FBI 14th June 2014 by Asian Business Publications Ltd

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Comment

Hopeful signs on the Horizon ne feels that the worst appears to be over. But it may not be as rosy as the Chancellor and the government proclaims in the British economy. Nevertheless, in the prevailing circumstances, especially for those who desire to expand or develop new enterprises, scopes are steadily improving. The best is not yet around the corner, but the better days appear to be coming. UK is looking East, especially to the emerging markets, particularly to India for both trade and investments. With the advent of investors friendly Indian government, headed by PM Narendra Modi, and especially in the light of the last fortnight's initiatives, there are grounds for optimism. More and more Indian companies are coming to the UK and the British corporates seem to be more at ease with the new regime in India. The Indian government is very much keen to open doors for the FDI in Defence industry as well as in the Financial services and other sectors, where Britain has more success stories to share. In the last 5 years, proportionately more Asian enterprises have withstood the challenges with their traditional skills and cautions. No doubt some businesses have experienced downward trend, some have been overtaken by innovative competitors or the inevitable transformation of the market place. At the same time there are new opportunities for those with their special searching eye, ear or nose. Several times, new entrants establish very well. In the competitive circumstances, some even overtake the established businesses. I am happy to state that Asians' own performance in retail sector has now expanded to many other exciting prospects. The Finance, Banking and Insurance magazine, as usual, has endeavoured to have contents to reflect on this optimistic phase.The Asian involvement in British economy has increased by leaps and bounds in the last 42 years, since the arrival of the Ugandan Asians. In the initial stage, the journey began from retail. Today it encompasses almost all aspects of the economy. With the advent of Indian IT companies, especially major players like Tatas, Hindujas and others, the confidence of the entrepreneur class has also had a very positive impact. The British based Indian Banks have contributed so much to the success of our entrepreneurship and the Bank of Baroda, which is already here for over half a century, has proved to be the lead bank, not only providing excellent services to the Indian and Asian clients, but increasingly larger number of 'native' British who are also enjoying banking with the BoB, as well as other Indian banks- both 'nationalised' ones and also rapidly increasing group of the 'private' banks. With the sun shining, as I write this short piece, I feel that Great Britain and its traditions, values and the people have provided a very fertile ground to develop Asian entrepreneurship and the benefit are more and more widespread all over the country. It's all encompassing and all inclusive. Small businesses do not remain small forever. Some of them reach larger or even gigantic proportions. Her Majesty has acknowledged the manifold contributions of the independent entrepreneurs. With substantially more confidence, both in British and Indian economy, I submit this 14th edition of FBI magazine. With sincere thanks to sponsors, advertisers, contributing editors and members of my team led by George.

Best Wishes CB Patel Publisher / Editor

Asian Voice & Gujarat Samachar

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Global Markets You’ll Be Shocked What’s Making Money ’ve just returned from India, Philippines, Malaysia, Hong Kong and am about to fly back to Jakarta and Singapore. I will be looking for world class technologies. But the stock markets, not perceptions, are the real indicator of where money is to be made – and as I said in my speech in New Delhi – money is not to be made where you think. When I launched AlpeshPatel.com to provide free financial education to the masses I knew people so easily get it wrong where money is to be made. Then I launched www.investingbetter.com to make them better investors. What then of BRICs and Asia specific companies? India’s markets have been beating China for over a decade – again not something you’d realise when you hear people whinging about Indian growth. India’s Sensex is up 387% in the past decade, 13 times more than the Shanghai Composite.

The easiest way to access the BRIC countries – Brazil, Russia, India, China (South Africa too!) is through stocks from those companies listed on the US stock market because then you can just buy them the way you would through a UK broker, buying say Google or Microsoft shares - or even online. So China first. It’s not the big names that have won in the past year – like China Mobile or Petro China, but rather the ones you will not have heard of, which are billion dollar companies – like China Lodging (Cheap rentals), Melco Crown Entertainment (Casinos in Macau). The same is for Brazil. It is not stinkers like Telefonica Brasil but Itai Unibanco which have done the best. Although I have to say I am happy leaving Brazil out for now. 4

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Alpesh Patel founding Principal Praefinium Partners (Private Equity) Russia, with all its problems, has seen lesser known names like Yandex (search engine) spirit ahead. If you want exposure to Russia, this is the way I would do it. Virtually everything in India of course is at all time highs, including expectations and emotions. So no surprise that US listed companies from India like HDFC and Wipro are doing as well as better known names. South Africa – the new entrant to BRICS, sees names like Sasol who you’ve probably not heard of rise 35% in a year. This energy company may be new to you but it is valued at $38billion dollars – so hardly a big bad risk. If Asia was your thing and you wanted to stick to some of the smaller economies I have been struck by Taiwan’s Chunghwa Telecom and SK Telecom from South Korea. Again remember all of these are listed on the New York Stock Exchange and so easy to buy. On the theme money is not where you think, let’s look at the biggest most exciting sectors, regardless of geography, to see what I mean. Big data plays you would think would be a good place to start. Wrong – take the returns of those in Business Intelligence within this sector – most have provided a negative return over 12 months; like SAP, Actuate, Qlik. Or Data Management companies – also negative like CommVault. Surely enterprise storage within Big Data is doing well? Nope. Fusion, Quantum both down. Of course even in such sectors some do well. Like EMC, or MicroStrategy or Verint. But the majority are steer clear plays. I’ll give one more example where reality and perception diverge, and then some lesser known tech sectors where you should investigate. Smart Grid – much hyped, much vaunted, where consumers can manage electricity consumption smartly thanks to digital intelligence and analytics. Yes infrastructure plays like Silver Spring Networks and PowerSecure stink. So does Smart Meter maker Itron. So which tech sectors are worth examining? China Internet is back. The subsectors I like are the portal companies like Qihoo, YY, Bitauto. Also in this sec-

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tor the e-commerce companies like Vipshop, Ctrip and the Gaming players like Shanda Games and KongZhong. Even the Subscription Networks in China Internet like SouFun are leaping ahead. Or take the opposite tech extreme – the Modern Warfare sector. Within that the subsectors doing really well are Command and Control companies like General Dynamics, L-3, Exelis, Harris. Advanced Aero companies too like Lockheed, Northrop and Orbital sciences. My favourite in this sector is Missile Defence and Smart Bomb companies Alliant and Raytheon. You’d think Robotics in Modern Warfare too wouldn’t you? Nope. Those and the Simulation Tech companies are not doing well. More tech doing better than perception? Take fracking companies. You may have thought with all the legal and political problems it was all over. Well every company from the chemical and proppants, to the fluid logistics to the contract drillers to the services and equipment companies are booming. Key examples are RPC, Pioneer Energy, Kirby, US Silica. My favourites which are overlooked include tech companies in minimally invasive surgery but not robotic surgery as they’ve not done well. I mean microsurgery companies like Conmed, ArthroCare, NuVasive, Staar, Globus. Speaking of overlooked, digital dollars companies, but only those in card networks (Amex, Visa, MC), Processors (Total System Services, Global Payments, Vantiv and in solutions like WEX, Xoom, QIWI. Take another look at tech in Chinese Solar too and Couch Commerce companies (MakeMyTrip – I am a shareholder), Vipshop. So you see, tech is all around, but it’s the ones you don’t hear about that do the best. I’ll leave you with this: Nuclear Tech – love it. Instrumentation companies like Curtiss-Wright and Flowserve to Fuel Management companies like Thermo Fisher and US Ecology. But I don’t like the Uranium mining companies – given how well those in Fuel Management and in Instrumentation do by comparison. Well we’ve travelled the world from BRICs and Asia to Global Markets – what then of just India? What if you believe small businesses will now flourish, infrastructure building will increase and the Rupee will rise?

There are a number of Exchange Traded Funds (ETFs) which unlike conventional funds, have lower charges because they are like index trackers and don’t have fat manager fees (the fees and the managers are fat). Here are some of the ones to investigate – your online or traditional UK broker can buy then for you. You won’t need an Indian bank account or brokerage account. ‘Market Vectors India Small-Cap Index (ETF). This fund tracks 88 small listed Indian companies. It is up 30% so far this year. Because the companies are small and not multinationals you get more exposure to the domestic economy. Around $256m worth of investments are tracking this index. But because it is following smaller companies, it is volatile. So beware. The charges are only 0.85% annually. INXX tracks 30 Indian infrastructure companies if you want to focus on a sector. According to the World Economic Forum, India’s infrastructure is poorer than that of Cambodia. If as expected there will be a huge focus under Modi-nomics on infrastructure to help build the nation and the economy, then this fund should continue the rally which has seen it up 25% already in the past month.

