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Into the unknown


his is the 16th Finance Banking and Insurance event in the House of Parliament and a commemorative magazine. Finance banking and insurance are some of the most important fundamentals for the British economy, especially with its international reach. Shocking if not totally surprising result of the EU referendum has forced us all into the unknown. The time is full of crisis, yet Britain and the British have shown tremendous resilience under such mind boggling situations. For whatever reason, we as a country have to accept the challenges. British Asian businesses have in a way the unique strength and skills to survive such crisis. Over the last half a century, Asian businesses began as a trading activity, within the 'internal' market. It has now grown successfully beyond recognition. There is always a stress and strain of progress. Britain based Indian entrepreneurs, mainly concentrated in the South-East and predominantly in Greater London have some 30,000 medium to large size businesses. They have been well catered for also by the Indian Banks operating in this country. Equally Indian multinational corporations have a sizeable and increasing presence in Britain. If the whole country is caught up in such a turmoil, even with all its traditional strength and skills, Asian businesses will be affected. In the past 15 years our entrepreneurs involved in finance, banking and insurance sector have seen ups and downs- though not the self created challenges of the present day. But the spirit of entrepreneurship and the resilience as shown by our brethren when expelled from Uganda give us hopes and confidence that our entrepreneurs will handle this as the best as they could. Economic Secretary Harriet Baldwin is expected to be the Chief Guest at the event in the Parliament on 30th June. The Chancellor and his team are hyper active in the present situation. For the sake of the country, we wish that, as it has happened even in more dire circumstances before, Britons can override such a bumpy road. ABPL is grateful to all the sponsors, writers, supporters as well as well wishers along with many thousand readers which has enabled us to arrange an annual event, not only to meet and greet, but to nurture the entrepreneurship as well as to be inspired by the role models. With best wishes,

Yours sincerely

CB Patel Publisher/Editor

Asian Voice & Gujarat Samachar


4-5-Brexit.qxp_A4 Temp 27/06/2016 15:58 Page 4

Brexit could hit UK businesses, finances


By Anand Pillai

veryone knows where they were when they heard about Princess Diana’s death in a car crash in 1997 or for that matter Michael Jackson’s untimely demise from a heart attack in 2009 – the two most shocking news of the last two decades. Brexit too falls in the same league. But if Diana and Jacko’s death was a shocker, Brexit was an earthquake. Britain deciding to quit EU was the greatest shock in modern British political history and one that almost no one saw coming. It was a British decision, but a global temblor, the tremors of which will be felt not only in Britain but also in Europe and the wider world at large. On the day of the referendum verdict (June 24, 2016), Britain had renounced its most important international relationship (EU), lost a prime minister (David Cameron), saw the value of pound fall sharply and revived the prospect of the imminent break-up of the UK if Scotland goes for another independence referendum in future. It should hardly surprise anyone if the tearing up of the political map sends shockwaves through financial markets. Growth depends on market confidence. Markets hate uncertainty and the feeling among many economists now is that a bumpy road lies ahead for British business and economy.

headquartered in London to do business freely with the EU. Jamie Dimon, JPMorgan’s chief executive, claimed, according to a Financial Times report, that a Brexit could mean the loss of 4,000 UK-based jobs, a quarter of the bank’s staff in the country.


Farming could also be deeply affected by Brexit. Support payments from the EU’s common agricultural policy (Cap) made up 55% of UK farmers’ income in 2014. According to the National Farmers’ Union, “if support was removed overnight, many family farms in the UK would not be viable”.

Retailers and automotive suppliers

Trade barriers would impair exporters and companies with supply chains that rely on imports, such as retailers and automotive suppliers. Incidentally, the UK is the EU’s secondlargest market for new car purchases and a key base for car production.

Food and beverages

The food and beverages sectors could face import tariffs into the EU of up to 45% for dairy products.

Labour costs

Needless to say, if the free movement of workers from Europe is curtailed or banned, overall labour costs could rise.

