with the Trump administration. 
Textiles are Pakistan’s biggest export, and the US is 
Pakistan’s largest export market, with exports of more 
than $5bn as of 2024, and imports of roughly $2.1bn.
Pakistan is not, however, an “especially trade-
dependent open economy” compared with other 
“dynamic” Asian economies, says Leather. “Tariffs 
aren’t the end of the world in the same way they 
would be for, say, Vietnam. Having said that, they’re 
certainly not going to help… if it’s harder to export to 
the world’s biggest economy.” 
Meanwhile, officials recently held talks about 
deepening ties with China, and the second phase of the 
China-Pakistan Economic Corridor, part of the Belt 
and Road Initiative. 
What now? Doubts remain as to whether 
Pakistan can stick to the IMF reforms. “What’s 
happened in the past in Pakistan is that they’ve 
made all these promises, they’ve agreed a deal with 
the IMF, the… worst-case default has been avoided, 
but then a couple of years later, when the economy’s 
past the worst, they renege on these deals. They go 
back to their old ways, and I think that’s the danger 
with Pakistan, that things are looking okay at the 
moment. But that is typically the time when they 
start to renege on their promises,” says Leather. “It’s 
whether they can… stick with the [IMF] programme 
for the lifetime of it.” 
But Hugger is more optimistic. “You can trade [on 
a] couple of weeks’ or months’ outlook, but… if you 
really want to make a lot of money, then you need to 
be a long-term investor and get it right.”
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The Vietnam of South Asia?
“Pakistan’s 
appealing 
qualities 
include 
a large 
population, 
low salaries 
and abundant 
gold and 
copper” 
The military has enormous sway over politics and the economy
 
Analysis24
 5 September 2025 moneyweek.com
Speculation has reached fever pitch about the contents 
of the government’s forthcoming Autumn Budget. 
This follows the assessment of the highly respected 
NIESR (National Institute of Economic and Social 
Research, Britain’s oldest independent economic 
research institute) that the government is more than 
£40bn adrift of the “fiscal rule” of achieving balance 
within five years. Allowing for a safety margin of 
£10bn, that means a requirement for £51.1bn, either 
in extra taxes or lower spending or both, annually 
by 2029-2030.
Slow growth, unexpectedly high inflation, 
disappointing tax revenues and overspending have 
caused the government’s finances to deteriorate 
rapidly. The promise of chancellor Rachel Reeves, that 
last year’s swingeing tax increases would be the last of 
this parliament, looks set to be broken.
 Most of the speculation has centred on tax 
increases on the well-off, whether on property, income 
or overall wealth. This is partly due to the Labour 
Party’s manifesto pledge not to increase the rates 
of income tax, national insurance or VAT; partly 
because there is little that excites the left more than the 
prospect of raising taxes on the better-off; and partly 
because the media loves scaring people about taxation.
Unintended consequences
However, there is abundant evidence that last 
year’s tax increases have been counterproductive, 
slowing economic growth, reducing compliance and 
encouraging taxpayers to change their behaviour, 
even their residency, to reduce tax. These appear to be 
factors that the government and its Treasury advisers 
grossly underestimated, if it considered them at all. Or 
maybe they just didn’t care. The taxes were motivated 
by revenge on the government’s enemies as much as on 
raising revenue.
In theory, there are three ways Reeves could address 
the problem: cut spending, raise taxation or abandon 
the fiscal rules constraining the government’s room 
for manoeuvre. Given that even modest reductions in 
the growth of welfare spending have been defeated 
by backbench revolts and that increases in spending 
have been built into the government’s strategy, cutting 
spending is not an option. 
Abolishing the fiscal target and allowing national 
debt to go on increasing may seem attractive but 
the cost of borrowing has continued to rise even 
as the Bank of England, more concerned to help 
the government than to exercise its theoretical 
independence, cuts interest rates. The cost of ten-year 
debt has risen to 4.7%, close to its January peak; that 
of 20-year debt to over 5.4%.
Some economists have been “crying wolf” about 
the risk of a spike in gilt yields, as supply continues 
to increase but demand drops away. So far, the trend 
has been slowly upwards but that could change; the 
point about the parable of the boy who cried wolf is 
that nobody believes him when the wolf eventually 
arrives. Scaremongering has proved premature but 
crises blow up very quickly. Anatole Kaletsky of 
Gavekal points out that rigid adherence to the fiscal 
The economy will shake off its torpor and grow robustly, 
says Max King. But not under the current government
rule leaves the chancellor unable to respond to an 
economic downturn. “Rather than benefiting from the 
Keynesian automatic stabilisers that have underpinned 
macroeconomic management since the late 1930s,” 
he writes, “the UK government has embraced a pro-
cyclical demand policy that might have been designed 
to amplify economic instability”. This is true but is the 
result of successive governments operating too close to 
the fiscal edge rather than leaving themselves room to 
respond to unexpected shocks.
Supply-side blunder
Kaletsky is on stronger ground criticising the 
government’s fiscal policy. “Starmer’s ban on any 
change to headline tax rates has compounded the 
demand-side error of pro-cyclical fiscal tightening 
with a supply-side blunder: imposing high marginal 
tax rates on a narrow base. This distorts the economy 
structurally, discourages investment, provokes 
political resistance, and encourages avoidance – 
guaranteeing disappointing revenue yields.”
He points out that “90% of British workers have 
qualified for big tax reductions since 1990” so that 
“fewer than 10% of taxpayers now bear the entire 
burden of financing the expansion of Britain’s 
welfare state, a shift to what may be the world’s most 
progressive income-tax structure [that] occurred 
almost entirely during the 15 years of Conservative 
government from 2010 to 2024”.
He shows that “median British workers pay less 
tax than those in other rich economies”, leaving 
Britain’s finances dependent on “a very small 
minority of high earners who would probably prefer 
to abolish or bankrupt the welfare state rather than 
to pay ever higher taxes”. He goes on to argue that 
“the obvious – and, in my view, the only – solution 
that will ultimately convince the markets is for 
Britain to increase income tax and reverse the fiscal 
restructuring of the past 25 years”.
In other words, increase the basic rate of income 
tax to 22% and then to 25%. This, he argues, would 
restore bond investors’ faith in the sustainability of 
government finances, increase confidence and restart 
growth. More of government services would be 
Britain is on the 
road to nowhere
“The point 
about the 
boy who 
cried wolf is 
that nobody 
believes him 
when the wolf 
eventually 
arrives” 
There is little that excites the left more than taxing the rich
Analysis 25
moneyweek.com 5 September 2025 
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funded with revenues contributed by the citizens who 
benefit from them. The NIESR also says that freezing 
tax thresholds and raising the standard and higher 
rates of income tax by 5% would close the fiscal gap, 
so Kaletsky is not alone. 
The problem is that such a policy would drive 
a coach and horses through Labour’s manifesto 
commitment.For that reason, Kaletsky doesn’t expect 
this to be implemented in the Autumn Budget. Instead, 
“Reeves will likely propose intolerable tax increases 
“Reeves is 
likely to 
propose tax 
increases in 
the Budget 
that will end 
any hope of 
growth” 
that would extinguish any lingering hope of reviving 
growth – and prove politically unviable. The resulting 
backlash could spark a financial crisis and force a Black 
Wednesday-style U-turn in 2026.” Kaletsky believes 
that such a U-turn, which he thinks is inevitable, 
combined with a relaxation of the fiscal rule would, as 
in 1992, be “an economic liberation that could spark 
an unexpected national revival and growth boom”.
A fresh start?
There are, however, some problems with the 1992 
analogy. Then, Britain was in recession with high 
interest rates and sterling tied to the over-valued 
deutschmark, providing no hope of escape. Breaking 
the link enabled interest rates to be cut and sterling to 
fall, though all the fall was recovered in the subsequent 
economic recovery. By 1997, the economy was 
growing strongly, the government’s finances were 
heading for surplus and taxes were being cut. 
It’s very hard to see raising income tax as having 
the same effect, even if it would stabilise bond yields 
and interest rates. Moreover, despite the success 
of the 1992 U-turn, the Conservatives still lost 
the subsequent 1997 election decisively. Labour 
backbenchers will be well aware of this. Kaletsky is 
probably right – there is no alternative – but that does 
not mean that backbenchers or other members of 
the government will support it. It is more likely that 
the government will fall and be replaced either by a 
national government, as in 1931, or by an election. 
That may sound like bad news but it will pave the 
way for a resolution. Several countries have faced 
a fiscal and economic crunch but have emerged 
revitalised. Not just the UK in 1992 (arguably a false 
dawn) but also Sweden, Greece, Italy and, most 
recently, Argentina. New governments implemented 
what was previously politically unthinkable, regained 
the confidence of the currency markets, deregulated, 
made government more efficient and revived growth. 
It just won’t happen under the current government. 
Rupert Hargreaves
Investment columnist
The rise of artificial 
intelligence (AI) has made 
it incredibly easy for criminals 
to attack computer systems. 
Defending against these attacks 
is now at the front of mind for 
many of the world’s businesses 
and consumers. Indeed, a 
quick online search for the 
word “cyberattack” shows the 
scale of the problem. At the 
end of August, US AI company 
Anthropic said its technology 
had been “weaponised” by 
hackers “to commit large-scale 
theft and extortion of personal 
data”. It said its tools had been 
used to hack 17 organisations, 
including government bodies. 
And that’s just one headline. 
So it’s no surprise an arms 
race has developed between 
cybercriminals and security 
experts. Okta (Nasdaq: OKTA) 
is one of the businesses in the 
vanguard. The US firm offers 
a platform that enhances 
security by verifying users’ 
identities. It provides secure 
identity verification, single 
sign-on (SSO) and multi-factor 
authentication (MFA) to protect 
identities and enable users to 
access apps from any device. 
Missing out on a rally 
SSO allows users to sign on 
to multiple platforms with 
a single set of credentials, 
removing the need to remember 
numerous passwords. That’s 
especially important as AI’s 
ability to crack passwords 
improves. The current best 
practice for passwords today 
is to use unique, randomly 
generated pass phrases of 
12-16+ characters, combining 
uppercase letters, lowercase 
letters, numbers and symbols. 
Many users resort to simple, 
easy-to-remember passwords 
and reuse the same password 
across multiple platforms. 
Okta’s MFA provides other 
authentication methods to 
approve a sign on, adding a 
critical layer of security. It’s a 
step-up from the two-factor 
authentication process that’s 
become universal in the 
banking industry over the 
past five years. Two-factor 
authentication comprises two 
forms of identification, such as 
a password and a code sent via 
text message. MFA can include 
three or more layers, including 
biometrics and a random 
number code generator app.
Demand for the company’s 
authentication software is 
brisk. Okta is forecasting sales 
of just under $2.9bn for the 
2026 financial year, up from 
$234m in 2021, a compound 
annual growth rate of 36.1%. 
However, over the past five 
years, the shares have lost 55% 
of their value and Okta has 
missed out on much of the AI-
fuelled rally that’s taken place 
over the past 12 months. 
There are two reasons 
for the company’s lacklustre 
performance. Firstly, 
while revenue has grown 
exponentially over the past five 
years, it has slowed in the past 
three, falling to a compound 
annual growth rate of about 
15%. The second issue was 
that in 2022, the shares fell by 
more than 70% after it was 
revealed that hackers had stolen 
information on all users of its 
customer support system in a 
network breach. It has taken 
Okta a few years to conduct a 
thorough review of this breach 
and make changes to stop it 
happening again. 
Return to growth 
Okta appears to be moving 
past the issues that have 
plagued the business over the 
past three years. Its second-
quarter earnings release 
blew past Wall Street and 
management expectations. A 
key part of the growth came 
from US government contracts. 
Despite Trump’s plans to cut 
spending, the overall trend 
across government contracts 
was positive, according to 
the company. Overall for the 
quarter, the company’s net 
retention rate, a metric to 
show growth with existing 
customers, came to 106% in 
the quarter, unchanged from 
three months ago. This rate, 
according to UBS, should 
Okta provides vital security services and appears cheap considering AI’s growing prominence 
An undervalued cybersecurity play
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accelerate over the coming 
quarters as the headwinds of 
the Covid-cohort of customers 
roll off and Okta returns to 
organic growth with its new, 
improved tools. 
Management believes there’s 
a huge opportunity to profit 
from the growth of AI agents, 
autonomous software systems 
powered by generative AI that 
can reason, plan and execute 
tasks. This market is expected 
to grow from $5.7bn in 2024 to 
$52.1bn by 2030, according to 
the Boston Consulting Group, 
with a compound annual 
growth rate of 45%. Okta has 
built a niche in agent-to-app 
and app-to-app access, and last 
month it paid $100m to acquire 
Axiom, a start-up specialising 
in non-human identity security.
Despite its potential, there’s 
still scepticism surrounding the 
company and its outlook. This 
could present an opportunity. 
Right now the shares are 
trading at a forward price-to-
earnings ratio (p/e) of 27.1, on 
UBS estimates, falling to just 
16.6 by 2030. Strip out Okta’s 
$2.4bn projected year-end net 
cash balance ($13 per share) 
and the ratio falls to 23. The 
company’s cash generation 
is even more impressive. It’s 
trading at a free cash-flow yield 
of 4.8%, making it somewhat 
of an outlier among tech stocks. 
For fiscal 2026, UBS has the 
company generating a free cash 
flow of $819m with a free cash 
flow margin of 28.4%. 
Okta’s valuation also 
appears cheap compared to 
Palo Alto’s recent acquisition of 
CyberArk. The two companies 
both specialise in securing 
access points within networks, 
with CyberArk focusing on 
the mission-critical, highest 
risk accounts. Still, Palo Alto 
paid $25bn to get its hands on 
the group’s technology, for a 
business generating just $1.3bn 
in annual recurring revenue as 
of the second quarter. Analysts 
believe the deal could be a net 
positive for Okta’s shares due 
to the dwindling number of 
opportunities in the space. UBS 
also believes the deal could 
be a positive development for 
Okta’s sales ascustomers look 
for an independent option, 
one that’s not controlled by 
one of the tech sector’s most 
prominent players.
