Morning Brief – Tuesday 19th

Real Estate- Mainstream Market Indicator rather than Middle Class Porn?!

Conflicting stories in Real Estate World have got SGM-FX Analyst Charles M. Porter scratching his head overnight: last year the largest property deal was the purchase of iconic City building the Walkie Talkie by Lee Kum Lee for £1.3Billion. Surely a testament to the faith that foreign investors shared for the UK ahead of Brexit? The Walkie Talkie is readers will recollect best known for its distinctive shape and for lying in the shadow of the global HQ of SGM-FX in Eastcheap EC3.

Scroll forward to February 2019 and we have recently seen Goldman Sachs entering into a 25 year sale and leaseback deal for their London offices for £1.2 Billion. So a definite move reflecting concern for commercial real estate values and GBP. Swiss giant UBS have leased their building so a neutrally Swiss move, and not exactly a symbolic show of support for the UK.

Conversely just this week Citibank has put in a bid for the ownership of its tower in Canary Wharf also for…£1.2Billion. So what does that get you in the way of space? It’s a huge number but in return it’s a huge space: 1.2 Million square feet at £1,000 per square foot. Take the current rate of commercial rentals in Canary Wharf and that means that the real estate team at Citi will have paid for the building in less than 20 years. So a vote for UK plc, a vote for GBP and a well-priced real estate hedge to boot.

The state of the Markets

Well the UK market received a major shot in the arm with the resignation of 7 Labour MPs to form an Independent Party. 

No perceptible net effect on anything very much in the market BUT this development should not be under estimated: it may just be a lifeline for the embattled PM: not that they will/will not vote for her version of Brexit but they are less of a threat rather than more in the way of support for the Government. 

FTSE closed at 7219 off by 0.24%. GBP was unchanged versus USD and EUR. WTI unchanged at $56. Is there a theme developing here?!

The US market took all this in their stride- they were off on hols for Presidents Day. This is of course to commemorate the first and great President of the USA, George Washington.

Digital Advertisers and the Impact of Technology

We are all of course aware of social media but what’s crept stealthily up on us are the subliminal effects of placement and “slebs” and what that does to each and every one of us. Belatedly politicians are waking up to just what that means in the hands of “digital gangsters”. Astonishingly this was the description applied to the mainstream FAANGS rather than internet fringe sites.

What is less known are the uses to which these mediums are being put: alcohol, gambling, cosmetics and diet drugs to name four.

Well known rap stars and faces repeatedly featured on YouTube ie those previous unknowns who have now become mainstream. Snapchat, YouTube and Instagram comfortably command 6-8 hours of a typical teenager’s day!

On top of that are the newer media stars from Love Island, TOWIE and other much watched shows. If this sounds fanciful the numbers of followers that many of these closely watched attractive young command are measured in 10 million plus watchers which means that the economics are simply colossal.

Traditional advertising executives have been fast to jump on this bandwagon.

So now advertising is reaching a much larger market and getting into their sub-conscious from a very young age. Regulators are way behind the curve in policing this market and have little chance of stopping abuses and harmful content to this most impressionable market segment. So next time your teenager is on Facebook for example. Remember that he or she will be exposed to both conventional and also so called “dark adverts.”

Anecdotally we at SGM-FX are seeing business from sources that reflect technology and its longer and longer reach (rather than the dark corners of the internet) for both our Corporate and also our Private Client client bases.

We are not however (yet) seeing that much extra business from impressionable teenagers and twenty somethings!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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