Terra: Tales of the Earth

In Terra, Hamblyn fuses history and science to explore the relationship between the earth and its inhabitants. The book is in four key sections – earth, air, fire and water. In each he explores a historical disaster through first-person accounts: the Lisbon earthquake of 1755; the European weather panic of 1783; the eruption of Krakatau in 1883; and the Hilo tsunami of 1946.

Hamblyn muses on the earth’s deep connections: each of these events was precipitated by another natural disaster – a volcano caused both the tsunami and the strange weather, for example. These testify to the planet’s energy, but is life on earth sustainable in the face of such devastation? Searching for an answer, he wonders why humans are unable to learn from past catastrophes.

Despite fascinating material, at times Terra reads as a stream of blurred facts rather than a sustained narrative or argument.

Published in the Financial Times

Investors over exposed to UK stocks

Nine out of 10 independent financial advisers have said investors are over exposed to the UK stock market, according to Ignis Asset Management.

The survey of 180 advisers in late August revealed almost half thought investors were ’definitely’ over-exposed to domestic equities. Forty-two per cent admitted investors were ’probably’ over-exposed.

Jonathan Polin, director of Ignis Asset Management, said: “Investors traditionally have a home bias when choosing funds but it is startling to discover that so many advisers believe UK investors are over-exposed to UK equities.

“It is clear that investors need to rethink their strategy and seriously consider whether their existing asset allocation is likely to deliver the performance they need in order to meet their retirement objectives.”

Meanwhile, 58 per cent of advisers said they did not believe we are in a bull market, with just 5 per cent saying we are ‘definitely’ in a lasting bull run.

The study suggested that advisers ‘bearish’ views were reflected in their gloomy predictions for the UK stock market for the remainder of the year. The majority predict that the FTSE 100 will close the year below 5000, slightly under its current level. Over half believe the FTSE 100 will close 2009 between 4500-5000, and a further 26 per cent predict a close of between 4000-4500.

”After such a tough period for us all it is encouraging to see that advisers are feeling fairly bullish about their business levels, if not about the UK stock market,” added Polin.

“Investors are clearly recognising the value of advice and seeking help when making decisions that could have a serious impact on their future.”

With UK equities set to disappoint in the short term and current asset allocation levels failing to close pension shortfalls, advisers were asked their opinion on how best to help solve the looming retirement crisis.

The research suggests that greater emerging markets exposure will help solve the pension’s crisis, as 83 per cent of advisers believe that greater exposure to emerging market equities is likely to play a key role in closing pension deficits, while 73 per cent admitted they typically allocate less than 10 per cent to the sector.

Almost a quarter of advisers said they allocated 11-15 per cent to emerging markets and a further 3 per cent allocated 16-20 per cent.

The research also demonstrates that the areas to which advisers may allocate a greater percentage in the future to include Asia Pacific, emerging markets and the US, which are the three sectors IFAs expect to perform best over three and five years.

“The fact that advisers expect business levels to rise over the coming months is further proof that investor sentiment is improving,” said Polin.

Published in the Financial Times

Second home owners benefit from a falling pound

The collapse of sterling against the euro will hit people going on holiday to the eurozone but it will benefit those with second homes abroad that need to bring euros back into the UK.

Sterling fell sharply against all major currencies on Friday to hit a five month low against the euro of €1.0946 after Mervyn King the governor of the Bank of England said that a fall in the exchange rate would help to balance the UK economy by giving exports a lift.

“The one thing everyone is agreeing on is that sterling is likely to fall fast and far,” said Peter S Ellis, chief executive officer at Foreign Currency Direct. “While this is bad news for most of the UK, those doing business overseas, or people with second homes looking to convert their Euros back to Pounds can get the best rates around.”

He says that the view that sterling will collapse is “supported by the Bank of England who state in the current quarterly bulletin that the UK has been running in deficit for some time which has only been possible due to foreign investment in the UK. This is now suddenly drying up.”

He added that concerns over the sustainability of the level of public debt, which has increased over 20 per cent in a year, and now stands at £804bn, are weighing heavily on the value of sterling.

“Servicing the national debt now equates to £1 of every £4 spent by Gordon Brown’s government and 57.5 per cent of the country’s annual output,” he said.

The pound was down around 0.8 per cent against the dollar, with a day low of $1.6171. Against the Australian dollar, sterling fell 1.3 per cent, hitting a day low of 1.8503. It also fell against the New Zealand dollar by 1.3 per cent, slumping to a day low of 2.2358.

Duncan Higgins, senior analyst at Caxton FX, said: ”As a chiefly importing nation, Britain’s current account has become accustomed to showing a deficit, which has now been proven to be an unsustainable course for the UK economy.

”Mr King’s comments underline the need to focus more on exports. In order to achieve this, a weak pound is necessary to assure the competitiveness of those exports in the global markets, so clearly Mr King has no desire to see the pound gain value.”

Higgins predicted that the pound would continue to decline steadily over the short term, heading towards parity against the euro by the end of October.

Peter Ellis also believes this. “As confidence returns to the rest of the world economy, this position is reversing, investors are once again confident enough to move to riskier currencies. This may see the pound dip against a basket of currencies over coming months.”