Companies26
Okta (Nasdaq: OKTA)
Share price in US dollars
300
200
100
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20222021 2023 2024 2025
 5 September 2025 moneyweek.com
Biometric checks are the future for cybersecurity
 5 September 2025 moneyweek.com
Profit from the sun’s power
But solar panels come with high costs and take time to pay for themselves
Though prices are far lower 
than they were at the apex 
of the energy crisis in 2022, 
powering your home still costs 
far more than it did before 
the pandemic. No wonder, 
then, that more than 1.3 
million households now use 
solar panels, or photovoltaics, 
according to government data.
The panels convert the sun’s 
free energy into electricity, and 
you will be using clean and 
renewable energy to power up 
your appliances.
According to the Energy 
Saving Trust, a typical home 
using solar panels could save 
around one tonne of carbon 
per year, the equivalent of 
driving 3,600 miles. And, 
once you pay for installation 
costs, your bill could be 
slashed by hundreds. You 
could reduce it by as much 
as 90% by using solar panels 
and batteries, according to 
Octopus Energy. But are 
solar panels for everyone? 
Installation costs and where 
you live are key considerations.
A big budget
Solar panels should eventually 
pay for themselves, but upfront 
costs run into the thousands of 
pounds. Solar-panel standards 
body MCS says the average 
cost of solar-panel installation 
in 2025 is between £7,200 to 
£7,700, but it could well be 
higher, depending on your 
Energy price 
cap creeps up 
home. Once installed, they 
will start generating power. 
But to increase your savings, 
you are likely to need to invest 
in a battery, which will set 
you back by between £7,000 
and £10,000. A battery stores 
the energy generated for later 
use; without it the panels can 
still power your home, but 
only while there is sunlight. 
Consider a diverter too. It is a 
device that can use solar energy 
to heat your hot water and will 
cost £300. 
Selling back to the grid
You can add to your savings 
by selling any surplus energy 
back to the grid using the 
Smart Export Guarantee 
(SEG) tariff. It is available in 
England and each provider has 
its own export tariff, which 
ensures you are paid for the 
energy you generate. 
You will need to register 
with a SEG supplier, but 
always shop around, as the 
rates and terms vary. 
The Energy Saving Trust 
claims it could take between 
ten and 15 years for a solar-
panel system to pay for itself, 
depending on how long you 
are in your home every day. It 
will also depend on where you 
live in the UK, and how much 
sunlight your home gets. 
For example, a solar-panel 
system in London will pay 
for itself in ten to 12 years, 
while one in Stirling will take 
between 12 and 15 years. And 
if you live in Belfast, it could 
take as much as 21 years for 
savings to outweigh costs.
An unshaded, south-facing 
roof will deliver maximum 
performance. Installing 
panels on a north-facing roof 
is not recommended, while an 
east- or west-facing roof will 
deliver approximately 15%-
20% less energy than a south-
facing one.
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Millions of households will 
pay more for their energy 
this autumn as the latest 
energy price cap kicks in, 
propelling bills 2% higher 
from 1 October 2025, writes 
Daniel Hilton. The price cap is 
set every three months by 
energy regulator Ofgem, and 
determines the maximum you 
will pay for your energy 
if you are on a standard 
variable tariff. The latest price 
cap for the period 1 October 
to 31 December 2025 has 
now been set, and means a 
typical household on a dual 
tariff using direct debit will 
pay around £1,755, up £35 
from the current July to 
September cap.
The energy price cap does 
not set a limit on your total 
energy bill – that will depend 
on how much energy your 
household consumes. Instead, 
the cap limits the maximum 
costs for each unit of gas and 
electricity you use. According 
to Ofgem, the higher costs are 
largely due to the increase in 
the expense of transporting 
energy to Great Britain.
A new cap for January to 
March will be released in 
November. According to 
consulting firm Cornwall 
Insight, prices may come 
down slightly in the new 
year. It predicts that the price 
cap will fall to £1,712 for a 
typical household – down 
2.4% from the fourth quarter 
of 2025. But these predictions 
could change depending on 
market circumstances. If you 
are on a fixed-price energy 
tariff, the energy cap does not 
apply to you. Ofgem’s energy 
price cap is supposed to 
ensure that those on a 
standard variable tariff pay a 
fair price for energy.
● HM Revenue & Customs (HMRC) 
is cracking down on claims for 
higher-rate pension tax relief to keep 
more revenue, says Charlotte Gifford in 
The Telegraph. From this week it will no 
longer accept requests for pension tax relief 
over the phone. All claims will need to be 
done via letter or online. The move is 
designed to help make it harder to lodge 
false claims.
You can save up to £60,000 a year into 
your pension and benefit from tax relief. 
Basic-rate 20% relief is applied 
automatically, but anyone who pays the 
higher or additional rate of income tax 
needs to claim the extra relief through self-
assessment. A recent investigation by 
HMRC found that approximately a third of 
claims for more than £10,000 of relief were 
“for an incorrect amount”.
● Financial wellbeing app Wagestream is 
offering “low-wage workers… a 
controversial new type of high-interest loan”, 
say Sarah Butler and Kalyeena Makortoff in 
The Guardian. Wagestream is “pitched as 
an employee benefit” and offers workers 
loans with a representative APR of 13.9% to 
19.9%. That means 51% of borrowers will 
get those rates but the ultimate interest rate 
can be up to 34.9% APR.
It says these are “an ethical alternative 
for low-wage workers who would 
otherwise be pushed to higher-cost 
loans”. But critics argue that Wagestream 
is making it too easy for low earners to 
fall into debt, by offering salary 
advances and loans in tandem. A further 
concern is that the app can automatically 
deduct loan repayments from wages. 
“This enables Wagestream to leapfrog 
other essential bills and practically 
guarantee that debts are repaid.”
● “As the price of gold soars, that broken 
chain or trinket sitting in the back of your 
drawer or jewellery box could be worth a lot 
more than you think,” says Dan Hatfield, a 
pawnbroker and valuation expert for This Is 
Money, in The Mail on Sunday.
With the price of gold up 32% in a year 
and 242% in a decade, many people 
looking to sell old jewellery are pleasantly 
surprised by the price they get.
“Last week, a newly divorced woman 
came into the shop to sell the gifts her 
husband had given her over the years. 
She thought she might get £500 at 
best. When I told her that her little bag 
of scraps was worth closer to £7,200, her 
look was priceless.”
Pocket money... HMRC targets pension tax relief 
Daniel Hilton
Money columnist
Personal finance28
A south-facing, unshaded roof will deliver maximum performance 
moneyweek.com 5 September 2025 
Small business 29
More British businesses 
selling to US customers now 
face additional costs, as the 
latest phase of US president 
Trump’s tariffs regime takes 
effect. Last Friday, the US 
dropped its so-called “de 
minimis” exemption, which 
previously saw low-value 
parcels shipped to the US 
from many countries, 
including the UK, excluded 
from most taxes and duties.
The shift means that 
packages valued at less than 
$800 will now face the same 
trade tariffs as more costly 
goods. In the case of sales 
made by UK exporters, that’s 
10%. The new rules are also 
expected to prompt shipping 
companies and logistics 
providers to raise their prices 
as they take on new 
responsibilities for handling 
duties and taxes.
A UK exporterselling $100 
worth of goods to the US 
could now face an additional 
$30 to $50 of costs. That will 
leave many SMEs with a 
difficult decision. Do they 
absorb most or all of those 
costs, taking a big hit on their 
margins, or try to pass them 
on to their US customers 
and risk losing their orders? 
British SMEs are particularly 
vulnerable to the new 
regime. The UK was the 
world’s fourth-largest 
exporter of small parcels to 
the US last year, with only 
China, Canada and Mexico 
making more de minimis 
shipments into the country. 
Some SMEs are already 
warning they may have to 
stop selling into the US 
altogether, particularly as 
confusion remains over 
exactly how the new rules 
will work in practice.
New US rules hit 
UK exporters
Energy regulator Ofgem 
gave people an unwelcome 
surprise last week, announcing 
that the cap on household 
energy prices will increase 
by more than expected next 
month. But for small and 
medium-sized enterprises 
(SMEs), the announcement 
was potentially even more 
disappointing. There is no 
cap on the bills that energy 
providers can charge corporate 
customers, which leaves them 
much more exposed to the 
factors driving up prices.
One recent survey found 
that four in ten now see energy 
prices as the biggest business 
challenge over the next 12 
months. The smallest firms 
are often the most vulnerable; 
two-thirds of businesses 
making less than £10,000 
a year are paying between 
£1,000 and £1,500 for energy 
annually. However, while 
small businesses are excluded 
from the protection Ofgem 
offers consumers, they’re not 
powerless. A change in supplier 
may secure significant savings. 
Investment in energy efficiency 
may carry upfront costs but 
has the potential to reduce bills 
over time.
Deemed contracts
The most important thing that 
SMEs can do is check exactly 
when their existing contract 
with an energy supplier is 
due to end. Energy providers 
typically require small 
businesses to sign up for a fixed 
term; at the end, companies 
that do nothing will be moved 
on to “deemed contracts”, 
which often come with default 
charging structures that can be 
significantly more expensive.
Instead, it makes sense to 
start looking around for a 
better deal in the final month 
or so of an existing contract. 
Online comparison sites such 
as Uswitch and Utility Bidder 
offer services specifically 
targeted at SMEs, separate to 
their consumer-comparison 
searches. This makes it 
relatively straightforward to 
compare tariffs and assess 
potential savings. That 
Cut the cost of energy
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said, energy contracts vary 
enormously. Some SMEs prefer 
fixed rates, so they have good 
visibility of future costs, but 
this does mean missing out 
on savings if prices fall – and 
some analysts expect to see that 
happen in the first quarter of 
2026. There’s also a trade-off 
to make on contract length. 
Signing up for longer may 
lower rates, but it also leaves 
small businesses locked in for 
an extended period.
Every business is different, 
making it difficult to 
recommend specific suppliers. 
Still, Startups.co.uk earlier this 
year identified Octopus Energy 
and Utilita as particularly 
good options for many SMEs. 
Checking their rates as part of 
a broader search makes sense. 
One thing to check with new 
suppliers is whether they offer 
schemes or grants that could 
help the firm become more 
energy-efficient. Providers 
often offer support that 
Act before your contract ends and use specialist comparison sites
can help businesses pay for 
improvements that will bring 
down their bills, particularly 
in the context of reducing 
their carbon emissions.
Support may also be available 
from local authorities. In the 
West Midlands, for example, 
the Business Energy Advice 
Service offers SMEs free 
energy assessments and 50% 
match-funded grants for 
improvements. The business 
finance and support finder 
pages on the Gov.uk website 
can be a good way to identify 
similar schemes.
Even small improvements 
can have a dramatic effect. 
The Energy Saving Trust 
says that in non-domestic 
buildings, 49% of energy use, 
on average, is connected to 
heating the space. Reducing 
heat loss through draught 
proofing, closing windows 
and ensuring radiators aren’t 
obstructed can therefore make 
a big difference.
Small business owners have long struggled with power prices 
David Prosser
Business columnist
● Has your small business investigated 
“vibe coding”? It’s a way to develop new 
software and apps even if you have no idea 
how to write computer code. You use a 
generative AI (GenAI) model, telling it what you 
want to develop in plain English; the model then 
codes on your behalf. Fans of vibe coding say 
GenAI can democratise software development, 
to the benefit of individuals and SMEs without 
access to technology. The potential is 
underlined by the $4bn valuation ascribed to 
Swedish start-up Lovable, reflecting the firm’s 
growing sales of AI agents that help users to 
vibe code. 
● Small businesses’ embrace of “embedded 
finance” continues to grow, a new survey 
from PYMNTS suggests, with 37% of firms 
now looking for payments providers able to 
offer such services. Embedded finance solutions 
enable businesses to offer customers 
financing options at the point of sale – the 
ability to pay through credit, for example – 
potentially extending their market reach.
● What do young people want to do for a 
living? A new survey from Adobe suggests 
the answer is increasingly that they want to 
run their own businesses: 49% of people 
under the age of 25 aspire to launch their own 
venture, the research concludes; 52% of these 
Gen Zers already have some form of “side 
hustle”. The growing number of online 
tutorials, digital apps and social-media 
supports can help young entrepreneurs, 
Adobe suggests. Critical funding is available 
from schemes such as the Start Up Loans 
project backed by the government.
Petty cash... let AI develop your app
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Personal view30
Where to find the world’s hidden gems 
offering durable growth and value
This summer, Asset Value Investors celebrates 40 
years as the manager of AVI Global Trust. Over 
this time, we have pursued the same distinctive 
bottom-up approach to global equities, focused 
on parts of the market that are overlooked, under-
researched and prone to mispricing. We aim to buy 
durable, growing businesses, trading at discounted 
valuations, where there is some form of event or 
catalyst to unlock and grow value. 
One such example that embodies this is Vivendi 
(Paris: VIV), the French holding company controlled 
by Vincent Bolloré, which trades at a 39% discount 
to our estimated net asset value (NAV). In late 2024, 
the historic sprawling media conglomerate was split 
into four separately listed businesses: Canal+, Havas, 
Louis Hachette and Vivendi. The last piece – Vivendi 
– remained home to a 10% listed stake in Universal 
Music Group (UMG), which is worth 144% of 
Vivendi’s market value and accounts for more than 
90% of NAV. 
In July 2025 the French regulator ruled that, 
following the split process, Bolloré is deemed to 
have effective control of Vivendi and as such, is 
obligated to make a mandatory offer within six 
months at a “fair price”. Whilst Vivendi’s discount has 
narrowed from close to 50% to the mid-30s, we see 
considerable upside from further discount narrowing. 
On top of this, the prospects for NAV growth are 
compelling, underpinned by UMG: we believe the 
market is underestimating the growth and durability 
of its earnings.
Win with windscreens
Another company we like is D’Ieteren (Brussels: DIE), 
a seventh-generation holding company that trades 
at a 43% discount to our estimated NAV. We wrote 
the stock up for MoneyWeek in September 2022. At 
the time, the share price was €140. Today the shares 
exchange hands at €188 – with the companyhaving 
paid a dividend of €74 per share in the interim period, 
giving a total return of 87%. 
Despite this strong performance, we remain 
optimistic about prospective future returns. The 
key asset – accounting for 66% of NAV – is a 50% 
unlisted stake in Belron, the global leader in vehicle-
glass repair, replacement and recalibration, which 
readers might be more familiar with in the UK as 
A professional investor tells us where he’d put his money. This week: Joe Bauernfreund, 
chief executive officer and chief investment officer, AVI Global Trust
Autoglass. Trends toward windshield complexity and 
the recalibration of ADAS cameras provide a strong 
structural-growth and margin tailwind in the years 
ahead. This value remains poorly reflected in D’Ieteren 
shares. A potential catalyst to change this would be a 
stockmarket listing by Belron.
