Richard Buxton is expecting an “enormously strong” bounce-back in consumer demand post lockdown.
In a BrightTalk webinar today (March 24), entitled ‘The End Of Lockdown Is In Sight’, the head of strategy for the £808m Jupiter UK Alpha fund said he was expecting this due to a combination of pent-up demand and enforced saving during lockdown.
With Covid cases continuing to fall and non-essential retail due to reopen from April 12, the fund manager said this would result in companies more willing to invest as well.
“It is highly likely from this summer through to next summer we see an enormously strong bounce back in consumer spending,” he said.
“In some ways the chancellor focused on how to get corporates to join the party, with a lot of schemes to induce them spending money. History suggests companies do respond to these incentives.
"I think we will see companies step up to the plate.”
In the 2021 Budget, Rishi Sunak announced a super deduction of 130 per cent of the tax bill for corporates that invest in their business, to encourage corporates to put their cash reserves to work.
Mr Buxton said he was content with his consumer-facing stocks (including Whitbread, Next and Pets at Home) but admitted the share price weakness of AstraZeneca was getting his attention.
“AstraZeneca is obviously hitting the headlines,” said Mr Buxton, who has a 3.6 per cent stake in the pharmaceutical giant.
“While there is clearly potentially a reputational issue with regulators going forward, we don’t really think this will do material damage to the business. If anything, the relevant weakness of the share price is tempting us to add to the position.”
Elsewhere, Buxton took issue with the independent review on UK listing reforms published this month.
Chaired by Lord Hill, these reforms are aimed at encouraging global companies to list on the London Stock Exchange by updating rules around free float requirements and dual class share structures, with safeguards to maintain UK’s standards.
Recommendations included modernising listing rules to allow dual class share structures in the LSE's premium listing segment, giving directors enhanced voting rights on certain decisions, and reducing free float requirements – the amount of a company’s shares that are in public hands - from 25 per cent to 15 per cent.
While Buxton welcomed more high-quality stocks joining the UK market, he admitted concerns about shareholder protection being impacted.
“I do worry about removing an awful lot of investor protection through allowing dual voting structures,” he said.
“For me equity should be equitable and if I give capital to a company, I should have an equal vote on how the company spends it. Whereas allowing companies to list with 20x voting power for owners and founders, I am not a supporter of. And frankly the London Stock Exchange is beautifully flexible as it is.”
Greater effort is being invested into supporting the UK’s attractiveness following Brexit, but such reforms have concerned Buxton about the UK becoming competitive for the sake of it.
He concluded: “I disagree with the Hill Review’s view that the entirety success of the City of London should be measured by an IPO league table against other jurisdictions.
“It is all very well Lord Hill saying he wants to encourage lots of global companies to list in London but there are two sides to this.
"I want to ensure we get quality companies listing in London, and not dodgy oligarch owned-single asset mining companies where massive preferential rights are given to owners and founders rather than providers of equity capital.”
Jon Yarker is a freelance reporter for FTAdviser
