UK: Suitable for retail investors. Rest of Europe and Singapore: For sophisticated investors only.

Average Xmas spend

£833Food & drink£238

Decorations£32

Gifts £493

Visiting friends & family £70

Source: Centre for Retail Research.

Between the linesMulti-asset investment thinking from the Quilter Investors team.

51Week

Stuff the turkey...Analysts are expecting just shy of £99bn in UK Christmas spending – a modest 2% increase on last year. Although prices for games and gadgetry have fallen, the cost of the great British Christmas dinner has risen £13 on last year.

GSK and Pfizer team up on consumer healthcareGlaxoSmithKline and Pfizer have announced plans to create a consumer healthcare joint venture, which will pave the way for GSK to split into two businesses.

The joint venture will bring together two complementary portfolios of consumer brands, including Sensodyne, Panadol, Advil and others, with combined sales of £9.8bn. The UK’s GSK will have a controlling equity interest of 68%, Pfizer will own 32%.

GSK added that within three years of the transaction, it plans to separate the joint venture from its pharmaceutical/vaccines business to create two UK-based global businesses. The news, which assuages many investor concerns about the future direction of GSK, saw its shares jump almost 8% on Tuesday.

ASOS crash echoes through retail sectorOn Monday ASOS, the major British online fashion retailer issued a profit warning that saw its shares plummet 37.5%. The news dethroned ASOS as the largest stock on the UK’s AIM index and triggered a minor cave-in in the retail sector.

As Maz Alamouti, head of trading at Quilter Investors, observes “Backs are to the wall now as discounting has clearly undermined margins for online retailers. ASOS claims the weather had a role to play but any company reduced to a 2% margin will struggle in a strong wind.

“The news sent shivers through Europe’s retailing sector with the likes of M&S, Next, Adidas, Boss and Inditex all falling at least 5% on Monday.”

Malaysia puts Goldman in dock for $4.5bn fraud caseThe Malaysian government has taken legal action against US bank Goldman Sachs as part of its investigation into suspected corruption and money laundering at the state fund 1MDB.

It filed charges against three units of GS connected to its role as underwriter and arranger of three bond sales that raised $6.5bn for 1MDB, alleging the bank made untrue statements and omitted key facts. Goldman Sachs has denied any wrongdoing and will contest the allegations, as it claimed parts of the former Malaysian government and 1MDB had lied to the bank.

The 1MDB fund was set up in 2009 and the US Justice Department estimates $4.5bn was misappropriated by fund officials between 2009 and 2014.

Credit: LMWH/Shutterstock

UK: Suitable for retail investors. Rest of Europe and Singapore: For sophisticated investors only.

Equities % Change GBP % Change USD

FTSE All-Share (UK) -1.54 -1.34

MSCI AC World -4.07 -3.88

S&P 500 (US) -5.61 -5.42

NASDAQ (US) -6.47 -6.28

MSCI Europe ex UK -2.01 -1.82

TOPIX (Japan) -2.76 -2.56

MSCI Asia ex Japan -2.03 -1.83

MSCI Emerging Markets -1.91 -1.71

Fixed Income1

BB Global-Aggregate TR Index 0.51 0.55

BB Global-Agg Treasuries TR Index 0.48 0.52

BB Global-Agg Corporate TR Index 0.59 0.63

BB Global High Yield TR Index -0.58 -0.54

Commodities

S&P Energy Index -7.51 -7.32

S&P Precious Metals Index 0.43 0.63

S&P Industrial Metals Index -1.28 -1.08

S&P Agriculture Index -1.80 -1.61

Currencies2

JPM UK FX Exchange Rate Index -0.22 -0.22

JPM US FX Exchange Rate Index -0.33 -0.33

JPM Euro Area FX Exchange Rate Index 0.40 0.40

Market data – % change in week ending 19/12/2018

...any company reduced to a 2% margin will struggle in a strong wind.

Display of potentialShares in embattled Japan Display leapt by a third last Friday and by a quarter on Monday, following potential alliance talks with a number of Chinese suitors. Shares in the Apple supplier had previously fallen 80% in 2018.

The smartphone screen manufacturer – a 2012 merger of Sony, Toshiba and Hitachi’s LCD screen units – has racked up $2.3bn of losses over the last four years, so talks of a cash infusion are nothing new.

Previously, the likes of Apple and Huawei were touted as potential partners but a number of Chinese OLED makers including BOE, Tianma and CSOT are now in discussions to provide $1.8bn of new investment to reposition the company in the OLED market.

Chart of the weekBurning bridges and building walls: Despite already being $1.4 trillion over the US debt ceiling, Donald Trump is threatening to close the US government this December if he doesn’t receive $5bn from Congress to fund his Mexican border wall.

Data softens in China and EuropeThe latest data reveal that the economies of both China and Europe are slowing amid trade and growth challenges.

In China, industrial production growth slowed to 5.4% in November while annual retail sales rose just 8.1% – their worst performance in over 15 years. There may be more pain to come as export numbers are expected to taper due to trade war ‘front loading’.

Meanwhile, the December Markit’s European PMI reading dropped to its lowest level in over four years (51.3), largely due to a slowing French economy that’s been mired in months of ‘Yellow Vest’ protests. German PMI figures also came in below estimates, confirming the growth risks that European Central Bank President Mario Draghi recently highlighted.

Index data as at COB Wednesday 19 December 2018. All sources Quilter Investors unless otherwise stated.1 Bloomberg Barclays index data. 2 JP Morgan Real Broad Effective Exchange Rate CPI Indices.

Source: Quilter Investors/US Department of Treasury, Macrobond.

Maz Alamouti, head of trading, Quilter Investors

Trill

ions

Statutory debt limit Total public debt outstanding Over/Under

Statutory debt limit, USD

-2.0

-0.5

1.0

1994 1998 2002 2006 2010 2014 2018

2.57.5

12.517.522.5

Important informationPast performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back any of the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares. Exchange rate changes may cause the value of overseas investments to rise or fall.This communication is issued by Quilter Investors Limited (“Quilter Investors”), Millennium Bridge House, 2 Lambeth Hill, London, United Kingdom, EC4V 4AJ. Quilter Investors is authorised and regulated by the Financial Conduct Authority. This communication is for information purposes only. Nothing in this communication constitutes financial, professional or investment advice or a personal recommendation. This communication should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments in any jurisdiction. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information

contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the document.Any opinions expressed in this document are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or companies within the same group as Quilter Investors as a result of using different assumptions and criteria.Quilter Investors is not licensed or regulated by the Monetary Authority of Singapore (“MAS”) in Singapore. This document has not been reviewed by MAS.QIL-213-18/218-1778/SK18218

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