Table of contents for Issue 1290 in MoneyWeek

“On paper, Indonesia’s economy is flourishing,” says Gabriele Steinhauser in The Wall Street Journal. Growth has eclipsed 5% a year and the IDX Composite index has made new record highs to gain 21% this year. Yet 2025 has also brought large protests that tell a different story. A “shrinking middle class” is angry about rising living costs and “limited employment prospects”, says Priyanka Kishore in Nikkei Asia. Indonesia should have been a big winner from the regional shift of supply chains out of China, but heavy regulation has seen it squander the chance. It imposes a host of rules limiting what raw materials can be exported and how much local content industries must include. The government is testing the patience of bond markets with plans for higher social spending, including…

China’s trade surplus with the rest of the world has surpassed $1trn for the first time. The trade balance hit $1.08trn for the first 11 months of this year, a 22.1% rise on the same period in 2024. The country’s exports to the US have dropped 18.9% this year as a result of higher tariffs, but that hit has been more than offset by higher exports to the EU (+8.1%) and Southeast Asia (+13.7%). China is muscling into high-tech industries, with its dominance in electric vehicles helping it to become the world’s top car exporter in 2023. Meanwhile, China’s import volumes have barely risen since 2019, and in dollar terms are down 3% over the past year, says Greg Ip in The Wall Street Journal, reflecting a reluctance to import…

Streaming giant Netflix made an $82.7bn deal to buy the studio assets of Warner Bros Discovery (WBD) last week, says the Financial Times. The media conglomerate owns the DC Comics franchise and the HBO Max streaming service. But now Paramount has “gatecrashed” the party. A $108bn hostile bid to buy WBD involves Paramount partnering with Middle Eastern sovereign wealth funds and Donald Trump’s son-in-law Jared Kushner to “derail” the Netflix deal. While WBD’s board has vowed to press on with the Netflix tie-up, the prospect “of a technology company at the helm of one of the most famous studios” has “drawn the ire” of powerful unions and the attention of Trump, who said he would review the transaction. The potential reduction in competition and impact on cinema mean many in…

A Trump-backed peace deal brokered between Thailand and Cambodia collapsed this week, with clashes erupting in the disputed border region. The self-styled “president of peace”, who has claimed credit for resolving conflicts around the world, reiterated his peacemaking skills at a rally in Pennsylvania on Tuesday, saying that he would now have to “make a phone call” to stop a “war of two very powerful countries… going at it again”, says Kate Lamb in The Guardian. Both Thailand and Cambodia accuse each other of violating the ceasefire and “vowed to defend their territories”. At least 13 civilians and soldiers have been killed this week, and more than 500,000 people have fled or been evacuated. Violence has now spread into at least six provinces in northeastern Thailand and five in Cambodia’s…

It took a couple of months for the amount of damage it would do to become painfully clear. In her first Budget, chancellor Rachel Reeves pushed up the national insurance (NI) charges that companies have to pay on every person they employ. Over the following months, vacancies started to fall dramatically and unemployment rose. Something similar is about to happen after Reeves’s most recent Budget. This time it is the punishing rise in business rates that will crush the British economy. After all the speculation, the Budget was a damp squib. The basic rates of income tax were not in fact increased for the first time since the 1970s, and there was no sign of a wealth tax – although the levy on “mansions” comes very close – or an…

When a company, government or other organisation wants to borrow money by issuing bonds, their bonds will usually be assigned a credit rating. This gives the investor an idea of how likely they are to get their money back on time and in full. These ratings are issued by credit-rating agencies such as Standard & Poor’s, Moody’s and Fitch. When determining a rating, the agency will look at several factors that may influence the likelihood of the bond being repaid. These include the profitability of the issuer, its past credit record and any assets the debt might be secured against (if a debt is secured against property that can be seized and sold, then it’s likely to be safer than a debt with no collateral). For bonds issued by countries,…

