By the end of last year it looked like a combination of central bank policy error and political uncertainty was about to end a decade-long bull market in global equities. That combination was certainly enough to stop Santa delivering his traditional year-end rally in 2018. As we approach the end of 2019, this year things are looking rosier and cautious optimism is on the rise.

Although economic data have remained relatively soft (particularly excepting the US consumer), there have been indicators of potential improvement ahead and the rate of deterioration has slowed markedly. Most importantly, the US Federal Reserve has resumed its balance sheet expansion, cut rates and assumed a much more dovish tone generally. Political pressure on the current Fed has reached extreme levels this year, courtesy of President Trump’s Twitter feed. The heat was also turned up by the US yield curve inverting in June. As shown below, this has tended to be a pretty accurate early warning of pending US recessions. It is difficult to know if the recent return to more expansionary monetary policy represents the Fed bowing to political pressure or a belated recognition of its policy error in tightening too much in 2018. Irrespective of the motivation, these moves have restored investor confidence that the Fed is fully invested in supporting asset prices.

Politics generally have been a consistent source of investor anxiety this year. Here too, however, it feels like imminent meetings with the ballot box are focusing minds, suggesting at least a moderation of risk. For instance, President Trump has apparently re-read his 1987 book “The Art of the Deal”, where he stated that “you can do wonderful promotion and get all kinds of press…but if you don’t deliver the goods, people will eventually catch on”. Escalating the trade war with China initially played well with his core supporters, but December’s tariffs threatened to inflate costs on US High Streets. Meanwhile, US farmers have already been hurt by a collapse in exports to China. With 2020’s presidential election less than a year away, the pressure to “deliver the goods” is definitely building.

The rumoured de-escalation and substantial Chinese purchases of US agricultural products would certainly represent a delivery of some of the goods. The fact that the pending deal is referred to as the “mini deal” or “Phase 1” just confirms, however, that substantial ground remains to be covered if the US and China are to meaningfully resolve their differences. It feels like the pressure of the electoral clock has triggered a more conciliatory approach from President Trump. Next November’s election will give the incoming president four years to agree on any potential “Phase 2” deal. We don’t think a deal will be easy and would not be surprised to see a re-run of some of this summer’s market concerns.

Investment style rotated very swiftly when the Fed changed tack (as shown below), leading to strong performance of traditional “value” sectors such as financials, industrials, materials and parts of consumer discretionary. This has subsequently stalled but could recur if and when the US and China actually sign a trade deal. The sustainability of any such rotation will likely depend on the ability of such a deal to produce a meaningful upturn in corporate capital spending.

Whilst we monitor these macro issues, our focus remains solely upon businesses that can sustain high cash returns on investment in the long term. We are looking for businesses with a material competitive edge and where management is continuing to invest heavily to maintain it. We find these Future Quality companies in most sectors of the market—even those cyclical sectors noted above. One good example of such a business is Gentex, which was recently added to the portfolio. It has a 90% share of the market in auto-dimmable mirrors for cars and invests 6% of its sales revenue in research and development. Top-down fears over the health of the automotive market had compressed its valuation, creating an attractive entry point into the stock.

Sentiment towards the healthcare sector remains sensitive to political newsflow. The sector has staged something of a recovery recently as investors speculated that some of the more aggressive Democrat-led proposals to restructure the industry in the US looked less likely to occur, as the cost of implementing these changes became clearer.

We have no doubt that the US needs to act to contain its healthcare spending and we continue to position the portfolio accordingly with holdings in Anthem, ResMed, Philips and LHC Group. Despite the very real pressure on spending, the US remains a dominant player in global healthcare research and development, and US consumers continue to demand the best and newest treatments. We continue to find new Future Quality opportunities in businesses that support this innovation. The recent addition of Bio-Techne is a good example. Its technologies in protein analysis will be critical to the success of new treatment options like cell and gene therapy.

In conclusion, market sentiment remains fickle and liable to frequent change driven by the political calendar and short-term measures of macroeconomic activity. Thanks to our focus on sustainable Future Quality we did not react to fears of recession in the summer and have not subsequently changed much in the portfolio now that these fears look misplaced.