Buying goods expensive

Some consequences of Brexit will take time to become apparent, but many of the implications are already becoming clear. So what does the Brexit vote mean for the businesses and finances in the UK? Certainly shareholders and regulators would want to know how companies plan to deal with this unexpected scenario. Although trading conditions won’t change immediately, financial market volatility and any slowdown could take a toll on the demand for companies’ products and services. For exporters and companies employing EU nationals, the changes could be substantial. Trading conditions will be too uncertain for British businesses to undertake new investments or for that matter hire new workers.

Financial services

Financial services may be affected if the terms of exit end the passporting rights that allow banks and other groups


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With the pound falling sharply, buying goods or services from other countries will become more expensive. Inflation will therefore be higher. Goods being sold to other countries will become cheaper for the buyers.


Before the vote the Treasury predicted Brexit would mean a rise of between 0.7% and 1.1% in borrowing costs (on top of what happens anyway), with the prime minister claiming the average cost of a mortgage could rise by up to £1,000 a year. A rise in interest rates would also affect those in rented accommodation, as costs for landlords would go up.

House prices

The Treasury has said house prices could be affected by between 10% and 18% over the next two years, compared to where they otherwise would have been. This would be good

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news for first-time buyers, but not so great for existing homeowners. The National Association of Estate Agents believes house prices in London could see the biggest change, losing up to £7,500 on average over the next three years, compared to where they otherwise would have been. Elsewhere, it said values could fall by £2,300. But since it expects prices to continue rising anyway, this means a slower rate of increase, rather than a fall in real values. And again, if the Bank of England were forced to cut rates, all these projections would be wrong.

Wages and Unemployment

Several experts have predicted that the economic shock of leaving the EU would cause unemployment to rise in the UK. That would reduce the pressure for wage growth. The Treasury estimated that wages will be between 2.8% and 4% lower at the point of maximum impact, with a typical worker at least £780 a year worse off. But as the UK will remain a member of the EU for at least another two years – predicting economic performance in two years’ time is certainly difficult.

Benefit payments

If you accept the argument that economic growth will be slower outside the EU – in the short term at least – the government’s income could also fall, leaving it with less money to spend. Estimates of the size of that possible shortfall vary between £28bn and £44bn by 2019-20. Since the welfare budget amounts to about 28% of all government spending, it is logical that it might see a significant proportion of cuts, further reducing the generosity of tax credits and benefit payments. A report by the National Institute of Social and Economic Research said some families could lose as much as £2,771 a year. In reality, the UK’s economic growth and potential budget shortfalls will very much depend on the precise nature of trade agreements, and whether the UK will be a member of the European Economic Area (EEA).

Investments and savings

During the campaign, the Treasury argued that UK shares would become less attractive to foreign investors should we leave the EU, and would therefore decline in value. In the longer term, this is by no means a certainty. Shares typically rise with company profits. Big exporters might benefit from the weaker pound, so the value of their shares might well rise, while importers might see profits squeezed. The big investment platform Hargreaves Lansdown has told its clients that it is impossible to know the long-term economic implications of Brexit. “We cannot assume an Out vote will be bad for the long-term prospects of the stock market,” it said.

Mobile phones

The cost of using a mobile phone in Europe could also rise. Both BT and Vodafone have said that EU caps to mobile roaming charges might no longer apply. But in reality it would be up to a future UK government to

decide whether to adopt the EU price restrictions or not. They are contained within a European regulation, not a directive, so they have not been incorporated into UK law.

Holidays and travel

A fall in the value of the pound will make holidays to the EU more expensive, as we will have to pay more for accommodation priced in euros. David Cameron had claimed that a holiday for four people for eight nights will cost £230 extra, as a result of sterling’s devaluation. However, the cost of flights would depend on individual airlines, and whether the base price is in pounds or euros. Both Easyjet and Ryanair have argued that flights will become more expensive, as a result of more restrictive aviation rules. But IAG, the owner of British Airways, has said a UK exit from the EU would not affect its business.


Crude oil is traded in dollars so if pound is weak the price we pay for petrol at the pumps will rise. If the pound rallies quickly and goes back to the value it was before the referendum verdict, then we are unlikely to see any difference in prices.