Finally what also of the Rupee – surely it too should rally now? Well the fund which tracks the Rupee against the dollar, ICN, is up 8% this year which means it is one of the best currency tracking funds in the world. With a strong central government, the demand for Rupees should continue as foreign investors look for Indian investments. If you wanted to stay clear of individual stocks, your best bet is Exchange Traded Funds (ETFs) which track indices. Some of the best for 2014 into 2015 look like iShares MSCI Frontier 100 and Market Vectors Gulf States. ETFs offer diversification without the risk of all your money in a few stocks. This way your risk is spread. The other benefit is they don’t have expensive fund managers and so more of your money is reinvested and doesn’t go into the pocket of a fat cat! Morningstar.co.uk offers a great site to investigate further. Well good luck! Asian Voice & Gujarat Samachar

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Avoiding Pitfalls in Trading hort term trading is now more common place for all investors, both new and old. Some common sense principles and ensuring you have some good trading techniques will help to avoid big losses. This guide will cover some basic concepts briefly and then move onto looking at some advanced trading strategies. I have used stocks as an example below, but the principles apply to most asset classes.

1. Bottom picking is a common strategy for beginners. Rule no 1 is to keep a stop loss. Buying stocks that have had recent falls, expecting them to rally back up without a stop loss is the first common error in trading. When trading a beat up stock, do not think that this is the same as investing in a good value growth stock that has hit hard times. Be careful not to confuse the two strategies. One is a long term investment strategy and the other is a short term trade. Short term trades should be based on reactions to expected news outcomes or on technical strategies.

2. Track your positions on a regular basis, at least once a week. Keep it simple so that you know when you are making a loss. Your gut instinct will tell you to average down any loses by increasing the position size at lower prices, effectively reducing your average purchase price. Averaging down must be the number one reason why small losses can turn into astronomical wipe outs. Don’t do it! If you want a better method to invest divide your initial investment up into 3 parts and invest at three different times. For example, if you are making a 3 month trade, invest once each week, over a 3 week period. This will give you time to get in at an average price and it gives you the time to evaluate your initial trade idea, to see if you still feel it is a good one.

Rakesh Shah Advisory Fund Manager at Kingly Capital 3. Be in touch with seasons. ‘The trend is your friend.’ The market tends to follow cycles some years. The axiom sell in May and go away (and buy back on St Ledger’s day) does tend to hold true in many years. Each year must be analysed individually and a trader must understand if the market is in an up-trend or down-trend. You can do this using moving averages. They are available on most financial websites such as Yahoo finance by adding Technical indicators of the 50 day and 200 day moving averages. If the market is crossing above the average indicator lines you are in a bull trend. So this is the most opportune time to buy. Some skills need to be learned here and this will come with practice. 4. Learn to understand the difference between volatile stocks and trending stocks. Volatile stocks naturally have a wide variance in prices on a daily/weekly basis. A strongly trending stock, moves in a single direction, for a consistent period of time. You can also have a stock that does both. The strategy you use for each of the scenarios will be very different and this will affect where you place your stop loss. Ask what type of stock is this and adjust your strategy accordingly. 5. Rule no 5. I would repeat rule no 1! Why? Because this really is the biggest problem in trading. For anyone that struggles with this, it is better to use a fixed stop loss account, where you can place stop losses on every trade that are fixed. These are available with most brokers. The other route is to start trading options and derivatives. You pay a small fixed premium for an option, so your losses are paid upfront. The most sophisticated investors use them in their portfolios, because they know that the average person finds them a little too complicated, so this can give them an edge over you. Explaining an option is beyond the scope of this article, but I know that if you have taken the time to read this much, this little gem is a wonderful strategy for all advanced traders. Options allow you to fix your risk at the outset with unlimited gains to the upside. Sometimes the novices have to dig a little deeper to find gold… Rakesh Shah is an Advisory Fund Manager at Kingly Capital Ltd, based at Sun Global Investments, 106 New Bond St. London. W1S 1DN. Can be contacted on rakesh@kinglycapital.com

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Bitcoin Getting To Grips with an Internet Currency uch has been written about Bitcoin in recent years. Essentially Bitcoin is a peer-to-peer payment system that was introduced as open source software back in 2009 by Satoshi Nakamoto. Payments in the system are recorded in a ledger using its own unit of account, which is also called Bitcoin. Although Bitcoin is not regarded as a true currency, it is commonly described as a virtual currency or a cryto currency. While most of your Sterling, US dollars or euros are stored as an entry in a database by an anonymous collective that comprises anyone who wishes to participate. The system is not controlled by a single entity such as a central bank and led the U.S. Treasury to refer to Bitcoin as a decentralised currency. As this crypto currency can be transferred directly from one individual to another it is sometimes viewed as digital cash.

Price Evolution

Crazy it may sound. However, even more crazy is that it seems to function - and to the surprise of many experts. It has certainly been an interesting ride for Bitcoin looking at the evolution. At the start of last year Bitcoin was trading at a relative modest figure of US$13. Subsequently on 10 April 2013 the price peaked at US$266 before collapsing some 60% in the space of hours. Then later in September 2013 a similar pattern took hold whereby a Bitcoin’s price stood at US$140 a unit and began to rise once again - soon shooting up to US$1,200 until negative news from the Chinese regulatory authorities led to the price falling back to below $500. After that it swiftly rebounded to US$800. For any nervous retail investor out there the Bitcoin experience may be a step too far. That said, by holding Bitcoin throughout 2013 would have yielded a 56-fold return in US dollar terms.

The History

It was late in 2009 that developer Satoshi Nakamoto disseminated a 9-page paper (‘Bitcoin: A Peer-to-Peer Electronic Cash System’). This essentially formally described the Bitcoin system. For those not in the know Mr Nakamoto’s true identity remains a secret even to this day. Shortly after this document came out Nakamoto published a first implementation or iteration as opensource software that anyone could download and run on their computer. For Bitcoin to operate it is critical that there are as many participants in its network. These participants are recorded with Bitcoin in return for providing computing power. And, these people are called ‘miners’ since they activity is akin to digging for a gold whereby the amount that will ever exist is predefined. The miners merely go about discovering it. The first known purchase of Bitcoin took place on 22 May 2010 when a pizza exchanges hands for 10,000

Roger Aitken Financial Journalist Bitcoin. At the time of the transaction there was no established market, but fast forward to today and at the recent exchange rate that pizza would have been valued at an eye-popping sum exceeding US$5m (c.€3.66m). Slowly but steadily Bitcoin is gaining traction in various market niches. For example, last year one intrepid couple managed to venture around the world only using Bitcoin as their currency. However, it will still take a number of years of growth before it will be as useful and versatile as established payment methods like cash, traveler’s cheques, debit and credit cards. The common wisdom suggests it will most likely become popular online. Today Bitcoin is predominantly used and applied by enthusiast geeks, which is not a dissimilar situation to how the internet and email technology was taken up some two decades ago in the early 1990s.

The Market

To a large extent the Bitcoin economy still feels and resembles the Wild West with its unregulated markets, exchange rate manipulation and cyber IT attacks. One only has to look at the case of a popular Bitcoindenominated fund that touted a mouthwatering return of 7% per annum to see how over hyped things can get. The operator in question is now on the receiving of fraud charges. While there have also been other hiccoughs for Bitcoin along the way - e.g. with the collapse of Mt. Gox, once the biggest Bitcoin exchange in the world that this April was facing liqudation after a Japanese court denied it bankruptcy protection, it does offer huge opportunities.

Predictions

As the cryto currency matures some experts believe that it will sooner or later become tradable on financial markets. There has even been an attempt at it already in the shape of the Winklevoss twins (Cameron and Tyler), American internet entrepreneurs, who sued Facebook founder Mark Zuckerberg for US$140 million (m), claiming he stole their ConnectU idea to create the social networking site. Holding in excess of US$50m worth of Bitcoin, which is equivalent to around 1% of its current money supply, the brothers filed U.S. Securities & Exchange Commission papers to a launch a Bitcoin exchange traded fund (ETF). Such a move would enable traditional investors to have access to Bitcoin and potentially enhance its prospects to be a currency. Roger Aitken is a freelance financial journalist who writes on exchanges and trading. He is a former FT staff writer and also previously worked for the London Stock Exchange. Asian Voice & Gujarat Samachar

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Bank of Baroda is established in the UK with company number BR002014 and is based at 32 City Road, London EC1Y 2BD. T. +44(0)207 457 1515 F. +44 (0)207 457 1505 E. info.uk@bankofbaroda.com W. www.bankofbarodauk.com Bank of Baroda is authorised and regulated by the prudential Regulation Authority and Financial Conduct Authority in the UK and is a member of the Financial Services Compensation Scheme (FSCS) established under the Financial Services and Markets Act 2000. Our regulator firm reference no. is 204624

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What makes Currency Value fluctuate? Wow, what a question and where to start…?