“I was raised a socialist. I’m trying to earn enough to become a socialist again.” British comedian and writer Shaparak Khorsandi (pictured), quoted in The Knowledge “When I was 14 I looked at where we lived and me mam having five jobs and my dad working as a hod carrier and I just said to them both, when I become the best footballer in the world, you two are never going to have to work again.” Football legend Paul Gascoigne, interviewed in The Sunday Times “The only function of economic forecasting is to make astrology look respectable.” John Kenneth Galbraith, quoted on Unherd “Be nice to nerds. The chances are you’ll end up working for them.” American political commentator Charlie Sykes, quoted in The Knowledge “When you start earning silly…

noahpinion.blog Anti-technology sentiment is on the rise and understandably so, says Noah Smith. Smartphones and social media are “largely responsible for a variety of modern social ills”. Yet our institutions will surely evolve in ways to minimise the harms and enhance the benefits. History shows that technology “almost always makes things better for humanity” in the long run. It won’t be any different with AI. Many people are nervous or even terrified about the effects it will have. But “I’ve spent most of my life dreaming” that something like it would eventually come along. Science fiction has long prepared us for the best and the worst that might result. The good news is that it’s turning out to be just like C-3PO and R2-D2 from Star Wars – a “loyal…

Some of the best investments are in businesses that operate in relatively unknown but essential markets, working in the background and fulfilling functions that other companies either don’t want to, or can’t afford to do themselves. One such business is Restore (LSE: RST), the leading provider of physical and digital document-management services in the UK. It stores documents for public- and private-sector organisations, such as the NHS, and destroys old documents. There’s also a document-processing business (called Synertec), which helps companies send electronic and physical communications and a technology division (Restore Technology). All of these help the company’s customers manage their data, whether it’s on paper or in digital form. Beating expectations In 2024, Restore generated £275m in revenue. The largest proportion of revenue (£170m) came from the information management…

Budget changes to salary-sacrifice pension arrangements will affect 3.3 million Britons at 290,000 employers, says HM Revenue & Customs: 40% of the 7.7 million savers currently using salary sacrifice are making annual contributions to their pensions of more than £2,000, which is where the changes take effect. Salary-sacrifice schemes enable you to give up part of your salary, which is then paid directly into your workplace pension scheme. Critically, your salary is then lower for the purposes of calculating your income-tax and national-insurance bills, reducing your liability. Your employer owes less national insurance on your pay for the same reason. From April 2029, however, the Treasury will introduce a £2,000 cap. Pay shifted into pension contributions above this threshold will no longer be free from national insurance. How, then, should…

Three years ago, OpenAI launched ChatGPT, sparking a surge of interest in AI and sending the stocks of many of the world’s largest technology companies soaring. However, in addition to the likes of Microsoft and Nvidia, shares in many smaller companies have also rocketed thanks to their role in building the infrastructure required for the adoption of AI. However, investors are starting to wonder whether all this investment in the new technology is likely to prove profitable. Their doubts are having a knock-on effect on some of the more contentious AI-infrastructure plays, such as Coreweave (Nasdaq: CRWV). Coreweave makes its money from building data centres full of high-end computer hardware that provide the vast amount of computing power needed to train firms’ AI models; it leases the data centres to…

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It’s always peak time with this wristwatch The Independence Skeleton Chrono wristwatch by Swiss watchmakers Norqain is a true collectors’ timepiece and only 500 have been made. The watch is powered by the “Norqain 8K Manufacture Calibre”, which is an exclusive high-performance skeletonised flyback chronograph movement, “inspired by the world’s highest mountains”, according to Norqain. In other words, it has been engineered to withstand the rigours of mountain-biking, skiing, or whichever adventurous pursuit is thrown at it in 2026. Price: £5,890, retail website: norqain.com Have a rockin’ Christmas The Willen II portable speaker from cool British music brand Marshall was built for a life on the road. It is dust- as well as waterproof in up to a metre of water for 30 minutes. Whether at home, in the park…

Silver is behaving like “gold on steroids”, says Ole Hansen of Saxo Bank. The metal has more than doubled in price this year, outstripping even gold’s 60% leap. On Tuesday, it topped $60/oz for the first time on record. The latest leg of the rally comes as the Federal Reserve prepares to cut US interest rates again, even though inflation is still running well above target. “If you’re worried about governments undermining the value of their own currencies, you might buy precious metals,” Collamore Crocker of New Century Advisors tells The Washington Post. This “debasement trade” has benefited gold for most of this year, says the paper’s Aaron Gregg. But recently gold’s mega-rally has started to price out smaller retail investors, prompting them to turn to silver (sometimes dubbed “poor…

Unilever’s spin-off, The Magnum Ice Cream Company, which includes Ben & Jerry’s ice cream, achieved a lower valuation than expected when it made its debut this week. The world’s biggest ice-cream company is keen “to revive its performance as a standalone firm”, says Bloomberg. While many had expected to see the price set at around €15, it ended the first day at just under €13, implying a market value of €7.94bn. Magnum listed in London, Amsterdam and New York, with Unilever’s shareholders receiving one Magnum share for each five Unilever shares they own. Unilever will retain a 20% stake in the new company. No wonder investors are cautious about Magnum’s prospects as an independent company, says Lex in the Financial Times. It has to deal with “fickle customers, including those…