'Brexit not a disaster'

However, there is no need to panic or lose hope, according to British research consultancy Capital Economics. Capital Economics has circulated a note with the headline: “Brexit is not a disaster for the world economy.” Their broad takeaway is that there will be a lot of turmoil for Britain, but the country will ultimately adjust. It is highly probable that a favourable trade agreement would be reached after Brexit as there are advantages for both sides in continuing a close commercial arrangement. But the worst-case scenario, in which Britain faces tariffs under ‘most-favoured nation’ rules, is certainly no disaster. Exporters would face some additional costs, such as complying with the European Union’s rules of origin, if they were outside the single market. However, these factors would be an inconvenience rather than a major barrier to trade. As far as financial services are concerned, the City would probably be hurt in the short term, but it would not spell disaster. The City’s competitive advantage is founded on more than just unfettered access to the single market. A European Union exit would enable the UK to broker trade deals with emerging markets that could pay dividends for the financial services sector in the long run. Concerns about a drying up of foreign direct investment if Britain votes to leave the European Union are somewhat overblown. Access to the single market is not the only reason that firms invest in Britain. It is likely Britain would remain a haven for foreign direct investment flows even if it was outside of the European Union. Of course, we could see a period of weak foreign direct investment inflows as the United Kingdom’s new relationship is renegotiated. However, if Britain is able to obtain favourable terms, then foreign direct investment would probably recoup this lost ground. Asian Voice & Gujarat Samachar


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Impact of China on global markets


By Paresh Davdra, RationalFX

o understand what impact China’s economy has on global markets, I guess it would first be wise to understand China’s economy.

Since initiating market reforms in 1978, China has shifted from a centrally planned to a market-based economy, experiencing rapid economic and social development. In the past three decades, growth in China has averaged at nearly 10% per year, which is widely agreed to be unsustainable. China’s economy grew at its slowest pace in 25 years in 2015 – due to weak demand both at home and abroad, cooling investment and overcapacity, particularly in industries such as steel and coal. The main driver of China’s economic growth has previously been manufacturing activity – earning the country the label ‘the factory of the world’; however as foreign companies have relocated to cheaper manufacturing bases around Southeast Asia, factory activity has drastically slowed down. Over the past year, the Chinese economy has undergone a period of financial market volatility and economic slowdown. The Chinese economy grew by 6.9% in 2015, as opposed to 7.3% in 2014. Targets for this year have been set at the lower range of 6.5-7%. With a population of over 1.3 billion and GDP of $17.6 trillion, China has become the world’s second largest economy, as well as the second largest importer of both goods and commercial services, and increasingly plays an important and influential role. Despite this, China remains a developing country, with a per capita income still a fraction of that in more advanced countries. Previous rapid growth has brought on many challenges, such as high inequality and environmental instability. China also has an ageing population which adds to the pressure. Although China is experiencing a slowdown, it is still growing at a very healthy pace. As the Chinese Government attempts to stimulate activity and hit growth targets, debt levels are being driven up causing worries over dangers to the country’s banking systems – non-performing loans have hit 11 year highs. Corporate debt is still manageable, though it is high and rising fast – estimates say this has swelled to about 145% of GDP, and the IMF says that Beijing must act quickly to tackle corporate debt. Rising debt levels pose risks to long-term economic expansion.

So how has this slowdown affected world economies?

China’s previous surge in investment meant high levels of demand for industrial metals and energy, its own internal requirement meant more jobs, new businesses and of course growth. After the Beijing Olympics, however, China pulled the plug and the prices of these have declined sharply. The decline in the oil price is not just due to Chinese demand, as there has also been an oversupply of crude oil. China’s slowdown has been a factor, but the decline in commodity prices has certainly