A third example is Jardine Matheson (Singapore: 
J36), the holding company of the Keswick family, 
which trades at a 31% discount to NAV. Despite 
an illustrious history, shareholders’ returns over the 
last ten to 15 years have been disappointing. The 
company is undergoing a period of evolution and 
change under the fifth taipan, Ben Keswick, as it 
evolves into a modern-day holding company, with a 
greater focus on governance, capital allocation and 
engaged ownership. 
In many ways, this mirrors what best-in-class 
European family-controlled holding companies did 20 
years ago and has the potential to unlock value from 
a NAV that has underperformed. Such changes pave 
the way for potentially improved NAV and discount 
returns, with a clear alignment of interest with the 
family, and – increasingly, following recent changes to 
compensation packages – management too.
“Belron, 
known as 
Autoglass 
in the UK, 
faces a bright 
future” 
Vivendi has a lucrative stake in Universal 
Music Group, one of whose artists is Billie Eilish
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Travel32
 5 September 2025 moneyweek.com
An 8am flight from Luton on a 
Saturday in the middle of summer is 
rarely a good way to start a holiday, but 
everything ran smoothly and our Wizz 
Air flight landed in Vilnius, the capital of 
Lithuania, at lunchtime. We had booked 
a two-week fly-drive through Lithuania, 
Latvia and Estonia through travel agency 
Regent Travel. But rather than follow 
their suggested itinerary of driving to 
Tallinn and back, we opted to go one way, 
dropping off our rental car in Tallinn.
Eight centuries of struggle
The three Baltic countries have much in 
common – excellent roads (borders are 
crossed almost without noticing), they 
all use the euro and they are at least as 
tech-savvy as the UK. They speak different 
languages – all incomprehensible, but 
fortunately, most people speak English. 
National flags are ubiquitous, as are 
Ukrainian ones, signalling the national 
pride that comes with having had to 
struggle against invasion and occupation 
for 800 years. They were invaded three 
times during the last war alone and there is 
no doubt who their enemy is.
As striking is the overwhelming 
evidence of civic pride. Roads, streets and 
public spaces are completely free of litter, 
everywhere is neat and tidy and the flower 
displays, both municipal and private, 
in Latvia and Lithuania would attract 
accolades from the RHS judges at the 
Chelsea Flower Show. Historical buildings, 
often severely damaged by past wars, 
have been faithfully restored, even rebuilt 
completely from scratch. After 50 years 
of Soviet occupation in which national 
identities and history were suppressed, 
farmland with little urban sprawl, and the 
roads are empty. Its highest point is only 
around 1,000ft above sea level, and the 
coastline has no shortage of beautiful sandy 
beaches. However, Scottish latitudes mean 
that it is not an obvious place for a seaside 
holiday outside high summer. The capital 
cities – Vilnius (Lithuania), Riga (Latvia) 
and Tallinn (Estonia) – have faithfully 
restored medieval old towns, as has 
Lithuania’s old capital, Kaunas. Klaipeda 
was the East Prussian city of Memel until 
100 years ago, and a drive down the 
Curonian spit, reached by ferry, is not to be 
missed. Don’t go too far or you will end up 
at the border with the Russian enclave of 
Kaliningrad, formerly Königsberg. 
A thriving food scene
Other stopping points include the 
attractive towns of Kuldiga, Sigulda (both 
in Latvia) and Tartu (Estonia). Rundale 
Palace, south of Riga, is magnificent 
and castle buffs, like me, will be in their 
element. Trakai, Turaida and Cesis are well 
worth seeing, as are the walls encircling 
Old Tallinn. The variety of churches, 
from Catholic to Orthodox to Lutheran, 
is exceptional. In an area where there is 
rarely more than a gentle hill, climbing the 
towers of castles, churches and town halls 
provides excellent exercise.
With one exception, our hotels were at 
least good, and sometimes excellent. It’s 
worth checking these out online before 
departure rather than leaving it all on 
trust to Regent; and the Insight Guide 
to the Baltics is a good investment to 
identify the sights, check the itinerary and 
propose variations. The quality of the 
restaurants was a major surprise. The days 
of eastern European stodge are long gone 
and there are enough Michelin-starred or 
recommended restaurants to merit a visit 
focused on eating rather than sightseeing. 
In Vilnius, don’t miss the Ertlio Namas 
where we were served beaver paté (they 
are a pest in the Baltics) and chocolates 
flavoured with strawberry and cucumber 
– the best I have ever tasted. Moreover, 
prices by UK standards are reasonable. ©
A
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Follow the 
beautiful 
Baltic trail
Max King explores the history, 
culture and cuisine of Estonia, 
Latvia and Lithuania
the last 35 years have been spent 
rediscovering the past.
With a combined area greater than 
England and Wales, but a population of 
only six million, the Baltic countryside is 
dominated by forests, swamps, lakes and 
The Lithuanian town of Trakai is well worth visiting
Riga’s medieval old town has been faithfully restored
Cars 33
moneyweek.com 5 September 2025 
Aston Martin’s new marauder
The Valhalla supercar from the Warwickshire-based brand has been worth the six-year wait 
The Aston Martin Valhalla first made 
an appearance in concept form at the 
Geneva motor show in 2019, says James 
Taylor in Evo. Since then, development has 
proceeded in fits and starts. The British 
hypercar has undergone an “extensive 
redesign and reengineering”, which has 
included swapping the in-house V6 engine 
for an AMG-sourced V8. At the board 
level, four CEOs have come and gone at 
Aston Martin in those six years since the 
Valhalla made its public debut. Happily, 
production is now finally underway. 
Around half of the 999 cars that will 
be made, each costing from £850,000, 
have already been sold, with the first 
customers taking delivery towards the end 
of this year. That four-litre V8 engine is 
“closely related” to the AMG GT Black 
Series and it develops 817bhp on its own. 
But it is supplemented by three electric 
motors – two at the front and one at the 
rear, incorporated into the transmission: 
the first dual-clutch gearbox to be fitted 
to an Aston Martin. Total power from the 
engine and motors comes to 1,064bhp and 
torque (twisting force) is 811 lb ft, while 
the Valhalla races from standstill to 62mph 
in 2.5 seconds, topping out at 217mph.
A car that defies logic
The steering is “relatively light and quick, 
but not hyper, and it’s very accurate”, says 
Matt Prior in Autocar, driving a prototype 
Valhalla on the Stowe racing track at 
Silverstone. That makes it “possible to 
drive the Valhalla smoothly and precisely”. 
For all of the Valhalla’s “extreme race-car 
vibes”, it is in fact a “very approachable 
car. Under braking, the body is allowed 
to move a bit so one can feel what’s going 
on.” On powering out of a corner, the 
rear wheels will “smoke up” and the 
car’s “difficult job oflies at the 
heart of the UK’s present malaise. Between 
2000 and 2019, dividends grew “nearly six 
times faster than real wages”. Meanwhile, 
national research & development (R&D)
spending lags behind that of other 
European countries. A wave of delistings 
by prominent firms saw the London stock 
exchange shrink at its fastest pace since 
2010 last year.
The trend has continued into 2025, 
with US private equity firm KKR buying 
Spectris, a 110-year-old high-tech engineer, 
at a huge premium to the stingy valuation 
it was able to command on the London 
market, says Rosie Carr in the Investors’ 
Chronicle. Yet there are tentative signs 
that a new and more encouraging “phase” 
is under way. There is some new blood 
– Greek energy and metals giant Metlen 
joined London’s bourse from Athens in 
August and may soon enter the FTSE 100. 
Meanwhile, NHS landlord Assura recently 
ditched plans to sell out to US private equity, 
instead opting to merge with a UK peer.
Global fund managers are becoming 
painfully aware that heavy US exposure 
leaves their portfolios vulnerable. Britain, 
with its modest valuations, early trade deal 
and strength in newly fashionable sectors 
such as defence, stands out “like a beacon 
in a storm”. Across a blended range of 
valuation measures, the MSCI UK trades 
on a 40% discount to the MSCI World 
index, compared with a long-run average 
of 20%, says Tom Grady of Schroders. The 
discount is partly justified by the FTSE’s 
preponderance of bank and commodity 
companies, which typically attract lower 
valuations than high-growth tech firms.
But even when comparing within the 
same industry, UK shares tend to trade 
on an average discount of 30% compared 
with their US-listed peers. Corporate 
America is certainly very profitable, but 
aggregate performance is boosted by 
a handful of supremely successful tech 
firms that aren’t typical of the whole 
market. Indeed, the average UK and US 
company exhibit returns on equity that 
are “within a similar performance range”. 
The valuation “case for UK equities looks 
increasingly compelling”.
A compelling case for UK equities
©
G
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London’s shares are 30% cheaper than America’s
Long-term UK borrowing 
costs have hit a 27-year high as 
bond vigilantes pile pressure 
on chancellor Rachel Reeves. 
Yields on 30-year gilts rose to 
5.72% on Tuesday, a 28-year 
high. Global factors prompted 
the sell-off, with German and 
French bond yields hitting 
their highest levels since 2011. 
But Keir Starmer’s mini 
re-shuffle this week is making 
bond traders nervous that 
Reeves is being “managed 
out”, Kathleen Brooks of XTB 
tells The Guardian. Yields 
briefly spiked in July when the 
chancellor was filmed in tears 
in the House of Commons, 
triggering fears “she could be 
replaced with a more left-
leaning member of the Labour 
party”. Unlike many countries, 
the UK is making at least some 
effort to keep spending under 
control and Starmer isn’t 
tweeting menacingly about 
central bank independence, 
says economist Sushil 
Wadhwani in the same paper. 
Reeves’ reward? Since last 
year’s US election, 30-year UK 
yields have risen by more than 
those in America. In the City 
there are two sharply 
diverging views. Some say 
this is an “anomaly” and a 
shift in the narrative should 
ease the pressure on Britain 
soon. Others think tax hikes 
have damaged the UK’s 
investment appeal so much 
that the “gilts market is 
heading towards a full-blown 
crisis because of fiscal 
sustainability concerns”. The 
autumn budget will prove 
decisive (see page 24).
The UK is less indebted than 
some other major developed 
nations, yet it pays the highest 
long-term borrowing costs in 
the G7, say Ian Smith and Sam 
Fleming in the Financial Times. 
Britain’s persistent inflation 
problem and a lingering “risk 
premium” since the 2022 mini-
budget are partly to blame. As 
under Truss, Britain’s large 
trade deficit leaves it “reliant 
on the kindness of strangers” 
to finance deficits, says Rob 
Wood of Pantheon 
Macroeconomics. By contrast, 
the eurozone runs a collective 
current account surplus.
Bond vigilantes eye up Britain
Liz Truss’s mini-budget led to a lingering risk premium for the UK ©
G
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Alex Rankine 
Markets editor
moneyweek.com 5 September 2025 
Markets 5
July 
2021
July 
2023
July 
2024
July 
2022
July 
2025
40
30
20
10
0
Price of UK food and non-alcoholic drinks
Rolling five-year change (%)
It turns out that diamonds aren’t 
forever, says Brian O’Connell for 
Quartz. Data from the Zimnisky 
Global Rough Diamond Price 
Index shows that prices have 
dropped 30% over the past three 
years. The industry is being 
upended by lab-grown 
synthetics, which trade for up to 
85% less than the price of a 
natural stone of the same size 
and quality. Cost-of-living 
pressures are only heightening 
the appeal of artificial gems. 
The diamond industry faces 
particularly intense tariff 
pressure, says Jinjoo Lee in The 
Wall Street Journal. Trump’s 
50% tariffs on India, the country 
that cuts and polishes most of 
the world’s supply, threatens to 
widen the price gap between 
natural and artificial diamonds 
all the more. But in the topsy-
turvy world of luxury products, 
that might prove a blessing. It 
would underline the “value and 
scarcity” of natural stones when 
compared to the “ever-
depreciating lab-grown variety”.
As luxury handbag makers 
are discovering, a luxury good 
that ceases to be scarce ceases 
to be very desirable, says Allison 
Schrager on Bloomberg. The 
likes of Hermès have succeeded 
by strictly limiting the supply of 
the Birkin, its most desirable 
model. Yet diamond dealer De 
Beers will struggle to enforce a 
similar level of scarcity because 
it wants diamonds to be on 
“every engagement ring”. 
A possible future is one where, 
rather like Birkin handbags, 
natural diamonds do retain their 
cachet, but only for a small, elite 
segment of the market.
“We’ll have a majority [on the 
Federal Reserve Board] very 
shortly… People are paying too 
high an interest rate… We have 
to get the rates down a little bit,” 
says Donald Trump. The US 
president isn’t being coy about 
his desire to bounce the central 
bank into cutting interest rates. 
As a property mogul, 
Trump regards low interest 
rates as “manna from heaven”, 
says Nathan Tankus for 
Politico. Trump has spent 
months complaining that the 
Fed – which hasn’t cut rates 
since December last year – is 
slow-walking monetary easing. 
Things escalated late last month 
when he ordered the removal 
of Lisa Cook, one of the Fed’s 
seven governors. She is accused 
of mortgage fraud, but there is 
little doubt the real agenda is to 
appoint someone more dovish. 
Economists regard central 
bank independence as 
“particularly sacrosanct”, 
yet market reaction to this 
unprecedented attack on 
Fed independence has been 
surprisingly calm. Cook is 
fighting Trump’s order and 
things are heading for a legal 
battle that could ultimately 
reinforce Fed independence 
rather than undermine it, says 
James Mackintosh in The Wall 
Street Journal. 
Another reason for the 
market sangfroid is that 
“Trump isn’t appointing 
clowns”. His preferred 
candidates to lead the central 
Investors shrug at Trump turmoilIs this the end 
for diamonds?
bank tilt dovish, but they 
are still “well within the 
mainstream of economics”. 
They might favour slightly 
quicker easing, but none plan to 
turn America into Argentina.
Anyone the administration 
could conceivably place on the 
Fed would “baulk” at instantly 
dropping rates to Trump’s 
desired level of 1% (rates are 
currently above 4%), agrees 
John Authers on Bloomberg. 
