The Cambridge Weekly –29th April 2024

The Cambridge Weekly –29th April 2024

Inflation, a common side effect of growth

Intraday equity market volatility is back, as the past roller coaster week showed. Still, we yet again seemed to end flattish after a busy end to last week.

UK markets were strong, helped by the bid for Anglo-American from BHP. Anglo American’s share price rose to match the premium offered by BHP. Meanwhile, China is also managing to rise and, in Sterling-based terms, is now 15% above the lows of late January. The Hang Seng is even perkier, up 20%. The Japanese stock market has had a less happy time of late, falling over 7% from its peak on 22nd March, although it has still risen 1.5% since late January

Buying back shares: growth strategy or accounting trick?

Good news for investors in UK equity: British companies paid out £15.6 billion in dividends through the first quarter of this year. That is a 4.9% jump from the previous quarter, and forecasted dividend growth for 2024 overall has climbed to 4.3% against the previously expected 3.7%. Corporate Britain’s reputation as a strong dividend payer is secure, but a few sectors saw declining payouts as companies instead decided to buy back their own shares.

China long on copper

The world’s largest mining company plans to swallow one of its biggest competitors. Last week, the UK headquartered Anglo American said it had received a takeover bid from Australian mining giant BHP, which is estimated to be 19% above analyst valuations. BHP’s motivations are reportedly all about copper: it wants the British firm’s copper mining access and is willing to deliver the biggest shakeup to the global mining
industry in a decade to get it.