There are a number of factors that have a direct and indirect effect on the strength or weakness of a particular currency. I could provide a simple economics lesson, but I believe that referencing some real life historical events dating back over the last decade, will make it a more interesting read. Pre 9/11, the markets were in steady growth with the world-wide economy expanding without a cloud in sight. International stock exchanges growing, Interest rates steady, housing markets steady, unemployment low, no EU bailouts, no war and no banking collapses. Then the unthinkable happened; the New York World Trade Centre was targeted by terrorists on 9th September 2001. This sparked the United States’ war against terror, which prompted one of the largest currency movements of modern times. In the following four years, the USD devalued consistently with cable prices moving from 1.40 to 2.1151 by 2008. During the steady rise we also saw the impact that environmental disasters can have. Hurricane Katrina hit the US in 2005 taking the lives of almost 2000 people and has since been recorded as one of the US’s deadliest hurricanes. In the months directly after the Hurricane hit, we saw the US Dollar weaken substantially, with investors seeking safer assets. 3 years later towards the end of 2008, we witnessed one of the biggest banking crashes in history, sparked by the sub-prime mortgage market. This crash resulted in the loss of two of the world’s largest banking institutions Lehman Brothers and MF Global. The demise of these two institutions left investors hurt and many with huge funds lost. In response to the crash we witnessed the US Dollar strengthen against the Pound to the tune of around 35%. Cable moved from 2.11 to 1.3590 in just twelve months. The huge USD currency appreciation was due to a number of reasons, but many analysts argue that the prominent reason was due to risk aversion, as investors saw the USD as a safe haven for their funds. Markets for the first time in living memory also witnessed the Government bailouts of UK Banks like RBS and Northern Rock. This led to more investors fleeing the UK and we almost saw the complete demise of the UK Pound. Post 2008 international markets and indeed national economies have been in recovery mode with nations doing as much as possible to release themselves from the constraints of the global recession.

Paresh Davdra Dealing Director of RationalFX, Currency Specialists Nations began to artificially stimulate their economies to promote growth using a method that has become widely known as Quantitate Easing (QE). This is a process whereby a nation effectively prints more money. The theory is that with more money in the economy, this will result in growth of an economy. QE has a large weakening effect on a currency, as they are putting more of the currency into circulation, hence there being more available. Markets and Investors now hang on the announcements, with any hint of QE resulting in large spikes and movements in currencies. Since the recession started in 2008 we have seen the requirement for Central Bank bailouts raise its head. In the Euro-zone we have seen Portugal, Cyprus and Italy require a bailout, as not to default on their loan repayments. When these bailouts are required, they represent a huge sign of weakness for the single currency. When Portugal requested €78 million bailout in 2011, we saw GBP/EUR rise from 1.11 to 1.20 in just three months. Similar moves were witnessed when Cyprus and Italy required loans. Investors look towards Unemployment and GDP figures as a barometer to how economies are doing. When these figures are released negative they naturally have a huge impact on exchange rates. An underperforming or shrinking economy dampens appetite for investment. With appetite dampened for investment, this means there is less demand for the currency. Less demand results in more availability hence a weakening exchange rate against its peers. One fundamental thing that investors and currencies are bought by historically and currently is interest rates. When interest rate decisions are made and rates are changed, these have a major impact on currencies strength. People want to hold their funds where they will receive a return, if a currency increases interest rates; it not only represents a return on funds, but also signals a strong economy. Hence more demand for the currency and a lower purchase rate. Finally the Indian Rupee – We have seen it go from 78 INR to the Pound to 106 INR to the Pound in the last three years! We are now starting to see the Indian Rupee strengthen post election. Markets are anticipating reforms to take place to encourage outside investment. The selection of Narendra Modi is being seen as very positive for the Indian Economy and the Indian stock market is trading at record highs. So perhaps it is only a matter of time before we see the INR strengthen again to those levels that we saw three years ago. Asian Voice & Gujarat Samachar

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Crude oil price and its impact on fuel prices Introduction:

Oil is one of the most important commodity, which affects the world economy. With each passing year, oil seems to play even greater role. Many of you may remember that the price of oil rose from $50 a barrel in Feb 2007 to $150 by July 2008, and then within the following six months, the price plummeted to $35 a barrel mainly due to global economic and financial crisis and partly due to short selling by speculators. (Prices have swayed either side of $215 a barrel within two years- as shown on the attached graph by the blue and purple arrows) A litre of petrol in UK rose by nearly 50% during the past five years from 90p in March 2009 to 130p in March 2014. The price of petrol is affected by variety of factors such as cost of crude oil, threat of war, threat on oil level supplies, tax legislation. As an example, recently, when escalating tensions arose between Russia and Ukraine, there were speculations that sanctions may be imposed on the Russian oil export affecting the World oil supply. As a result the price of the crude oil rose. It is interesting to note that 25 percent of the total oil production and exports are in the hands of Saudi Arabia and Russian Federation.

What constitutes the price of a litre of petrol? In the UK, the price of a litre of fuel can be divided into four parts: (1) Product costs – Cost of Crude oil and refinery costs – 48p (2) Fuel duty- currently set at 57.95p per litre (3) VAT – Currently at 20% 12

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Ragu Dharmaratnam ACMA CGMA (4) Retailer margin - around 5p As you can see 60% (57.95p plus 21.19p) of the total cost of a litre of petrol in the UK relates to fuel duty and VAT. In contrast, in the United States and China, it is 13% and 0% respectively. Some have misconceived ideas that the higher price in the UK is due to the higher margins enjoyed by the retailers, which to the contrary, they earn approximately 5p per litre.

Fuel prices around the world: The UK Diesel price of 132p per litre is one of the highest in the world. Drivers in Venezuela (South America) pay an unbeatable price of 2p for a litre of petrol, 6500% less than the price in the UK. On the other hand drivers in Norway pay 140p for a litre of fuel, mainly due to higher taxes imposed by the Norwegian Government which is compensated for by higher average wage earned reflecting 8% of total income. Whilst the price in the UK is 132p per litre, it is is 12p in Kuwait, 43p in Malaysia, 55p in Srilanka, 59p in India, 73p in South Africa, 76p in Canada, 78p in Japan, 88p in Australia, and 106p in France.

Oil price volatility: Price of Oil has been very volatile from 2007 to 2009. The increase in oil price was due to higher demand from BRIC counties such as Brazil, Russia, India and China to fuel their economic growth and expansion programme. During this period the level of demand outstripped the level of supply. There were grave concerns over the origins of oil from economically unstable countries. Civil war torn countries such as Nigeria or Iraq where the oil infra structures were attacked; it had an adverse impact on the world supply of oil. Further, restrictions on OPEC quotas and weak US dollar contributed towards the higher prices. The main issue is that nobody knows exactly how much oil is there in the ground, and therefore oil prices tend to be very volatile during the release of inventory figures every Wednesday at 3pm UK time. In addition to supply and demand factors, speculators also play a major role in the determination of the oil prices. Due to the global credit crunch

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many investors and speculators were diversifying their investment portfolios into more commodity related instruments such as Oil, Gold and food related products such as Wheat and Soya. Private traders and financial institutions commenced trading in oil similar to that of shares or currencies. In the past we only had one type of commodity trader ( who are hedgers) who would be buying oil futures to hedge against potential rising prices. They were mostly companies who were oil consumers (for example airline industry) buying in the future by fixing the price thereby mitigating the risk exposure against higher prices. Over the last 15 years, speculators (second type of commodity trader) whose only motive was to profit from the fluctuation in the price of the oil also entered the market. If it was anticipated that in the

future that the prices were to fall , they would sell oil contracts which they do not own and buy them back at a later date at lower prices to fulfil the deal ( this type of trading is called shorting the oil market).

Conclusion and Future Oil prices: Major hedge funds use technical analysis (charts) methods to predict the future price movements rather than use fundamental analysis . As you can see from the attached chart that the price of Crude Oil currently trading at $103, has been trading within a symmetrical channel during the past six years as shown by the blue lines. Once the oil price breaks out of the channel to the upside above $115, I would then expect the all time high price of $147 to be reached. If this happens we can expect petrol prices to go above 150p per litre.

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15-Prideview Properties_A4 Temp 09/06/2014 12:17 Page 15

Convenience stores - is it time to ‘top up’ your portfolio? ince the days many of us ran newsagents, the convenience store market has evolved massively. Multiples have swooped in on what used to be a local, family business, almost doubling their presence since 2003 in a trend set to continue given that total UK convenience store sales are forecast to reach £46.2Bn by 2018, compared to £35.6Bn as of last year. This article will summarise why this is so, who the main players are, what they are doing and how we, as commercial property investors, can take advantage. Consumers today rely less and less on the ‘weekly shop’ preferring instead frequent ‘top-up’ shops – partly due to social factors such as the increasing number of single households, growth in the female working population and longer working hours, and partly due to the internet competing with supermarkets with respect to bulk and non-food items. Seeking to embrace the rise of the internet, the supermarkets have found a convenience store network is ideal for providing click-and-collect services and also for facilitating home delivery of perishable goods. Additionally higher fuel prices, increased focus on reducing food wastage, and the improved standards and product offering of today’s convenience stores are all driving their growing popularity. So what are the supermarkets doing about this and what does it mean for the private investor? Co-op Food is the UK’s leading convenience retailer with over 2,000 stores. Being a ‘co-operative’ business, it’s run for its 8m customer members with a local focus. They plan to open 100 stores this year and in April announced a deal to lease 54 former Marstons pub sites on 15 years leases with no breaks. Despite the near collapse of Co-op Group’s banking division, the strength of its Food business enabled it to overcome the turmoil. We recently acquired a fantastic Coop Food in Fulham (15 years no breaks) for 5.3% demonstrating the covenant strength, however higher yields are available for Co-op Foods run by one of the group’s independent co-operative societies such as the one in Eastbourne let to Southern Co-op on the same lease which went for 6.8%. Tesco, though in second place with over 1,500 Tesco Express, 200 Tesco Metro and 600 One Stop stores, remains the most popular investment, given its net worth of ca. £3Bn. Amidst falling sales this year and competition from the discount grocers, Tesco’s strategy is to better use its convenience store network to consolidate its leadership position online - Tesco controls 45%