Asian Voice & Gujarat Samachar

Paresh Davdra

impacted countries that export them. China is also such a large buyer of industrial commodities that the possibility of lower-thanexpected sales to the country has affected the prices of copper and aluminium. Global investors are now cooling on China – fearing growth may be weaker than official data suggests. It is unclear as to how accurate China’s economic statistics are. Some economists measure China’s financial health through looking at electricity consumption figures – the results of this show that the economy is growing but not as rapidly as official statistics show. Reliably quantifying the effects of China’s slowdown on the rest of the world is very challenging. The quality and availability of data complicates efforts to do so. Some economists estimate that a drop in China’s growth rate from 10% to around 6.3% expected this year could directly knock about 0.75% off the global growth rate. However, the spillover effects are much broader than this. Uncertainty about the global economy has also made the Federal Reserve more cautious when considering interest rate hikes. The Chinese economy’s performance forms a significant part of the Fed’s discussion. With pressure from the IMF to implement reforms with more urgency, China faces growing vulnerabilities. There are fewer buffers currently in place to deal with shocks.

What will China do next?

China is moving away from expanding on industrial output, exports and investment to an economy based more on Chinese consumer spending and growth of service industries. New Government policies are helping to move the economy in this direction. These new policies will favour household income growth, and support the expansion of the service sector and private enterprises. As disposable incomes rise, consumers will be in a position to buy more goods and services, which should encourage the expansion of new service business, for example financial services. The ageing population is affecting the pool of available labour, and companies will need to find new ways to innovate and increase productivity. The challenge is to develop new products that meet the demands of both domestic and the global markets.

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Commodities Investing, Outlook and Techniques for better investing


By Rakesh Shah, Kingly Capital

elcome to a world of highly volatile investments, where small changes in forecasts, weather, supply and demand, can create very significant swings in prices in a short period of time. At the same time, they present a good opportunity for making money because when they move, they can move very significantly. This also creates some serious problems for any investors and traders, who do not cut their losses quickly, or when stop losses are not in place and the commodity markets move unexpectedly (which they do on a frequent basis.) In this article I will explore 5 techniques to help working professionals, who wish to invest in the commodity market, but still have full time occupations elsewhere. Please also read my article on FX trading in conjunction with this. 1. Stick with the trend. But to do this, you must really understand what a trend is and know how establish when the trend changes. The trend can be judged by looking at a chart and establishing the high over the last two years to ten years and looking at the low of the market in the same time period and seeing where the market is today. The trend should be very obvious, if it is tricky or hard to read, stay clear of that market until it become very simple and easy to read. No rewards are given for guessing when investing. 2. Find important low points or high points in the markets and look to take simple trades that support the market at key levels. For example at the time of writing we can see that the wheat market was trading around the $460 level and there is a significant low at $430 level which was the low point in the market both in 2009 and 2010. The wheat market can be traded with most brokers using futures, CFD’s or spreadbets. It is known to be highly volatile and moves of $30 to $40 in one day are possible. Here we are predicting that the low of the 2009 move at $430 will hold and establishing a long (buy) position as close to this level as possible, with the objective to sell above $500 when taking profits.

Chart 1. (Saxobank.com) The wheat market moves from $1200 highs to below $500

3. Trading from low points gives the investor an advantage. Commodities are highly unlikely to go to zero (unlike stocks) so if you have a long term time horizon. You can trade a small positon

for a very long period of time with lower amount of risk. For example, if we look at the oil market. It has made significant moves from the highs around the $150 level in 2008 and $125 in 2011 and 2012 falling to below $30 earlier this year. Now I am not saying, these opportunities come around every month, but understanding, when the market sets itself up to give you the maximum advantage with a limited amount of risk is important. For a long term investor, buying oil at the $30 level is significantly less risky than buying oil at $50. The key here is to be monitoring the markets on a regular basis to spot these trends and opportunities.