Perhaps that’s why the Move 
index of bond-market volatility 
has been steadily falling ever 
since the panic over tariffs in 
April, Trump’s repeated threats 
to fire Fed governor Jerome 
Powell notwithstanding. 
Markets are calm, but with 
Trump there is always a risk that 
he will end up doing somethingmelding all the 
systems together to decide how much the 
differential locks, how much the front 
wheels help out, all happens pretty 
seamlessly as the Valhalla adopts an easy-
going slide”. It’s “marvellous”. 
“The laps fly by” with the time spent 
behind the wheel “revealing layers of 
unholy speed beneath the car’s incredible 
accessibility”, says Ben Miller in Car 
magazine. Yes, the £850,000 price tag 
is “punchy by anyone’s standards… But 
somehow it doesn’t feel like Aston will 
struggle to find buyers.” Aston Martin cars 
of the mid-engine variety are “vanishingly 
rare… and beautiful, 
too”. The 
Valhalla is no different. It is “bewitching to 
drive… ferocious yet flattering, powerful 
yet playful. It makes the extraordinary 
accessible,” assuming you are prepared to 
part with the best part of £1m. And while 
that is more than you will pay for a similar 
Ferrari or Lamborghini, it nevertheless 
feels like a “dynamic rival” to those cars. 
For sure, the Aston Martin is pricey and 
it shows not “a shred of practicality”. “It 
makes little sense [to buy one] on paper. 
But on tarmac it’s magnificent.”
For further details, visit 
astonmartin.com
 
 5 September 2025 moneyweek.com
Property34
House on the Shore, Thorns Beach, 
Beaulieu, Hampshire. An Arts & Crafts house 
overlooking the Solent with 128 metres of 
beach frontage. It has exposed beams and 
open fireplaces. 6 beds, 3 baths, 3 receps, 1-bed 
annexe, conservatory, 2 kitchens, swimming 
pool, 4-bed pool house, tennis court, 20.5 
acres. £12.5m Knight Frank 020-7861 1065.
Bay House, Embleton, Alnwick, 
Northumberland. A semi-detached period 
property on the Northumberland coast 
overlooking the sandy beaches of Embleton. 
It has wood floors and a fitted dining kitchen 
with French doors opening onto a patio 
garden. 4 beds, 3 baths, 2 receps, garden. 
£950,000 Knight Frank 0131-222 9606.
Shipstal, Shipstal Point, 
Arne, Wareham, Dorset. A 
1960s bungalow with a private 
slipway and water frontage 
on Poole Harbour. It is clad in 
wood and local Purbeck stone, 
and comes with a studio and a 
Finnish sauna in the gardens. 
3 beds, 3 baths, 2 receps, 
kitchen, conservatory, integral 
garage and boat house, slipway, 
adjacent deep-water mooring 
leased from Poole Harbour 
Commissioners, 0.81 acres. 
£4m Savills 01202-856861.
This week: properties close to a beach – from an Arts & Crafts house in Hampshire with 128 metres of beach frontage, to a 16th-century house in Norfolk, just 300 metres from a Blue Flag beach
moneyweek.com 5 September 2025 
Property 35
The Mews, Balcary, 
Auchencairn, Castle Douglas, 
Dumfriesshire, Scotland. A 
renovated 17th-century house 
with an attached cottage and 
a detached annexe and garden 
studio set in landscaped 
gardens with direct access to 
the beach. 3 beds, 3 baths, 
open-plan dining kitchen/ 
living area, dressing room/ 
bed 4, recep, office, 2-bed 
cottage, 1-bed annexe, 
studio, garage, laundry and 
gym. £895,000+ Fine & 
Country 01896-829569.
Littlestone, New 
Romney, Kent. This 
early 20th-century 
house is now in need of 
some modernisation. 
It overlooks the English 
Channel, has direct 
access to the beach, 
and is situated next to 
an empty plot that is 
available separately. 
It has a wood-panelled 
hall, open fireplaces and 
a dual-aspect sitting 
room overlooking the 
garden. 7 beds, 4 baths, 
5 receps, breakfast 
kitchen, store, double 
garage, swimming 
pool with pool house. 
£900,000+ Jackson-
Stops 01580-720000.
Holmes House, Colwell Bay, 
Isle of Wight. A refurbished 
Victorian house with a clifftop 
cantilever deck and views over 
Colwell Bay and the Solent in 
an Area of Outstanding Natural 
Beauty. It retains its original parquet 
flooring and open fireplaces. 10 
beds, 8 baths, dining kitchen, 
annexe with private entrance, 2 
receps, library, bar with enclosed 
veranda, media room, gym, 
conservatory, garage, stables, 
manège, paddocks, gardens, kitchen 
garden, heated swimming pool, 
tennis court, 5.2 acres. £2.995m 
Strutt & Parker 01983-761005.
Incleborough House, 
East Runton, Norfolk. A 
Grade II-listed, 16th-century 
coastal residence with 
south-facing walled gardens, 
just 300 metres from East 
Runton’s Blue Flag beach. 
The house has open fireplaces 
and a breakfast kitchen with 
bespoke oak units and an Aga 
with six ovens. 7 beds, 7 baths, 
recep, two conservatories, 
gazebo, 0.75 acres. £1.33m 
Sowerbys 01263-710777.
Belgrave Place, Brighton. A 
Grade II-listed, two-storey maisonette 
in a Regency building built by the 
master builder Thomas Cubitt in 
the centre of Kempton. The maisonette 
retains its original floorboards and 
period fireplaces, and has a drawing 
room with double-aspect windows 
and doors that open onto a balcony 
overlooking the sea. 2 beds, bath, 
recep, breakfast kitchen, attic. 
£875,000 Winkworth 01273-772175.
This week: properties close to a beach – from an Arts & Crafts house in Hampshire with 128 metres of beach frontage, to a 16th-century house in Norfolk, just 300 metres from a Blue Flag beach
Reviews36
 5 September 2025 moneyweek.com
The Secret History 
Of Gold: Myth, 
Money, Politics & 
Power
Dominic Frisby
Penguin Business, £22
The rise 
and rise 
of bitcoin has 
pushed gold out 
of the limelight 
and has robbed 
the yellow metal 
of its status as the asset of choice 
for those convinced the global 
economy is going to collapse 
(or who just want a hedge 
against inflation). Over the 
past few years, however, gold 
has been making something of 
a comeback, nearly doubling 
(in dollar terms) in the last two 
years. Few people have covered 
the precious metal for longer 
and in more detail than regular 
MoneyWeek contributor 
Dominic Frisby. He also put on 
a successful show about it at the 
Edinburgh Fringe in 2023.
In The Secret History of 
Gold: Myth, Money, Politics 
& Power, Frisby takes us on a 
whirlwind tour of humanity’s 
relationship with the precious 
metal, from Neolithic man 
and the ancient Greeks, right 
through to the present day. 
Throughout this journey he 
entertains the reader with 
various fascinating stories and 
facts. We learn, for example, the 
origin of the word “touchstone”, 
which derives from the black 
siliceous stones used by 
medieval traders to assay the 
quality of the gold they were 
given in trade for their goods.
Not as good as gold
The touchstone points to one 
of the major themes of the 
book, which is that while many 
governments in history have 
tried to use gold as the basis 
for their currency, these 
attempts have nearly always 
failed. The problem is that 
a gold standard forces strict 
budgetary constraints, 
limiting the power of the 
state to either wage war or 
(more recently) to provide a 
safety net for their citizens. 
As a result, governments 
ended up either debasing the 
currency by reducing the 
gold content in coins, as the 
Romans and many medieval 
monarchs did, or simply 
abandoned gold altogether in 
favour of paper money. 
Still, despite the fact that you 
can no longer use gold to buy 
goods and services directly, 
it has retained its mystique 
and many investors still have 
some in their portfolios. 
Governments, too, have not 
completely ditched what Keynes 
called the “barbarous relic”, 
as shown by the gold bars kept 
in the vaults of central banks 
around the world, and its use by 
the Russian government in an 
attempt to evade the sanctions 
imposed as a result of their 
invasion of Ukraine.
Frisby is a born storyteller. 
His book is as polished as 
you’d expect from such an 
accomplished writer and 
successful comedian, and he 
has a treasure-trove of tales 
to illustrate his points, many 
of which could form the basis 
of a book in their own right. 
The result is a read that will 
not only appeal to goldbugs or 
economists, but also the general 
reader. Whatever your views 
on gold, this book is destined to 
become a classic that should be 
at the top of your reading list.
©
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A book destined to becomea classic
Wine of the week: a spectacular and highly desirable Champagne
Charles Heidsieck, 
Champagne Charlie Mis En 
Cave 2020, France
£275, in bond per bottle 
for pre-order, 
farrvintners.com, 
laywheelertrading.com
The two merchants noted (see 
left) are the first to stick their 
hands up to sell this 
spectacular and highly 
desirable Champagne, and I 
am sure others will join the 
throng.  That said, any punters 
desperate to lodge this epic 
wine in their cellars will 
undoubtedly stop at 
nothing to track Charlie 
down, given its sheer 
scale of flavour and 
grandeur in the glass.  
This is only the second 
iteration since the revival 
of this special Champagne 
Charlie cuvée.  You can 
read about the first on my 
website, which includes a 
history lesson on the legend of 
Charles Heidsieck. 
This is a stellar wine, and this 
Mise En Cave 2020 version is richer, 
showier and more flamboyant than 
the 2017 release.  I was completely 
mesmerised by its perfume, 
flavour and finish!  Made from 66% 
chardonnay and 34% pinot noir, 
drawing on a 45% core of 2019 
vintage base wine and 55% of 
reserve wine, with a large 
portion of 1996 vintage Grand 
Cru Cramant Chardonnay 
(11%) and 2009 Grand Cru 
Avize Chardonnay (20%).  
With the oldest ingredients 
dating back 30 years, you can 
imagine the depth of field on 
the palate is incredible, and 
this means that, while these 
bottles have yet to arrive in 
the UK, they will be drinking 
perfectly the moment they hit 
our soils, while having the ability to 
age further for ten, 20, perhaps 30 
more years.  
I often find it hard to justify the 
prices of many of the so-called 
“duty-free” Champagne brands, 
but this wine is not only stunning 
and rare, but it is also unique, and I 
venture that it is worth every 
penny.  For those of you who want 
to get your eye in, before taking 
the plunge, NV Charles 
Heidsieck Brut Réserve (£49.99, 
lokiwine.co.uk) is the standard-
bearer for this sensational 
Champagne house. It gives you an 
idea of the luxury you find in 
bottles of Charles’ while tickling, 
not pulverising, your credit card!
Matthew Jukes is a winner of the 
International Wine & Spirit 
Competition’s Communicator of 
the Year (MatthewJukes.com).
Matthew Jukes
Wine columnist
Reviewed by 
Matthew Partridge
The “barbarous relic” still retains its mystique
Crossword 37
moneyweek.com 5 September 2025 
Caper’s Quick Crossword No.1276
A bottle of Taylor’s Late Bottled Vintage will be given to 
the sender of the first correct solution opened on 15 Sept 
2025. By post: send to MoneyWeek’s Quick Crossword 
No.1276, 121-141 Westbourne Terrace, Paddington, London W2 6JR. By email: 
scan or photograph completed solution and coupon and email to: crossword@
moneyweek.com with MoneyWeek Crossword No.1276 in the subject field.
Across clues are cryptic and down clues are normal
ACROSS
 1 Head Bishop resting on silver cushion (7)
 5 What chair is covered with? (5)
 8 9 on ice – a new type of coffee (9)
 9 Weapon comrade carries back (3)
10 Scottish isle without a workforce (5)
12 Leave eating small pudding (7)
13 Girl with small amount of money 
 for an old bike (5-8)
15 Tenor interrupts poor singer at leisure (7)
17 Not all sauvignons are likeable initially 
 – it’s to do with the nose (5)
19 Sick millionaire has it both ways (3)
20 Put up to amuse (9)
22 Chemistry student hosts 
 secret meeting (5)
23 Presumably one goes on and on 
 about walking? (7) 
DOWN
 1 Alloy of copper 
 and zinc (5)
 2 Beer (3)
 3 In short (7)
 4 Female relative (13)
 5 Places to buy things (5)
 6 Disasters (9)
 7 Label showing
 ownership (7)
11 Fairground target
 for balls (4,5)
13 Continue
 steadfastly (7)
14 Childish fit (7)
16 Of chemicals
 – unreactive (5)
18 Of the moon (5)
21 Everyone (3)
Solutions to 1273
Across 1 Task T Ask 3 Scaffold Mildly cryptic def 9 Curator Cur on a tor 
10 Arson (P)arson 11 Tutti Musical instruction 12 Turkey Turnkey minus 
centre 14 Rasher R plus anag 16 Appeal A P (piano =soft) Peal 19 Pliant 
Hidden reversed 21 Ad hoc A doc around H 24 Osier Os ie R 25 Blender L in 
Bender 26 Sorcerer Anag around CE 27 Warm Swarm minus S
Down 1 Taciturn 2 Strut 4 Curate 5 Flair 6 Obscene 7 Deny 8 Attire 
13 Plectrum 15 Soldier 17 Planet 18 Stable 20 Agree 22 Hydra 23 Boss
Bridge by Andrew Robson
High cards in your partner’s long suits are huge – golden cards – and 
to be upgraded in value.
* 23 or more points, or an upgrade for shape.
** Negative or waiting.
*** High fives.
§ Another waiting bid, consistent with nothing 
 (Two Spades was forcing to game).
§§ Love it! Those two Kings are humongous.
Declarer won West’s King of Diamonds lead and, as usual, set about 
establishing his side-suit straight away. At trick two, he crossed to 
the King of Hearts and, at trick three, he led a second Heart.
It would be weak defence for East to ruff (it would amount to 
ruffing his partner’s winner) and East correctly discarded. Winning 
the Ace, and playing perfectly, declarer now ruffed a Heart with the 
King of Spades. He crossed to hand in Clubs then ruffed his ten of 
Hearts with the low Spade. East overruffed, but declarer could win 
any return, draw Trumps and cash the Queen of Hearts – slam made.
Note, if declarer had ruffed his third Heart low, East would have 
overruffed and returned a Trump, defeating the slam. Also, note 
how much easier the play would have been if East had ruffed 
that second Heart, a play most non-expert defenders would 
(erroneously) make routinely.
