Table of contents for Issue 1294 in MoneyWeek

We are in a real-life game of Risk. In 2019, Fiona Hill, an official at the US National Security Council during Donald Trump’s first term, said the Russians had informally proposed a plan whereby they would give the US free rein in Venezuela if the Americans would leave Ukraine to them. Since then America has fully embraced the Russian and Chinese view of international relations – follow the national interest and expand power and influence; there is no need even to pay lip service to liberal globalist notions such as universal values or international law. The Trump administration’s National Security Strategy, presented last month, contains plans to dominate the Americas, or “enlist and expand” the Western hemisphere, as it puts it, so we can’t say we weren’t warned. We have…

In 2011 Tesla’s CEO Elon Musk dismissed Chinese electric-vehicle (EV) maker BYD as a serious competitor. But 14 years later, BYD appears to have managed to “beat the American EV pioneer at its own game”, say Chris Isidore and John Liu on CNN. BYD has eclipsed Tesla as the world’s largest seller of EVs, selling 2.26 million in 2025, up 28% from the year before. Tesla sold only 1.6 million. BYD’s achievement was even more impressive when you consider that its EVs aren’t on sale in America, while China is Tesla’s second-largest market. The switch in the leadership of EVs from Tesla to BYD “is a symbolic moment in the rise of China’s car companies”, says Jasper Jolly in The Guardian. It also provides further evidence of how Chinese firms…

The Times Legal & General Shares in pension and investment groups have “bobbed around” in recent years, but a gush of dividends and buybacks may boost the sector, says Patrick Hosking. Legal & General (L&G) is to hand £5bn back over the next three years, starting with £1.2bn this year, which should prompt a rerating. L&G manages companies’ pension liabilities; its defined-contribution pensions business, which oversees workplace schemes for top employers, is also “promising” and provides growing revenue from ongoing contributions. The stock’s “thumping” 8.7% yield should look “even more attractive” if interest rates fall. 264p Diageo Guinness maker Diageo’s shares trade at 13 times forward earnings, the lowest level since the financial crisis, due to flatlining sales, falling alcohol consumption, and an overleveraged balance sheet, says Emma Powell. But…

I never take the flood of forecasts that investment banks and brokers produce at the start of the year very seriously, but this isn’t because the analysts who produce them are fools. Most people who work in these jobs are smart and knowledgeable. Yet the tendency of the investment industry to reward moderate bullishness at all times means that very few can put out a genuinely unconstrained view. There are not many analysts who have the freedom to write that they think investors should have zero exposure to the US, as Jeremy Grantham argues (see right). Right or wrong, it is clearly a strong opinion, while simply saying that investors should be “market weight” in US equities does not offer much to chew over. Still, when you read enough of…

The £2.7bn Monks Investment Trust (LSE: MNKS) sits in the shadow of its £13bn Baillie Gifford-managed stablemate Scottish Mortgage (LSE: SMT). However, it boasts a strong record, it is less concentrated – no holding exceeds 5% of total assets – and unquoted investments account for just 6% of the total. So it offers an interesting, lower-risk alternative to SMT. Indeed, over five years, Monks’ investment return has been 26% against 11% for SMT, and over three, 47% against 51%. In the last year, helped by its higher exposure to private equity, SMT has moved ahead – returning 17% against 10% – but Monks has outperformed most other global trusts over three and one years. Global growth “Growth doesn’t have to come at the expense of resilience,” says deputy manager Helen…

The secrets of China’s success Shuli Ren Bloomberg One of the biggest takeaways from 2025 is “never, ever underestimate China”, says Shuli Ren. The world’s second-largest economy has staged a dramatic turnaround in the last year. It remains the world’s “most vibrant factory”, its trade surplus hit a record $1trn and foreign investors are flooding back as an AI boom lifted Hong Kong stockmarkets to a four-year high. President Xi Jinping is the only leader who stood up to Donald Trump’s bullying on trade by “weaponising” Beijing’s control of rare earths. How did China manage to “shake off its malaise and dazzle the world with DeepSeek moments in tech, biotech and even defence”? First, Xi’s focus on higher education is bearing fruit. Around 40% of young people now…

capx.co The “peculiar ideological mélange” defined by Donald Trump will probably outlast his presidency, says Branko Milanovic. Policies that, in the beginning, “looked unusual”, are now being adopted by the rest of the “body politic”. The new political and economic dispensation that will replace the old liberal international order is already here. Expect the direction of travel to remain the same – and brace for some acceleration. What characterises this new world order? Trade wars, sanctions and actual wars against perceived rivals and enemies. A protectionist and mercantilist approach to trade and a view that markets are merely the “terrain of contestation and combat” – essentially, a “businessman’s view of economics”. A limiting of immigration and promotion of “ethno-nationalism”. Features such as these define not just Trumpism, but a “new…