Published in the Financial Times

Demand for housing continues to rise

The housing market has entered the summer months in a far stronger position than 12 months ago, according to a new report by the National Association of Estate Agents Housing Market (NAEA).

The research shows an increase in the number of house hunters in the market. The number of house hunters registered with estate agents increased from 192 in July 2008 to 292 in July this year.

After dipping slightly in June the number of people searching for property rose again in July. The past three months as a whole represent the largest three-month demand in property since September-November 2007 and could represent the fact that people believe lower house prices can deliver a bargain but also that they consider the market to have bottomed out.

“Prices are gently on the rise as demand outstrips supply especially in the first time buyer end of the market,” says Martyn Gerrard, chairman of the London NAEA branch. “Building society surveyors have appreciated the situation and are no longer down valuing for mortgage purposes although the increased demand for funding has meant that the time taken from application to offer is often several weeks.”

NAEA say that relative to last year’s low, this year’s figures may still be taken as a positive indicator and further evidence that the market is moving towards recovery.

“July has seen recovery in the housing market continue, but it is still a very sensitive recovery,” says Ricardo Copus, chairman of Devon NAEA branch. “Assuming no national or international disasters occurring before the end of the year, the percentage of transactions should continue to increase slowly.

As seasonal activity picks up after the summer holidays and buyers make their way through the system, NAEA predict that the number of properties available for sale will increase.

“We certainly have a “feel good” factor at the moment and any time you year estate agents whingeing about “lack of stock” the market must be good,” says Des Rowson, chairman of the Essex NAEA branch. “The shortage of properties coming on the market means prices are beginning to edge upwards in most areas.”

Published in the Financial Times

Fall in house prices hits pension pots

Falling house prices have wiped off £29bn from British pension pots this year, yet almost 8 per cent of the UK population are relying on their property to fund their retirement, according to a new research from Baring Asset Management.

The research revealed that of the 2.8m people relying on property to fund their pensions, around a quarter are aged between 55 and 64, and a further 7 per cent are aged 65 or over, leaving them little or no time to build up extra, less risky, capital to help fund their retirement.

The research further revealed that those in East Midlands (11%) are more like to rely on homes to fund retirement while Londoners are the least likely to take this approach (5%).

“During the long house price boom it was convenient to view your home or other property as your pension pot but recent events have exposed the risk of this approach. Sadly, those approaching or at retirement age have little or no time to rebuild their savings and are paying the price,” said Marino Valensise, chief investment officer at Barings.

“What’s really alarming is that so many people have not changed their retirement plans despite what’s happened to house prices. Saving for retirement should start as early as possible and involve a well planned approach that controls risk through spreading investments across several asset classes.”

In spite of the financial crisis and house price falls, nearly 7.9m of those relying on property to fund part of all of their retirement have made no changes to their pension in the past year. Only 433,000 have started to make alternative pension arrangements and are looking at other investment opportunities.

“Apart from the tax efficient benefits of a pension plan, putting all your retirement eggs in the property basket is hopelessly optimistic,” added Valensise.

Published in the Financial Times

Sterling lifted on recovery hopes

Sterling bounced back against the US dollar on Tuesday, to reach a two week high of $1.6523.

The pound was supported by the rising equity and commodities market as well as better-than-forecast monthly manufacturing production figures, which climbed to 0.9 per cent in July by from 0.4 per cent in June.

Duncan Higgins, senior analyst at Caxton FX said: ”After heavy falls over the last two weeks today’s manufacturing data will come as welcome relief for the Bank of England’s Monetary Policy Committee, who are meeting on Thursday.

“If equity markets continue to rally, they may now be able to talk more positively about the UK’s recovery prospects. Caxton FX’s analysts are therefore predicting the pound will regain some value against the dollar in the lead up to Christmas.”

Sterling was not the strongest currency against the US dollar, however, with the euro hitting a one-month high against the greenback, whilst the Australian dollar which hit a one-year peak. The pound also rallied against the euro following the data, as the FTSE 100 climbed 0.7 per cent in early trading.

Published on the Financial Times

Property buyers think ‘outside the box’

Property registrations with online estate agent NetMovers have shot up a staggering 40 per cent in the last month.

New findings revealed that 80 per cent of people now use the internet to buy and sell property. The internet has become buyer’s first point of call.

The company says house prices have risen to levels not seen for 18 months. It added that while six to nine months ago properties were not selling, they are now being bought for the full asking price.

The latest Royal Institution of Chartered Surveyors survey of estate agents suggests, however, that some of the recent buoyancy has been caused by a shortage of properties.

Gordon McCallum, NetMovers chief executive said: “When the market crashed last year, investors sat on the fence and waited for it to hit rock bottom, what we are now seeing is the return of investors.

“People are now in a position to buy are taking advantage of the market.”

NetMovers predict that the current surge in investment could drive the market upwards. The reduction in rates for home loans is also helping to move the market. HSBC last week launched a new discount deal at 1.99 per cent home and in response the company was inundated with applications – other banks are expected to bring out similar products in the coming months.