Chart 2. (Saxobank.com) The oil market hits lows below $30 falling from $125

4. Whatever you feel is a sensible amount to trade, the advice I give to most investors and traders who are looking to improve profitability is to half the position size and double the stop loss. What I am saying here is that there is always the natural tendency to trade in position sizes that are too big. Investors almost always underestimate how much markets will move in the opposite direction before moving in the favoured direction and have stop loss points (the point at which you throw in the towel because your losses are too big). The way to deal with this is to double whatever you feel is the lowest point the market will go to before it turns. Consequently, it would be prudent to half your positon size (the amount of money invested in the trade), so that you are still risking the same amount. 5. Lastly, commodity trading is a profession, where the most successful investors succeed by have very long term time horizons. For example gold took over 10 years to rise from below $250 to above $1900 from 2001 to 2011. The key is to get on the trends early and ride them out for a long time, slowly adding to positons when a clear trend is established. Or to plan to buy and sell off key levels using a shorter term strategy, looking to pick points to enter and exit without adding. All too often investors get the two strategies mixed up, which is like running a decorating business and painting houses with a toothbrush. It can be done, but you will be destroyed you in the process. Be very clear with your strategy and risk management objectives and write everything out in a plan on paper before you start. Rakesh Shah is an Investor and an Asset Manager at Kingly Capital, working with HNWI’s and family offices based at 203 Buckingham Palace Rd. For more information please get in touch www.tenpointtrading.com . Asian Voice & Gujarat Samachar


8-Pride Group #255.qxp_A4 Temp 27/06/2016 17:54 Page 8

The Post-Brexit Commercial Property Investor's Checklist 2016, what a year it's been! First the tax grab on residential property and now Brexit. Commercial property has become the order of the day, as private investors avoid over-taxed buy-to-let property and volatile stock markets in their attempt to generate returns that sufficiently exceed the incessantly low Bank of England base rate. But our market is far from risk-free and in these uncertain times, one must stick to the fundamentals. Accordingly, I felt compelled to create this checklist, aimed at anyone trying to make a decision on a potential commercial property investment. You won't find a deal that ticks all these boxes – prioritise say six or seven that are most important to you and if ticked, do not let that deal slip away!

1. Location, Location, Location!

Regionally speaking, London’s where it’s at with its optimal demographic: a dense and affluent population. But even within London this varies widely, and out in the regions there are numerous, prime towns. The micro-location is perhaps more important – even the worst towns need some commercial property - if yours is on that corner, off that road or next to that station, it will rent all day long.

2. Tenure: Freehold / Virtual Freehold / Long Leasehold

Owning the Freehold means you sit on the top and have maximum control, now and forever. Whilst a 999 year Virtual Freehold is sufficient for a ‘dry’ investment, for many Freehold is still a must.

3. Tenant Strength: Blue-chip / Multiple / Independent

Tenants of PLC covenant strength comply with their leases and pay rent on time & in full. The rigorous analysis they conduct before signing a lease also breeds confidence. But the bigger they come, the harder they fall, so ensure you are satisfied with the nature of their business too, be that supermarkets, banks, pubs etc.

4. Unique Property Attributes

Everyone knows what to expect from a typical shop, but some have certain features which make them a cut above e.g. car parking, prominent frontage and best of all those that are purpose-built.

5. Sustainable Rent Level

A property let at a sustainable level is one that can be reviewed and re-let more easily, it will deliver long-term. Some investors prefer for rental growth to be written in stone via fixed or inflationlinked uplifts, but that this can lead to a property becoming overrented vis-à-vis market rents.


Asian Voice & Gujarat Samachar

6. Lease Length & No Breaks

Nilesh Raj Patel ACA

All investors like a long lease; unfortunately in the evolving retail market tenants don’t. As a rule, never look beyond a break clause, as for lending and investment purposes, the ‘term certain’ (the time until the break) is what matters. 10 years’ term certain is ideal, 15 years’ the gold standard.

7. No VAT

To be clear, buying a VAT property does not mean you pay VAT on the purchase price – there is a simple process to avoid that, which many buyers don’t get. But it does mean you must charge VAT on the rent (and account for it), which this may affect future tenant demand given not all tenants can charge VAT on their sales (e.g. Banks).

8. Upper Parts: Whole Building / Lock-Up

Most commercial properties come with upper parts, usually ancillary, office or residential accommodation. Generally it’s preferable to own the whole building, not just to diversify your income but in order to maintain control of it. In London many floors of flats won’t be affordable and a “lock-up” ground floor unit usually suffices as an investment given the strong tenant demand.