Last year was a horrible year for the active fund-management industry. Investors have consistently been pulling money from active investment funds over the past decade, but outflows accelerated in 2025. According to data compiled by Bloomberg Intelligence, more than $1trn flowed out of US active mutual funds last year, up from around $600bn in 2024. Investors moved into passive exchange-traded funds (ETFs), adding more than $600bn last year. The trend is much the same in the UK, albeit with smaller numbers. This might appear to suggest the end is nigh for the UK’s listed fund-management sector, but that’s not entirely the case. Figures available indicate that only two of the listed managers are on track to report a decline in assets under management (AUM), according to analysis from Peel Hunt.…

• If you’re planning on updating your accounting software this year, new research from Startups.co.uk could help. It’s just completed a review of the software aimed at small businesses in the UK, with Zoho Books coming top in its survey of the various packages on offer. The Startups.co.uk survey also rated Xero and QuickBooks highly and praised Sage for its AI features. • Lloyds Banking Group is understood to be closing its invoice-financing service for small businesses, leaving firms with little choice of high-street banks. The Financial Times reports that Lloyds is pulling back from invoice financing, which enables firms to unlock the value of invoices that customers have yet to pay, and therefore to improve cashflow. That would leave only HSBC as an active player in the market among…

With Nicolás Maduro deposed, this “should be María Corina Machado’s moment”, says the Financial Times. But Venezuela’s main opposition leader, who has been living in hiding for many years, faced difficult choices. Having left the country to accept the Nobel Peace Prize in Oslo in December, should she return to her homeland? Or call her supporters onto the streets to push for regime change? Machado (pictured), 58, has been on a “roller coaster”. An industrial engineer from Caracas, her political career peaked with a resounding victory in the opposition’s primary election in 2023. A subsequent ban on holding public office forced a retreat into hiding. She then won the Nobel Peace Prize, only to hit a new low with the “humiliation” of a snub from Donald Trump. Despite her warm…

Australia’s BlueScope Steel is mulling an A$13.2bn (£6.5bn) takeover bid by US steelmaker Steel Dynamics and Australian conglomerate SGH. The agreement, at a 23% premium to Monday’s closing price, will allow the US buyer to take over BlueScope’s North American operations, worth half its revenue, with SGH retaining the remainder. BlueScope has long been viewed as “a potential takeover target” given the scale of its North American operations, which have “become a particularly attractive proposition since the Trump administration imposed steep tariffs on steel to shield US producers”. Donald Trump’s tariffs have certainly given US steel producers more power by allowing them “to raise their prices without the threat of losing customers to lower-cost imports”, says Rhiannon Hoyle in The Wall Street Journal. While demand has so far been “sluggish”,…

The outlook for Muenchner Rueck, known internationally as Munich Re, is excellent, says WirtschaftsWoche. The world’s biggest reinsurer is pencilling in net income of €6.3bn in 2026, a significant increase from the typical annual profit of €1bn or €2bn seen only a few years ago. Earnings per share are expected to rise by an annual 8% over the next few years. A cost-cutting programme worth €600m over the next few years helps explain why. The sector is also benefiting from the increasing frequency of extreme weather events causing widespread damage, which is fuelling demand for insurance and reinsurance. All this implies further increases in the dividend – and the yield is already 4%.…

Iran’s leaders have “no good options” when it comes to quelling protests that have broken out in at least 17 of Iran’s 31 provinces, says Patrick Sykes in Bloomberg. They’ve tried “both carrots and sticks”, from cash handouts to “tear gas and threats of no mercy”. Yet the protests continue and the currency, whose “rapid drop first sparked the unrest”, fell to a record low on Tuesday. What makes these protests different from previous uprisings is the global backdrop. Already “reeling from the June war with Israel”, the Tehran authorities are now acting under the threat of US intervention and the “live case study in regime change in Venezuela”. The lack of an organised opposition “strengthens the Islamic Republic’s hand”, but also focuses attention on the exiled son of…