For Andrew’s acclaimed instructional daily BridgeCasts, go to 
andrewrobsonbridgecast.com
Sudoku 1276
MoneyWeek is available to visually 
impaired readers from RNIB National 
Talking Newspapers and Magazines 
in audio or etext. 
For details, call 0303-123 9999 
or visit RNIB.org.uk
To complete MoneyWeek’s 
Sudoku, fill in the squares 
in the grid so that every row 
and column and each of the 
nine 3x3 squares contain all 
the digits from one to nine. 
The answer to last week’s 
puzzle is below.
The bidding
South West North East
2♣* Pass 2♦** Pass
2♠*** pass 2NT§ pass
3♥ pass 6♠§§ end
Dealer South Neither side vulnerable
Golden cards
Name
Address
email
Taylor’s is one of the oldest of the founding Port houses, family run and entirely 
dedicated to the production of the highest quality ports. Late Bottled Vintage 
is matured in wood for four to six years. The ageing process produces a high-
quality, immediately drinkable wine with a long, elegant finish; ruby red in colour, 
with a hint of morello cherries on the nose, and cassis, plums and blackberry 
to taste. Try it with full-flavoured cheeses or desserts made with chocolate.
♠ 
♥
♦
♣
♠ 
♥
♦
♣
♠ 
♥
♦
♣
♠ 
♥
♦
♣
 K4
 K5
 87543
 87432
 86 10972
 J9764 8
 KQJ2 10986
 Q10 J965
 
 AQJ53
 AQ1032
 A
 AK
The winner of MoneyWeek Quick Crossword No.1273 is: 
Mark Perry of Doncaster
✁
5 9 4
6 4 3 8
6
8 9 7 5
7 9
4 1 7
3
1 2 7 4 5
8 2 5
5 7 4 6 3 2 9 1 8
3 6 1 4 8 9 5 2 7
8 9 2 7 5 1 4 6 3
7 3 9 5 4 6 1 8 2
2 4 8 3 1 7 6 9 5
1 5 6 9 2 8 7 3 4
4 8 5 1 6 3 2 7 9
9 1 3 2 7 4 8 5 6
6 2 7 8 9 5 3 4 1
N
W E
S
 5 September 2025 moneyweek.com
Last word 38
©
A
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an
 P
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to
 A
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ve
/A
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Evita on the Potomac
Observers of Trump’s second act may be thinking they’ve heard it all before
Perón also withheld around 
50% of world agricultural 
export prices to finance both 
imports and to support newly 
created public companies. 
Import tariffs were raised, the 
multiple exchange-rate system 
was maintained and a scheme 
of import permits was created. 
In addition, Argentina suffered 
from the nationalisation of 
railways, telephones, electricity, 
public transport, and other 
utilities and services between 
1945 and 1950 (the early 
Peronist years). Trump is 
travelling the same road.
After almost 80 years 
of Peronist rule, the state 
pretty much run out of other 
people’s money. It was then 
that Javier Milei came along, 
brandishing a chainsaw.To 
almost everyone’s amazement, 
he was elected president. To 
their even greater amazement, 
he actually has done what he 
said he would do. The budget 
is balanced. Inflation is coming 
down. Wages are up by more 
than inflation. People are 
beginning to make progress. 
Has freedom taken root in 
Argentina? We don’t know, 
but north of the Rio Grande, 
Peronismo grows like cannabis. 
Fertilised by trillions of other 
peoples’ money, it is likely to 
keep growing... until the money 
runs out.
For more from Bill, see 
bonnerprivateresearch.com
What a pity they are almost 
all dead. The Argentines 
who were around in the 1940s 
and ’50s, and old enough to 
remember Evita and to know 
what was going on. They could 
have come to Washington and 
relived those glory years.
Hannah Cox on X: “It 
actually is crazy that Argentina 
elected a libertarian to save 
them from decades of Peronism. 
And then the US, after building 
the greatest country ever 
known to man on the principles 
of libertarianism, elected a 
Peronist.” Surely some budding 
Andrew Lloyd Webber is 
already planning the Broadway 
musical: Melania!
Peronism was Argentina’s 
most successful export. 
Argentines were happy to get 
rid of it. Much of the US seems 
happy to get it. The world turns. 
But what is Peronismo? Juan 
Perón was, by most accounts, 
a charming rascal. He was also 
the most important person in 
Argentine politics in the 20th 
century. Like Donald Trump, 
he was elected president two 
separate times. And like Trump 
he was a Big Man.
He was also a disaster. While 
the US stuck (mostly) with 
consensual democracy and 
free-market policies, Argentina 
took up tariffs, demagoguery, 
nationalised industries, 
censorship, violence and central 
planning. America got rich. 
Argentina got poor. 
Many things in the US 
today would be familiar to the 
Peronistas of the 1940s and 
’50s. The recent FBI raid on the 
home of former US ambassador 
to the UN, John Bolton, for 
example. Bolton probably 
deserves to be hanged for his 
role in starting the Iraq war, but 
it is unlikely he could jeopardise 
national security by revealing 
US secrets. More likely, the raid 
was intended to silence critics.
Also not surprising to 
those who lived through the 
Perón years was the firing of 
intelligence chief Jeffrey Kruse 
and top statistician Erika 
McEntarfer. Early on, the 
Peronists politicised Argentina’s 
statistics and published phoney 
figures for many years. Trump’s 
dust-ups with universities and 
the press would be familiar 
too. Perón drove hundreds, 
maybe thousands, of students, 
professors and intellectuals to 
leave the country. More than 
100 magazines and newspapers 
closed down in Perón’s first 
term. The largest newspapers, 
La Nación and Clarín, stayed in 
business but became timid.
“Surely some budding 
Lloyd Webber is 
planning the musical”
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IISSN: 1472-2062 
Milei and Trump: the export of Peronism was the worst trade deal of all time
Bill Bonner
Columnist
90
00dramatic such as declaring a 
national emergency to strong-
arm the Fed into crisis-style 
money printing. Such risks are 
difficult to price.
 
Eroding institutions
Even political meddling that 
only “leans” on central bankers 
rather than ordering them 
around can have “calamitous” 
effects, says The Economist. In 
1972 Richard Nixon did just 
that to secure rate cuts before 
a presidential election. The 
resulting inflationary spike 
took over a decade to bring 
back under control. Trump’s 
“war” on central banking raises 
long-term questions about the 
credibility of US assets. 
There is one sign of markets 
moving to price Fed risk: gold 
prices hit a new record high 
this week, topping $3,546/oz 
(£2,648/oz) on Wednesday. 
Gold, seen as a safe-haven from 
turmoil, has gained more than a 
third so far this year. 
Viewpoint
“[US investment scam losses] have…
surged in recent years… If I had to pick an 
underlying fundamental cause I’d argue 
it’s… occurring for the same reason that 
the internet is such a cesspool of bad 
behaviour – we just don’t care about 
other people because there’s no 
interpersonal relationship in more and 
more of our business dealings. Why do 
grown men and women go on the 
internet and treat people a way they 
would never ever treat someone in real 
life? Because there’s no accountability…
But this is the same reason scams are 
becoming so much more pronounced. 
We’re all distancing ourselves from one 
another. As our relationships with our 
phones and AI improve, our relationships 
with real people decline… I wish it was 
going to get better, but I suspect it won’t. 
The next generation will probably date 
robots and spend more time with their 
personal robot than anyone else.” 
Cullen Roche, Discipline Funds
Food prices in the United 
Kingdom rose 4.2% in the 
year to August. Chocolate, 
coffee and butter prices 
have increased by almost 
a fifth over the past 12 months 
as bad weather makes for 
unreliable harvests, says Irina 
Anghel on Bloomberg. Some 
London restaurants have 
reportedly switched to using 
olive oil instead of pricier butter. 
Beef and veal prices surged an 
eye-watering 24% in the year to 
July, as food and energy costs 
eat into global herd sizes. In the 
UK, food prices rose 37% over 
the five-year period from July 
2020, say Amy Walker and 
Mitchell Labiak for the BBC. 
That compares with a modest 
4.4% increase in the prior five-
year period. Blame high 
demand, tightening supply and 
increased labour costs.
■ Britain’s inflation bloat
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Lisa Cook is fighting her sacking by Trump
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 5 September 2025 moneyweek.com
Shares
Last week’s report from 
chipmaker Nvidia was 
deemed “the first test” 
of investors’ appetite since 
the “mass AI-stock sell-off” 
in August, says Johana 
Bhuiyan in the Guardian, 
and the results proved to 
be mixed. 
On the one hand, Nvidia 
announced it had set a fresh 
sales record for its AI chips in 
the second quarter. What’s 
more, adjusted earnings per 
share also outperformed. 
However, despite the 
company claiming that 
production of the latest 
superchip is going at “full 
speed” with “extraordinary” 
demand, and the board 
approving $60bn in 
additional stock buybacks, 
shares in the company 
actually declined. This 
suggests investors’ worries 
of an “AI bubble” have not 
been alleviated. 
A “monster quarter” and 
a “jaw-dropping” $60bn 
share buyback produced a 
“mild stock dip” because the 
market “is looking past the 
headlines” to the future, 
says AvaTrade’s Kate 
Leaman. While the core 
business is still “booming”, 
there are several clouds on 
the horizon. 
The biggest of these is the 
fact that export restrictions 
are “biting”, preventing 
Nvidia from selling any of its 
H20 chips to China. This is a 
reminder that no matter 
how strong a company is, 
“regulation, trade tensions, 
and global politics are now 
part of the equation”.
Viewed through the 
conventional price/earnings 
lens, Nvidia’s stock “isn’t 
expensive”, says Lex in the 
Financial Times – it trades 
at a multiple of 33, only a 
little more than tech giants 
Microsoft and Oracle. You 
could even argue that, 
thanks to Nvidia’s faster 
growth rate, it looks 
“positively cheap”. 
The problem is that 
 trade tensions are hardly the 
only concern for the market – 
some of Nvidia’s customers 
are already designing chips 
of their own. 
Indeed, the company’s 
72% gross margin, which 
is “far ahead of anything 
ever reported by Apple”, 
provides “an open invitation 
to competitors”. Both 
of these factors could 
prove problematic for a 
company whose valuation 
depends on continued 
long-term growth.
Investors say no 
to Nvidia
Last week, chipmaker Intel formally received 
$5.7bn in cash following its previously 
announced decision to sell 10% of itself to 
the US government, says Rebecca Szkutak in 
TechCrunch. It also revealed for the first time 
that the deal will control Intel’s ability to make 
key business decisions about its “floundering” 
foundry (chip-manufacturing) business. 
Intel will have to give the US government an 
additional 5% stake in the overall company if 
it sells more than half of its stake in the unit. 
There have hitherto been calls from analysts, 
board members and investors alike to spin out 
the “struggling” foundry arm, which reported 
an operating-income loss of $3.2bn during the 
second quarter and has been “a source of strife 
for the semiconductor business”.
In theory, the deal doesn’t make much sense 
for Intel, as the $5.7bn in cash comes from 
money that had already been allocated to it in 
grants, via the 2022 Chips Act, says Richard 
Waters in the Financial Times. However, US 
president Trump has long railed against the 
Chips Act grants, so the new arrangement “at 
least guarantees Intel will get the cash”. 
And the condition relating to the foundry 
aside, the equity investment comes with “less 
explicit strings attached”. There is also hope the 
stake could encourage an interventionist White 
House to “cajole” companies such as Nvidia 
and Apple to become customers for Intel’s next 
advanced process.
Relying on foreign rivals
Investors hoping that Trump will succeed in 
convincing tech companies to buy from Intel 
are likely to be disappointed, says Greg Ip 
in The Wall Street Journal. While US tech 
“would welcome a domestically based supplier 
of advanced chips to limit their reliance on 
TSMC and South Korea’s Samsung”, they 
will only switch to Intel if it can “make these 
leading-edge products in high volume that meets 
Trump nibbles at US chips
The government is to take a 10% stake in semiconductor giant Intel. What 
will this mean for the company and the sector? Matthew Partridge reports
In the latest “megadeal” by food 
groups “trying to stay a step 
ahead of changes in demand”, 
Keurig Dr Pepper said it would 
acquire the European coffee 
company JDE Peet’s for $18bn, 
says The New York Times. 
Keurig Dr Pepper will 
combine its coffee business 
with JDE Peet’s and spin it into 
a new company, which would 
include brands like Dr Pepper, 
Snapple and 7up. 
The deal effectively undoes 
the multibillion-dollar 
combination of Keurig and Dr 
Pepper announced in 2018, 
which aimed to create a 
beverage giant with the 
capacity to distribute hot and 
cold drinks to customers. The 
coffee industry has since 
slowed sharply, turning it into a 
drag for Keurig Dr Pepper.
The market has already 
given the deal the thumbs-
down, at least where Keurig Dr 
Pepper is concerned, with the 
firm’s value falling by 18% since 
it was announced, says 
Bloomberg’s Chris Hughes. The 
“savage” market reaction is 
due to the fact that “it’s hard to 
see the synergy value vastly 
exceeding the $3bn premium 
KDP is paying”, especially since 
JDE “has faced stiff 
competition from Nespresso 
leviathan Nestlé”. 
What’s more, investors are 
sceptical about the idea of 
“bulking up in orderto 
separate”, seeing it as a waste 
of time and money. Even the 
“alchemy” behind moving a 
European company to the US is 
uncertain, since the success of 
such moves “depends on being 
a business that US investors 
will really want to own”.
The deal “has something to 
displease both sides”, says Lex 
in the Financial Times. 
JDE Peet’s investors will be 
receiving only a 20% premium 
to the pre-offer price, many of 
them might have preferred to 
give Rafa Oliveira’s turnaround 
strategy more than just two 
months, especially as the 
shares had started “rocketing”. 
But the dominance of JAB 
Holdings, set to make $12bn 
from the sale of its 69% stake in 
JDE, means “the wishes of 
outsiders are of little import”.
Dr Pepper’s coffee deal goes cold
specifications at a good cost structure”. If Intel 
can’t do this, companies will simply refuse to 
buy “meaningful volume” from them, 
“regardless of what pressure the US government 
brings to bear”.
Even Intel has admitted the deal comes with 
many additional risks, says Ashley Belanger in 
ArsTechnica. These include “the uncertainty of 
knowing that terms of the deal could be voided 
or changed over time as federal administration 
and congressional priorities shift”. 