● The short-selling “attack” on online review website Trustpilot by Grizzly Research is “dispiriting either way”, says Patrick Hosking in The Times. The firm seemed to be doing a good job of managing “the conflict of interest at the heart of its business model” – taking money from companies while hosting user reviews they won’t like. Yet if Grizzly’s allegations of fake reviews and “mafia-style” extortion are true, “the credibility of a company trusted by millions of consumers and thousands of businesses is shot to pieces”. If they are false, “a good company providing a helpful service has been monstrously defamed”. No wonder the shares fell 32% from 190p to 130p, before rallying to 159p. Pointing to a “code of ethics” and a “board trust and transparency committee” isn’t enough…

Fears about private credit are based on four big myths, says Marc Rowan, the chief executive of private-equity firm Apollo Global Management. Private credit refers to loans and debt sold directly to long-term investors (as opposed to traditional bank lending and bonds that are issued and traded publicly), and Apollo is one of the largest players in this market. Today, the private-credit market is worth around $40trn, writes Rowan on Bloomberg, of which about $38trn is investment grade. Only around $2trn is sub-investment grade (often known as leveraged lending). Recent high-profile blowups such as First Brands and Tricolor are part of this “small sliver” of the market. They “say nothing about the broader-private credit market” and are “isolated incidents”. Yet private credit is still the subject of “intense conjecture” about…

unherd.com A “startling” report from the Office for National Statistics was drowned out by news from the Budget, says Freddie Sayers, but it “may be of greater political import” than anything announced by the chancellor. It shows that net migration to the UK has collapsed and returned to pre-Brexit levels. The trend points to the possibility of reaching “net zero” before the next general election. Restrictions introduced by Rishi Sunak put an end to the so-called “Boriswave” and further restrictions introduced in March and April 2024 are now having an effect. Long-term visa grants in the last quarter are down by more than 50% since the first quarter of 2024. “Consider it Sunak’s parting gift to Keir Starmer,” whose government has continued to tighten the rules. This is a “game-changer”.…

From health checks and vaccinations to dental work and emergency care, veterinary costs can be substantial. While a record 4.6 million pet owners had insurance in 2024, according to the Association of British Insurers, this is the equivalent of just one in six (17%). In a survey of 1,205 pet owners by Co-op Insurance, 34% said they avoid visits to the vet, with a fifth doing so owing to the expense. Prices depend on several factors, such as the type of animal and the procedure, as well as region. The average cost of a vet out of hours is £316 in the southeast of England (excluding London), compared with £241 in the north of England, according to pet insurer Many Pets. Keeping vet costs down Buying pet insurance can give…

Minor tweaks to proposals to bring pensions within the inheritance-tax (IHT) net were a welcome piece of Budget small print, but the complexity of the new rules still looks set to cause problems. From April 2027, pension savings will count towards the value of your estate for IHT. When someone dies, those in charge of administering their estate – “personal representatives” – will have to track down their savings, liaise with pension providers, and assess the estate’s IHT liabilities. The tax is due within six months of a death and personal representatives who don’t arrange for the full amount to be paid can be held personally liable for the shortfall. Pension experts believe many families will find it hard to meet the six-month deadline and warn that pension-fund assets will…

It has been less than 18 months since the general election, but the political landscape has changed beyond recognition. Labour has slumped in the polls. One survey puts it in fourth place behind Reform, the Conservatives and the Greens. Keir Starmer’s approval rating is also extremely negative. No wonder, then, that with £277,729 matched on Betfair, punters put the odds of Starmer being replaced in 2026 as short as 1.81 (55.2%). This is an overreaction. True, there are rumours that various figures have been canvassing support for a leadership bid. But any challengers would have to secure the support of a large number of Labour MPs and then beat Starmer in a vote among the members, who tend to be more loyal to the leadership. And there is always the…

“Not long ago you could, with a little effort, make a reasonable case that [bitcoin] was a bit like gold. Digital gold. Not so much in 2025… a few days ago it was off 16% in just six months… Maybe it’s just some profit-taking… Maybe it’s connected to energy use – as the cost of mining Bitcoin converges with its current price, it gets harder to justify… The sharp Bitcoin moves also could be market recognition that its intrinsic value isn’t quite what fans think, and that it’s heading for its fair value – zero… Bitcoin is a pyramid of constantly shifting stories… But however you layer these stories, we can’t know what moves the price beyond the emotions and momentum that come with them. With no cash flow, no…

