News

News round-up: 31 October 2025

The biggest investment stories of the past seven days

Valeria Martinez
Valeria Martinez

HSBC sets aside $1.1bn to cover Madoff fraud claim

The bank lifted its profitability outlook despite booking hefty legal provisions in the third quarter. Valeria Martinez and Mark Robinson report

HSBC (HSBA) took a $1.1bn (£824mn) provision in its third-quarter results after losing part of an appeal linked to Bernard Madoff’s Ponzi scheme, but upgraded full-year net interest income (NII) guidance by $1bn as revenue came in ahead of expectations.

The case dates back to 2009, when Herald Fund SPC – a European feeder fund that invested in Madoff’s funds – sued HSBC’s Luxembourg securities arm, HSSL, which acted as custodian, seeking up to $5.6bn in damages. A lower court dismissed the claim in 2013, but an appeals court revived it last year.

Luxembourg’s top court has now upheld part of the ruling, forcing HSBC to recognise the provision. The bank plans a second appeal and will contest the amount HSSL is required to pay, while adding that the eventual financial impact could be “significantly different”. Chief financial officer Pam Kaur has indicated it could take years to arrive at a final settlement.

The bank also booked a $300mn provision for a French investigation into dividend withholding tax treatment of “certain historical trading activities”, which it said is now at an “advanced stage”. Those charges constrained reported profits and reduced the common equity tier one capital (CET1) ratio, a key measure of financial resilience, to 14.5 per cent.

Shareholders can take heart from the bank’s adjusted figures, however. Constant currency pre-tax profits (ex-exceptionals) for the third quarter came in at $9.1bn, an increase of 3 per cent on the 2024 comparator, all helped by deposit growth and the benefit of a structural hedge.

The revenue beat was driven by strong wealth fees and banking NII, pushing it up 15 per cent to $8.8bn, with the margin up 11 basis points to 1.57 per cent. The lender said the $1bn upgrade to NII guidance was a partial reflection of targeted efficiency gains and confidence in the “near-term trajectory for policy rates in key markets”.

Guidance for return on average tangible equity (ROTE) excluding notable items was raised to “mid-teens or better”, compared to just “mid-teens” previously. That reflects a higher capital base after the bank announced it would temporarily suspend share buybacks while pursuing its proposal to privatise Hang Seng Bank.

Analysts expect the bank’s run of solid results to continue in the years ahead. Even when accounting for the new Madoff costs, consensus forecasts tracked by FactSet suggest pre-tax profit will exceed $30bn for the third consecutive year in 2025, with more gains expected in 2026 and 2027.

“These earnings, if attained, are way ahead of what HSBC achieved at the peak of the cycle in 2006-07, just before the great financial crisis hit, and this all helps to explain why the shares set a new all-time high earlier this month,” said AJ Bell investment director Russ Mould.

Oil services contractor Petrofac (PFAC) has applied to the courts to call in administrators.

The heavily indebted company, whose shares have been suspended since May, has been trying to shore up its balance sheet for two years but said that a decision by Dutch electricity network company TenneT to cancel a contract to deliver six 2GW wind farms meant that a restructuring plan it had planned to deliver by the end of November “is no longer deliverable in its current form”.

The company had already warned two weeks ago that the proposed restructuring would “result in no residual value being retained by existing shareholders”. It said that group operations were continuing to trade as “alternative restructuring and M&A” options were being explored with creditors. 

Petrofac was worth around £6bn at its peak in 2012 but collapsed following a Serious Fraud Office probe and multiple profit warnings. By the time its shares were suspended in May, the group was worth around £20mn. The company has blamed contract payment delays and mounting costs for its misfortunes. MF

Emma Walmsley will step down as chief executive of GSK (GSK) at the end of this year, but will be going out on a high after the pharma heavyweight registered its second upgrade to sales and profits for 2025. 

Within its third-quarter trading update, the group revealed that revenues through the year are now expected to grow by 6-7 per cent, while core profit growth is now pitched at 9-11 per cent, against the previously given range of 6-8 per cent. 

Total third-quarter sales, up 8 per cent at constant currencies to £8.5bn, have been propelled by double-digit increases within its specialty medicines, HIV, and respiratory, immunology and inflammation units. However, the standout performance was attributable to its oncology product group, with sales up 39 per cent. Vaccine sales hit £2.7bn, with a strengthening contribution (£800mn) from its Shingrix treatment for shingles. 

“We assume that the company is likely to reiterate previous comments that it intends to reinvest some of this outperformance in accelerating research and development investments in 2026,” said UBS analyst Matthew Weston.

The group’s shares were marked up in response to the positive update, but closer inspection will be given to the clinical trials under way, and those due to commence by the year end. MR 

WH Smith (SMWH) has pushed back the publication date of its annual results by more than a month as it awaits the outcome of an independent review by Deloitte into accounting errors in its North American division. 

The results were scheduled to be released on 12 November but have now been postponed to 16 December. The travel retailer said the delay will give it time to respond to Deloitte’s findings and allow its auditor, PwC, to complete more audit checks.

Shares in WH Smith plunged more than 40 per cent in August after the company said it had uncovered a dramatic overstatement of its North American operating profit. An internal review found an overstatement of around £30mn in North American headline trading profit, which was knocked down to £25mn. 

The board said it expects a headline profit before tax and adjusted items of around £110mn for the 12 months to 31 August, well below analyst consensus of around £140mn. 

WH Smith blamed the error on “accelerated recognition of supplier income”, which is the payments, incentives or discounts the company receives for buying higher volumes of stock or marketing or promotional activity. These are deducted from the cost of sales on an accrual basis as they are earned for each contract. VM

The Competition and Markets Authority (CMA) said Greencore’s (GNC) acquisition of Bakkavor (BAKK) could harm competition – particularly in the supply of own-label chilled sauces to supermarket chains in the UK. 

Greencore struck a £1.2bn deal to buy its rival Bakkavor in April, creating a UK convenience food giant with a combined revenue of £4bn. The watchdog, which has completed its phase 1 investigation into the deal, said the company now has until 3 November to put forward proposals to address the issue.

Analysts at RBC Capital Markets noted that chilled sauces make up less than 1 per cent of revenues for the combined group, and said they expect that the companies “have already identified a potential remedy and are ready to move forward with further discussions”. 