What’s more, while the deal doesn’t come 
with any board seats (at least for now), the US 
government can still use its shares to vote “as 
it wishes”, and could affect major decisions 
regarding, say, lay-offs or forays into foreign 
markets. This could lead to a conflict “between 
what’s right for the company and what’s right for 
the country”. Finally, investors should note that 
the administration’s stake also “risks disrupting 
Intel’s non-US business”. 
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 5 September 2025 moneyweek.com
Shares8
IPO watch
Angling Direct
Investors’ Chronicle
Fishing-tackle retailer Angling 
Direct has 55 shops in Britain, 
a digital platform and an app, 
which has boosted loyalty 
programme membership to 
500,000. Half-year UK 
shop and online sales 
rose, but the European 
business lagged the 
home market, 
although sales still 
increased. The 
company has ample 
cash to support its organic and 
acquisition-led growth strategy. 
Angling Direct is trading on a 
“harsh” valuation, given that 
cash profit is forecast to increase 
by a third next year, thanks to 
new shop openings, and the 
European business is expected 
to break even. 49p
Amcomri
This is Money
Engineering group Amcomri 
buys small engineering 
businesses that are either in 
financial distress or looking 
for new owners. It sealed a 
new deal recently, and others 
are in the pipeline. The firm’s 
14 businesses provide repair 
and maintenance services, 
commission new equipment, 
and make goods for industrial 
customers. Analysts expect a 
35% rise in profits to £5.3m this 
year. The stock “should deliver 
further gains” as prospects are 
“bright”, with engineers in short 
supply. “Buy and hold.” 117p
Convatec
The Times
After a volatile year for the 
stock, Convatec’s shares were 
boosted recently after the launch 
of a buyback worth 5% of its 
market value. The programme 
suggests the medical equipment 
company’s outlook is healthy 
and reinforces the “bull case”. 
UBS analysts say the buyback 
could return $2bn, or a third of 
Convatec’s market capitalisation, 
in the next four years. Despite 
expecting a 1%-2% hit to 
2026 and 2027 sales thanks to 
product-reimbursement cuts 
in the US, its largest market, 
Convatec reaffirmed its full-year 
revenue forecasts. 244p
Dr. Martens
Shares
Dr. Martens’ shares have 
struggled since floating in 2021 
after the famous shoe brand 
issued a profit warning owing to 
difficulties at a US distribution 
centre. But the group’s “return 
to operational excellence” seems 
to be gaining traction under new 
CEO Ije Nwokorie. Dr. Martens 
returned to profit growth in its 
recent full-year results thanks 
to £25m of cost savings and its 
US direct-to-consumer channel. 
Nwokorie has shifted the 
company from a “channel-first to 
a consumer-first mindset”. 91p
Hikma Pharmaceuticals
The Telegraph
Despite lower half-year 
sales and profits, Hikma 
Pharmaceuticals expects to 
record a higher full-year core 
operating profit. If it achieves 
its $5bn sales goal by 2030, 
it would see a major earnings 
upgrade. Meanwhile, a 13% 
hike in the interim dividend 
suggests that analysts’ 
full-year forecasts for an 
unchanged distribution look 
“conservative”. Hikma has a 
strong competitive position: 
witness its healthy profit 
margins and low net debt. 
The stock is cheap and offers a 
forward dividend yield of over 
3%. 1,836p
Shares in FirstCash Holdings have risen 33% this year, reaching a 
record high, after the US pawnbroker posted strong second-
quarter earnings, says Barron’s. There is ample scope for further 
gains. The largest pawnbroker in the US and Mexico – and now 
Britain, following its acquisition of H&T Group – is capitalising on 
demand from customers with low credit scores, a result of stricter 
bank lending amid weak labour markets and high interest rates. 
Furthermore, FirstCash’s expansion into technology-driven 
lending with lease-to-own and “buy now, pay later” options has 
proved fruitful. The stock’s valuation is “a steal”; it deserves a 
premium rating.
An American view
MoneyWeek’s comprehensive guide to this week’s share tips
Investors’ Chronicle
Tribal Group’s software helps 
educational institutions with 
administration, such as 
managing admissions processes 
and settling in new students. 
Half-year recurring sales 
increased 5.5% to £59.9m, 
driven by 16 new customers and 
a simplified product range. Its 
adjusted cash profit margin 
grew thanks to cost efficiencies. 
Tribal expects to beat full-year 
market expectations after 
winning a further £4m of new 
business from London South 
Bank University and Durham 
University. Tribal’s valuation is 
“affordable”. Buy (57p).
The Telegraph
For the first time in three 
years, OSB’s first-half results 
are “passing without undue 
incident”. Although the 
challenger bank is exposed to 
the buy-to-let and UK property 
markets at a time of economic 
uncertainty, its low 40% cost-
to-income ratio and “healthy” 
13.7% return on tangible equity 
mitigate potential risks. OSB’s 
income is boosted by the 5% 
hike in the interim dividend 
and its buyback programme, 
which takes investors’ total cash 
returns to about £240m, 10% 
of its market value. Buy (556p).
This is Money
SRT Marine Systems specialises 
in security and surveillance 
at sea. It makes black boxes, 
known as transceivers, 
that track and locate boats 
and facilitate ship-to-shore 
communication. SRT also helps 
governments detect smugglers 
and sabotage of underwater 
pipes and internet cables. It 
recently won a $214m contract 
from the Kuwaiti government. 
Full-year sales surged to £78m, 
and profits reached £4.4m 
compared with a £14m loss last 
year. Analysts expect further 
gains this year and the next. 
The stock should continue to 
climb. Buy (75p).
Five to buy
One to sell
...and the rest
Stada is aiming for an initial public offering (IPO) this autumn 
after postponing listing plans in April owing to geopolitical 
uncertainty and market volatility triggered by US president 
Trump’s tariff policies, says The Wall Street Journal. CEO Peter 
Goldschmidt said the German pharmaceutical company will go 
public “provided the general conditions are right”, but did not 
reveal where. The private equity-backed company recently 
reaffirmed its full-year expectations for adjusted earnings of 
between €930m and €990m, after disclosing that its exposure to 
the US and its tariffs is limited. First-half sales rose 6% to 
€2.12bn, while adjusted earnings grew 5% to €481m.
Costain
The Telegraph
Higher profit margins 
offset lower half-year sales 
at infrastructure specialist 
Costain, but this was due to 
one-off contract gains from 
the water business unlikely to 
recur in2026. Analysts have cut 
forecasts. While the water unit’s 
performance bolstered group 
profits, the roads unit struggled 
after finishing contracts, and 
rail projects faced delays due to 
changes in spending plans for 
HS2. Costain aims for a long-
term operating return on sales 
of over 5%, but will struggle 
to achieve this goal thanks to 
earnings downgrades and risks 
related to government projects. 
Lock in gains and “let the dust 
settle”. 132p
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moneyweek.com 5 September 2025 
Indonesia’s most violent 
protests in decades have left at 
least six dead, with “rallies over 
lavish perks for lawmakers” 
descending into riots after 
police officers ran over a 
young delivery driver, reports 
France 24. 
Southeast Asia’s biggest 
economy recorded a “surge in 
growth” in the second quarter 
due to growing manufacturing 
and export demand, but most 
citizens are not feeling the 
effects. Lay-offs are up 30% 
on last year, and a cost-of- 
living crisis has led to a sharp 
rise in people living below the 
poverty line.
President Prabowo Subianto 
gave a televised briefing from 
the presidential palace on 
Sunday alongside political 
party leaders, in which he 
pledged to “listen and act on 
people’s concerns”, says 
Soraya Permatasari in 
Bloomberg. He promised a 
moratorium on overseas 
trips by lawmakers and said 
“erring” party members would 
face “firm action” – as would 
violent demonstrators.
On Monday, the minister for 
economic affairs, Airlangga 
Hartarto, sought to reassure 
investors, citing Indonesia’s 
strong economic fundamentals 
– resilient growth and stable 
inflation – as signs that the effect 
of the protests would be short-
lived. He also pointed to a rise in 
investment and the relatively 
stable exchange rate. 
Food prices, however, rose 
4.47% last month, points out 
Ni Made Tasyarani in The 
Jakarta Post, and people on 
lower incomes spend a 
disproportionate amount of their 
money on food. The recently 
cancelled monthly housing 
allowance for lawmakers was 
$3,075, nearly ten times what 
someone on the minimum wage 
in Jakarta would earn. 
These are the worst riots 
since 1998, and those led to the 
end of the three-decade rule of 
dictator Suharto, economist 
Rully Arya Wisnubroto points 
out in the Financial Times. Until 
the political, economic and 
security situation stabilises, 
“market uncertainty” is likely to 
remain “very high”.
France’s fiscal incontinence
France is sailing into trouble; Britain is right behind it. Emily Hohler reports
François Bayrou, the 
beleaguered French prime 
minister, has said that the 
8 September confidence 
vote in parliament, which 
is expected to go against 
him and his budget 
proposals, will not decide 
“the fate of the prime 
minister” but “the fate of 
France”, says Le Monde. 
The “real judgement 
is already being delivered 
in the bond markets”, 
with ten-year borrowing 
costs rising to 3.5%, says 
Damian Pudner on CapX. 
The fact is, France faces a 
“full-blown fiscal crisis”. 
Public debt stands at 114% of GDP and is expected 
to rise. The deficit is on track for 5.4% this year. 
The country’s benchmark stock index, the CAC 40, 
dropped more than 3% in three days. 
Redistribution, but not as we know it
The centrist prime minister, allied to president 
Emmanuel Macron, insists “there’s no alternative 
to the path of fiscal rectitude”, say Carlo 
Martuscelli and Giovanna Faggionato on Politico. 
But opposition parties, which hold a significant 
majority in the National Assembly, have already 
said that they won’t back him next Monday. His 
predecessor, Michel Barnier, was similarly toppled 
by his unpopular 2025 budget last December. 
Bayrou is “going down fighting – albeit fighting 
old people”. He blames his generation of baby-
boomers for putting increasing pressure on France’s 
“exploding” public debt, and his budget includes 
a tax rise for pensioners. The country’s €400bn 
annual pensions bill is equivalent to 14% of GDP, 
accounts for 25% of all government spending, and 
with the share of over-60s rising to a predicted third 
of the population by 2040, the bill will only rise. 
This pattern is similar across most of Europe.
The real problem in France, as in Britain, is the 
“failure of political will” to do what is needed to get 
debt under control, arising in no small part from 
politicians’ reluctance to challenge an older cohort 
that represents a large slice of their vote and that 
holds the majority of the country’s wealth, says 
Roger Bootle in The Telegraph. Even Marine Le 
Pen’s National Rally “shows no sign of accepting 
the need for fiscal retrenchment”.
Britain’s situation is uncomfortably similar to 
France’s, with debt at 96% of GDP and rising, and 
a deficit running at 5.3%. Although Rachel Reeves 
talks endlessly of “iron discipline” and “stability”, 
her most “striking move” has been to elevate 
Torsten Bell, an advocate of higher taxes and a 
bigger state, into her inner circle, says Pudner. 
To investors this signals that Britain will “dodge 
the hard choices of structural change and instead 
lean on redistribution”. But markets don’t “price 
fairness. They price credibility and risk”, and their 
response will simply be to demand a higher return. 
“Every notch higher in yields diverts billions 
from schools and hospitals into the pockets of 
bondholders. Redistribution, yes – but not the 
kind Reeves imagines.”
The Reform UK party 
may only have four MPs, 
but as its noisy and 
visible summer shows, it 
is already seeking to 
portray itself as a 
government in waiting, 
says The Times. Labour’s 
poll ratings are at their 
lowest ebb in six years, 
with a recent poll putting 
support for Reform at 
33%, well ahead of 
Labour on 18% and the 
Tories on 17%. 
Labour’s decision to 
treat Reform, not the 
Tories, as the opposition 
– it has been talking 
about leader Nigel 
Farage “non-stop” in 
recent days – is partly 
opportunistic, says 
Adam Wooldridge in 
Bloomberg. Given its 
“dismal record”, its best 
chance of winning the 
next election is to “define 
itself as the best defence 
against barbarism”. 
But the “transition 
to the big leagues is 
not smooth”. It only 
took a day for Reform 
to backtrack on its 
proposal to deport 
women and children 
as part of its Operation 
Restoring Justice. 
Although there is 
anger and widespread 
recognition that the 
asylum system isn’t 
working, voters 
“probably realise that 
Farage is a single-issue 
candidate”, and that his 
emerging position fails 
to “paper over the cracks 
between his Thatcherite 
instincts and his 
newfound enthusiasm 
for state activism”.
Keir Starmer could 
hardly have done more 
to make it easier for 
Reform to fill the void 
left by his party if he had 
“sublet Downing Street 
to Farage and washed 
the towels”, says Frances 
Ryan in The Guardian. 
The key issues of recent 
weeks – immigration, 
starvation in Gaza – 
have received “next 
to no input from our 
elected leaders”. 
As he returns to work, 
Starmer is reshuffling his 
aides to “regain ground. 
But the real issue is not 
personnel – it is the 
project. What is the 
purpose of a Starmer 
government? And what 
courage can he find to 
deliver it?”
Violent protests rock Indonesia
Bayrou: going down fighting
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Chicago
Bitter taste: The decision of Kraft Heinz 
CEO Carlos Abrams-Rivera to unwind the 
merger that made the food giant a decade 
ago makes some sense, says Chris Hughes 
on Bloomberg. But “investors should be 
realistic about what going back to square 
one… achieves”. Kraft Heinz will become 
two listed companies. The attraction for 
the condiments business, called Global 
Taste Elevation Co. for now, will be its 
growth potential in emerging markets. 
The other company, provisionally called 
North American Grocery Co., which is 
centred around Kraft brands includingCapri Sun, will try to appeal to investors 
through a “decent dividend”. Kraft Heinz 
proved to be a lesson in creating too much 
complexity, which “stifles innovation”. 
The negative market reaction to Keurig 
Dr Pepper’s recent bulking up on coffee 
with a view to splitting off into separate 
soft drink and coffee businesses (see page 6) 
offers another lesson. “Investors know well 
enough that there are constraints to what 
can be achieved [by] rearranging 
the larder.” Abrams-Rivera 
is touting the cost benefits of 
separating, yet “the latest financial 
engineering seems implausibly 
optimistic”, says Jennifer Saba on 
Breakingviews. Kraft’s “tortuous” 
past of “wild M&A strategy”, such 
as buying Cadbury only to split up 
later, “also provides good reasons 
to be sceptical about the [latest] split’s 
ability to create lasting value”.
