Why investors should proceed with caution after the grand pub re-opening - James Rowbury

British revellers cheer in preparation for the grand reopening of their local pubs and restaurants, as this weekend marks the further easing of lockdown restrictions.

Investors should, however, proceed with caution, while poor weather expectations put a ceiling on the capacity of many landlords, as they must impose strict social distancing

measures.

Hoping for a decent forecast, UK-listed pub landlord, Mitchells and Butlers suggests its positive takings from its German division provide an encouraging read through

to its UK business.

The operator of All Bar One and Harvester demonstrated several days of year-on-year growth at its German sites, since re-opening back in mid-May.

Nonetheless, its city centre sites had shown a slower recovery than suburban counterparts.

Germany’s DAX Index has been deep breath the most fruitful of the major indices in last quarter’s number, rising by 23.9 % compared to the FTSE 100 at only 8.78%.

The UK high street suffered a series of blows this week, beginning with the collapse of one of its biggest shopping landlords, Intu. The owner of the Trafford Centre in Manchester and

the Metrocentre in Gateshead called in the administrator over the weekend, after a prolonged lockdown led to its rental voids outstripping its debt obligations.

The UK retail sector looks to be re-shaped significantly by the COVID-19 pandemic, as the read across to other landlords shines a light on the industry’s misgivings. The gradual unwinding of the UK furlough scheme has exposed the fragility of the retail sector’s labour market, with this week’s report that thousands of jobs are being axed.

Bucking the trend, FTSE 250 Listed LondonMetric Property has announced an increase in its dividend after reporting 95% rent collection for the quarter.

The company seems to have placed itself on the right side of an economic downturn, with its key properties let to beneficiaries of a recessionary environment, with the likes of B&M stores, and the discount supermarkets Aldi and Lidl on its roster. The news highlights that opportunities are ever present in a variety of market conditions.

In the US, President Trump’s handling of the pandemic has been much criticised since the turn of the year, with the country seeing a surge of infections in key states over the past

fortnight.

Latest odds from betting sites suggest a sea change in voter sentiment, with betting markets now envisaging a win for the Former Vice President Joe Biden. It seems investors are similarly inclined – a Citi Group poll of 140 fund managers found that 62% believed Mr Biden and his Democratic Party would win the race to the White House.

Mr Biden provides a mixed picture for investors, as his more socially-focused agenda will see an increased tax base for corporations and households while companies will see further cost

increases through the raising of the minimum wage to $15.

The heralded reversal of President Trump’s cut in corporation tax will weigh heavily on American business, as analysts predict a 28% increase to US domiciled firms.

Despite rising infections and further lockdowns in some states, the US job market shows a contrasting picture to its UK counterpart, with a record increase in employment. US non-

farm payrolls for the month of June increased by 4.8m, putting the US at the forefront of economic recovery.

Please note that investments and income arising from them can fall as well as rise in value and you may lose some or all the amount you have invested. Past performance and forecasts

are not reliable indicators of future results or performance. Please note that this communication is for information only and does not constitute a recommendation to buy or

sell the shares of the companies mentioned.

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