Sunday newspaper round-up: Arm, China, M&G
News that Arm has chosen to float on the other side of the Atlantic is stunningly bad news for Britain. The rationale is straightforward, the business can fetch a higher valuation there. So too is the reason for that, even if some might argue otherwise. UK pension funds and insurance companies do not invest in British companies with their holdings currently standing at 1.8% and 2.5%, respectively. In fact, at 56.3%, its foreigners who own the lion's share. Back in 1997, insurance companies owned 23.6% and pension funds probably held a similar proportion back then. And where has the money gone instead, because of regulation and tax changes it had been funneled into gilts and other fixed-interest securities. But according to Credit Suisse, those flows appear set to turn around and head back into equities. - Financial Mail on Sunday
China's outgoing premier has set a target for gross domestic product growth in 2023 of 5% which is towards the lower end of what analysts were anticipating. In the same speech, he also addressed foreign policy, highlighting again the Chinese Communist Party's goal of annexing Taiwan, but Beijing appeared intent on incremental progress and not quick results. Li Kequiang also unveiled a slightly higher increase for defence spending to 7.2%, which compares to 2022's 7.1% rise. According to Professor Victor Shih at the University of California the "not overly ambitious targets" set the stage for a potential "easy victory" for the government and the new premier. Higher welfare spending and stimulating consumption was another focus of Li's speech and would require sizeable government financing, Shih added, but it was unclear where those funds might come from. - Guardian
M&G boss Andrea Rossi will be grilled about the M&A speculation swirling around the firm when he presents his first set of results. The week before, Macquarie was linked to a possible £5bn takeover approach. The Australian investor's interest had not yet been confirmed. It did however come close on the heels of Schroder's admission that it had studied a possible bid before walking away, arguing that a tie-up might damage the firm's culture. But that had not stopped the City rumour mill and the shares had gained 16% year-to-date. Another key question that he will be asked is whether he believes that the annuity book should be reopened, following the recent trend of pension funds transferring assets to insurers to be managed. He will also be queried regarding a potential break-up of the business and whether he is still opposed to the idea. - The Sunday Times
US investment manager Triplepoint Venture Growth cut its internal valuation of Revolut, Britain's most valuable start-up, by 15% from $33bn (£28bn) to $28bn. It follows the qualified opinion issued by its auditor on the company's long-delayed 2021 accounts during the previous week. The decision also comes even as Revolut is seeking to secure a banking license in Britain. Other well-known fintech start-ups such as Ckeckout.com and Klarna had slashed their valuations over recent months due to the downturn in shares of public technology companies and higher interest rates. Revolut on the other hand had given no such indication that it had done the same. Rather the opposite, a spokesman for Revolut said the business had continued to perform strongly since its last funding round, when it was valued at $33bn, and that it had reported its first full-year of profits. - Sunday Telegraph
One out of every six first time buyers will still be paying off his mortgage in retirement with UK finance figures revealing that 17% of all new mortgages taken out in December were for 35 years or longer. That was up from 9% of home loans last February. Roughly 55% of mortgages are now for terms of 30 years or more, versus 9% in 2005. The average age of a first time buyer has also increased, reaching 32 and even older in London, Halifax data show. That means that many borrowers will still be paying home loans when they are in their 60s or even in their 70s. - Sunday Telegraph