Meta’s CEO Mark Zuckerberg is “slashing the metaverse team’s budget by as much as 30%”, says CNN’s Allison Morrow. It is shifting some of the investment from the metaverse group, the company’s virtual-reality (VR) division, towards AI glasses and other wearables. Meta it is not completely abandoning VR. But it seems that after “four years and billions of dollars wasted”, the metaverse — a feature Zuckerberg “believed in so deeply that he renamed [Facebook] after it”– is “more or less cooked”. Good riddance, says Andrew Orlowski in the Daily Telegraph. Pursuing Mark Zuckerberg’s “personal obsession” has cost the company “at least $70bn over four years, equivalent to the annual GDP of oil-rich Azerbaijan”. Despite Zuckerberg’s predictions that “we would all soon meet, shop and do business in a cartoon world…

The Trump administration has denied pressuring Kyiv to accept a peace deal with Russia, despite reports that US envoys Steve Witkoff and Jared Kushner have told Volodymyr Zelensky that Donald Trump wants an agreement “by Christmas”. The negotiations are “frustrating and tragic”, says Christopher Chivvis in The Guardian. On one side is a “victim of aggression”, on the other, a “brutal aggressor”. In the middle, a “transactional” US president eager for a deal to “bring Russia’s $2trn economy in from the cold” and, notes Drew Hinshaw in The Wall Street Journal, put US firms in line to reap the dividends. At the time of going to press, Ukraine and its European partners were due to present the US with “refined documents”. The contents have not been made public, but Zelensky…

What’s happened? Last month’s climate jamboree in Brazil, COP30, was a damp squib – and not just due to the torrential rain that poured through the venue’s leaking ceilings. The UN’s 30th Conference of the Parties had been touted as the moment when there would be a move from pledges to implementation. But action was little in evidence. For the first time the US boycotted the conference. China was there, but studiously avoided stepping into the leadership vacuum. The summit ended with a watered-down resolution that made no direct mention of fossil fuels, the main driver of global warming. And at a summit held in the Amazon rainforest city of Belém, delegates failed to agree the hoped-for road map to a global deforestation accord. Did it achieve anything? The summit…

Private credit is not the catchiest topic. Put it alongside AI or bitcoin and you can see why it doesn’t make so many headlines. Yet there has been a growing stream of stories over the past year or so about the potential risks that could be lurking in the sector, to the point where big names such as Marc Rowan of Apollo apparently feel the need to step up and defend it. Shares in Blue Owl Capital, which is exposed to some of the main worries that investors have about private credit, have fallen about 30% this year. It has done noticeably worse than private-markets peers such as Apollo or Ares, which are big players in private credit, but have a smaller proportion of their overall business there. These jitters…

It’s time to get off the sickbed Michael SimmonsThe Spectator The real story of the recent Budget is welfare, says Michael Simmons. Spending is now on track to hit £406bn by 2030, £109bn of which will go on sickness payments: 6.5 million Britons are now on out-of-work benefits, with more than five million under no obligation to seek work. When the government claims that welfare as a share of GDP is “no higher than in 2012” it is “wilfully ignoring” the reality, which is that the fastest growth is in sickness and disability benefits and many claimants will never return to work. This not only adds billions to future tax bills, but it also changes incentives. To match the standard of living enjoyed by a family with three children on…

conversableeconomist.com As an economy develops, its financial sector tends to expand, says Timothy Taylor. The shape of the sector also changes over time, as a study in the Annual Review of Financial Economics by Robin Greenwood and co-authors reveals. The finance sector in the US expanded rapidly between 1980 and 2006, its contribution to GDP rising from 4.8% to 7.6%. After the financial crisis, the size of the sector stablilised at about 7%. More recently, its shape has shifted. There has been continued growth in alternative asset management (such as hedge funds and private equity) charging high fees and a shift in lending away from banks and towards “non-bank financial intermediaries”. This shift has been driven by the growth in pension funds seeking higher returns from alternative assets and by…