In Britain, trainspotters “have a 
reputation for dorky docility”, but head 
to Japan and it is quite a different story, 
says Richard Lloyd Parry in The Sunday 
Times. “Amateur train photographers” 
there, known as toritetsu, “trespass on 
private land, endangering the lives of 
others. They steal and cheat, curse and 
fight”, and some even exploit their 
knowledge of the railways to avoid 
paying for fares, or buy tickets intended 
for children. So determined are they to 
snap the perfect picture of a new train, 
they will jostle each other on narrow 
platforms or break into railway 
property. In June, several toritetsu were 
arrested for shoplifting to fund their 
trainspotting habit, while in 2019, four 
schoolboys threw smoke bombs from a 
railway bridge so they could 
photograph a rare emergency stop. 
The Japanese language has 36 
different names for varying types of 
trainspotters, including yomi-tetsu for 
armchair enthusiasts, eki-tetsu who 
love stations and the toritetsu who just 
want to take photos of passing trains. 
Even Japan’s prime minister Shigeru 
Ishiba has admitted to being a rail 
enthusiast, although as yet “he has 
shown no signs of taking his hobby to 
[such] dangerous extremes”.
Mountain View
Google keeps Chrome: Shareholders in Alphabet can breathe a sigh of relief, says Dave Lee on 
Bloomberg. As punishment for running an illegal online search monopoly, the tech giant won’t have to 
sell its leading Google Chrome browser or Android operating system. Its artificial intelligence 
(AI) efforts won’t be hampered and it can keep shovelling $20bn a year to Apple to remain 
the default search provider on the latter’s Safari browser. It will 
have to refrain from entering into certain exclusivity deals in 
future and Google must make limited search data available 
to rivals – neither of which is likely to affect the status quo 
or Google’s dominance in a meaningful way. But, then, 
what was federal judge Amit Mehta supposed to do? The 
ruling “confirmed the fears” of those who felt the US government 
had brought these competition proceedings too late. “Mehta’s 
remedies are an attempt to level a playing field in a game that 
ended long ago.” The game-changer has been AI. The government 
had argued that Google’s Gemini AI bot, which competes with 
ChatGPT and others, had only been made possible “with the fruits 
of its monopolistic behaviour in search”. But, if anything, Google 
has been “struggling somewhat” in a “fiercely competitive” AI 
space. Restraining Google here would have ironically risked reducing 
competition. Alphabet is entitled to celebrate the outcome of this long-
running court case, which it technically lost.
Washington, DC
De minimis rule ends: Royal 
Mail has joined postal services 
around the world in refusing 
to deliver parcels bound for 
the US due to the closing of 
the “de minimis” exemption. 
The loophole had allowed US 
consumers to buy inexpensive 
items from abroad without paying 
tariffs and completing complicated 
paperwork, so long as the value of the items 
was $800 or less, says Peter Eavis in The New 
York Times. The exemption ended in May for 
small items sent from China and Hong Kong, 
and from the rest of the world last Friday. Express 
carriers, such as UPS and FedEx, can calculate 
and pay the duties, so recipients have to do little 
more than pay the higher prices charged by 
sellers. However, many foreign 
postal services are unable to comply 
with the rule changes, despite Peter 
Navarro (pictured), an adviser to 
US president Donald Trump, telling 
them to “get their act together”. 
“Nevertheless, a strong case can 
be made that this was long overdue,” 
says an editorial in The Washington 
Post. The de minimis system had allowed 
Chinese online retailers, such as Shein and 
Temu, to “flood the US market with cheap, 
low-quality and sometimes dangerous 
goods that, because they were untaxed, 
undercut products made in America”. The 
exemption had also made it easier to smuggle 
counterfeit and illegal goods, particularly 
drugs, and those made with forced labour.
The way we live now... going off the rails in Japan
Enthusiasts will do anything for a photo
News 11
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moneyweek.com 5 September 2025 
Tokyo
Essilor eyes Nikon: Nikon’s shares surged more 
than a fifth on a Bloomberg report that 
EssilorLuxottica is looking to boost its stake 
in the Japanese lens manufacturer from about 
9% to roughly 20%. The Franco-Italian maker of 
Ray-Ban sunglasses is “boldly looking towards the 
future,” says Karen Kwok on Breakingviews. Even 
so, its vision “seems a little out of focus”. Nikon, 
which makes digital cameras, semiconductor kits 
and optical lenses, recently cut its full-year sales 
and operating profit forecasts due to weak demand 
and a strong yen. It has also struggled to invest in 
new technologies, so, the backing from a giant lens 
customer like Essilor “may be welcome”. Essilor is 
seeking regulatory approval to increase its stake in 
Nikon, potentially offering financial support via a 
capital injection or rights issue, but a full takeover is 
unlikely due to Japan’s aversion to foreign mergers 
and acquisitions. Some of Nikon’s semiconductor 
technology may also be “politically sensitive”. 
Essilor’s motive may be related to wanting greater 
control over the lens supply chain to 
help reduce costs and increase profits for 
its Ray-Ban Meta smart glasses, which 
it makes with Instagram’s owner Meta 
Platforms. Although its sales are healthy, 
margins remain “murky”. But owning a 
minority stake would not give Essilor 
“significant sway” over Nikon, whose 
valuation is “hardly cheap”. “Investors 
may end up squinting to find the returns in 
the dark.”
Bangkok
PM dismissed: The People’s Party, a Thai pro-democracy party 
which has hitherto been “thwarted” by the country’s conservative 
establishment, is “suddenly in pole position” to anoint the next 
prime minister following the dismissal of Paetongtarn Shinawatra 
by Thailand’s Constitutional Court for an ethics violation, say 
Patpicha Tanakasempipat and Philip Heijmans on Bloomberg. 
Paetongtarn’s Pheu Thai Party and the conservative Bhumjaithai 
Party, which left Paetongtarn’s coalition after a leaked-phone-call 
scandal, are now courting the People’s Party, which has been in 
opposition since a 2023 election, despite winning the most seats. 
MPs from the People’s Party met on Monday to discuss the merits 
of supporting either party, but failed to come to a decision, says 
Chayut Sethboonsarng on Reuters. A parliamentary vote may yet 
be held on a new prime minister – the two main contenders are 
Anutin Charnvirakul, the leader of Bhumjaithai, who is widely 
considered the frontrunner, and Pheu Thai’s candidate Chaikasem 
Nitisiri. But with “political interests shifting [and] bitter histories 
of betrayal… there is plenty of scope for switches in allegiance, 
bringing the prospect of deadlock at a time of weak growth and a 
dim outlook for Southeast Asia’s second-biggest economy.”
Vevey
CEO sacked: Swiss food giant Nestlé has sacked its CEO, Laurent 
Freixe (pictured), following an investigationinto an “undisclosed 
romantic relationship with a direct subordinate” which breached its 
code of conduct, say Madeleine Speed and Mercedes Ruehl in the 
Financial Times. The maker of KitKat chocolate bars and Purina 
pet food has appointed Philipp Navratil, who led the company’s 
Latin America and Nespresso businesses, to the top job. Freixe 
only became CEO last August after nearly 40 years at Nestlé. The 
probe began in late spring after several reports were made through 
Nestlé’s internal complaints system about potential conflicts of 
interest and favouritism. Nestlé had previously said the claims were 
“unsubstantiated”, but the complaints persisted and the board 
launched another investigation with external counsel, which found 
them to be substantiated. Now Nestlé’s third boss in two years 
will have to contend with sluggish sales at its core brands, French 
authorities investigating the company’s alleged use of unauthorised 
filtration methods in its bottled mineral water, and the recall of 
frozen meals in the US. Navratil “will want to put his own mark on 
strategy, and that suggests the clock could be reset when it comes to 
the turnaround plan”, says Russ Mould of AJ Bell.
Glasgow
Defence industry boost: Britain has won a £10bn deal to supply Norway with at least 
five warships, deepening defence ties between the two nations amid growing 
Russian aggression in the Arctic and North Atlantic, says David Sheppard in the 
Financial Times. Norway will buy Type 26 frigates, which will be built in Glasgow by 
BAE Systems, with the first deliveries expected in 2030. As part of the deal, Britain 
and Norway will operate a joint fleet of 13 anti-submarine frigates to counter 
submarine threats in the High North. Britain beat the US, France and Germany to 
land its “biggest ever warship export deal by value” in a big boost to the defence 
industry. The government has also pledged to increase defence spending to 3.5% of 
GDP by 2035 from 2.3% in 2024. The deal is projected to support 4,000 jobs in 
Britain, particularly in Scotland, and benefit 432 British companies. But while talks 
about construction timelines and costs for the vessels are set to begin, there are 
concerns the Norway deal may delay Britain’s frigates coming into service, with 
eight expected by 2035. The British government said all its frigates would be in 
service by the end of the 2030s and that the two navies are essentially “acting as 
one”. This agreement follows recent military activities involving British, Norwegian 
and US forces in the North Atlantic to track Russian submarines. The Type 26 frigates will be built in Scotland
 5 September 2025 moneyweek.com
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Briefing12
What are wealth taxes?
Taxes that make you pay a levy based on 
your assets – typically your net wealth – 
rather than your income from work. Such 
taxes used to be far more common globally 
than they are now. Sweden charged an 
annual levy on net assets for the best part 
of a century, with a top marginal rate that 
peaked at 4% in 1984; it was abolished 
in 2007. France had a wealth tax (riddled 
with loopholes) that was scrapped in 
2017. As late as 1990, 12 OECD nations 
(advanced economies) still had wealth 
taxes, though they raised a paltry 1.5% of 
all tax revenues, on average. Today, only 
three countries still levy a tax on net wealth, 
namely Switzerland, Norway and Spain. 
Several European countries – France, Italy, 
Belgium and the Netherlands – do still levy 
wealth taxes on selected assets, but not on 
an individual’s overall wealth. 
What are typical rates?
In Switzerland, which first introduced a 
net wealth tax in 1840, the level varies by 
canton between about 0.3% and 1% of 
a taxpayer’s net worth above a threshold 
typically in the low six figures. In Norway, 
where the tax dates back to 1892, the 
government currently charges 1% on 
individuals’ wealth exceeding a threshold 
of NKr1.76m (£130,500). So if you lived 
in Norway and you had £250,000 in 
investments and £500,000 equity in your 
house, you’d pay an extra £6,190 a year in 
taxes. Above NKr20.7m, the rate ticks up 
fractionally to 1.1%. 
Why did they fall out of favour?
In part, because they are hard to introduce 
and administer, and are inevitably 
accompanied by a thriving cottage industry 
to help the truly wealthy avoid them. The 
only time a UK government was elected 
promising to introduce one was Labour in 
1974. But over the 
course of his five 
years as chancellor, 
wrote a rueful 
Denis Healey in his 
memoirs: “I found it impossible to draft one 
which would yield enough revenue to be 
worth the administrative cost and political 
hassle.” The value of some assets is fairly 
easy to record, but for others – property 
equity, say – valuations are expensive, 
subjective and wide open to legal challenges. 
HMRC does not currently have an 
overview of the wealth of every citizen and 
no way of doing so without a big investment 
of time and resources, and political will. All 
that makes wealth taxes a giant headache. 
Why else are they unpopular?
Bluntly, because they don’t work. Calls for 
wealth taxes are readily understandable: 
governments everywhere – not least in the 
Are wealth taxes coming to Britain?
The Treasury is short of cash and mulling over how it can get its hands on more of our money to 
plug the gap. Could a levy on the net wealth of the rich do the trick? Simon Wilson reports
UK – are facing vast fiscal challenges in an 
era of low-growth and ageing populations. 
Meanwhile, in recent decades the very 
wealthy have got much wealthier. In 
2010, the combined wealth of the top 100 
people on The Sunday Times Rich List 
was £172bn. Last year it was £594bn. At 
the same time, the rich have remained as 
canny as ever about mitigating their tax 
liabilities (ie, paying as little as possible). 
The problem, though – even for fans of big 
government who think it’s fine for the state 
to tuck into individuals’ private assets – is 
that wealth taxes end up raising less than 
hoped and do so much collateral damage 
to the economy that they are self-defeating 
in fiscal terms. If that was true in Healey’s 
day, it’s even more so now. 
Why’s that?
Because wealth, and the wealthy, are far 
more mobile. Dan Neidle, the Labour-
supporting tax lawyer 
turned campaigner, 
recently published a 
16,000-word essay 
“explaining why 
a wealth tax is a really stupid idea”, says 
Robert Colville in The Times. Executive 
summary: if you tax something you get 
less of it, and wealth is no different. Neidle 
examines a model backed by campaigners, 
and some Labour backbenchers, which 
posits that a 2% wealth tax on those with 
assets of more than £10m would raise at 
least £24bn a year. But he calculates that 
under this system 80% of the revenue would 
come from just 5,000 people and 15% 
from just ten. “So the entire thing could be 
scuppered if a dozen people got on a private 
jet.” Neidle favours, instead, a wholesale 
reform that scraps several existing taxes 
– including stamp duty, council tax and 
business rates – with a land value tax.
What are other arguments against?
Not only do wealth taxes not work, they 
distort the economy. Since debt is tax-
deductible, wealth taxes tend to encourage 
the rich to avoid the tax by borrowing to 
invest in exempted asset classes (farmland 
or woodland, say), thus shrinking the tax 
base and distorting incentives. Alternatively, 
they might simply leave the country for a 
lower-tax jurisdiction, as did thousands 
of wealthy French citizens who set up in 
Belgium, or the thousands of the richest 
Norwegians who live abroad. Opponents 
argue that a wealth tax would only work if 
it were adopted globally – in practice that 
means never. Another argument against 
wealth taxes is that rather than diminish 
billionaires’ political power, they would 
increase it by encouraging them to spend 
their money on nefarious political causes.
But we will get them anyway?
It’s unlikely, given that Rachel Reeveshas 
ruled it out. But she may well be looking 
at more stealthy ways of taxing assets. 
Indeed, this summer has seen almost 
constant Treasury kite-flying in the press, 
with tales of various different property and 
inheritance taxes the government is said to 
be mulling over. There’s certainly significant 
wealth there and it would be possible to tax 
it, says Neil Unmack on Breakingviews. 