Rick Jones, operation and development executive said: “NetMovers is experiencing a significant increase in vendors joining the site, whilst we understand this may not be representative of the market as a whole.

“It definitely shows an increase in confidence and a willingness for vendors to think ’outside the box’ and for those looking for alternatives such as NetMovers to sell their properties.”

Published at the Financial Times

Trendspotter: Air purifiers

Since the invention of the air purifier, scientists and designers have attempted to address issues about indoor air quality by harnessing natural processes of purification, while also trying to assist in the production of machines that are not ugly boxes festooned with grilles.

The Andrea, invented by French designer Mathieu Lehanneur and Harvard professor David Edwards, employs an award-winning filtration system designed to absorb and purify toxic gases, such as formaldehyde, in home and office environments through the natural absorptive and metabolic properties of living plants.

In addition it is unobtrusive enough to sit in a living room without looking out of place because it appears to be a plant in a plastic dome.

Meanwhile, the O2 air purifier by Tian Lingrui relies solely on plants to improve air quality.

The saucer-like machine is designed to accelerate the process of photosynthesis while also reminding owners to water their houseplants.

Published in the Financial Times

Half of all mortgages now charge a percentage fee

The number of mortage lenders imposing a percentage fee on their fixed rate products has increased from 43 per cent to 49 per cent, according to new research from MoneyExpert.com.

The research found that for people with large home loans, fees may run into thousands of pounds, particularly as only 4 per cent of products that charge a percentage fee impose a cap of the maximum fee.

The research revealed that percentage fees vary from as much as 2.5 per cent of the mortgage loan to as little as 0.4 per cent. The average percentage fee comes in at 0.89 per cent and on a typical home loan of £150,000 this equates to a fee of £1,335.

“Fees are often linked to loan to value ratios and anyone without a significant amount of equity in their house can expect to pay a hefty fee,” said Pierre Williams, head of research at MoneyExpert.com.

“Borrowers looking for a mortgage focus on rate, but fee has to be a consideration particularly when these can run into thousands of pounds. All too often we forget about the fee by rolling it straight into the loan.”

The research further revealed that, though the number of fixed rate mortgages charging a set fee has decreased as percentage of the market from 57 per cent to 51 per cent. The highest charge on the market has increased significantly, from £1,999 last year to 2,499 today.

The total number of products charging a set fee has increased from 405 to 472 as the market has expanded. The increase consists largely of the introduction of new tiers of fees by the banks. Last year for example there was only one mortgage charging a fee of between £100 and £200 but today this figure has increased to 49. Similarly, a year ago there were 17 products charging between £700 and £800 but today there are 61 products.

Average fees have actually decreased slightly from £860 a year ago to £790, largely due to the introduction of a large number of mortgages charging a small set fee rather than a percentage fee.

Mainstream lenders currently offering fixed rate mortgages with a fee of less than £300 currently include Royal Bank of Scotland and NatWest, on products to existing customers, while regional building societies such as Skipton also offer competitive deals.

“Borrowers need to make a calculation as to whether they opt for a fixed or percentage fee but with the introduction of large numbers of low fee mortgages this year borrowers do have options when it comes to choosing a mortgage,” added Williams.

Published at the Financial Times

Half of all mortgages now charge a percentage fee

The number of mortage lenders imposing a percentage fee on their fixed rate products has increased from 43 per cent to 49 per cent, according to new research from MoneyExpert.com.

The research found that for people with large home loans, fees may run into thousands of pounds, particularly as only 4 per cent of products that charge a percentage fee impose a cap of the maximum fee.

The research revealed that percentage fees vary from as much as 2.5 per cent of the mortgage loan to as little as 0.4 per cent. The average percentage fee comes in at 0.89 per cent and on a typical home loan of £150,000 this equates to a fee of £1,335.

“Fees are often linked to loan to value ratios and anyone without a significant amount of equity in their house can expect to pay a hefty fee,” said Pierre Williams, head of research at MoneyExpert.com.

“Borrowers looking for a mortgage focus on rate, but fee has to be a consideration particularly when these can run into thousands of pounds. All too often we forget about the fee by rolling it straight into the loan.”

The research further revealed that, though the number of fixed rate mortgages charging a set fee has decreased as percentage of the market from 57 per cent to 51 per cent. The highest charge on the market has increased significantly, from £1,999 last year to 2,499 today.

The total number of products charging a set fee has increased from 405 to 472 as the market has expanded. The increase consists largely of the introduction of new tiers of fees by the banks. Last year for example there was only one mortgage charging a fee of between £100 and £200 but today this figure has increased to 49. Similarly, a year ago there were 17 products charging between £700 and £800 but today there are 61 products.

Average fees have actually decreased slightly from £860 a year ago to £790, largely due to the introduction of a large number of mortgages charging a small set fee rather than a percentage fee.

Mainstream lenders currently offering fixed rate mortgages with a fee of less than £300 currently include Royal Bank of Scotland and NatWest, on products to existing customers, while regional building societies such as Skipton also offer competitive deals.

“Borrowers need to make a calculation as to whether they opt for a fixed or percentage fee but with the introduction of large numbers of low fee mortgages this year borrowers do have options when it comes to choosing a mortgage,” added Williams.