The regulator did not raise competition concerns about 99 per cent of the revenues generated by the merger, but a satisfactory response from Greencore will avoid a more in-depth second phase of the investigation. The transaction is scheduled to complete in early 2026, subject to the outcome of the CMA’s full investigation. EW

Shares in engineering group Goodwin (GDWN) soared by 32 per cent on Monday after it said it would pay a special interim dividend as profits are likely to be double those of last year.

The company expects “with a high degree of confidence” to be able to generate a trading pre-tax profit of more than £71mn for the financial year ending in April, based on a strong order book of £365mn, plus expectations of more work from nuclear and defence projects that haven’t yet been booked as orders.

It also plans to get ahead of any potential changes in the Budget by paying a one-off special dividend of 532p, which will be in addition to the 280p final dividend it announced in July – half of which has already been paid, with the remaining 140p due to be paid next April.

Since the company has no debt, strong cash generation and few capex requirements that are not being funded by customers, it has “surplus funds exceeding those needed for optimal efficiency”, executive chair Timothy Goodwin said in a statement.

Even after the payout, Goodwin will “continue to have low gearing relative to its peers”, he added. MF

Funds

Why the Japanese market is on a roll – and how to invest

The country’s recent rally is backed by a compelling long-term case, but valuations might be close to the peak

Val Cipriani
Val Cipriani

Earlier this month, the Japanese stock market reached a record high, with the Nikkei 225 jumping above the 50,000 mark. From the start of the year to 28 October, the index was up 27.7 per cent in local currency terms and 22.5 per cent in sterling.

A lot of change is afoot in the country. From a political perspective, all eyes are on Japan’s first female prime minister, Sanae Takaichi, elected earlier this month. She is a conservative whose dovish stance on fiscal policy contributed to the market’s rally. Takaichi’s Liberal Democratic party has been in power for years, but her new government relies on a different coalition, supported by right-wing Nippon Ishin, which is expected to look more favourably on defence spending.

Takaichi is in favour of big fiscal spending, at a time when Japan is dealing with an inflation for the first time in decades – core CPI has exceeded the target rate of 2 per cent for the past three years – and the Bank of Japan (BoJ) is expected to hike interest rates. In a country that has had to deal with deflation for years, price growth is arguably a good thing, as long as it doesn’t prove too stubborn. For one thing it could encourage Japanese households, who are sitting on big piles of cash, to consider more investment in the stock market.

That is the theory, at least, and recent performance may encourage more participation. Last year, the Japanese market finally surpassed the levels it had reached at the top of the bubble in 1989, which feels like an important psychological milestone.

Line chart of Nikkei 225, year to 29 October showing The Japanese market has passed 50,000 for the first time

Meanwhile the BoJ is slowly bringing rates up to a more conventional level, having hiked twice last year and once in early 2025.

Takaichi’s election could theoretically delay further increases, but it is far from a given. Oxford Economics analysts argue that “market pressures – especially the weakening of the yen – will probably leave her no choice but to accept some rate hikes” and that “persistently high inflation and the cost of living crisis continue to be politically very important, and it will probably become more difficult to justify a continued very low policy rate to the public”.

The main piece of bad news is that over the past two years, the yen has weakened more than analysts had expected, partly driven by interest rates in the country remaining much lower than in the rest of the world. Among other things, this has reduced sterling returns for UK investors – as well as buoying export-focused companies and pushing inflation up.

Still, equity investors are clearly feeling very confident about both the Japanese market and its new prime minister.

The BoJ owns trillions of yen’s worth of Japanese stocks via exchange-traded funds, having tried to stimulate the country’s struggling economy via these purchases in the past. Not even the announcement earlier this year that it would start selling up has really alarmed investors. “The market has taken this in its stride, an indication of the level of investor confidence,” notes Mick Gilligan, head of managed portfolio services at Killik & Co.

Masaki Taketsume, manager of Schroder Japan Trust (SJG), argues that the rally has been driven by “receding uncertainties”, including signs of progress on US-China tariff talks, easing worries in US credit markets, and the new government’s coalition agreement, which “lowers political risk”. “Valuations now sit at the upper end of historical ranges, so further multiple expansion looks limited near term; the pace of earnings recovery will be key to the rally’s durability,” he says.

A continued rally may partly rely on further progress on long-term trends, particularly corporate governance reforms, which are pushing companies to be better at giving back money to shareholders. “The drive led by the Japan Exchange Group – to make companies more efficient with their capital, improve shareholder returns through dividends and buybacks, and unwind cross-shareholdings – will persist. That’s what ultimately underpins Japan’s equity story,” says Richard Aston, portfolio manager of the CC Japan Income & Growth Trust (CCJI).

Gilligan notes that the return on equity for Japan’s Topix benchmark has risen from below 8 per cent to around 9.5 per cent in recent years. “There is certainly scope for this to improve further, towards the level of other developed markets, which are typically in the 12-15 per cent range,” he says. “The scope for re-rating is even greater among Japanese mid and small caps, many of whom still have high levels of cash on their balance sheets.”

A range of sectors have benefited from the latest economic improvements. “I see opportunities in sectors such as financials, construction, industrials and utilities, which all enjoy steady pricing power as labour shortages, digitalisation and infrastructure demand drive order books, while also having relatively limited sensitivity to US tariff outcomes,” says Min Zeng, manager of the Fidelity Japan Fund (GB00B882N041). He notes that banks in particular have been the clearest beneficiaries, “underpinned by resilient net interest margins, lower credit costs, and progress in cost controls”.

Investors who want to tap into Japan’s market have a wide range of funds and trusts to choose from. On the smaller companies front, AVI Japan Opportunity (AJOT) and Nippon Active Value (NAVF) deploy an activist, value approach which relies on engagement with its company holdings. It has been working well in combination with the market’s corporate reforms. Both are fairly concentrated, with the top 10 holdings accounting for 85.5 per cent of the former portfolio and 71.4 per cent of the latter as at the end of September.

As for large-caps, value funds have been outperforming in the past five years. Among investment trusts, one option is Schroder Japan, which has a value tilt and looks for undervalued companies where a catalyst for improvement is apparent.

CC Japan Income & Growth’s quality investing approach has also had a very strong five years. The trust seeks to combine rising dividend streams with capital growth and currently offers a yield of 2.4 per cent. Schroder Japan promises a bigger payout of 4 per cent of NAV, which was introduced last year, but how much that amounts to in monetary terms ultimately just depends on performance.

