“IT WOULD BE FOLLY TO IGNORE THE CONTRIBUTION TO

STOCK MARKET GAINS!”

We are heading towards the end of the year with just 5 weeks to go. Unlike last year the final quarter looks like it might be quite productive. Investor will recall that US markets surrendered about 20% in value in the last two months of 2018. Yesterday, not for the first time, all three main US indices reached record levels. In some ways this is surprising since GDP has been falling globally and there is still no clarification over the US/SINO trade spat nor is there any clarity over BREXIT, as far as the UK in concerned. Together with the Hang Seng, because of prevailing civil unrest, the FTSE 100 were the two worst performing of the global indices so far this year. As onlookers we ‘doff our titfers’ in the direction of the Central Banks who are sitting on interest rates with their hobnailed boots.

There are three other reasons why equities have done so well this year. Firstly, share ‘buy-backs’ have been prevalent. Investors are slowly becoming wary of their value. Secondly it might be folly to underestimate the huge contribution private equity has made in tandem with markets. However, investors are becoming a bit more cynical towards private equity, when it brings companies to the market, after they perceived that they are only offered for sale when ‘the fair, so as to speak, has left town and investors are to be left to pick up the trash!’

Finally, M&A activity has played a significant role this year with many deals emanating from health care, media and defence, coupled with a few specialised deals. There have also been copious deals involving biotech operations, valued at between $1-3 billion.  It should never be forgotten that M&A activity always keeps a positive momentum going. Set out below are a few examples of deals that have manifested themselves this year! To date there have been 15,400 M&A deals globally – down 3000 on last year.

David Buik