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Important Information: This document is prepared by Nikko Asset Management Co., Ltd. and/or its affiliates (Nikko AM) and is for distribution only under such circumstances as may be permitted by applicable laws. This article does not constitute personal investment advice or a personal recommendation and it does not consider in any way the objectives, financial situation or needs of any recipients. All recipients are recommended to consult with their independent tax, financial and legal advisers prior to any investment. This article is for information purposes only and is not intended to be an offer, or a solicitation of an offer, to buy or sell any investments or participate in any trading strategy. Moreover, the information in this document will not affect Nikko AM’s investment strategy in any way. The information and opinions in this document have been derived from or reached from sources believed in good faith to be reliable but have not been independently verified. Nikko AM makes no guarantee, representation or warranty, express or implied, and accepts no responsibility or liability for the accuracy or completeness of this document. No reliance should be placed on any assumptions, forecasts, projections, estimates or prospects contained within this document. This document should not be regarded by recipients as a substitute for the exercise of their own judgment. Opinions stated in this document may change without notice. In any investment, past performance is neither an indication nor guarantee of future performance and a loss of capital may occur. Estimates of future performance are based on assumptions that may not be realised. Investors should be able to withstand the loss of any principal investment. The mention of individual securities, sectors, regions or countries within this document does not imply a recommendation to buy or sell. Nikko AM accepts no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this document, provided that nothing herein excludes or restricts any liability of Nikko AM under applicable regulatory rules or requirements. All information contained in this document is solely for the attention and use of the intended recipients. Any use beyond that intended by Nikko AM is strictly prohibited. This document is issued in Australia by Nikko AM Limited (ABN 99 003 376 252, AFSL 237563). It is for the use of wholesale clients, researchers, licensed financial advisers and their authorised representatives only.

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The US healthcare market is often a ‘proving ground’ for new healthcare technologies.

Nikko Asset Management’s global equities team has an investment philosophy that’s centred on the search for Future Quality in a company. Future Quality companies are those that are able to attain and sustain high cash returns on investment.

We sat down with Greig Bryson, Portfolio Manager, to understand how they uncover Future Quality companies in the healthcare sector.

How do you identify key themes?

Our portfolio construction process is done on a bottom up-stock basis. All of our companies are researched and modelled by one of our seven sector analysts (who also collectively manage the global equity portfolios, within a flat team structure). As they do their due diligence and model out the company over five years, they can identify other broad-based ideas, applicable to other companies or industries; what we refer to as second and third derivatives.

Once an analyst has identified the potential for a thematic, like healthcare cost containment or the industrial Internet of things, they ask: “Is this thematic giving me a rising tide that lifts all boats in that thematic or is it something that will uniquely benefit only company X or company Y?”

That’s when your skill as the sector analyst comes in. You need to work out which stocks impacted by that theme best fulfils our Future Quality criteria: quality of franchise, management and balance sheet. Just as importantly, it can’t already be fairly valued.

This was the case for the healthcare cost containment theme we identified, which built up organically from doing work around stocks like ICON, LabCorp and Phillips. As we did our analysis on these stocks, the scale of the cost challenge facing global healthcare payers became increasingly obvious – as did a list of exciting companies that would help meet these issues head on.

How do others in the team contribute to stock or thematic ideas?

We’ve all got a richness of experience and have covered a lot of sectors having spent 20 plus years in the industry. So, ideas can come from anywhere. Sometimes a passing comment can remind you of something that drives you to go deeper.

For example, when my colleague Iain Fulton returned from the US after meeting with Quintiles (now called IQVIA) — one of ICON’s biggest competitors in the contract research space —he was discussing his trip and it triggered a memory of a meeting with ICON management in Dublin in the mid-2000s. At that time, the market was obsessed with drug price reform in the US and its potential impact on the biotech industry. Our view was that drug developers faced a stark choice: innovate or die, as commercial and political pressure likely intensified. Contract research organisations like Quintiles, LabCorp and ICON stood out as businesses that could help deliver this innovation more cost effectively. Both LabCorp and ICON really stood out for us, because they had a notable valuation discount relative to the other contract research organisations, like IQVIA.

What was the process you went through to arrive at the key theme of healthcare cost containment?

The US healthcare market is often a ‘proving ground’ for new healthcare technologies; partly because they have the largest budgets to pay for them. These budgets can’t grow forever though. The US already spends about 20% of its GDP on healthcare and that’s forecast to rise to 25% over the next five years. Cost control is urgently needed but this can’t be at the expense of innovation.