Nilesh Raj Patel Consultant at The Prideview Group of the UK online grocery market and already has 1,700 click-and-collect points for general merchandise and 200 for food. In late 2013 we sold a Tesco Express in Elephant & Castle let on a 20 year lease with a 10 year break to an overseas investor for 5.07% and sold one in Greenwich with 8 years unexpired for 6.7% recently cheaper because it may have been slightly over-rented. For those after a deal, One Stop, a wholly-owned subsidiary of Tesco, trades cheaper – we bought a One Stop in Braintree last summer on a 15 year lease with a 10 year break for 7.2%. In 3rd place is Martin McColls, which operates over 700 McColls convenience stores and 500 Martins newsagents and plans to increase its convenience store portfolio to 1,000 by the end of 2016 both through acquisitions and conversions of existing newsagents. If you couldn’t buy shares in their recent IPO, we can still help you invest, but hopefully not at the price we just sold a newly refurbished McColls in Tunbridge Wells with a 20 year lease (no breaks) for – a staggering 4.6%! Sainsbury’s Local is catching up fast; they opened 91 convenience stores in the year to March ’14, tak ing the tally to 600 and claim to account for 1/3 of the UK’s convenience store market growth. Their standard lease is 15 years with a break at 10, and we negotiated two well-located deals this year in Surbiton and North Islington for 6.4% and 6.2% respectively, and expect to see more in the coming year. Meanwhile Morrisons has lagged way behind the rest in this format, but is aiming to double its por tfolio to 200 M Local stores by the end of 2014. With additional shareholder pressure to sell and leaseback their freehold property, we’re already working on a few properties let to M Local for 15 years with a 10 year break, so stay tuned. Many of our buyers are first-time investors, and arguably there is no better place to start than this sector. In all of the stated examples rent reviews are RPIlinked, meaning you and your bank can budget for a reasonable rental growth too. But remember, as good as tenant strength and lease length are, long term factors must not be ignored and often explain yield differentials - the location, the property itself and whether a ‘market’ rent is being paid. We look forward to helping you find the right investment so ‘check out’ our website and do get in touch to discuss more. To see more property deals, register your interest and discuss more visit www.prideviewproperties.co.uk and call 020 8863 8680 Asian Voice & Gujarat Samachar

John Cumming2013_A4 Temp 09/06/2014 11:45 Page 1

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17-Rakesh Shah-Asset Managedment_A4 Temp 09/06/2014 12:19 Page 17

The Changing Risks in Asset Management he way that people trade and invest has significantly changed in the last 10 years. Investors now need to be aware of different risks that were not relevant just a few years ago. One of the most important considerations is understanding how safe your funds are, whilst you are trading. Can you be at a loss if the broker makes a loss, or worse still, if another client makes a large trading loss, can you be responsible for that? The answer is yes in some circumstances. It is up to you to find out what type of account you have and what regulatory body oversees the company that manages your account. 1. Selecting your broker. What implications can the geographical location have on the safety of your funds? It is in your interest to deal with the most reputable company where your account and funds will not be subject to any unauthorised or unscrupulous activity. Although we are part of the European Union, the regulatory standards in each of the member countries is very different. A broker in the UK has to comply with many different rules and regulations when compared to a broker from Cyprus. This is because they have different regulatory bodies to report to. In many cases, your protections are significantly reduced. The standards of reporting and the ‘minimum working capital’ required to run a business are much lower in most non EU countries compared to the EU. Setting up a new business is easier in some countries also. For example, it is much easier to get a licence to trade FX in Cyprus than it is in the UK or USA. Each European country is different and the further away you travel from core Europe, it can be seen that there are less onerous regulatory requirements that are needed to set up and run a business. All this means that you have less security about the robustness of policies and procedures around the management of your account and the trading process. 2. Once you leave Europe and you consider opening a trading or investing account in other countries (exceptions include the USA, Canada and other key financial locations), regulatory standards can be virtually non-existent. Take for example Belize, if your funds went missing from a Belize FX company, how would you go about getting them back? Everything from finding a lawyer to understanding the local regulations would set you back thousands of pounds even before you pursuing your funds. I am not saying that the companies operating there are doing anything wrong, it is

Rakesh Shah Advisory Fund Manager at Kingly Capital just that you need to be aware of what you are getting yourself involved in. Make sure you know the difference between the location and the legal entity with which you are dealing with and the locations and legal entity where your funds are located. You can have an offshore company with a local London marketing office. Just because you speak to a local company with a local telephone number does not mean anything for the protection of your funds, if you just wired your cash to Latin America via Barclays, HSBC, Santander or any other major bank in the UK. The use of a UK correspondent banking account, does not mean your funds will end up in the UK. 3. What else can trip up an investor or trader? Once you have your account, it is important to understand what type of account you have. In the UK, brokers are required to separate their funds with the funds of their clients. This has been the case for many years. Other countries vary and you need to check this first to see if co-mingling of funds is allowed under that particular legal framework. Co-mingling allows the bank, broker or investment company to use your cash whilst it is your account for any purposes they wish (purchase of Ferrari for the director included!).To repeat, this is not allowed in the UK for FCA regulated firms. You can check a firm is regulated by looking them up on the FCA Website. www.fca.org.uk and looking at the “Financial Services Register”. I would advise you to do this as a learning process. Lastly going back to the original question. Can I be held accountable for a loss from another individuals or corporate trading account? The answer is yes if you have a ‘non-segregated’ account. A ‘segregated’ account means that your funds sit in a separate account to all other individuals or corporate account in that firm. A non-segregated account means that your account is joined up with all the other non segregated accounts in the firm and they are treated as a single account for the purpose of any losses made by any of the ‘non-segregated’ account holders. Now is the time to ask. Caveat Emptor! Rakesh Shah is an Advisory Fund Manager at Kingly Capital Ltd, based at Sun Global Investments, 106 New Bond St. London. W1S 1DN. Can be contacted on rakesh@kinglycapital.com Asian Voice & Gujarat Samachar

Titan-DPS_A4 Temp 06/06/2014 09:12 Page 1

20-William Albert_A4 Temp 09/06/2014 13:57 Page 20

Renewable Energy The way forward to counter Global Warming ew research had found that the world is not moving fast enough on investment in low carbon energy to tackle climate change. If the world is to limit global warming to an increase of 2°C, then the amount needs to proportionately increase to $2 trillion instead of $1.6 trillion, which is being invested annually in the global energy supply.* Companies and governments are still investing heavily in fossil fuels, which can leave $300bn in 'stranded assets', for example in coal-fired power plants and oil extraction infrastructure. Currently, energy efficiency is key with about $130bn spent on it globally each year- an investment that must rise to more than $550bn by 2035.* The challenge of energy accessibility needs to be understood in terms of availability as well as affordability for individuals and communities. Fortunately, renewable energies such as wind, solar or biomass come in small units – solar cells or wind turbines – making construction and maintenance fairly straightforward. Over time, the costs for solar, wind and efficient biomass have reduced significantly, now levelling at the same price, and in some cases cheaper, than fossil fuels. Friends of the Earth had recently accused the chancellor George Osborne of exacerbating climate change by handing out £2.7bn of incentives to energy companies to fuel North Sea oil and gas production. FoE said he was too focused on propping up oil companies at the expense of making renewable energy cheaper. With huge subsidies planned to encourage fracking and cuts to subsidies for wind farms and solar energy on the horizon, Osborne has come under intense pressure from environmental groups to change course. Recently Prime Minster David Cameron said he believed man-made climate change to be ‘one of the most serious threats that this country and the world faces’. It is, therefore, no surprise, that there is increasing focus on a planet-wide push for greener energy. It is this bold statements like this that leave us in no doubt that the renewable industry as a whole is gaining both support and momentum, but there’s still a way to go. Despite the rhetoric from the Ministers we have just seen a substantial cut in the Feed in Tariff rate for wind turbines up to 15kw – those which largely