Bar chart of Sterling share price total return to 28 October (%) showing Trusts investing in Japan have performed strongly

Among open-ended funds, the IC Top 50 Funds list includes Man Japan CoreAlpha (GB00B0119B50), whose value approach has been doing extremely well. Away from the list, one interesting if small option is JK Japan (IE00BJBY7B30), which claims to look for “quality companies, combined with an acute eye on valuation metrics” and to “blend top quality value and growth companies”. The fund has been another standout performer since its launch in early 2020. In the five years to 22 October, both of these funds returned roughly 134 per cent.

Interestingly, growth funds have also been showing signs of life this year after a prolonged period of poor performance. Baillie Gifford Japan (BGFD) has returned 31.8 per cent in the year to 21 October, although it still has quite a lot of underperformance to make up for from previous years.

The trust is currently focused on the themes of artificial intelligence and automation. The portfolio construction process looks in some ways similar to that of global equity stablemate Monks (MNKS), in that it divides the portfolio into different types of growth companies.

For Baillie Gifford Japan, these are secular growth (54.8 per cent of the portfolio as of March), in other words companies with the opportunity to grow rapidly but where there’s more risk; growth stalwarts (17 per cent), where growth is less rapid but more predictable; and then ‘special situations’ (13.9 per cent) and ‘cyclical growth’ companies (14.3 per cent).

Fidelity Japan (FJV) is also doing very well this year, but after failing a continuation vote is in the process of being merged into AVI Japan, with shareholders facing a choice between a cash exit or having to accept a fairly radical shift in strategy.

Economics

Another round of rate cuts? Economic week ahead: 3-7 November

Falling inflation means another BoE cut is back on the agenda

Dan Jones
Dan Jones

The Bank of England (BoE) is likely to keep rates on hold when it meets next Thursday, but a cut this year is back on the table. Last Wednesday’s lower than expected inflation print (CPI price growth was flat at 3.8 per cent versus expectations of a rise to 4 per cent) creates space for more easing.

With inflation likely to fall before the year is out, last week’s number is now seen as the peak. That makes it more probable that the BoE will lower rates to 3.75 per cent either next week or on 18 December.

Gilt yields have moved to price in these changing assumptions; at 4.4 per cent, the 10-year yield is now at its lowest point of the year. Capital Economics thinks this drop may have come too late to influence the Office for Budget Responsibility’s forecasts for the November Budget (see left). On the plus side, the forecaster now has more conviction in its belief that both rates and inflation will fall further than expected next year – the former to 3 per cent.

Monday 3 November

China: Manufacturing PMI

Eurozone: Manufacturing PMI

UK: Manufacturing PMI

US: Manufacturing PMI

Tuesday 4 November

Japan: Manufacturing PMI

Wednesday 5 November

Eurozone: Composite and services PMIs, producer price index

UK: Composite and services PMIs

US: Composite and services PMIs

Thursday 6 November

Eurozone: Retail sales

UK: BoE interest rate decision, construction PMI

Friday 7 November

China: Imports/exports trade balance

UK: Halifax house price index

Companies

Morgan Sindall and Coats: Big director share deals this week

Find out which directors are buying and selling shares in their own companies

Mark Robinson
Mark Robinson

John Morgan, chief executive of Morgan Sindall (MGNS), is sufficiently funded ahead of the festive season, having unloaded £1.4mn worth of shares in the fit out and construction services contractor. The 28,458 shares in question represented a minuscule proportion of his total holding, but they were offloaded at a time when the group’s valuation has hit successive five-year highs.

The share price gains reflect improved work volumes through 2025. The group revealed a 36 per cent increase in reported profits at the half-year mark, and at that point Morgan – architect of the group’s decentralised business model – told the Investors’ Chronicle that fit out volumes were unlikely to remain at elevated levels indefinitely. But in a trading update published at the start of October, management revealed that the secured order book at the unit had reached £1.6bn by the end of August, with £900mn relating to 2026 and beyond, an 8 per cent increase from the end of June. As a consequence, full-year results are now predicted to be significantly ahead of previous expectations.

Performance levels at the construction and infrastructure units were more prosaic by comparison, but they both remain on track to deliver profits in line with previous guidance. Morgan Sindall also recently landed a place on the not-for-profit South East Consortium’s £1bn decarbonisation partnerships framework, which was created to support the housing sector.

It was probably prudent of Morgan to try to temper expectations ahead of the November Budget, but it’s not difficult to appreciate why the shares are so well supported given the visibility on the revenue front provided by the secure order book. MR

The share price of Coats Group (COA) has retraced somewhat since it registered a 12-month low in the second week of April. At that point, the industrial thread and footwear components manufacturer had just revealed that it was exiting the performance materials division’s US yarns business. But the strategic move away from a non-core asset was followed by news that the FTSE 250 constituent had bucked the transatlantic trend by agreeing to acquire private equity-owned US insole maker OrthoLite for $770mn (£570mn). The group is clearly still intent on tapping into US growth, which is hardly surprising given that the US apparel and textile markets are estimated to be worth $359bn and $259bn respectively.

Admittedly, the shares hit an all-time high during the final quarter of 2024, so Coats’s recent share price performance needs to be seen in that context. And the partial rebound could reflect the gradual easing of the destocking problem which has plagued the industry since 2022. In any event, its current price/earnings-to-growth ratio of 1.1 times suggests that the valuation is far from stretched, a point re-emphasised by the group’s relative discount to industry peers on an enterprise/Ebitda basis.

The group’s chief executive, David Paja, presumably feels that there’s still potential upside, having recently purchased 250,000 shares at around 78p apiece, for a total outlay of £195,330. That it came on top of an earlier purchase of 200,000 shares which was completed on 10 September. MR

Buys        
Company Director/PDMR Date Price (p) Aggregate value (£)
Coats David Paja (ce) 17-Oct 78 195,330
Coca-Cola HBC AG Stavros Pantzaris 𖤓 22-Oct 3,474 104,243
Coca-Cola HBC AG Pantelis “Linos” Lekkas 22-Oct 3,450 345,000
Contango Holdings Oliver Stansfield 22-Oct 0.8 38,426
Fevertree Drinks Kevin Havelock 16-Oct 868 477,400
Forterra Nigel Lingwood (ch) 23-Oct 179.8 89,900
GB Group Dev Dhiman (ce) 21-Oct 236 47,200
Oxford Biomedica Dr. Heather Preston 20-Oct 593 36,633
Secure Trust Bank Ian Corfield (ce) 21-Oct 879 248,727
Secure Trust Bank Jim Brown (ch) * 22-Oct 915.9 228,988
SIG Pim Vervaat (ce & ch) 22-Oct 8.9 44,500
Volution Group Nigel Lingwood (ch) * 23-Oct 664 30,913
Sells        
Company Director/PDMR Date Price (p) Aggregate value (£)
Morgan Sindall John Morgan (ce) 15-Oct 4,950 1,408,671
Pan African Resources Cobus Loots (ce) † 17-Oct 96 191,816
*All or part of deal conducted by spouse / family / close associate. † Converted from ZAR. 𖤓 Converted from €.
Companies