When we started working on this theme (in late 2015), the focus was (and is now) on drug price reform. Our view was that this focus was too narrow, with drug spending only 10% of healthcare spending. We believe that any regulatory action here may present opportunities, rather than just downside risk. New drug development is taking place at an accelerating pace as new tools improve our understanding of science and health. Any pressure on pricing would only intensify the need to bring this innovation to market, as quickly and cost effectively as possible.

Outsourced research & development looked like one such opportunity. Running the clinical trials needed for any new drug is cost consuming and ICON have a proven ability to manage these trials faster and up to 30% more cheaply than the in-house teams of other drug companies. This industry is growing 4 – 6% every year as a result and ICON had potential to grow even faster.

From there, we looked at other areas, where new technologies were opening up even more meaningful savings. One key area is better healthcare information technology. This takes many forms, from better managing patient health data, to enabling patients to be treated as well in their own homes as they are in hospital. This led us to do more work on companies like Phillips, LHC Group and others, including ResMed. Patients are becoming ever more engaged in their own care and payers are increasingly aware of the better health outcomes and lower costs delivered by this engagement. As a result, we remain very confident about the long-term growth in truly connected healthcare.

Technology in itself is only part of the solution though. You need to make sure that these innovations will actually get paid for. To do this, they will increasingly need to deliver a demonstrable value for patients. Managed care organisations like Anthem are at the forefront of this switch from the old, inefficient ‘fee-for-service’ model to value-based care.

Although the US is a poster child for this issue, we’re confident it’s going to spread to other parts of the world —you can already see it happening in Japan and France, which recently moved to reimburse the connected care capabilities that ResMed offers for sleep apnoea. While the structure of who’s paying for healthcare may be different between commercial payers, government payers, etc., as we move from country to country, the technologies are going to be similar across the world.

How do you decide which healthcare stocks to invest in?

Every stock that goes into the portfolio must have a path to attaining and sustaining a high cash return on investment. Our hurdle for this is 10 – 12%. There are a lot of companies that can deliver a 10% to 12% return for a couple of years if the economic wind is in their sails or they can borrow cheaply and do a couple of transactions or pursue a very aggressive restructuring program. But if ultimately their industry structure or the franchise quality of that business isn’t strong enough to support that improvement or return in the medium to longer term, then they tend to disappear very quickly.

Empirical evidence shows that companies that get to that 10% to 12% and stay there generate even stronger returns than businesses that started above that level and stayed there. Setting the bar here also gives the chance for those improving fundamentals businesses to come through. This represents roughly25% of our portfolio, which traditional quality growth managers perhaps wouldn’t own, but which give our portfolio a certain richness of opportunity. The crossover between our funds and other quality growth managers has always been pretty low.

We tend not to spend too much time trying to gauge where we are from a top-down perspective, but rather focus more on other considerations. So, where the company’s returns are realistically shaped by what’s going at a macro level, whether it be interest rates or commodity prices, that’s not something where we think we have a real edge over the competition so we’ll tend to focus on stocks that have that franchise quality and management quality — two of our Future Quality pillars — which means that the path to Future Quality is more in their own control.

We’ve spent a lot of time working out the common characteristics of the businesses that we like to invest in as a team, which includes a lot of empirical analysis. These common characteristic that we look for in a company include:

• companies that are in good industries and enjoy a sustainable competitive advantage
• high quality management teams, suitably incentivised to drive growth and returns
• strong balance sheets.

But just as importantly we need an attractive valuation. We don’t want to buy quality at any price. We focus on cash flow based metrics as we won’t buy companies that look like the ‘next big thing’ but are unable to fund themselves if the credit cycle turns against them.

We tend to wait until the technology is verified by real commercial application and a tipping point has been reached in terms of profitability and cash generation. It is at this point that returns typically move higher and we firmly believe that share prices follow returns.

Facebook and Amazon are good examples of our approach in action. Although Amazon had been a popular share before we bought it in early 2018, we didn’t want to own it as very high levels of capital spending meant that they were seeing declining cash returns on investment. We only stepped in once we felt they were starting to harvest the benefit of their investments. Until that point, we had preferred the profile at Facebook. At the same time, ironically, it was becoming clear that they needed to aggressively increase their investment in the business and that this would pressurise returns — for the short to medium-term at least. We sold Facebook to fund the purchase of Amazon.

What about healthcare in China?

