St. James’s Place WeekWatch 9th December 2024
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Stock Take
After the French president's resignation last week, the French Parliament is divided between Macron’s centrist party, a left-wing alliance, and the right-wing National Rally. Barnier tried to resolve this for next year’s budget but could not satisfy two of the three groups.
Macron faces a dilemma after Barnier's resignation. He can name a new Prime Minister, but the candidate must be acceptable to Parliament to avoid similar issues. With no elections until mid-2025, the successor will encounter the same challenges. Nonetheless, Macron stated he would appoint a new Prime Minister soon.
The day after Barnier’s resignation, Felipe Villaroel from TwentyFour Asset Management observed a contrast between political turbulence and financial markets' calm response.
Villaroel reasons: “As opposed to previous problematic episodes in the Eurozone, there is no imminent threat of a ‘Frexit’.” He adds: “A US-style government shutdown scenario is not on the cards; if there is no support for a new budget, then a version of 2024’s would apply next year. This means the French government can continue receiving taxes, spending monies and most importantly paying bond coupons. Therefore, from a markets perspective the worst-case scenario here is far less damaging than previous examples of government budget stand-offs.”
The Euronext France CAC 40 index actually rose 2.78% last week, with the market performing better in the second half of the week.
South Korean President Yoon Suk Yeol's attempt to impose martial law was rejected by the National Assembly, leaving the political fallout uncertain. An impeachment effort also failed after his Party did not support it. Calls for his resignation persist, and he is now under an international travel ban.
In response to the political uncertainty, the Korea Stock Exchange fell 1.13%, in local currency.
The US-China trade war escalated last week when China imposed restrictions on rare earth mineral exports to the US. These minerals are crucial for manufacturing various technologies, including semiconductors.
Commenting on these recent developments, Martin Hennecke, Head of Asia & Middle East Investment Advisory at St. James's Place, said:
“Events like the political turmoil in South Korea or the rare earth export restrictions applied by China in response to new semiconductor export restrictions by the US are hard to predict. It can serve as a good reminder of the importance of the three factors of diversification. Avoid short-term speculation and leverage coupled with overconfidence in specific predictions.”
Chinese export news failed to prevent the S&P 500 from reaching record highs, as Friday's jobs data raised hopes for another interest rate cut.
The FTSE 100 in the UK was flat last week despite Governor Andrew Bailey's forecast of four interest rate cuts next year and record-high house prices.
Wealth Check
Gifting cash or assets is a practical, thoughtful present that enables various possibilities. A cash gift can fund a family holiday, support childcare for a grandchild, or start a savings fund for dreams. Beyond cash, there are tax-efficient gifting methods that can save on taxes. Here are some options:
Making a Christmas cash gift
Gifting cash could be a welcome boost to those you love, and the effect can last longer than you think. Gifting is now an even more powerful way to mitigate your Inheritance Tax liability, too. You can give away up to £3,000 a year and make any small gifts of up to £250, which reduces the size of your estate and, therefore, your IHT liability.
Giving a Junior ISA for Christmas
Junior ISAs (JISAs) are tax-efficient savings accounts that encourage smart saving habits for children. Parents or guardians can open a JISA for any child under 18 living in the UK. Once opened, anyone can contribute, making it a potential new Christmas tradition.
Starting a child’s pension
A child's pension likely won't top a Christmas list with games or Lego at eight years old. However, for parents or guardians, starting a pension for them is a considerate long-term gift that encourages saving.
Whatever path we choose in life, money will be part of making it happen.
So, start giving, and have a very merry, tax-savvy Christmas! Need help understanding gifting and tax? We're here to help—get in touch today.
The value of an investment with St. James's Place will be directly linked to the performance of the funds selected. It may fall or rise, and you may get back less than the amount invested.
The levels and bases of taxation and reliefs from taxation can change anytime. Tax relief is generally dependent on individual circumstances.
In The Picture
Both South Korea and France are facing political challenges. Even before this, both countries have struggled this year.
Past performance is not indicative of future performance.
Please note that it is impossible to invest directly in a financial index, and the figures shown do not consider any charges applicable to the appropriate investment wrapper or any relevant tax charges.
The Last Word
“The developments in Syria in recent hours and days are unprecedented, and we are speaking to our partners in the region and monitoring the situation closely.”
UK Prime Minister Sir Keir Starmer comments on the fall of Syria’s Bashar al-Assad.
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