Sainsbury & Auto Trader: Stock market week ahead – 3-7 November

A summary of key company announcements expected in the coming week

Mark Robinson
Mark Robinson

Monday 3 November

Economics: PMI manufacturing

Finals: Spirax (SPX)

Companies paying dividends: Banco Santander (€0.12), F&C Investment Trust (3.8p), Old Mutual (1.55354p), TwentyFour Income Fund (2p), WPP (7.5p), Hargreaves Services (18.5p), Mercantile IT (1.55p)

 

Tuesday 4 November

Trading updates: International Workplace (IWG)

Finals: EnSilica (ENSI), Focusrite (TUNE), Smiths News (SNWS)

AGMs: Murray Income Trust (MUT)

Companies paying dividends: Harworth (0.538p), Johnson Service (1.6p), Weir (19.6p), Alumasc (7.6p), Brooks Macdonald (51p)

 

Wednesday 5 November

Economics: PMI composite, PMI services

Trading updates: Barratt Redrow (BTRW), Conduit Holdings (CRE), Lancashire Holdings (LRE), Persimmon (PSN)

Interims: Trainline (TRN)

AGMs: Barratt Redrow (BTRW), Manchester & London Inv Tst (MNL)

Companies paying dividends: BlackRock Latin American Investment Trust (5.274825p)

 

Thursday 6 November

Economics: BoE interest rate decision, PMI construction

Trading updates: Derwent London (DLN), Howden Joinery (HWDN), IMI (IMI), OSB (OSB), S4 Capital (SFOR), Vistry (VTY), Watches Of Switzerland (WOSG)

Interims: Auto Trader (AUTO), National Grid (NG.), Sainsbury (J) (SBRY), Tate & Lyle (TATE)

AGMs: Ashmore (ASHM), Diageo (DGE), Tavistock Investments (TAVI), Time Finance (TIME)

Companies paying dividends: Bodycote (6.9p), Begbies Traynor (2.9p), City of London Investment (22p)

 

Friday 7 November

Economics: Halifax house price index, Unemployment rate

AGMs: JPMorgan Emerging Markets Investment Trust (JMG), Pennpetro Energy (PPP)

Companies paying dividends: Anglo-Eastern Plantations (27.8524p), AVI Japan Opportunity Trust (2.2p), Barr (A.G.) (3.44p), Breedon (4.75p), Christie (0.75p), Ferguson Enterprises (61.7835p), Judges Scientific (32.7p), Kerry (€0.42p), LSL Property Services (4p), M P Evans (18p), Microlise (0.6p), Persimmon (20p), Schroder European Real Estate (1.28479p), Seneca Growth Capital VCT (5p), Smith & Nephew (11.26p), Spectris (28p), TP ICAP (5.2p), Travis Perkins (4.5p), Wickes (3.6p), Knights (3.05p), Manchester & London (14p), Mid Wynd International (4.35p), British American Tobacco (60.06p), CT UK High Income Trust (1.37p), Alfa Financial Software (5p), AVI Japan Opportunity Trust (2.2p)

Companies going ex-dividend on 6 November
Company Dividend Pay date
Me Group 3.85p 28-Nov
October AIM VCT 2 1.8p 27-Nov
Genus 21.7p 05-Dec
Ashmore 12.1p 08-Dec
Dunedin Income Growth 4.25p 28-Nov
Warpaint London 4p 21-Nov
Springfield Properties 2p 11-Dec
Galliford Try 13.5p 05-Dec
Avingtrans 3p 19-Dec
Card Factory 1.3p 12-Dec
JPMorgan India Growth & Income 11.08p 01-Dec
CVS 8.5p 05-Dec
Tritax Big Box Reit 1.915p 27-Nov
Artemis UK Future Leaders 3.85p 05-Dec
Bytes Technology 3.2p 21-Nov
Albion Crown VCT 0.76p 05-Dec
Albion Crown VCT “C” 1p 05-Dec
abrdn Property Income 3p 13-Nov
Softcat 36.5p 16-Dec
Unilever 39.28p 05-Dec
Companies

Unilever beats Q3 growth expectations as core products impress

All of the business units delivered sales growth ahead of the ice cream demerger

Mark Robinson
Mark Robinson

Hot on the heels of our review of the prospective listing of The Magnum Ice Cream Company (TMICC), its parent company Unilever (ULVR) has just released third quarter (Q3) figures that beat market expectations – at least in terms of underlying sales growth. That particular metric came in at 3.9 per cent (4 per cent excluding the ice cream business), on a 1.5 per cent rise in sales volumes.

All the business units delivered sales growth in excess of 3 per cent, but the beauty and wellbeing unit produced the standout performance. Unilever’s chief executive, Fernando Fernandez, who took the reins at the fast-moving consumer goods group in March, said the improved showing reflects a strategy aimed at “prioritising premium segments and digital commerce, and anchoring our growth in the US and India”.

In terms of the latter locale, sales growth slowed due to tax reforms which affected around 40 per cent of Unilever’s business in the country, but management maintains that the changes to the tax regime will have a “transitory negative impact on sales growth”, but should “support long-term demand improvement across key categories”.

Unilever’s North American markets continues to impress, with underlying sales growth of 5.5 per cent, underpinned by volume growth of 5.4 per cent. Personal care and beauty and wellbeing continue to lead the way. Matters weren’t quite so encouraging south of the border, with Brazilian sales down by mid-single digits, while Mexico recorded a high-single digit decline, both with negative volumes. By contrast, Argentina saw price-driven growth against an unstable macroeconomic backdrop, although one imagines that the backdrop might become a little more predictable following the victory of Javier Milei’s Libertad Avanza party in the country’s recent mid-term elections.

Meanwhile, Unilever’s European markets, which account for 23 per cent of Q3 turnover, delivered sales growth of 1.1 per cent, but this was entirely due to price increases. Food volumes were flat “as consumer demand continued to be subdued”, while home care volumes held up reasonably well. Growth lagged in the German market, albeit against strong comparators in the prior year.