Life sciences research is likely one of the key battlegrounds between the US and China as each tries to assert its power over the other in the long-term. China is committing a lot of capital, deploying newer technologies like artificial intelligence and machine learning to try and bridge that gap with (and ultimately overtake) the US as the global leader in life sciences research and development.

Further evidence of this ‘arms race’ is found in the rising number of young Chinese enrolled at high quality universities around the world. Those young adults will likely return to China to help drive the next leg of innovation for the Chinese healthcare industry.

The challenge for us is trying to find the right investment opportunities to participate in because often those stocks in China are very aggressively valued. The other challenge is that carrying out due diligence on those businesses, which is something we always do before we commit our client’s capital to them. Although not solely for this reason, we have recently recruited a mandarin speaker to the team and this should help us do the detailed stock level research that we need to do before risking our clients’ capital.

How do you integrate ESG when building portfolios?

ESG has been a key bedrock in terms of how we invest. If you look at our portfolio, in particular the sustainability of those higher returns (or high cash flow returns), one of the ways that returns can become unsustainable is if management is underinvesting in the quality of their business.

Generally speaking, extractive industries and energy have been structural underweights for us too. Mostly because of the volatility of their returns. But also because we hold concerns about the long-term cost of clearing up some of these industries and the impact that would have on cash flow returns in the medium to longer term. That means they don’t really fit our criteria for Future Quality.

We have a very low carbon footprint relative to the broader market and I don’t imagine it’s ever going to change. And we’ve always been very serious about corporate governance and that won’t change either. For us, ESG isn’t a new thematic because that’s what our clients want us to talk about; it’s pivotal to the way we invest.

There’s no point having excellent investment performance if it isn’t built on sustainable grounds. The real win-win situation is if you can deliver excellent investment performance, but also engage with the companies that you’re investing in to try and make the world a slightly healthier and more inclusive place.

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This material was prepared and is issued by Nikko AM Limited ABN 99 003 376 252 AFSL No: 237563 (Nikko AM Australia). Nikko AM Australia is part of the Nikko AM Group. The information contained in this material is of a general nature only and does not constitute personal advice, nor does it constitute an offer of any financial product. It is for the use of wholesale investors, researchers, licensed financial advisers and their authorised representatives, and does not take into account the objectives, financial situation or needs of any individual. The information in this material has been prepared from what is considered to be reliable information, but the accuracy and integrity of the information is not guaranteed. Figures, charts, opinions and other data, including statistics, in this material are current as at the date of publication, unless stated otherwise. The graphs and figures contained in this material include either past or backdated data, and make no promise of future investment returns. Past performance is not an indicator of future performance. Any economic or market forecasts are not guaranteed. Any references to particular securities or sectors are for illustrative purposes only and are as at the date of publication of this material. This is not a recommendation in relation to any named securities or sectors and no warranty or guarantee is provided.

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Northern Ireland is where Johnny Russell, portfolio manager, Nikko AM global equity team, called home and where he grew up. Despite The Troubles, he has wonderful memories of his childhood. Was he just lucky? Like life itself, the answer is a little complicated.

Johnny’s first stroke of luck was his parents’ decision to move out of West Belfast. As things turned out, that decision improved his chances of survival by a factor of almost three-to-one (there were 623 Troubles-related deaths in West Belfast vs 213 in South Belfast). His second stroke of luck was the school his parents chose to send him to. Both of his parents worked in mixed communities with Catholics and Protestants and decided on a school that offered children, regardless of religion or colour, loads of opportunity.

Johnny now realises his parents had a set of values; a framework for how they wanted to bring up their children. Both his parents worked hard and neither earned a lot of money. What was earned was funnelled into a family home—a safe one at that. That purpose, and the values underpinning it, drove their key decisions in life.

It has been 50 years since the start of what is locally called ‘The Troubles’ in Northern Ireland.

We all have multiple roles in life—parent, child, spouse, coach, colleague, friend, teammate, leader—and for most of us, each role needs to be worked on and nourished.

If we devote all our time and effort to any one of these areas, the others suffer. And while it may work out in the short term, over the long term our overriding goals will be lost. Like many things in life, things are complicated and there is a need for balance.

Businesses are similar. They need a purpose and a framework of values to deliver that purpose—something other than just maximising profits.

Profits are a construct to help measure how successful a company is solely through the eyes of the shareholder. In fact, it is the singular focus on profit at the expense of all other stakeholders that has led to our current state, where the success of capitalism is being questioned.