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Mr Samrat Bhandari Director of William Albert Securities and CFO, Proventus Renewables Plc serve the rural, domestic, farm, school and small business-based sector, where a combination of the Feed-In Tariff and renewable energy supply bring affordable energy independence to thousands. We have recently been privy to the second of three publications by the UN’s Intergovernmental Panel on Climate Change, and it is one of the most comprehensive investigations into the impact of climate change ever undertaken. The report is somewhat distressing. Specifically, it states that a global mean temperature increase of 2.5°C above pre industrial levels could lead to global aggregate economic losses of between 0.2-2%; put simply, a 2% reduction would wipe $1.4 trn off the world’s economic output.* The evidence is there: farm scale wind energy is still a great investment on many levels. Small wind is a manufacturing success story, and the UK is one of the windiest countries in Europe, and domestic energy prices look set to rise. Turbines are designed to capture wind and, unlike most conventional power plants, they do not pollute. 2014 to date has been blighted by floods and extreme weather, and evidence suggests that carbon dioxide is at its highest level for 800,000 years. Capturing wind energy is one of the key ways in which we can work to reduce dependence on traditional energy sources. In doing so, we will see more manageable energy costs for all, a boost in the de-carbonising process, and ultimately a reversal in the impact of climate change. It’s a solution that I firmly believe will continue to build momentum as more people are educated on turbines. Across the sector, manufacturers have been working to improve efficiency, lifespan and raise production levels so that Feed-in-Tariff support will be an increasingly smaller part of the equation. The wind energy industry is working hard to raise awareness of the importance of Farm Scale energy, and to ensure that more proportionate-planning requirements which recognise the difference between farm scale turbines are put in place. If you have any questions about renewable energy you can contact Proventus Renewables PLC, by email info@proventus.co (*Source International Energy Agency)

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22-Bhavini Kalaria_A4 Temp 09/06/2014 15:05 Page 22

Auto enrolment is here - Key Employer Checklist he most significant legislation for a generation, affecting millions of workers, was introduced in October 2012: auto-enrolment. Auto-enrolment has been introduced to deal with the twin problems of people living longer whilst failing to save enough to allow them to live comfortably into old age. It is impressive in its ambitions and the likely affect it is intended to have. However, the burden is very firmly placed on employers who are responsible for ensuring that every worker, earning over approximately £8,105 (this figure might change) who is not in a work place pension scheme (and others who choose to opt in) will be enrolled into a pension scheme. The Department for Work and Pensions (DWP) has said: "Rather than taking action to save, an employee has to take action not to save”. The basic premise of auto enrolment is that workers who aren’t saving will more likely start saving, encouraged to do so by contributions which employers will have to make to the scheme (though the option for workers to opt out is always there). Although the scheme began in October 2012 for the biggest companies (with more than 120,000 staff) the roll out was staggered. As a business owner, you will have been busy with many other matters, in the hope that the start date for auto-enrolment may not reach you until much later. However, April 2014 is significant for SME businesses, and it has meant that many of the businesses which we deal with, and you run, must now start taking steps to ensure compliance. The Pensions Regulator, responsible for the roll out, will impose a fixed penalty fine of £400 in the first instance where an employer does not comply. After this there is an increasing scale of daily fines starting from £50 per day through to over £10,000 for employers with 500 staff or more where there are persistent and wilful breaches. Importantly, employees, even if unable to bring a claim for the failure to comply with the auto-enrolment and minimum contribution duties, can still allege that he has suffered a detriment, or has been treated unfairly where an employer does not comply. So what should you do? Here is a basic checklist to help you take the necessary steps:

Bhavini Kalaria Solicitor, Director The London Law Practice Staging date. How many people are on your PAYE – this will help confirm when your staging date is to enrol people into pension schemes. Workforce. Find out who is eligible to be enrolled. A freelancer would in the normal course not be, but you will need to take advice on someone who works consistently and on fixed days with you. Pension scheme. Take advice on how to comply with the requirements. You can see whether an existing scheme will comply or whether you would like to adopt a new scheme for all current and newer staff. A key issue for employers will be how to finance the contributions they make to the scheme – and may want to consider whether mandatory salary sacrifice will be needed to do so. Notices. Employers are required to give information about the schemes to their staff, which may include the details of the scheme, the level of contributions and details of how to opt in and opt out. Prepare standardform documents, including opt-out and opt-in member notices, standard auto-enrolment, opt-in and joining information notices and postponement period notices if appropriate which will make roll out easier. Contracts of employment. It may be easier to undertake a “Contractual enrolment” process, so that the burden of reviewing each person’s status is lifted. This would mean reviewing standard-form contracts of employment and deciding whether to contractually enrol new jobholders into a pension scheme or include wording about auto-enrolment. You may want to check data protection provisions at the same time. Payroll. Set up auto-enrolment payroll processes for contributions and deductions. Recruitment. It is unlawful to induce new staff to opt out – and you should therefore make sure that HR personnel are properly trained. Records. Employers will have to keep records for up to 6 years of specific information such as details of the auto enrolment scheme, personal data on staff members, copies of all notices received etc. Registration. Register with the Pensions Regulator within four months of your staging date.

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If you have any questions on this or any other related work place issue, please feel free to contact us at info@londonlawpractice.com

14-23 Advert_A4 Temp 09/06/2014 12:05 Page 23

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24-25-Bank of Baroda x1.5_A4 Temp 09/06/2014 15:07 Page 24

Development and Growth of Indian Banks in the UK

Mr D P Trivedi Chief Executive, Bank of Baroda

eign exchange business before independence rade was concentrated in Calcutta after the though there was no legal bar on entry of Indian growth of East India Companyâ&#x20AC;&#x2122;s trading and banks. Few Indian institutions tried to enter the lucraadministration. With this grew the requirement tive foreign exchange market before and during for modern banking services, uniform currency to finance foreign trade and remittances by British army personnel and civil servants. Thus the first Presidency Bank â&#x20AC;&#x153;Bank of Bengalâ&#x20AC;? was established in Calcutta on June 2, 1806 followed by Bank of Bombay in 1840 and Bank of Madras in 1843. The Presidency Banks issued currency notes until the enactment of the Paper Currency Act, 1861, when this right to issue currency notes by the Presidency Banks was abolished and that function was entrusted to the Government. The first Indian owned bank was the Allahabad Bank set up in Allahabad in 1865, the second, Punjab National Bank was set up in 1895 in Lahore, and the Second World War only burnt their fingers. As a third, Bank of India was set up in 1906 in Mumbai. result of that at the time of Independence, no Indian All these banks were founded under private ownerbank had branch outside the country. ship. The Swadeshi Movement of 1906 provided a After independence, Indian banks started movgreat impetus to joint stock banks of Indian ownering international to enter into foreign exchange ship and many more Indian commercial banks business. Due to limited competency in the such as Central Bank of India, Bank of sector first challenge for them was to Baroda, Canara Bank, Indian Bank, and Number develop skilled manpower and they did Bank of Mysore were established of Indian banks have focus on that by deputing them to between 1906 and 1913. selected English institutions as apprenThe three Presidency Banks were increased in the UK tices. Once getting the required skilled amalgamated into a single bank, the as we know that manpower, Indian banks focused on Imperial Bank of India, in 1921. The foreign exchange sector and started Imperial Bank of India was further without banking following Indian Diaspora globally to reconstituted with the merger of a numpartners no trade attain a sizeable market. Over a long ber of banks belonging to old princely period of time, Indian banks focused on states such as Jaipur, Mysore, Patiala and can flourish Forex business and their primary activity was Jodhpur. The Imperial Bank of India also functo facilitate remittances to India from their countioned as a central bank prior to the establishtries of operations ment of the Reserve Bank in 1935. In 1955 Imperial Bank of India was brought Foreign banks had virtual monopoly on the forunder state ownership and renamed as State Bank of India which made it the oldest Indian bank in the UK and Bank of Baroda entered UK in 1957. For a long time, Indian banks in the UK primarily focused on Forex business and supported cross country business. In India, Nationalization happened in 1969 followed by second phase in 1980 and banks were brought under state control. Policy liberalization happen in 1991 and number of sectors were opened for private investment including Foreign Direct Investment. As we know that the relation between Indian

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24-25-Bank of Baroda x1.5_A4 Temp 09/06/2014 12:24 Page 25

and UK is more than 400 years old and international trade has also increased substantially since liberalization. Today India is the third largest investor in the UK and UK is also significant investor in India. India and the UK have vibrant economic ties and the two- way trade rose to about USD 16.15 billion in 2012 from USD 12.56 billion in 2010-11. During April 2000 and November 2012, India has received FDI worth USD 17 billion from the UK. Number of Indian banks have increased in the UK as we know that without banking partners no trade can flourish. There was a constant demand through out from business community from both nations to facilitate the business immediately after policy liberalization in India. This demand was analysed properly and Indian banks enter the fray gradually with trade finance, whole sale banking, syndications, commercial banking set ups. Indian banks pro-active approach has made their standing strong and has also boosted the trade between both the countries. Presently a significant share of trade between both the countries is enjoyed by Indian banks. Prosperity in international trade was also reflecting in persons of Indian origins setting their foundation in the UK and skilled manpower from different sector also migrated to the UK. It became a high pot niche segment for local retails business as well as for NRI business for Indian operations. Recognizing these red hot opportunity Indian banks started open-

ing their branches. As a result of that Indian banks are present in Indian dominant areas and offering bouquet of retail services and facilitating NRI services on behalf of Indian operations. Presently State Bank of India and Bank of Baroda both have 10 branches each, ICICI bank have 9 branches and Punjab National Bank have 7 branches with an eye to open new branches. With the growing economic pace, technology and competition, the banks from India have also adapted to the changes and are now imprinting their mark as main stream banks for all, instead off person of Indian origins only. Indian banks are managing multibillion business and their appetite for business is insatiable. Branch operations is moving north, customer base is enlarging, balance sheet sizes are expanding, offerings basket is widening and thrust for customer service & excellence is driving every bank to keep the momentum on with development of technologies & products and un-imitable customer service.