There’s one very easy prediction to make for 2026, and this is that the government will make a whole series of U-turns. The one thing we know for certain about Keir Starmer’s government is that, as soon as it runs into any serious opposition, it quickly changes its mind. We saw that early on with the reversal of the decision to scrap the winter fuel allowance for pensioners, followed by the decision to abandon the very modest attempt to control the spiralling cost of welfare. Likewise, just before Christmas it more than doubled the threshold at which farmers have to pay inheritance tax on their estates after widespread protests. A clear pattern has been established. A policy is announced, it sparks a backlash, and the government quickly caves in to…

In finance, a tail risk is an event that might cause an asset to perform far below or far above its typical past performance. In practice, tail risk is almost always used to refer to the chances of suffering a very large unexpected loss. While the same principles may apply to the chances of receiving an unexpected gain, nobody worries about that kind of risk in quite the same way. The term arises from the theory that returns on most asset follow some kind of mathematical probability distribution. The model that is typically used is called the normal distribution, which is essentially a bell-shaped curve. The most frequent outcomes are small gains or losses and these cluster tightly around the average return when plotted on a chart, creating the bell…

The battle between activist Saba Capital and Edinburgh Worldwide Investment Trust is heating up ahead of a shareholder vote on 20 January that Saba has called to try to replace the trust’s current board with its own nominees. Jonathan Simpson-Dent, the board’s chair, has urged regulators to force activists to prove any claims they make, arguing that Saba’s statements include “material inaccuracies regarding relative performance, unfounded assertions of governance failures and other claims that are demonstrably incorrect”. Meanwhile Saba has threatened to sue the board if it does not respond to questions about why it allowed manager Baillie Gifford to reduce the trust’s stake in rocket firm SpaceX shortly before its valuation doubled.…

“If poor people knew how rich rich people are, there would be riots in the streets.” Comedian Chris Rock (right), quoted on Inequality.org “It’s 46 hours of holiday and two hours of work.” Ricky Gervais on turning his worldwide gigs into weekend mini-breaks, in the Daily Express “The people who live in a golden age usually go around complaining how yellow everything looks.” Randall Jarrell, quoted in The Knowledge “I like work. It fascinates me. I can sit and look at it for hours.” Jerome K. Jerome, quoted in The Hindu (India) “Once again, we come to the holiday season, a deeply religious time that each of us observes in his own way by going to the mall of his choice.” Author Dave Barry, quoted in Good Housekeeping “Given the…

spectator.com This is the time of year for banishing vices, says Chas Newkey-Burden. Cigarettes and alcohol have long been “booed off the stage”, but now there’s a new villain – caffeine. Giving it up is a craze in the US and over here too turmeric lattes and chicory brews are threatening to “knock coffee off its perch”. But if you’re tempted to do likewise, beware – giving it up is “tough”. I tried to quit when my yoga teacher told me I’d never enjoy the deepest benefits with caffeine in my system. But caffeine withdrawal “announces itself with an almost personal hostility” – expect migraines and “weapons-grade nausea” on day one. And expect such symptoms to drag on for days. But the psychological challenges are worse – you must get…

Small businesses considering hiring new staff during 2026 will need to make a leap of faith. Data published this week by the British Chambers of Commerce suggests firms are nervous about the outlook for the next 12 months: while around half of small businesses in the UK expect to see sales increase this year, almost three-quarters point to high labour costs as a significant pressure. Those costs have increased following a raft of government measures, including last year’s hike in employers’ national insurance contributions and hefty rises in the national minimum wage. There is also concern about the impact of the Employment Rights Act, which finally passed into law last month and introduces new protections for workers that could prove challenging for some employers. However, for firms in two minds…