The scale of private-equity firms has driven them to pursue larger and larger deals. And conditions for these have been getting tougher. “Across the market, exits are difficult, with many funds full of over-valued assets,” says veteran private-equity investor Jon Moulton. There have been few flotations and listed companies are prioritising share buy-backs rather than acquisitions. That leaves other private-equity funds or continuation funds – a fund set up to buy assets from existing funds run by the same firm – as almost the only buyers. Hence returns from large buy-outs have fallen to 10%-12% and investors need to be patient. By contrast, Moulton – who now invests through his private office to fund medical research – is in a different part of the market. His 40-strong portfolio is invested…

• With changes to cash Isas on the cards it is time high earners did some tax planning, says Claer Barrett in the Financial Times. The cut to the cash Isa allowance from £20,000 to £12,000 for under-65s won’t happen until April 2027. Before then make sure you are using your entire allowance and check you are getting the best interest rate possible. Trading 212 currently offers the best cash-Isa rate at 4.56%. • More than 14,000 families have been handed unexpected inheritance-tax (IHT) bills after breaking gifting rules, says Tom Towers in The Mirror. HMRC has issued bills to families who have fallen foul of the seven-year gifting rule. If you give away assets or funds and die within seven years, the value of the gift can be included…

• The Budget’s promise to keep older people with no income other than the state pension out of the income-tax net will be challenging to deliver. With income-tax thresholds frozen until the early 2030s, the state pension alone is set to leave some pensioners owing income tax from 2027. The chancellor says pensioners in this position won’t be expected to pay small amounts of tax, but has offered little detail on how this would work. One fear is that large numbers of older people may have to start completing self-assessment tax returns. • Watch out for government proposals for a new type of individual savings account to replace the Lifetime Isa (Lisa). Ministers are promising a revamp of Lisas, which are targeted at two different groups: savers must either use…

It has been a good four weeks for my six long tips. While four of them declined, two increased by significant amounts. Telecoms firm Airtel Africa shot up from 299p to 311p, while Barclays rose from 405p to 436p. However, home-furnishings retailer Dunelm Group declined from 1,133p to 1,109p, food-distribution company Sysco went down from $74.03 to $72.74 and renewable-energy group First Solar leaped from $272 to $255. Cryptocurency Bitcoin also dropped, from $114,639 to $90,252. However, while my overall profits jumped from £1,180 to £2,342, this was partly due to the losses on ME Group no longer being counted. It was a similar story with my short tips: while two moved against me, the gain from the one that moved in my favour was greater than the losses. Electric-car…

Tom Stoppard (pictured), who died this month at the age of 88, was the greatest English playwright since Shakespeare, says Daniel Hannan on Conservative Home. “That might seem an extreme view, but it is surprisingly widely held.” Upon news of his death, “our entire literary establishment” lined up to “salute Sir Tom as the most accomplished stage writer of our age”. He had won every prize going: five Tony awards, three Oliviers, an Oscar, a Golden Globe and a knighthood. Not, though, a Nobel prize, which is not surprising considering that his work was “all too obviously designed for the enjoyment of others”, says John Maier on UnHerd. Stoppard’s “talent to amuse would have registered as a big no-no to the Swedish academy”. Stoppard was “at ease with his talent…

The world was a very different place in February 2020, when I wrote up the 2018 Bride Valley Chardonnay in my monthly column in the specialist English wine publication, Vineyard Magazine. I noted this was a breakthrough “still” wine from this glorious vintage for Bride Valley’s owners Steven and Bella Spurrier. A year later, Steven, one of the UK’s most famous and respected wine writers-turned vigneron, passed away, leaving a remarkable legacy and hundreds of great memories for many in the wine world. The same 2018 vintage forms the backbone of my favourite sparkling wine for the 2025 Christmas season, Bride Valley’s spectacular Reserve Brut. Made from 65% pinot noir and 35% chardonnay, it is now evident that Bride Valley’s pinot grapes harvested in 2018 were every bit as scintillating…

Yub Nub this yuletide If proof were ever needed that cinematic classics never grow old, this nine-inch Lego model of Wicket the Ewok from Star Wars: The Return of the Jedi (1983) is appealing to a new generation of fans. Wicket is holding his spear as he was in the scene in which he meets Princess Leia in the forests of Endor. £110, argos.co.uk Start your engines… The Hot Wheels Racing Formula 1 Sprint Race Circuit is the ultimate in die-cast racing. The cars, now sporting the actual liveries of the teams, whip around the track thanks to a two-speed three-lane booster. £30, thetoyshop.com A true British fashion icon Collectors of all ages have been falling over themselves this year to get their hands on the most fashionable plush toys…