Whilst the primary goal of the investor has always been to make as big a gain as possible, a growing trend has emerged in
recent years. A more conscientious approach to investing - one that looks not only to make returns, but also to give something
back. In a world of global warming, deforestation and animal rights, investors are becoming more progressive in wanting their
money to make a change, invested in companies that communicate social and environmental messages.
With oil prices plumbing new depths this year, investors are increasingly shying away from the sector, looking instead to
renewable forms of energy as a source of returns. But does the promise of strong returns aligned with care for the environment
really make a good investment? Despite the clear environmental benefits, such schemes still carry considerable risks.
Although renewables and fossil fuels are not totally inversely correlated, lower prices at the pumps—as the Financial Times put it
earlier this year - ‘would be to renewables what kryptonite was to Superman.’ As oil gets cheaper, it becomes harder for green
energy to compete. A scenario where oil remains cheaper for longer will only serve to put people off often-expensive renewable
alternatives. An illustration from history only serves to reinforce this theory: when the oil price spiked in the 1970s, then-US
president Jimmy Carter had solar panels fixed to the White House roof, only to see his successor Ronald Reagan rip them off
when the oil price tumbled during the 1980s.
Perhaps the biggest challenge
to renewable energy remains
not how government is
powered but rather who is in
power in government.
Politicians have been seen to
continually fail to take up the
mantle on green energy, failing
to formulate not only a
cohesive policy but a long term
strategy. A recent example is
the collapse of an ambitious
plan to build a £1bn prototype
plant to capture carbon from a
coal-fired power station in
North Yorkshire. The owners
blamed cuts in renewable
energy subsidies by ministers,
claiming that the government
energy strategy is “unravelling”.
Although the viability of
investing in the sector remains
questionable, it doesn't mean that renewables have a bleak future—
historic correlations between oil prices and the demand for renewable
energy have been increasingly weakened over previous years. Like apples
and oranges, we use fossil fuels and renewables to make completely
different products: oil to produce transportation fuels, and renewables to
generate electricity. Thus they both have a role to play, and the strong
performance of one need not diminish the other. Click to view online
2020 Target: 20% Renewable Energy Production
The Eurozone is well on its
way to hitting the target of
20% of total energy
production being renewable
by 2020. Source: Eurostat
Cumberland Place Financial Management Ltd | Thavies Inn House 3-4 Holborn Circus London EC1N 2HA | Registered in England: 8948895,
Registered Office: 35 Ballards Lane London N3 1XW | Authorised and regulated by the Financial Conduct Authority.
History was written last month when the
Communist Party in China ended its
contentious one-child policy as part of a new
five-year plan, allowing all couples to have two
children.
It’s approximated that the introduction of that
policy three decades ago has prevented around
400 million births.
The current policy has been referred to as a
demographic time-bomb, with a shrinking
labour force and an ageing population
disrupting the future of the Chinese growth
story.
According to the World Bank, 17% of China’s
population will be aged 65 or over by 2030 —
up from 10% this year. On top of that, the
working age population (between 15-59) fell by
3.71 million in the past year alone. The latter is
a trend that is expected to continue, meaning
the need for a change in policy was urgent.
Despite this urgency, it was a long time coming
and a long time forecast: the Communist Party
relaxed the rules slightly in November 2013,
allowing couples to have two children if one of
the parents was an only child.
Many have said it is too little, too late. The
sharp rise in the cost of living as a result of the
boom years, backed with the uncertainty of
China’s economic future, has meant that one
child could remain the norm.
Indian Prime Minister Narendra Modi has traversed more than 27
countries in his 17-month tenure, with the aim of building India’s global
presence.
He has visited places no Indian PM has been in decades, including
countries like Mongolia and Israel.
In his attempt to improve India–Africa ties, which Modi described as “the
two bright spots of hope in the global economy”, he invited more than
50 African leaders to a summit in Delhi at the end of October this year.
The assembly represented the highest number of foreign dignitaries to
descend on India since 1983 and, according to the BBC, is also the
biggest gathering of African leaders to occur.
There is more at play than meetings however; Modi announced $600m
of assistance in development projects in African nations and, although
comparatively small, trade between India and Africa currently stands at
$72bn — a doubling since 2007.
A particular bond highlighted by Modi himself is that India and Africa are
united by youth — two thirds of the populations are aged below 35 —
demonstrating a recognition of the importance of the two focussing on
the future and including younger generations in the economic journey.
Investment news, portfolio commentary and
charts, along with lots of other Cumberland
Place information, is available online. Visit
our website at: cumberlandplace.co.uk
020 7936 0300 | [email protected]
This change in legislation comes into effect
March 2016, though the consequences of this
may not be seen for years.
Cumberland Place Financial Management Ltd | Thavies Inn House 3-4 Holborn Circus London EC1N 2HA | Registered in England: 8948895,
Registered Office: 35 Ballards Lane London N3 1XW | Authorised and regulated by the Financial Conduct Authority.