Some £7trn of value is stored in British 
housing, making the full capital-gains 
tax exemption for primary residences 
look tempting to target. Inheritance-tax 
exemptions mean the average taxed estate 
pays 13%, not the 40% headline figure. 
The risk is that any such raids would add 
“affluent middle-class voters to the ranks 
of Reeves-haters. Yet targeting them would 
make it politically easier for her to cut 
welfare spending. Especially if she does so 
with a degree of stealth.”
“If you tax something 
you get less of it. Wealth 
is no different”
Private jets on standby: the Budget is coming
 5 September 2025 moneyweek.com
City view14
burst and only survived with a round of 
ruthless cost-cutting. Shares in Apple fell 
from $150 to just $13, but it recovered to 
become one of the biggest companies in the 
world. Many other companies disappeared 
completely, despite huge backing from 
investors: Pets.com, for example, despite an 
$80m IPO, and Webvan, despite $800m of 
investment. Perhaps they would have turned 
into big businesses if it weren’t for the crash. 
Any company that is not yet financially 
self-sufficient could easily get destroyed. 
Even a giant such as Meta is vulnerable. 
AI may well be a bubble. Many of the 
valuations look insane, and it’s hard to 
believe profits will ever be substantial 
enough to justify them. Even so, it is very 
risky for the leaders of the industry to call 
that out. If the bubble bursts, things will get 
out of control very quickly and it will take 
down many good businesses along with the 
flimsy ones. The AI tycoons may end up as 
the authors of their own demise. 
Anthropic, now worth $170bn, or Elon 
Musk’s xAI, now worth $50bn. Chipmaker 
Nvidia has become the biggest company in 
the world, with a value of more than $4trn, 
on the back of booming demand for the 
semiconductors that power smart chatbots. 
Firms such as Microsoft, and indeed Meta, 
with a stake in the industry have soared 
to record highs. There is a lot of hype, and 
investors have been piling into any company 
that has a stake in the boom. Indeed, the 
gains in the stockmarket this year have 
been almost entirely driven by AI. Strip 
that out and all the major indices would be 
completely flat.
The AI barons may have an eye on their 
costs when they caution that it can’t last. 
Salaries for a small number of AI engineers 
have been soaring, with reports that Meta, 
for example, has paid up to $100m in salary 
and stock options for top researchers. They 
may hope they can bring that under control 
by warning of a bubble. Likewise, they 
may be hoping to get some of their backers 
to take a more realistic view of the value 
of some of the leading companies, so they 
are not disappointed if they turn out to be 
worth less than they thought. If the bubble 
does burst, a lot of good companies will get 
caught up in the storm. 
Be careful what you wish for
If AI proves to be anything like the internet 
when it first emerged in the late 1990s, we 
will see huge amounts of capital poured 
into the industry, with valuations soaring, 
followed by a massive collapse, and the slow 
emergence of a more durable industry of 
lasting significance. But the good companies 
get caught up in that collapse just as much 
as the bad ones. Amazon’s share price 
fell by 90% when the dotcom bubble 
In a briefing to reporters last week, Sam 
Altman, the founder of ChatGPT maker 
OpenAI, mused that the valuations of AI 
companies were being driven way too high. 
“When bubbles happen, smart people get 
overexcited about a kernel of truth,” he 
said. “Are we in a phase where investors 
as a whole are overexcited about AI? My 
opinion is yes.” That matters. Altman is the 
poster boy for the AI boom. ChatGPT has 
become by far the best-known brand in the 
emerging industry. Earlier this year it raised 
another $40bn in funding, at a valuation of 
$300bn, more than double the size of the 
UK’s largest firm and the largest sum ever 
raised by a private technology company. 
Altman is not alone. Earlier this year, 
the chairman of China’s tech giant Alibaba 
warned that the explosive growth in AI 
data centres meant supply would very soon 
start to outstrip demand. Meanwhile, it 
emerged last month that Meta, the owner of 
Facebook, Instagram and WhatsApp, has 
frozen hiring in its AI unit, hardly a sign of 
confidence. We might expect the firms with 
fund-raising rounds and stock valuations 
riding the boom to be cheering it all the way. 
Instead, they are starting to caution that it is 
reaching dangerous territory.
They have a point. “The difference 
between the IT bubble in the 1990s and 
the AI bubble today is that the top ten 
companies in the S&P 500 today are more 
overvalued than they were in the 1990s,” 
warned Torsten Slok, chief economist of 
asset management firm Apollo, in a note 
to investors over the summer. It is not just 
private companies such as OpenAI, or 
The AI barons call 
time on the bubble
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City talk
● “That’s the Financial 
Conduct Authority (FCA) for 
you: turn up when the forest 
has already been razed to the 
ground,” says Alistair Osborne 
in The Times. The regulator is 
investigating power producer 
Drax, which has received more 
than £6.5bn in taxpayer 
subsidies since 2012, over 
statements about the sourcing 
of the wood pellets it burns at 
its Yorkshire plant. The inquiry 
details are “pretty vague”, but 
analysts at Jefferies believe the 
FCA may explore issues similar 
to those raised by Ofgem, 
which forced Drax to pay £25m 
for some “technical” reporting 
“failures”. While the FCA 
doesn’t have jurisdiction over 
subsidy contracts, the probe 
puts Drax “in the spotlight” 
before a new deal is finalised in 
2027. “Has the company been 
deliberately barking up the 
wrong tree? It’s in the tax-
payer’s interests that the FCA 
finds out.”
● Premier Foods – the owner of 
Mr Kipling cakes – has 
“ventured down a healthier 
path” with the £48m purchase 
of microwave grains producer 
Merchant Gourmet, says 
Jennifer Hughes in 
the Financial Times. 
The deal should 
satisfy the “bean 
counters” – Premier 
has paid less than 
twice Merchant’s 
sales of minimally 
processed grains 
and legumes. With 
more Brits claiming to eat more 
healthily, the acquisition could 
“reignite” its “sputtering” 
share price. However, if 
investors “are to have their 
cake and eat it, they’d better 
hope that lots of health-
conscious consumers will still 
sneak a cherry Bakewell 
alongside their quick-cook 
grain medley.”
● WH Smith has shattered its 
“credibility with 
investors” after 
admitting to 
overstating profits at 
its North American 
division by £30m 
due to improper 
accounting of 
supplier income, 
says Nils Pratley in 
The Guardian. This area is both 
“sensitive” and “basic”. 
Retailers can receive payments 
from suppliers based on sales 
or promotions, but accounting 
rules require these to be booked 
as they are earned, and not up 
front. The 42% drop in the 
stock was “more than justified” 
– North America was meant to 
be a “gleaming growth 
opportunity” after selling the 
high street operation to be a 
pure “global travel” retailer. 
Accountants at Deloitte are 
reviewing supplier contracts, 
but investors will want clarity 
on how financial controls failed 
and a better sense of how 
reliant the US arm is on 
supplier payments. Until 
November’s annual results, the 
shares “look like dead money”. 
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Altman: the poster boy for the AI boom is having doubts
Matthew Lynn
City columnist
Investment strategy 15
moneyweek.com 5 September2025 
I wish I knew what a Spac was, 
but I’m too embarrassed to ask 
A special purpose acquisition 
company (Spac) is a company 
that lists on the stock exchange 
without any business of its own. 
Instead, its sole purpose is to 
raise money to buy an existing 
company. Spacs are also known 
as blank-cheque companies in 
the US, while in the UK, they are 
commonly called cash shells. 
Investors can buy shares in 
the Spac during the initial public 
offering (IPO) – in the US, the 
offer price is almost always $10 
per share. They may also get 
other securities (warrants and 
rights) that allow them to buy 
additional shares in the Spac at 
a pre-determined price in the 
future. Once listed, the Spac 
generally has a fixed period of 
time to find a deal – in the US, 
two years is typical. If it doesn’t, 
then it has to return the cash to 
shareholders. Under US rules, 
even if a Spac lines up an 
acquisition, then its investors 
can still back out if they don’t 
like the target company. If so, 
they get back their $10 per 
share, plus interest.
Assuming the Spac finds a 
target company to acquire and 
enough shareholders are 
willing to go ahead, it merges 
with the target and typically 
changes its name to reflect the 
new business. The money 
raised by the Spac should be 
used to help fund the growth of 
the business, but some may 
also be used to allow the target 
company’s existing 
shareholders to cash out part 
of their stake immediately
For private companies, the 
benefit of joining the market 
by merging with a Spac is 
that it is less stringent in 
regulatory terms than the 
traditional process of listing 
via an IPO. For investors – 
particularly small investors – 
buying into a Spac may offer 
a chance to invest in deals 
and companies they would 
otherwise struggle to access. 
Still, the rewards are 
skewed towards the Spac’s 
founders (known as 
sponsors), who usually get 
20% of the stock at a 
discount, or even free. 
For most other investors, 
returns from Spac deals 
during the 2020-2021 boom 
were poor, on average.
Yes, they are making plenty of money now, but 
will they be disciplined enough to hand that 
back to shareholders? Or will they squander 
it on higher-cost or riskier projects to expand 
production, or indulge in empire-building 
mergers and acquisitions?
Certainly, the sector has a remarkably poor 
long-term record. The MSCI ACWI Select 
Gold Miners index has a gross total return – ie, 
with dividends – of 3.3% per year in US dollar 
terms since 2003. That’s a compound return of 
just over 100%. One nuance here is that after 
gold had been in a long bear market during the 
1980s, many gold miners took to hedging their 
output in the 1990s and early 2000s, which 
worked against them once prices began rising. 
Still the record of the NYSE Arca Gold Bugs 
index (see above), which tracks stocks that did 
little hedging, is not that impressive either.
However, hedging is now minimal so 
producers are fully exposed to rising prices. 
Gold miners will be very profitable with gold 
anywhere close to here. They also tend to have 
low correlation to the wider market, which may 
be useful if the AI boom turns to bust. A tracker 
such as iShares Gold Producers (LSE: SPGP) or 
the even more operationally leveraged Van Eck 
Junior Gold Miners (LSE: GJGB) is a simple way 
to follow the trend. Just don’t treat it as a long-
term core holding. History suggests that it isn’t.
There have been two big developments in gold 
recently. The first is that the metal itself is 
reaching new highs: this week it passed $3,500 
per ounce for the first time. The other is that gold 
mining stocks are outperforming gold, which is 
something we have not really seen in this cycle.
Gold miners are a geared play on gold. When 
gold goes up, they rise higher; when it goes 
down, they fall further. This is because they 
have operational leverage: relatively high fixed 
costs means that they make weak profits when 
gold prices are depressed, but higher prices can 
translate into a strong increase in margins. 
Of course, this depends on input costs not 
going up too much, but recent trends have been 
positive. Gold miners have been seeing a huge 
improvements in free cash flow for a while, yet 
the shares only began to move this year. 
Sceptical investors
You can view this in a few different ways. One 
is that buyers of gold have different motivations 
to buyers of stocks. Gold is going up because 
some investors are nervous and see it as a useful 
hedge against the kind of risks that could cause a 
stockmarket slump. Gold stocks are still stocks 
and if they are worried about the market as a 
whole, they would logically rather have gold 
than any kind of stocks. Conversely buyers 
of stocks are excited about the bull market in 
areas such artificial intelligence. They are not 
interested in the bull market in gold – and hence 
not interested in gold stocks – because they see 
racier opportunities elsewhere.
Another possibility is that investors are 
doubtful about the quality of gold miners in 
particular, based on memories of the last cycle. 
Gold miners are outperforming the 
metal for the first time in this cycle. 
Enjoy the ride while it lasts
Chamath Palihapitiya, 
chief executive, 
Social Capital
Former Facebook 
executive Chamath 
Palihapitiya is 
launching another 
special purpose acquisition 
company (Spac) despite a 
track record that has 
“incinerated billions of 
investor dollars”, as the 
Financial Times puts it.
The self-styled “Spac 
King” and figurehead for the 
2020-2021 mania for blank- 
cheque companies is looking 
to raise up to $250m for his 
“American Exceptionalism 
Acquisition Corp”.
“I got calls from many 
Wall Street and Crypto 
Titans… They all want in and 
their vote matters a lot to 
me,” Palihapitiya wrote on X 
back in June, in response to 
a social media poll in which 
nearly 58,000 respondents 
overwhelmingly urged him 
not to try again. “Maybe this 
time it will go better? Who 
knows. The risks are clear, 
though. The last time wasn’t 
a success by any means.” 
It is unclear which “last 
time” Palihapitiya meant, 
since he has been involved 
with 12 Spacs, according to 
MarketWatch. MP Materials 
(a rare-earths firm in which 
the US government has 
taken a stake) and SoFi 
Technologies are in positive 
territory since listing. Two 
more failed to find a deal and 
returned the money raised. 
The least-bad of the rest was 
acquired at a 47% loss, while 
two have now gone bankrupt 
and two others are down by 
more than 98%.
The new Spac is likely to 
look for a deal in artificial 
intelligence, crypto-
currencies, and energy or 
defence, Palihapitiya said 
in a letter addressed to 
“friends and supporters” of 
Social Capital, his venture 
capital firm. 
“The biggest gains in the 
future will come from 
companies that are involved 
in fixing the fundamental 
risks that come from our 
interconnected global order, 
while reinforcing American 
exceptionalism”.
“Without doubt, the 
investment will entail 
substantial risk including the 
possibility of total loss,” he 
said. If investors lose their 
entire capital, “they will 
embody the adage from 
[US president Donald Trump] 
that there can be ‘no crying 
in the casino’.”
Gold stocks shining brighter Guru watch
Cris Sholto Heaton
Investment columnist
NYSE Arca Gold Bugs index
Price return index in US dollar terms
800
600
400
200
0
2003 20232008 2013 2018
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 5 September 2025 moneyweek.com
“It’s literally like 
having the 
economy 
run by 
Baldrick.”
Kirstie 
Allsopp 
(pictured), 
presenter 
of property 
shows on 
television, on chancellor 
Rachel Reeves’ rumoured 
plan to impose national 
insurance on rental 
income, quoted in The 
Mail on Sunday
“I’m sure they’re 
wrong, but I… was paid 
extremely well. I feel 
extremely fortunate.”
Former deputy prime 
minister Nick Clegg 
on reports he 
earned £100m when 
working at Meta, 
quoted in The Guardian
“They say