As it happens it is also 50 years since Nobel Prize-winning economist Milton Friedman won the debate on the role of businesses with his view that their only responsibility is to maximise profits. But the Friedman doctrine is starting to be rejected in favour of a model that considers all stakeholders.

The overarching pursuit of profit maximisation, which is underpinned by the notion of self-interest, has lowered the purpose of business and robbed many firms of their ability to engage with communities, employees and others. As a result, trust in capitalism is on the wane.

The purpose of business is not to maximise short-term profits. It has always been to provide profitable solutions for society’s problems. To do this they need to consider all stakeholders and find purpose and value for each in the pursuit of these solutions.

The environment in which companies operate and indeed the assets owned by companies have significantly changed over the last 50 years. More is currently being invested in intellectual property and research and development. There is a greater recognition that businesses are using natural resources without recourse. It is becoming clearer that companies need to consider a broader list of stakeholders if they are to succeed.

A good example of failing to consider the impact of their stakeholders is Ryanair. Europe’s largest airline has delivered cheap travel to the masses. For many years, the firm benefitted from profitable growth and a rising share price, resulting in a happy investor base. However, this was at a cost.

Europe’s largest airline has delivered cheap travel to the masses. For many years, the firm benefitted from profitable growth and a rising share price, resulting in a happy investor base. However, this was at a cost.

The management team and in particular its CEO, Micheal O’Leary, is well known for cutting costs and adding surcharges onto customer fares. However, this ultimately led to a number of profit warnings in 2018 after their cabin crew and pilots went on strike or left to join the competition. Their singular approach and unhappy employee base remains an issue today.

To achieve sustainable profit growth, all stakeholders need to buy in to the company’s mission if the company is to deliver that value. If not, the business will flounder.

(For reference: we held Ryanair between September 2014 and June 2018, during which it delivered a positive contribution of 2.08%. We sold it as we believed returns had peaked and the pilot strike would impact profits.)

One globe – Many cultures

One of the joys of covering global equities is the opportunity to meet people from different countries and learn about their cultural differences. These differences can influence how companies are managed and consequently how we approach our investments and engage with management teams.

Our search for Future Quality leads us to companies that we believe will attain and sustain high returns. With the influence of multiple stakeholders on the rise, how management teams deal with these shifting tides will impact future returns. These areas simply can’t be ignored.

Nikko AM’s Approach to Stakeholder Analysis

The Friedman doctrine is more a Western approach to value creation which has evolved to where management teams have not been held to account and the pursuit of profit—as opposed to the company’s mission or purpose—has dominated all else.

Some cultures have never been as enthusiastic about the Friedman doctrine. For example, in Japan there is greater emphasis on creating shared value for all stakeholders, as demonstrated by the following excerpt.

Kazuno Inamori, founder of Kyocera, mentors 5,000 leaders of small-to-midsize companies through a management school called Seiwajyuku. Here is what he teaches them:

“I tell them to seek profits by doing the right thing as a human being. No company can generate long-term profit unless it makes every stakeholder happy. Altruism will bring a company the right profit and long-term growth. I encourage business leaders to keep their own compensation reasonable and manage their business with altruism. They contribute not only to themselves but also to the people around them. Top executives should manage their companies by earning reasonable profits through modesty, not arrogance, and taking care of employees, customers, business partners and all other stakeholders with a caring heart. I think it’s time for corporate CEOs of the capitalist society to be seriously questioned on whether they have these necessary qualities of leadership.’

Source: 13D, ‘What I Learned this Week’, 13 April 2009

This isn’t suggesting that there are no Japanese companies struggling to properly consider all of their stakeholders. However, such Japanese firms tend to face different environmental, social and governance (ESG) challenges, which mainly relate to governance, inefficient balance sheets and demographic headwinds.

We believe the long-term trend away from Friedman towards a more balanced approach to creating value is permanent. However, identifying the companies that will benefit from this shift is not easy. Management teams are aware of the changes in society, however, the growth in ESG—for example, growth in related assets, research providers, sustainability reports and Sustainable Development Goals (SDG)—has also led to widespread ‘greenwashing’.

Despite challenges to determine authentic engagement with employees and communities, we have identified a number of companies that have elevated their purpose and placed stakeholders at the core of their strategy. One such example is Unilever.