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26-Gold Investment_A4 Temp 09/06/2014 12:27 Page 26

Why Buy Gold? A Safe Haven uying gold has always been regarded as a safe and reliable medium to long-term investment. Paper currency can lose much of its value overnight as a result of recession, political uncertainty, war, or natural disasters, whereas tangible, durable gold always maintains its intrinsic attraction as an asset to invest in. Investors make gold purchases feeling confident that their investment is virtually guaranteed to retain most of its value as a highly marketable commodity. Prices for the metal may rise and fall in line with markets, but individual governments

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cannot manipulate the price of gold, a globally traded and stable commodity, as easily and quickly as they can change the face value of their own paper currency. Oliver Temple Indeed, the reserve banks hold physical gold as part of their assets. So, gold remains a secure hedge against fluctuations in markets and national currencies, as there are very few places in the world where this precious metal is not acceptable as a universal form of currency for trading and exchanging value. Gold is widely regarded as a fundamental asset with a place in any medium to long-term investment portfolio, since it offers a stability rarely found in any other financial instrument. Its worldwide presence and the diversity of forms and security of locations in which gold is stored make it easily tradable and broadly immune to the wilder swings of the financial markets. Whereas promissory notes (paper money) depend on an issuers promise to pay the bearer, physical gold bullion has its own intrinsic value. This gives it a stability which is its greatest strength, and to a degree a potential weakness as an investment proposition for those looking for capital gain in the short to medium term. However if you are looking for reliability and security there is little reason to look any further â&#x20AC;&#x201C; buying gold is your safest bet! When looking to buy gold, as with any other investment, it pays to seek advice from the experts. That's why it is essential to choose your dealers and investment advisers with great care, and find honest brokers you can trust. We, at Gold Investments, have been operating in the gold market for 34 years and would be delighted to help if you are still wondering "why buy gold". Contact Gold Investments today for advice on buying and storing physical gold bullion as well as live pricing on purchases and sales.

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28-29-Kiran Patel_A4 Temp 09/06/2014 15:08 Page 28

After They’ve Gone An Accountants’ Prospective Introduction

When someone dies leaving assets over a certain amount, the organisations holding those assets will need proof that they can be released to the right people. A grant of Probate or Letters of Administration (if there is no will) is required to carry out the administration and distribution of the Deceased’s Estate to the Beneficiaries. You can either choose to apply for the Grant to yourself, or use a professional to do so on your behalf. The majority of people choose to employ professionals, because the Estate or the terms of the will can be complicated or no one in the family may feel that they do not have the necessary skills or time. Typically, a case can take months to complete. Before you explore the administration process yourself, there are many factors to take into account, such as whether you have the time to gather and process all the required information and Forms and how much money you may actually save in professional fees. It is also important to bear in mind that whoever deals with the Estate could be legally and financially liable for any mistakes or oversights.

What is Probate?

Probate is a Court Order that is required before a Deceased’s assets can be distributed. It is required if the value of the Deceased’s Estate is more than £5,000 after the funeral has been paid. Probate is required whether or not there is a Will and to avoid the risk of fraud, Probate should start as soon as possible.

How long does it take?

An average Estate, Probate takes up to 12 months to complete due to the complex and time-consuming process, involving many organisations, individuals and government departments. The period includes the complete process from death to distribution. However every case is different and delays can occur, for example, if the bank and building societies take a long time to reply.

When to seek Professional advice

You should consult a Professional for advice in the following circumstances: l The Will cannot be found. l The Will is not valid. l The Will is likely to be contested. l The Beneficiaries cannot all be found. l The terms of the Will are not clear. l This Estate is subject to inheritance tax. l The Deceased was married, but left no Will and the final value of the Estate is over the Inheritance Tax threshold which is currently £325,000. l There is no will, and the value of this Estate is over £250,000 and there is a spouse or civil partner with children. l There is no will, the value of the Estate is over 28

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Kiran D Patel FCA Partner at MGR Weston Kay LLP Chartered Accountants £450,000 and there is a spouse or civil partner with no children. l Part of the Estate will be passed to children under the age of 18, with or without a Will. l The Deceased has left assets in trust. l The Deceased owned or was a partner in a business. l The Deceased owned land or property that has an unregistered title. l The Deceased owned land L property abroad. l There are Beneficiaries with a Life Interest in the Estate. l The Deceased inherited from another Estate within the last two years. l The Deceased was insolvent. l The Deceased was involved in any court proceedings. l The Estate belongs to a widow or widower and maybe liable to inheritance tax, as some of the previously Deceased spouses on used tax allowance may be have been used up after the first death.

When Probate is not required?

Probate is not required if the Estate is worth less than £5,000 and therefore, it can be distributed without proof of formal title. Banks and building societies will often release small amounts of money on receipt of a Registrar's Death Certificate but they may also ask you to sign a Statutory Declaration Form to confirm you will be distributing the Estate in accordance with the Will or Intestacy Rules. Accounts in joint names can usually be transferred to the surviving holder without Probate. If there are other assets such as life policies in trust, those too, can also be normally claimed without the need for Probate.

Simple steps to be taken

Listed below, are the steps that need to be taken when the unfortunate occurs from the Registering of the death to the distribution of the Estate and the accounting l Contact the doctor to report the death provided the Coroner is not involved. l Contact the funeral directors to start making arrangements for the funeral. l Register the death and obtain copies of the Death Certificate. (Most account holders require originals, so ensure sufficient copies are obtained.) l Secure the Deceased’s assets and property if they are likely to remain unoccupied. l Find and read the will, if one exists, and confirm its validity. l Contact the Personal Representatives if they have been named in the Will, or if they are not named, determine who is entitled to administer the Estate. l Find all documents relating to the Deceased’s life.

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l Send

a Death Certificate to each of the account holders and ask for the value or balance in the account at the date of death. Also request details of any income received up to the date of death. l Open a bank account on behalf of the Estate. l Contact the Personal Applications Department of the Probate Registry and request the relevant Forms. l Complete the appropriate Forms and send them to the Probate Registry along with the original Will and the Deceased's death certificate l If the Estate is not subject to Inheritance Tax, complete Form IHT 205. Presently, this is £325,000 l Complete Form IHT 400 if the Estate is subject to Inheritance Tax. If it’ value is more than £325,000 or if certain other circumstances apply. l Arrange for funds to be available to pay the Inheritance Tax and the Probate Fees. l Attended the interview at the Probate Registry when requested to do so and “swear the papers”. l Received the Grant. l Place the statutory advertisement for creditors and any other claimants. l Send a copy of the Grant to all account holders and request payment of the funds. l Complete the Income Tax Forms and Capital Gains Tax Forms for the period of administration. l Pay all the creditors. l Complete stock and share transfer forms and draft the assent for ant property in the Estate. l Prepare the Estate Accounts. l Once the Accounts have been approved by the Personal Representatives, pay the Beneficiaries and distribute the

legacies. (Ensure a receipt is obtained of all payments made.) l Finally, keep all correspondence. “Simple” you may say. However, please note that the above is merely a basic understanding of the approach to be taken when you are faced with the unfortunate death of a close relative or friend. There are a number of complexities associated to the distribution of the Estate, therefore it is imperative that Professional advice is sought as soon as possible. The ICAEW is set to become an Approved Regulator and Licencing Authority for Probate work in England & Wales. This is a landmark event as it means that, subject to accreditation, Chartered Accountants may provide the reserved legal service that is “Probate”. MGR Weston Kay LLP, are ideally place for the provision of such services. Kiran Patel is a marathon running long distance cycling Chartered Accountant and a Partner at MGR Weston Kay LLP. MGR Weston Kay LLP is a limited liability partnership registered in England and Wales with registered number OC307515. It is registered to carry on audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales. ‘mgr.westonkay’, ‘MGR Weston Kay’ and ‘Reportis’ are trading names of MGR Weston Kay LLP. A list of members' names may be inspected at our registered office at 55 Loudoun Road, St John’s Wood, London NW8 0DL. Please contact Kiran Patel for further details by e-mail him at Kiran.patel@mgrwk.com for further advice and guidance.

We at MGR Weston Kay take this opportunity to announce a major achievement of our own. MGR Weston Kay, has now established itself as a leading contender for the SME Sector following the merger of Martin Greene Ravden LLP and Weston Kay on 1 May 2013.