The Aberdeen New India Investment Trust seeks to deliver long-term outperformance by investing in exceptional companies. Our bottom-up approach targets quality businesses benefiting from India’s structural growth. We focus on five key traits: resilient business models, strong finances, supportive industries, capable management teams, and robust practices in the field of environmental and social governance (ESG). Stock selection drives returns, so we remain agnostic with respect to sectors and benchmarks. If a company fails our quality threshold, we don’t own it – even if it’s a market leader. We also avoid stocks priced beyond their earnings potential. The result is a focused, high-conviction, all-cap portfolio of India’s best ideas. And because quality typically holds up better in periods of volatility, the fund can offer a defensive edge in downturns. Dialling the…

In early December, Vagabond opened its brand-new urban winery in Canada Water, London, and I visited winemaker Jose Quintana for a sneak preview. Not only is the winery itself utterly stunning, but, as with all Vagabond venues, there is a superb wine bar with delicious food on site. I tasted the entire newly released 2024s, and every wine was a winner. The 2024 Bacchus (£25) shows mirror-ball brightness, with elderflower, lemon zest, and herb mist lift. The 2024 Ortega (£25) is a dreamy, melon and honeysuckle-kissed wine with aerial freshness and a gorgeous glassy texture. Floral notes give way to white pepper delicacy, making this a rare beauty. The 2024 Rosé (£25) is a vinous, real, toothsome rosé with grip, length, and a desire to be paired with the most…

The phrase “ticking time bomb” is alarmingly common in discussions of public debt and deficits. Citadel Securities’s Jim Esposito was one of the many financial luminaries to reach for the explosive metaphor in 2025. With global government borrowing standing at $100trn, and rising sharply relative to economic output in most countries, it’s a tempting comparison. Yet in 2026, the tone could shift. The public debt bomb didn’t detonate amid surging inflation, geopolitical shocks and record deficits. With price rises and central-bank rates now heading in a more favourable direction, investors could learn to stop worrying and love the government bond. That would imply lower state borrowing costs, and offer some breathing room to finance ministers who are under pressure in Britain, France and the United States. In October, the International…

Even by the “hyperactive” standards of Nvidia, Christmas Eve is “a little late in the day to be coming up with yet another deal and a rather unusual one at that”, says Katie Prescott in The Times. It has reached an agreement with Groq, an AI-chip start-up whose products power the usage of AI. For a reported $20bn, Nvidia’s CEO Jensen Huang got “non-exclusive access” to Groq’s valuable intellectual property, as well as hiring Groq’s key employees, including Jonathan Ross, its founder and CEO. While Groq will technically remain independent, how will it survive “stripped of its original leadership, who are now working away inside Nvidia”? While the arrangement is clearly an acquisition “engineered to avoid regulatory scrutiny”, the bigger question is why Nvidia decided to shell out $20bn for…

SBI Funds Management has recruited nine banks to advise it on its initial public offering (IPO), which could value India’s largest asset manager at $14bn, says Bloomberg. The IPO, expected in the first half of 2026, could raise $1.4bn. India is enjoying a boom in flotations, with firms raising $22.4bn in 2025. Recently, ICICI Prudential Asset Management, India’s second-largest fund house, raised $1.2bn at its oversubscribed IPO, which valued it at $14bn. SBI is 61.9% owned by the State Bank of India and 36.4% owned by French asset management giant Amundi, which both plan to sell a combined 10% stake in the IPO. SBI has 28.31trn rupees (£232.8bn) of total assets under management.…

● Games Workshop, the firm behind the Warhammer and Warhammer 40,000 tabletop games, has been on an “endless march” under CEO Kevin Rountree, says Nicholas Megaw in the Financial Times. Its shares have gained a “lordly” 3,600% since he took over in 2015 and trade on over 30 times forecast earnings. “With growth expected to slow over the next few years, that could leave Rountree’s empire looking vulnerable.” Yet this is a “uniquely odd company”. Its 43% operating margin is nearly twice that of Dungeons & Dragons owner Hasbro, its most obvious peer. An army of repeat customers who spend heavily on the latest models means that in some respects it is more like fashion house Burberry, one of the few FTSE 100 stocks on a higher valuation, while upcoming Amazon…

“We are overdue a setback,” says Jeremy Grantham, veteran investor and co-founder of asset management firm GMO. “There are so many negatives intruding that investors would be lucky to escape the coming year in one piece.” Markets “can keep climbing beyond our expectations”, but investors need to recognise that valuations in some markets are dangerously stretched, he tells Barron’s. “The investment bubble is extreme in the US.” “I would recommend zero exposure to the US, but if you have to own US stocks, own quality stocks” – meaning companies with “high, stable returns, and low debt”, and a “degree of monopoly power and price control”. There is much better value outside the US market and that’s where Grantham is putting money that he invests for his family. “My biggest investment…