Case Study: Unilever and ‘Benefit Corp’ status

As a global leader in fast-moving consumer goods, Unilever has relied on its powerful brands and strong distribution channels to deliver solid growth and high returns on capital for many years. Our assessment as to whether this success is sustainable into the future hinges on our assessment of the franchise quality of the business.

For companies who rely on consumers around the world buying their products daily, doing the right thing from an environmental, social and governance perspective is increasingly synonymous with long-term strength of individual brands. Having the right products, manufacturing and distributing them in the right way, and benefiting all stakeholders in the value chain are critical ingredients in the creation of long-term value. Unilever, with its range of purpose-driven brands, is an excellent example of a company achieving these objectives.

With 2.5 billion people worldwide using Unilever’s products every day, the company understands that to thrive long term, they need to serve society the right way today. Unilever’s sustainability plan not only mitigates risk but is a driver of profitable growth. The firm’s objective is to grow profitably while reducing its environmental impact by half, thereby improving the health and well-being of more than 1 billion people and enhancing the livelihood of millions of others in its value chain. This is a blueprint for long-term value creation with compounding growth. As long-term investors, we believe Unilever is a prime example of a quality company today, as it ensures that its brands sustainably deliver against stakeholder expectations of value creation. It is truly a Future Quality company.

We believe these initiatives are central to the sustained quality of Unilever’s returns on capital. Indeed, the company points out that their ‘brands driven by purpose’ grew 60% faster than their traditional brands in 2018. ESG factors are no longer just mitigators of risk, they are genuine drivers of franchise quality for the business and one of the key factors by which we assess Future Quality at the stock research level.

The clearly identifiable and measurable targets Unilever has put in place stands as testament to the high quality of the management team and their commitment to pursue United Nations SDGs while continuing to profitably grow their business.

The evidence of the need for change is everywhere: global populist movements, rising wealth divides and a younger generation that increasingly believes the system is rigged against it. Scores of companies now tout their ESG credentials, but few have gone the extra mile to gain externally accredited Benefit Corp (B Corp) status, thereby matching their processes with long-term thinking and the creation of shared value. Unilever has seven businesses with B Corp status, such as Ben & Jerry’s Ice Cream and Pukka Herbs.

There are now over 2,750 certified B Corps across 150 industries and 64 countries. The direction of travel is set and management teams are reacting to society’s changing needs.

Conclusion

“Not everything that counts can be counted and not everything that can be counted counts.” Albert Einstein

The blinding focus on short-term profit maximisation at the expense of everything else has damaged the role capitalism needs to play in solving society’s problems. As with individuals or the family unit, fulfilment is not measured by net worth. Without purpose and an understanding of how stakeholders are impacted, companies will continue to give in to short-term pressures and ultimately may lose their license to operate.

Whether it’s the scale of share buy backs, the low level of wages as a percentage of profits, the increase in importance of ESG across the asset management industry, increased inequality, social unrest or Larry Fink’s annual letter to Blackrock’s shareholders, the focus on a wider base of stakeholders is a trend that is here to stay.

Increasingly we are seeing businesses interject purpose and stakeholder analysis into board room discussions. This is a positive trend as capitalism needs a new narrative; one that reflects its true purpose and ability to deliver value to society as well as to its shareholders. Capitalism has successfully solved many of society’s problems in the past and we think good management teams are already on the journey to showing that this trend will continue.

Brexit – And bargain hunting

Voting for Brexit was billed as ‘taking back control’. But since the referendum, the pound sterling has fallen about 17% against the UK’s major trading partners and recent corporate activity on the London Stock Exchange suggests that the UK is up for sale.

This year alone, announced public-to-private deals have exceeded USD 30 billion, with a wide range of targets: media content, domestic pub chains, a defense contractor and real estate companies, among others. Data compiled by Datalogic shows that, since 2016, there have been over 3,000 mergers and acquisitions of UK companies—about 50% more than in the previous three years.

And the falling pound sterling isn’t the only reason for this activity. The booming private equity world is as much to blame, with perhaps as much as USD 750 billion (per Preqin, the data provider) looking for an investment. And this dry powder sees value in the UK.

We have identified undervalued, high-return businesses in the UK for some time, so this change in heart by foreign buyers comes as no surprise. As we approach a conclusion to Brexit, perhaps we are past peak uncertainty? And why past the peak?

Well it’s back to Northern Ireland. The fear of a return to The Troubles’ should lead all parties to find a solution to Northern Ireland’s border with Europe. Let’s hope so.

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