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Annual Tax on Enveloped Dwellings (ATED) Annual Tax on Enveloped Dwellings (ATED) is a tax payable generally by companies (and certain other corporate entities) that own a UK based high value residential property (dwelling) within a corporate envelope (regardless of whether the entity is based abroad or in the UK. The ATED charge came into effect from 1 April 2013 for properties worth £2 million or more (property value based on 1 April 2012 or at acquisition if later). Along with the tax payable (which is determined by a banding system based on the value of the property and ranges currently from £15,400 to £143,750), the company is required to file an annual ATED self-assessment return in respect of the property. To summarise these entities are now liable to: l A 15% Stamp Duty Land Tax (SDLT) charge on acquisition. l An annual ATED charge. l CGT at 28% on the disposal of the property. The 2014 Budget extended the definition of a high value residential property to include properties worth more than £500,000. The 15% SDLT charge will apply to transactions on or after 20 March 2014, however the ATED charge is to be phased in as summarised below: l From 1 April 2015 where the property is worth between £1m and £2m, an ATED charge of £7,000 per year will apply (although this is expected to increase each year in line with the Consumer Price Index). Also Capital Gains Tax (CGT) will apply on the capital gain post 1 April 2015. l From 1 April 2016 where the property is worth between £500,000 and £1m, an ATED charge of £3,500 per year will apply (although this is expected to increase each year in line with the Consumer Price Index). Also CGT will apply on the capital gain post 1 April 2016. The Government’s objective in introducing the new rules is to deter ownership of UK residential properties by its owners through a corporate wrapper, thereby avoiding a CGT charge. Also although certain reliefs are available for landlords and property developers caught under the ATED regime, there is still an unwelcomed compliance burden as an annual ATED return needs to be submitted to claim the relief. It should be noted that the ATED charge applies regardless of whether a market rent is paid for the property or not by the owner occupier or a P11D declaration has been made for the occupation of the property. With regards to these properties that may fall into the new regime there are ways of de-enveloping the properties before the ATED charge applies, but great care needs to be taken not to trigger further charges on deenveloping.

Capital Gains Tax (CGT) on Non-Residents

Until recently one of the principal of the UK CGT rules was that they only applied to someone who was resident 30

Asian Voice & Gujarat Samachar

and ordinarily resident in the UK (except in some exceptional and unusual circumstances e.g. non-resident with a branch in the UK, etc). Last December, the government announced that as of April 2015 there is expected to be CGT on non-residents who own a UK residential property. The announcement was by way of the December 2013 Autumn Statement and a consultation was to be held the results of which would be enacted through the 2015 Finance Act. The consultation document was duly published on 28 March 2014 called “Implementing a capital gains tax charge on non-residents”. Unlike the ATED charge there is no discrimination based on the value of the residential property, it will apply to small and large, although a saving grace would be that it would apply to gains accruing after April 2015 instead of as with the ATED charge from April 2013. The new charge will have a few exceptions which include the following: l Accommodation for children and students – residential accommodation for children, school pupils, hall of residence of further or higher education. l Accommodation to provide care – residential accommodation for persons in need of personal care and nursing e.g. due to old age, disability, alcohol/drug dependency, mental illness. l Other communal accommodation – residential accommodation of members of the armed forces, prisons etc. It is unlikely that Principal Private Residence (PPR) relief which would reduce or eliminate the CGT tax charge will be available to the overseas owner by virtue of the fact that they are by definition claiming to be nonresident and therefore on the whole outside the UK tax regime. However PPR relief is expected to be available where someone emigrates from the UK and sells what used to be their main residence. Interactions with this proposal are also expected to have impacts on the PPR relief. Under the current rules, one can nominate which property is the main residence (in a situation where two properties are held either of which can be deemed as the main residency). This is expected to be removed and to be replaced with a relief by which the property eligible for PPR relief will be based purely on the facts e.g. address where the taxpayer’s spouse or family live, mail is sent and that is on the electoral roll. This proposal will apply to both UK and non-residents. In terms of the rate of tax that is to apply on the gain, this is expected to be comparable with that paid by UK residents (18% for basic rate taxpayers and 28% higher rate taxpayer) along with a deduction for the annual exemption which currently stands at £11,000. The tax rate which is expected to apply will require a declaration of the individual’s UK income and a system of withholding tax is expected to be put in such that only when the declaration has been completed and assessed will any excess amount be refunded. Hirji Patel is a director at John Cumming Ross Limited, Chartered Certified Accountants, and for more information can be contacted by e-mail hirji.patel@jcp.uk.com

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Recent Mortgage Approvals he introduction of Mortgage Market Review (MMR) was set out as a case for reforming the mortgage market to ensure it is sustainable and works better for consumers. It had become clear by the height of the market in 2007, that, while the mortgage market had worked well for many people, it had been a cause of severe hardship for others. The regulatory framework in place at the time had proved to be ineffective in constraining particularly high-risk lending and borrowing. The MMR package of reforms is aimed at ensuring the continued access to mortgages for the great majority of customers who can afford it, while preventing a return to the poor practices that we saw in the past. The Mortgage Market Review aims to avoid the reckless lending that contributed to the global financial crisis but the new regulations have been criticised for being too strict. The new regulations require lenders to ask potential borrowers a wider range of questions about their spending habits and has resulted in a startling fall in the number of mortgage approvals. Lenders says that stricter rules have resulted in fewer mortgages being agreed. According to figures the mortgage approvals have fallen by 17% since new rules came into force at the end of April 2014. New rules mean borrowers can expect a long mortgage interview and to be forensically quizzed on their spending. Potential borrowers are being asked about their gym membership, gambling habits and detailed personal expenses including monies spent on children & weekend soiree. There are growing fears that mortgages will soon become more expensive and harder to qualify for. Some experts believe that the rules have gone too far and this punitive scrutiny is freezing out some applicants who can otherwise comfortably afford to pay a mortgage. Brokers have also complained that mortgage applications, which typically took a month to process, are now taking over 2 months.

Interest rates kept on hold again

The Bank of England announced it was keeping interest rates on hold for the 62nd consecutive month. The base rate is to be held at 0.5% for a further month with the Bank suggesting that rates will remain low for the time being for a foreseeable future. Despite the longest regime of lowest base rate, the recent Mortgage approvals is on a lower trend. The real effect of MMR will start from June 2014, since the lenders have to scrutinise borrowers more closely, to check they can afford the loan in question; a lower approval will be the order of the day. May 2014

Darshan Roy Director, Zoom Finance Ltd figures are not yet published but industry insiders say that the downward trend is continuing. The Recent Oct 2013 Nov 2013 Dec 2103 Jan 2014 Feb 2014 Mar 2014 Apr 2014 -

Mortgage Approval 67,701 70,758 71,638 76,947 70,309 67,135 63,170

The above statistics shows a drop of Mortgage approval of over 17% in just over the last 4 months from Jan 2014 to April 2014. What is surprising is that the recent economic recovery corresponds with the increase in Mortgage approval from October 2013 through January 2014 whereby it increases steadily (about 13.65%), but in the last 3 months from February 2014 the mortgage approval is on an acute downward spiral. Mortgage Approvals in November 2003 peaked at 133,000 a month; it is perspective that will illustrate how far we have come down from the heady days of 2003. Another reason people have been unable to apply for mortgages is due to a lack of new homes on the market. The Help to Buy Scheme has had limited success and with the new MMR many experts expect a lower usage of the Scheme as detailed scrutiny on oneâ&#x20AC;&#x2122;s income will refrain applicants from applying. Further recent figures from the Royal Institution of Chartered Surveyors (RICS) have shown low numbers of homes being put up for sale - suggesting many people are reluctant to move, thereby requiring no new Mortgage approvals. Thus if the downward trend continues of Mortgage approvals, it will have catastrophic consequences on the economic recovery as it further builds pressure on Housing Companies to build their NewBuilt Housing Stock. The only ray of hope is a strong Buy-to-let market with a very low mortgage interest rate making the residential investment market very attractive. This is one bright spot especially in London, South-East and University Towns across England & Wales. Source: BBC, Daily Mail, Financial Conduct Authority. Asian Voice & Gujarat Samachar