Leaving aside the Q3 figures, Unilever has confirmed that the planned separation of its ice cream division remains on schedule for completion by the end of the year, with preparatory work on track despite disruption brought about by the US government shutdown. Upon completion of the separation, Unilever will retain a 19.9 per cent stake in TMICC for up to five years.

Not everyone is sold on the rationale behind the move. Analysts at RBC Capital Markets maintain that while the spin-off will enable management to concentrate on its beauty and wellbeing product grouping, it removes the “most competitively advantaged segment from [Unilever’s] portfolio, albeit one where growth has been underwhelming”. The analysts go on to say that the “demerger could lead to 11-13 per cent dilution to the group’s Ebitda”, and it “does not guarantee 4-6 per cent [its targeted] organic revenue growth for its remaining portfolio”.

Perhaps not, but at least once the demerger is completed, bosses at Unilever will no longer have to contend with the constant criticism levelled by Ben Cohen, co-founder of Ben & Jerry’s, who recently complained that “the question that Unilever should be asking itself is what happens to the bottom line when a brand that is built on authenticity and social values is systemically muzzled by its parent company”. Doubtless this type of activism stands as an unwanted distraction when you’re attempting to finalise a major corporate restructuring.

The RBC analysts concede that they “see a favourable set-up allowing TMICC to thrive as an independent company and deliver more resilient growth and margin improvement”, although it does not envisage the demerger “materially adding to Unilever’s worth”. RBC provides a sum of the parts calculation of £38 a share (following restructuring). Unilever now trades on a forward enterprise value/Ebitda consensus rating of 13 times, a material discount to both Procter & Gamble (US:PG) and Colgate-Palmolive (US:CL), although this could simply reflect the persistent divergence between UK and US capital market ratings.

Unilever delivered a handful of negative earnings surprises between 2005-10, so management had become convinced that the group’s product portfolio and supply chains need to be rationalised long before the pandemic took hold. But we think there is limited scope for upgrades until the dust settles on the TMICC demerger. In any event, it’s probable the near-term impact of the deal is already priced in to the current valuation.

News

UK banks ride a mortgage market proving healthier than the wider economy

Third-quarter results from lenders have reinforced the impression of a well-functioning market

Hugh Moorhead
Hugh Moorhead

The UK economy may be crawling and the housing market in hibernation ahead of the Autumn Budget next month, but one sector is still chugging along nicely.

The mortgage market grew 3 per cent in the year to August, twice the rate of house prices, while approvals – described by RBC Capital Markets analyst Anthony Codling as his key indicator of the market’s health – are on the up. On the other side of the ledger, credit quality has been benign.

Whether prospective homebuyers should take heart in spite of the wider doom and gloom, and whether a robust mortgage market justifies doubling down on UK bank stocks Barclays (BARC), HSBC (HSBA), Lloyds (LLOY) and NatWest (NWG), are the issues now facing investors after a year of strong gains.

Improving availability has been key to the market’s resilient performance. The Bank of England’s (BoE) credit conditions survey, a quarterly poll of banks and building societies, points to improving supply over the past year, with expectations for this to continue during the fourth quarter.

Regulatory changes have helped. Banks can now lend at higher loan-to-income ratios to more borrowers, while first-time buyers can secure a mortgage with only a 5 per cent deposit.

A competitive pricing environment is also encouraging, even if rates have been volatile in recent weeks amid conflicting economic datapoints in the run-up to November’s Budget. Many lenders are already offering sub-4 per cent rates on certain products, with NatWest chief financial officer Katie Murray pointing to “really intense competition” in the market during the bank’s recent third-quarter analyst call.

Prices have recently been stable in the buy-to-let market, with rates averaging 5 per cent for mortgages worth 75 per cent of a property’s value. The volume of new buy-to-let lending actually rose during the first half of the year, albeit from subdued levels. This is despite the number of individual mortgages drifting down as landlords exit the market.

A rumoured eduction in the annual cash Isa allowance would undermine mortgage supply, the Building Societies Association has argued. Reducing the limit to as little as £5,000 from the current £20,000 could reduce its members’ supply by up to 5 per cent, equivalent to 17,000 mortgages, it said.

This line of argument is unsurprising, given that building societies tend not to offer investment products, and so are unlikely to benefit from customers shifting their savings from cash into, say, equities.

Banks may also look to pass on to mortgage customers any increases in the UK bank tax surcharge from its current 3 per cent level, in what would be another blow to mortgage customers.

While looser regulations will inevitably prompt questions around credit quality, there are currently few causes for concern. Default rates for surveyed lenders fell during the third quarter and are drop further. Barclays and NatWest reported low levels of provisions in their retail banking books, which are predominantly composed of mortgages, for the third quarter.

The less positive aspect of the market is demand, which remains subdued despite the recent uptick in approvals. The BoE’s credit conditions survey reported flat mortgage demand during the third quarter, with affordability still the key constraint here despite regulatory tweaks. Few of the very many who aspire to get on the housing ladder can afford to do so, with house prices around 6 times average annual incomes (9 in London).

The government can do more to help. A scheme like Help to Buy, under which the government from 2013-2023 would lend first time buyers up to 20 per cent of a new build property’s value (up to 40 per cent in London), would stimulate mortgage demand, housebuilding activity and the wider housing market. It would also entail a minimal increase in day-to-day spending, as the loans would constitute capital expenditure.

However, there is little evidence this is under consideration for the upcoming Budget, even if “they [the government] are thinking more and more about it,” said RBC’s Codling.

Headlines around UK banks’ third-quarter reporting focused on provisions tied to the collapse of US subprime auto dealer, motor finance provisions, which cost Lloyds a further £800mn and Barclays £235mn; and the long-running Madoff scandal, for which HSBC booked a $1.1bn provision (£828mn).

Yet underlying performance was strong, with all four banks upgrading their 2025 profitability guidance, when adjusted for the above charges. The UK mortgage market has supported these upgrades, with Barclays, Lloyds and NatWest each growing their book broadly in line with the wider market.

Pricing competition may weigh on margins in the coming quarters, however, especially as higher-margin mortgages originated during the 2020-21 stamp duty holiday roll off.

The banks’ valuations increasingly reflect their ability to generate returns above their cost of equity. While NatWest and Lloyds currently trade on 1.5 times their book value, Barclays looks more reasonably priced. With management signalling its intention to increase the bank’s medium-term profitability target at full-year results in February, there may be more gains to come.

