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Bonham Carter: Is Royal Mail the canary in the FTSE’s coal mine?
by Robert St George on Oct 11, 2013 at 10:01
Jupiter’s chief executive Edward Bonham Carter has acknowledged concerns that the frenzy over the Royal Mail’s flotation could signal the top of the market.
Shares in the newly listed company changed hands for almost 40% more than their offer price in early trading, following heavy oversubscription.
‘When the retail investor gets excited, should you worry?’ asked Bonham Carter (pictured), adding that the Royal Mail could represent ‘a canary in a coal mine’.
However, noting that markets looked to be in the middle of their typical range, McVeigh maintains faith in shares for the long term. ‘On a 10-year view, I wouldn’t put my money anywhere other than equities,’ he said.
By style, McVeigh has tended towards contrarian investments. In the 2000s, for example, he was an early convert to resource shares. ‘It was crystal clear that China hadn’t been priced into mining equities,’ he explained, as most analysts expected commodity prices to revert to their lower long-term averages.
But once he and his team detected a more ‘cautious tone’ during a trip to China, McVeigh swiftly exited those positions. ‘The supercycle had become received wisdom,’ observed McVeigh.
At that point McVeigh turned back to domestic plays. ‘The most pessimistic view then was towards the UK consumer,’ he recalled. In particular McVeigh snapped up banks, which traded at one third of their book value.
‘We’re looking for extreme pessimism so we can buy it,’ McVeigh summarised.
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