● Chrysalis Investments – the trust specialising in unlisted growth companies whose holdings include bank Starling and payments firm Klarna – has wrapped up a long consultation with restive shareholders by proposing a three-year wind-down. The trust plans to sell assets, make no new investments and return capital through tenders and buybacks, followed by a continuation vote in 2029. An alternative of introducing a dual share-class structure to allow investors to choose whether they wanted to exit as assets were sold, or remain invested, was rejected as too complex. Shareholders will be asked to vote on the proposals in February. The shares ticked up on the news, but remain on a wide discount to net asset value (NAV) of around 32%. ● Supermarket Income Reit capped a busy year with…

britishprogress.substack.com In policymaking circles, it is widely held that “everything is more complicated than it seems, nothing is easy and there are always trade-offs” – that there is, in short, no such thing as a free lunch. This is mostly true, says David Lawrence. But it’s also a ready excuse for inaction. We should be trying to find lunches that are, if not free, then very cheap. These do exist. We live in a world of rising prices, stagnating productivity and constrained budgets. This is an ideal environment for motivating us to find cheap lunches – policy changes that will make everyone better off, or at least most people better off at little political or economic cost. An example is planning reform. The big prize here lies in building more…

Of the companies mentioned in the previous sections, seven in particular are worth examining as potential investments. These seven fall into two groups. The first – four lower-risk companies – consists of AstraZeneca (LSE: AZN), GSK (LSE: GSK), Pfizer (NYSE: PFE) and Sanofi (Paris: SAN). The second, a riskier collection, consists of Merck (NYSE: MRK), BioNtech (Nasdaq: BNTX) and Moderna (Nasdaq: MRNA). The latter two are loss-making. AstraZeneca has a forward price/earnings (p/e) ratio of 18 and a forward dividend yield of 1.8%. The shares are up 88% in five years and the company intends to raise revenue by 48% between 2024 and 2030. GSK is on a forward p/e of 9.5 and a dividend yield of 3.5% and the share price has gained 35% over the last five years.…

If selling online is central to your small business’s strategy, don’t overlook the potential of TikTok as a new source of customers. Major retailers to begin trading through TikTok Shop, the social-media channel’s e-commerce service, in recent months include Marks & Spencer, Sainsbury’s and Clarks. But 200,000 small and medium-sized enterprises have also joined the platform since its launch in the UK four years ago. That makes TikTok Shop one of the fastest-growing sales channels in the UK, with the platform reporting overall sales growth of 50% at busy times last year. However, TikTok is a different proposition to other online channels and may require your business to invest in new expertise. Many brands report that their best results from TikTok Shop come from videos and content that they stream…

I’m mesmerised from the moment I arrive at each Leela Palace hotel on a tour of northern India by the immersive ceremonial rituals put on for guests and the personal touches that elevate every experience. Each hotel is unique with its own character and yet The Leela brand flows seamlessly throughout them all. The Leela’s signature Tishya fragrance, for example – smelling of rare and indigenous kumud (lotus) and nilgiri flowers – fills each of the palaces during our stay. And there is, of course, The Leela’s fleet of luxury cars, on hand to welcome returning guests like old friends. We visit New Delhi, Jaipur and Udaipur on The Leela Palace Northern India Trail, as part of our itinerary. At each stop, we are met with spectacular floral displays that…

The Truth About Investing Debunking Myths for Better Returns Jonathan GuthrieFT Publishing International, £16.99 There is no shortage of financial columns and pundits in the media. Some are even worth reading. Others are less useful, even counterproductive. But when it comes to company news and analysis, the Lex column in the Financial Times has an unrivalled reputation. Until his retirement in 2024, Jonathan Guthrie was in charge of that column. In this book, Guthrie seeks to turn the wisdom accumulated in his time spent scrutinising companies for the column into a practical guide to the world of investment. Those looking for a simple path to riches or a list of the hottest investments will be disappointed. Guthrie’s book is a lot more subtle than that, as readers of his column…