Line chart of Price to tangible book value showing Barclays’ valuation lags its UK peers

Ideas

This stock has a clean balance sheet and a bargain share price

Despite record profitability, this cleaning products manufacturer’s valuation is yet to catch up

Erin Withey
Erin Withey

McBride bull points

  • Robust balance sheet

  • Record high return on capital employed

  • Attractive valuation

Today, McBride (MCB) makes good money supplying more than 90 per cent of Europe’s top supermarket chains with affordable own-brand dishwashing, laundry and surface cleaning products. 

The Manchester-based manufacturer delivered revenues of £927mn in 2025, but as chief executive Chris Smith told Investors’ Chronicle, “it’s a tough business”. In 2022, unprecedented levels of raw material cost inflation – annualised to around £200mn – led to an operating loss of £25mn that forced banking covenants to be waived and dividends to be suspended. The share price collapsed to 16 pence.

It’s a mess that took time to clean up, but the balance sheet now looks close to sparkling. However, the current valuation still bears the scars – the shares change hands at just 6 times earnings. As the market catches up, this could prove an opportunity to capitalise on an impressive turnaround story.

McBride is now two years into its five-year ‘Transformation’ turnaround programme, with a focus on cost control and sales volumes as the key profitability levers.

The company is on track to achieve its target of cumulative savings of £50mn by 2028, and an agile approach to cost control has so far proven a key bulwark for margins. Amid downward pricing pressure from retailers, the company is taking smart measures to streamline production costs. “Lower price does not mean lower margin,” Smith explained, noting the impact of product reformulation and resizing in keeping Ebitda margins flat from last year, despite prices falling. 

McBride bear points

  • Input cost volatility risk

  • Customer concentration 

  • Time needed to prove earnings sustainability

But cost is only one side of the equation. Margins have been bolstered by higher volumes, with the company reporting growth of 4.3 per cent for 2025. This is impressive in a mature market, with a handful of major contract wins driving the gains and converting well into free cash flow.

Consistent cash generation has allowed for serious progress to be made with net debt, decreasing from a peak of £167mn including leases in 2023, to £105mn by 2025. This has in turn brought debt cover – a key metric for McBride’s bank financing facilities – well below management’s target of 1.5 times adjusted Ebitda, sitting at 1.2 times. As a result, the terms of McBride’s €200mn (£175mn) core banking facility materially improved at its refinancing last year, with debt servicing costs lowered and restrictions on shareholder distributions lifted. 

The transformation is most evident in the company’s overall adjusted Ebitda margin – a figure which has now climbed beyond its pre-crisis levels of 6-7 per cent to 9.3 per cent today. Now credit metrics have been normalised, McBride is able to reap the rewards of a hard-won grail – balance sheet flexibility.

Column chart of Adjusted Ebitda margin (%) showing Post-crisis profitability hits new heights

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McBride’s much-improved funding position allows it to credibly pursue growth along two main lines. One is investing in the business to develop organically, and the other is seeking expansion through acquisitions. 

Taking the first, management has boosted its tech spend on new resource planning software to optimise processes and improve customer service. Capital expenditure stepped up by £10mn last year as a result, reassuringly underpinned by resilient free cash flow. Execution risk is minimised by the piecemeal deployment strategy, starting in the UK and then taking on selected Belgian sites. While technology investment is expected to remain elevated into 2026 to support the implementation, it should return to normal levels thereafter.

Large contract wins are the other area of focus for achieving organic growth. While McBride has profited from the private label boom as consumers pass over branded products in search of better value, it is the ‘contract manufacturing’ unit that punches well above its weight. Despite making up just 14 per cent of 2025 revenues, contract manufacturing volumes were up by 49 per cent.

According to Smith, there is a strong pipeline to boot. “We are encouraged by win rates,” he said – a sentiment echoed by Charlie Cullen at Zeus Capital Management. Cullen argues that contract manufacturing can offer an exciting new avenue for growth because “brands increasingly seek the efficiencies [that McBride] can provide, relative to in-house activities”.

Turning to the second option, the current valuation means that inorganic growth would most likely come via smaller, debt-funded acquisitions at this stage. This aligns with the stated function of the €75mn ‘accordion’ feature in the company’s refinanced bank facility, which is earmarked for “future acquisitions or other financing needs”. And while paying down debt has been the focus for the past few years, Smith confirmed that select bolt-ons could make sense for McBride’s longer-term strategy. The top six companies have 66 per cent of the European private label market, with the remainder largely independent or family-owned outfits. It’s therefore much more effective to buy rather than add capacity, and with a 30 per cent market share, McBride is well positioned to lead future consolidation of the sector.

While attractively priced, there are some areas to keep an eye on. Input cost risk remains, although the company has since built longer-term buying into its process. Lessons from 2022 include purchasing supplies a year ahead where possible, and utilising hedging to smooth out any price bumps. The contracts business is also routinely repriced to guard against pricing gaps opening up.

Concentration risk presents another potential concern, with the company’s top ten customers accounting for 53 per cent of 2025 revenues. Although the loss of a contract would have an adverse impact, McBride’s strong pipeline offers a mitigant to this, as well as its ability to grow volumes in a mature market.

All things considered, McBride has been on quite the journey in recent years. With the turnaround agenda finally paying dividends, and a credible pathway to future growth, its lowly price/earnings ratio of just 6 times feels somewhat unjustified.

Bar chart of Dividend yield (%)* showing Brokers expect the dividend yield to grow

As a well-diversified market leader that has rebased its operating profits from approximately £24mn-£45mn across 2015-21 to £65mn today, the company has proven its ability to pull the levers required to navigate pricing headwinds. But despite this, it continues to trade at a material discount to its consumer peers, and to its own historical range of 13.6 times (excluding 2021/22 losses).

The challenge will be convincing investors that this is the new normal, and that McBride’s transformation from a business offering a 12 per cent return on capital employed in 2020 to 30 per cent-plus today is a sustainable one. In terms of a re-rating, Smith understands the need for reassurance – growth and durability of earnings are “the two biggest topics that I think investors are fearful about”, he says. With the fundamentals in place, it seems the missing ingredient in the McBride equity story is the time to prove itself.