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A new way to generate tax free returns from the financial markets, and completely legally too! t was in early 2012 that the seedling of an idea was germinated between 2 ex-City professionals – former institutional fund manager and Chartered Financial Analyst Richard Jennings and ex public company CEO Angus Dent. Their idea was pretty simple – how to use the benefits of a spread betting structure but with the discipline of professional fund management in order to generate completely tax free returns for investors. Eighteen months of hard work and planning finally came to fruition when Titan Investment Partners, having received FCA approval, commenced trading in the summer of 2013. A new and unique boutique fund manager was born with an initial suite of four investment offerings run on a “fund” type basis – every investor however has their own account which replicates Titan’s model portfolios (and whose capital in the model funds comprises of the actual directors’ and fund managers own money – so ensuring true alignment with their investors). Unlike a traditional fund however, investors can see their positions in real time (but cannot trade on the account). The benefits of a spread betting account are multi-fold and well known – cheap borrowing capacity through the leverage facilities offered (which we’ll come back to as a double edged sword later) and that investors would be hard pressed to gain access to at the same rates elsewhere (generally Libor +/- 2.5%); the ability to go long and short of a financial instrument; access to thousands of tradable products globally; speedy execution and of course, no stamp duty or capital gains tax. With this in mind then, why do so many investors lose all their money within 12 months (anecdotal evidence reveal this figure is as large as 90%)? It is very simple and is wrapped up in the name – spread “betting”. The very vast majority of account holders view the account more akin to gambling than investing and so they take the “rope” of leverage (the double edged sword) and metaphorically hang themselves! Give an investor £10,000 to play with but with no leverage being applied at all and a minimum of 10 positions, and it is a very unlucky individual indeed that will lose all that money inside 1 year. Give him £10,000 and allow him to leverage it 10, 20 or even 30 times on just one trade however and the odds of total wipe out increase exponentially…

Asian Voice & Gujarat Samachar

Richard Jennings Director & Fund Manager, Titan Investment Partner

At Titan, the concept of spread betting is turned on its head. The portfolios are managed exactly as a fund manager would run an institutional fund rather than as highly levered “all or nothing” punts. Indeed, the Chief Fund Manager Richard Jennings was formerly responsible for managing over half a billion pounds at one of the UK’s largest local authority pension funds. It is the same principles of diversification, in-depth research and a seasoned trader’s gut that are applied to the management of the Titan portfolios. Leverage is capped on the equity component at two and a half times and even on currencies leverage of no more than 6 times is allowed. Contrast this with the 100+ times typical of most FX traders and the difference in approach is clear. As the company approaches its important one year track record anniversary, so far, what it says on the tin has been delivered. Titan’s flagship Global Macro account is up a stunning 131.12% against a benchmark return – the MSCI World Index (in constant $’s) - of 18.75% over the same period to the 31 May 2014 (from 1 July 2013). Considering that the average leverage that has been employed by the fund manager in this fund in achieving these returns is less than 2 times over this period and it is illustrative of how their predominantly asset allocation, value based approach that is borne of many years’ experience in the markets works. Remember, that for Titan’s investors in their funds, these returns have also been delivered totally tax free. One can see that the spread betting structure is actually the means to the end to generate the returns on a legal tax free basis and is far removed from traditional spread betting. The firm presently offers four distinct funds, all of which were seeded with the founders own capital Global Macro, Natural Resources, Precious Metals and Small Cap. All four funds have comfortably outperformed their benchmarks (based on figures to 31 May 2014) while offering fees that are also lower than the typical hedge fund – 1.25% annual fee and 20% of absolute returns (a typical hedge fund is 2% annual and 20% of absolute returns). The performance fee is also subject to a high watermark ensuring that investors only pay this fee on “incremental” returns. So, if on a risk scale spread betting is 10 (10 being the highest risk) and typical unleveraged equity fund management offerings are a 4, Titan’s funds would sit at around a 5 or 6. With the fund manager’s own capital being invested in the funds this ensures

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In summary then, Titan offers investors: real alignment with investors – something that is rarely l Tax efficient managed account structure the case in the world of investment management. l Active fund management approach Richard Jennings, Chief fund manager is quoted as “I l Fund manager and customer outcomes that are fail to see how many hedge funds can even dare to ask investors to put up capital backing them if they themdirectly aligned l Access to a wide range of asset classes selves are unwilling to show the faith in themselves”. l Hedge fund style management (Long / short posiWhen asked where the Titan’s funds would fit into a client’s portfolio, Jennings retort was – “Our funds are tions and leverage availability) l FCA & FSCS regulatory safeguards most suitable for those clients with an existing ball Competitive charges and performance related fee anced portfolio who have utilised their current year tax allowances such as ISA’s and pensions and whose structure. focus is on capital growth with a moderate to high risk Under current UK tax legislation profits realised by profile over a medium term timescale. We can’t guaranindividual UK taxpayers, through spread betting, are tee to deliver stellar returns month on month for clients free of tax. Past performance is not necessarily a guarand indeed such a short-termist approach is usually antee of future returns and Titan funds are higher risk than conventional unleveraged funds. folly in the markets but, we can guarantee to be laser For more details visit www.titanip.co.uk focused and totally aligned with our investors on generating absolute returns in all market conditions.” Each of the funds are benchmarked against appropriate indices to ensure a measurable test of real “alpha” being generated as opposed to pure luck. Jennings is also a strong believer in the cyclicality of the financial markets - a dynamic which is often driven by the rotational nature of the asset allocation process - something that the more nimble and fore sighted investors can take advantage of. A “closet index” investment approach is most certainly not applied by Titan. Reasoned, contrarian, value orientated and well researched asset allocation is at the heart of their model. The available leverage withThe only Indian non-life insurance company in the funds is also applied countto achieve over US $ 1.5 Billion Global Premium er-cyclically. That is, the cheaper Established in the UK in 1921, New India has operations in 27 countries across the globe. We an asset becomes, the more offer the market an A M Best "A-Excellent" financial security rating and a quality range of leverage is applied and vice versa, Commercial Products backed by Underwriting expertise to match, moulded to your needs. the dearer one is, the less leverage is used. This type of true conLook to New India Assurance for trarian investing takes skill and Care Sector Property Owners Business Combined also stringent risk control – something that the Titan mandates Hotel and Leisure Industry Wholesalers and Manufacturers impose on the fund manager with regards to position sizes and Facultative Property Reinsurance- Worldwide (From London Office) other important parameters. While the Titan Funds have The New India Assurance Co Ltd a predominantly long bias, the Wholly owned by the Government of India * Authorised and regulated by the Financial Services Authority mandates allow for the taking of For all of your general insurance needs, please call 0845 3000 988 or write to: short positions. These short positions are typically employef d as IPSWICH OFFICE LONDON OFFICE a hedge against long portfolio 3rd Floor, Crown House, 14 Fenchurch Avenue exposure with a view to protectIpswich, Suffolk, IP1 3HS London EC3M 5BS ing existing gains and limiting the Telephone:01473 233 626 Telephone: 020 7480 6626 effects of a market correction Fax: 01473 233 625 Fax: 020 7702 2736 however. Email: enquiries@newindia.co.uk Email: info@newindia.co.uk www.newindia.co.uk

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Editorial Index

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Topics ........................................................................Author Page No. Global Markets: You’ll be shocked what's making money ......................................................................................by Alpesh Patel 4 Avoiding pitfalls in Trading ..........................................by Rakesh Shah 7 Bitcoin, getting to grips with an Internet currency ......by Roger Aitken 9 What makes currency value fluctuate? ......................by Paresh Davdra 11 Crude oil price and its impact on fuel prices ..............by Ragu Dharmaratnam 12 Convenience stores- is it time to top up your portfolio? ......................................................................................by Nilesh Raj Patel 15 The changing risks in Asset Management ................by Rakesh Shah 17 Renewable Energy The way forward to counter Global Warming ......................................................................................by Samrat Bhandari 20 Auto enrolment is here - Key Employer Checklist ....by Bhavini Kalaria 22 Development and growth of Indian Banks in the UK by D. P. Trivedi 24 Why buy Gold? A Safe Haven ....................................by Oliver Temple 26 After they’ve gone - An accountants prospective ......by Kiran D. Patel 28 Annual Tax on Enveloped Dwellings (ATED) ............by Hirji Patel 30 Recent Mortgage approvals ......................................by Darshan Roy 31 A new way to generate tax free returns from the financial markets, and completely legally too! ..........................................by Richard Jennings 32

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Bank of Baroda......................................................................10-36 SME Euro Finance Ltd ..............................................................25 Zoom Finance Ltd ......................................................................14 Rational FX Ltd ..........................................................................23 Afro- Asian Insurance Services Ltd ..............................................8 New India Assurance Co Ltd......................................................33 John Cumming Ross Ltd ............................................................16 Advanced Wealth ......................................................................27 Punjab National Bank International Ltd......................................13 Market Financial Solutions Ltd ................................................6-35 Lall Ondhia ................................................................................34 Titan Investment Partners Ltd ..............................................18-19 Gold Investments Ltd ................................................................26 Foxmandal LLP ..........................................................................27 Secure Safe................................................................................21 Finance House Ltd ....................................................................23 Pride Management ....................................................................14 Weston Kay ................................................................................29 Proventus Renewables Plc ..........................................................2

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Disclaimer

The ideas and conclusions expressed in the articles are the author’s own and do not necessarily reflect the views of any particular company. They are for general interest only and should not be taken as investment advice or as an invitation to purchase or sell any specific financial product. The publishers of Finance, Banking and Insurance (FBI) magazine are not responsible for the individual views expressed by various authors in this publication and would like to direct readers to consult professional advisers or brokers if they require further information on any topic covered in this magazine. Some of the products, offers, opinions included in the articles and advertisements carry risk and readers should consider them at their own discretion.

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