A picks-and-shovels mining play ready to rebound

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Company Details Name Mkt Cap Price 52-Wk Hi/Lo
McBride (MCB) £226m 127p 164p / 93.2p
Size/Debt NAV per share* Net Cash / Debt(-) Net Debt / Ebitda Op Cash/ Ebitda
55p -£105m 1.2 x 91%
Valuation Fwd PE (+12mths) Fwd DY (+12mths) FCF yld (+12mths) CAPE
6 2.6% 11.1% 23.3
Quality/ Growth EBIT Margin ROCE 5yr Sales CAGR 5yr EPS CAGR
6.9% 29.0% 5.6% 39.7%
Forecasts/ Momentum Fwd EPS grth NTM Fwd EPS grth STM 3-mth Mom 3-mth Fwd EPS change%
4% 4% 4.3% 1.1%
Year End 30 Jun Sales (£mn) Profit before tax (£mn) EPS (p) DPS (p)
2023 889 0.3 -6.6 0.00
2024 935 53.1 21.7 0.00
2025 927 54.9 21.1 3.00
f’cst 2026 932 54.7 22.0 3.23
f’cst 2027 949 56.8 22.8 3.40
chg (%) +2 +4 +4 +5
Source: FactSet, adjusted PTP and EPS figures, NTM = Next Twelve Months, STM = Second Twelve Months (i.e. one year from now)
Ideas

A picks-and-shovels mining play ready to rebound

As spending increases in the sector, companies such as this are reaping the rewards

Alex Hamer
Alex Hamer

Buying into picks and shovels during a mining boom is a cliché for a reason. Picking the right equipment to hawk to miners flush with cash is the hard part.

The cash is there at least – margins at major gold miners and mid-caps have shot up and balance sheets are in good shape. There are a few options for picks-and-shovels investments. Caterpillar (US:CAT), Epiroc (SE:EPI.B) and Komatsu (JP:6301) sell heavy equipment to miners but are much broader companies overall. Explosives company Orica’s (AU:ORI) Australian Securities Exchange listing might limit its accessibility for UK investors. 

Valuations across the sector are also elevated: Caterpillar has gone from 15 times forward earnings to 25 times since April despite worries over tariffs hitting its business. Orica is more stable around 18 times, while Komatsu has the usual Japanese discount applied and is slightly cheaper than the Australian company, even though it is well ahead when looking at profitability. 

Happily for our purposes, an affordable and growing mining services company is listed on the London Stock Exchange – Capital Limited (CAPD), with a price/earnings ratio of 13 times next year’s earnings.

Capital Limited bull points

  • Growing business benefiting from gold mining boom 

  • Labs division can take on extra work without much extra capex

  • Exposure across African and US markets

The company, formerly known as Capital Drilling, used to have a simple but hard-to-scale business model: a mining company would hire it to provide drilling services. Capital owns the drill rigs, and its sales and profits came from how much use it could get out of machines based in West Africa and a handful of other regions. 

Management therefore looked for other growth options, and landed on a laboratory business to test and analyse samples. 

This involved a significant investment in equipment across sites initially in West Africa but then also the US, to service Nevada Gold Mines, a complex of mines owned by Barrick Mining (US:B) and Newmont (US:NEM).

Capital Limited bear points

  • Reliance on major contract work 

  • Drilling growth limited by rig numbers

The links to Barrick are significant, given a contract for mining and other development work at the Reko Diq copper and gold project in Pakistan. This is an entry into a new country in terms of top-level mining, but the risk sits with Barrick. 

Capital is also heavily exposed to AngloGold Ashanti (US:AU), which now runs the Sukari gold mine in Egypt after its buyout of Centamin last year. Around three-quarters of Capital’s revenue comes from Africa, while last year the split between drilling, labs and contract mining was 69/12/19 per cent respectively.

Analysts at broker Peel Hunt expect this ratio to shift in favour of labs as revenue increases, with the unit’s sales set to go from $50mn in 2024 to a forecast $152mn in 2028. That would be 30 per cent of total sales. Stifel is more conservative, putting the MSALABS and surveying revenue at $115mn in 2028. 

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In mid-October, Capital raised its 2025 sales guidance and also announced that the Reko Diq contract would have a $10mn-higher run rate of revenue, taking it up to $70mn a year, as per a Stifel forecast. Overall revenue in the third quarter was $94mn, which was the company’s highest ever (by a small margin – 0.2 per cent ahead of Q3 last year). 

Bar chart of $mn showing The Labs business is key to Capital's growth

Sales guidance for the full year is now $335mn-$350mn. At best, this will be flat with 2024.

But the positive part for the growth picture is the $10mn increase in the MSALABS guidance to $65mn-$75mn. “The division is now positively contributing to group profitability after a rapid expansion in our footprint over the past two years,” said executive chair Jamie Boyton. These gains are still incremental, with the division generating sales of $44mn last year. 

Capital’s improvement in the second half of this year comes after a tougher end to 2024. Former chief executive Peter Stokes called it a challenging year, and left a few weeks before the full-year results came out in March. 

Column chart of Free cash flow, US dollars per share showing Gold miners’ spending power soars

Even ignoring an impairment because of the changed situation in Mali in 2024, cash profits slid last year on the back of contracts ending and projects not going as planned in the US. This was largely at Nevada Gold Mines, with the new laboratory commissioned six months later than anticipated and difficulties in the new drilling business. There was also a ramp-up issue, Boyton said in March, noting high staff turnover had knocked operations. 

The picture was looking better at the halfway mark this year, as Capital lifted sales guidance. Interim earnings remained behind last year with the cash profit down a quarter to $32mn, but the outlook for the second half and 2026 improved. Operating mostly in the gold space, there would be something seriously wrong with Capital if it wasn’t doing well in a bull market. But these rushes take some time to filter down. 

The contract situation also means a rapid rush of new work is unlikely, even with the more flexible labs business. But Boyton believes there are richer pickings coming through. “We’ve got really good runway now for a couple of years, minimum, ahead of us, with the amount of money that’s flowing into the sector,” he said in an interview with Investors’ Chronicle earlier this month. 

He said some customers were looking to increase mine site spending 20 per cent year-on-year coming into 2026. Mine plans are shifting because of record gold prices, which mean ore that would have been unprofitable to dig and process is now in play. 

There are also plentiful opportunities alongside the existing Nevada contracts, for both drilling and lab work. This is because Capital is expanding its lab that serves the complex, while Barrick also has a major new project outside the existing Nevada complex, called Fourmile. 

While not yet greenlit, it will need serious drilling work to upgrade the existing resource to a reserve, considered a more reliable estimate of how much gold is within the deposit. 

Capital only started drilling work in the Americas last year. Its roots and the majority of its work remain in Africa. Alongside Barrick, AngloGold is the key client for Capital. This $35bn company has most of its assets in Africa, alongside Brazilian and Australian operations. West Africa has plenty of established and hopeful gold miners.

This is the bread and butter of the Capital business. It owned 134 rigs as of 30 September, with an average utilisation rate of 76 per cent and average monthly revenue per rig for the third quarter at $198,000. That figure was flat quarter-on-quarter but should creep up as the market for exploration gets tighter. 

Serious growth in that business is tough, as it means Capital has to grow its fleet. Going out now and ordering a serious number of drill rigs would not result in an immediate uptick in earnings either, given a wait time of about six months for delivery currently and high demand. It’s not just miners in a bull market at the moment – rig manufacturer Sandvik (SE:SAND) is up 43 per cent year-to-date.

 That’s where the lab capabilities come in – and not just in the US. Boyton says expansion is coming in West Africa, as there has been a shift in focus there by a lot of mining companies that have moved investments from Mali and Burkina Faso to neighbouring countries, like Guinea. New territory means more drilling and lab work.

Lastly, Capital’s exposure to gold is not just in the operating business. It has also put cash into junior companies, and for the third quarter alone the gain on these was $22.5mn, with the holdings worth $74mn as of 30 September. This can obviously go the other way, and there are some unlisted assets in there that would be hard to shift in a downturn, but currently the portfolio looks like an asset.

It appears as though Capital has come good just as miners open some of their growth spending taps. The valuation and dividend should follow the market higher. 

This stock has a clean balance sheet and a bargain share price

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Company Details Name Mkt Cap Price 52-Wk Hi/Lo
Capital (CAPD) $322m $1.64 130c / 58.2c
Size/Debt NAV per share* Net Cash / Debt(-)* Net Debt / Ebitda Op Cash/ Ebitda
144c -$41.9m 0.9 x 80%
Valuation Fwd PE (+12mths) Fwd DY (+12mths) FCF yld (+12mths) CAPE
14 2.8% 10.6% 15.8
Quality/ Growth EBIT Margin ROCE 5yr Sales CAGR 5yr EPS CAGR
9.0% 9.5% 24.8% 3.0%
Year End 31 Dec Sales ($mn) Profit before tax ($mn) EPS (c) DPS (c)
2022 290 37.5 20.8 2.6
2023 318 47.7 17.3 2.6
2024 348 32.4 6.8 1.3
Forecast 2025 345 34.9 8.2 3.8
Forecast 2026 416 48.7 12.5 4.8
Change (%) +21 +40 +52 +26
source: FactSet, adjusted PTP and EPS figures. NTM = Next Twelve Months. STM = Second Twelve Months (i.e. one year from now)
The Editor

There are worse things afoot than a British Isa

A bigger threat is the race to get your pension money working for other people

Rosie Carr

London’s junior market is only a tenth of the age of its bigger sibling but both have been going through a midlife crisis of sorts. The Alternative Investment Market (Aim) continues to have its successes – indeed London’s biggest IPO so far this year has been that of chartered accountant MHA which floated in April and whose share price has risen by 45 per cent since then – but as Dan Jones outlines in his introduction to Part 1 of our Aim 100 annual guide, it has faced a number of challenges, similar to those testing the main market: takeovers, take privates, a dearth of listings, and unfavourable tax policies (stamp duty in the case of the main market and for Aim the part removal of the IHT exemption that drew in the crowds).

The Quoted Companies Alliance (QCA) has requested a government rethink on business relief and, at the very least, a promise that half-relief will remain in place for a minimum of a decade. Neither of these wishes may be granted in the November Budget, but another QCA recommendation – creating an Isa product aligned with UK companies – might have the chancellor’s ear: Rachel Reeves appears to be considering previously rejected Isa reforms, including one requiring a portion of the Isa equities allowance to be invested in UK-listed companies.

This is not an idea that appeals to everyone, especially avid overseas-focused investors who will resent being “forced” to buy British. But ultimately if this change is made, Reeves will simply be returning the tax-free investing rules to where they were previously, when holding UK investments was a requirement, realigning the UK with almost every other country that offers a similar tax incentive but attaches a domestic shares condition. 

Like it or not, it makes no sense for the government to give tax breaks to investors only to watch them lower the cost of capital for overseas companies, but not British ones. If Reeves can pull this lever to release new capital into the UK market, she can ill-afford to ignore it when doing so would support her growth objectives and deliver greater tax revenues. Charles Hall at Peel Hunt points out that publicly listed companies pay more tax than private companies, who often structure their business and balance sheet to minimise corporation tax. 

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But if being told how your Isa must be invested is anathema to you and you are a member of a defined contribution pension scheme, you should be alert to other troubling developments. One such threat is the array of bodies, from the Treasury to the Impact Investing Institute, determined to put your pension savings to work for their objectives rather than yours.

You might believe your pension pot is there to provide you with an income for life in retirement. But campaign groups such as Impact Investing have woken up to the fact that they can “unlock” your pension pot to achieve their own social objectives. Impact Investing is campaigning for a new amendment to be added to the Pensions Bill to make trustees consider not just investment returns but also how they can build a “positive future for people and the planet”, for example by reducing climate risks and ensuring everyone has access to quality healthcare. This should, argues the group, form part of how trustees act in “members’ best interest”. Co-chief executive Bella Landymore is therefore urging people to lobby their MPs to ensure this “vital amendment” is added, while Catherine Hogarth, chief executive at ShareAction says if trustees can be told to consider standards of living, they can take into account people’s access to affordable housing and functioning local infrastructure, “not just the numbers in an annual pensions statement”. 

If the amendment, which Impact claims would “clarify” trustees’ duties, is added to the Pensions Bill, it will be a further intrusion on pensions schemes’ ability to focus primarily on the returns they are delivering for their members. Leading pension lawyer at Temple Bright, Hywel Robinson, says, however, the amendment is a change to – not a clarification of – the existing law. He hopes “these new powers are not introduced, because of the confusion they would sow among trustees about what their duties are”. 

Private sector pension schemes have already been roped in by the government to help build affordable housing and improve broadband connections in rural areas – in other words, projects that the state would normally be supporting or financing using its own resources.

The purpose of pensions is not to fix society’s problems, bankroll government projects or “build a better world for members to retire into”. It is simply and solely to ensure members’ savings are invested well to deliver a lasting healthy level of income. Attempts to make them focus on other people’s objectives should be stoutly resisted.

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