9. Value Add Opportunities

Some properties have potential that can be unlocked one day perhaps they sit on a large plot that could be developed or maybe part or all of the property could be converted to an alternative use. It’s always good to have a plan B should the tenant vacate.

10. Financeable

Lending is only really available for quality properties i.e. which tick many of the above boxes. But financeable properties offered for sale within a suitable timescale (ca. 6 weeks) will be accessible to more buyers and will be more expensive than those for the quick, cash buyers.

Taking all the above into account, the most important factor is the Price and therefore your Yield / Return. If you are getting something within your budget at market value, just satisfy yourself you are not buying at the top of the market - because it is cyclical. If it’s under-value, exchange ASAP and if it’s overvalue, it either ticks all your boxes or you really really must need to get your money working! If you want sight of some opportunities that tick most of these boxes or would like to discuss any of these areas in more detail, give me a call on 0203 113 2142 or email me at nilesh@pridemanagement.co.uk so I can understand your requirements and register you on our active investors mailing list.


Commercial Property Investments for Private Buyers Suite 4,Fountain House,Church Road,Stanmore,Middlesex,HA7 4AL T 0203 113 2142 E enquiries@prideviewproperties.co.uk Acquisitions





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Misconceptions of investing in bonds


By Ben Kumar, Seven Investments

onds are one of the major asset classes; they have been around in a similar form for nearly 500 years and the global bond market is nearly three times the size of the equity market. Yet it is equities that dominate popular thinking about investing, whilst bonds are seen as basically cash (when they’re thought of at all). You will hear the FTSE 100’s closing level on the news every evening, but it is a very rare occasion that the UK government bond yield is mentioned. At the same time, a large part of the population will have some exposure to bonds - most company pension funds have a dedicated (and sizeable) allocation. So, even if the exposure is unwitting, it is worth digging into the asset class a little, to try and understand how fixed income works. Below I’ve had a think about the most common issues we hear regarding bonds, and tried to clear up some of the misconceptions.

Bond returns are guaranteed

In a situation where the borrower remains solvent, the returns are guaranteed. Indeed, many investors view US and UK government bonds as

Bonds are complicated

As with most financial markets, there is a language used by bond investors that seems designed to confuse. Terms such as “duration,” ”convexity” and “option adjusted spread” mask the basic simplicity of a bond; if you buy one, you lend money and get paid some interest. At the end of the loan period, you get your money back. If you buy a government bond, you are lending to a country. If you buy a corporate bond, you are lending to a company. The interest you get paid is determined by how likely that country or company is to pay you back.

All bonds are the same

Bonds are pretty similar in terms of the structure described above. It is the characteristics of the underlying borrower that are more important for differentiation – for example, lending to the UK Government is almost certainly less risky than lending to say, Russia. This can be seen in the difference in interest paid on the bonds; the UK pays less than 0.5% to borrow for a year, whereas Russian borrowing costs are nearly 10%. Clearly, one of those is a safer investment, but you get paid a lot less in order to get that security.

Bonds are risk free

As should be obvious from above, there is a risk that the bond issuer goes bust, or refuses to pay back the bond. There is a second, more complicated risk related to interest rates. If the interest rate offered on cash rise, then the bond you own becomes relatively less valuable should you want to sell it on. Of course, if you are content to hold it, this doesn’t matter – you can happily collect your interest payment until the end of the bond’s life.


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Ben Kumar guaranteed, due to the unlikely situation of either nation going bust. However, while returns are guaranteed in the absolute sense (you collect your interest payment every year), the relative attractiveness may change if the prevailing interest rate does.

Bonds are no longer a good investment

There is a growing school of thought among investors that with interest rates in most developed markets at or near zero, bonds are becoming less and less valuable as an investment – due to the risk described above. This is predicated on the value of the bond if looking to sell it on and make a profit. However, as we have mentioned, if you hold a bond to maturity, you have a guaranteed, predictable income. For a large number of investors, this aspect is at least as important as potential “upside”. Large pension funds have consistent outflows as they pay out to retirees. As such, the knowledge that a payment will be made regularly gives them the ability to time their cash-flows over the next five, ten or twenty years. The idea of bonds being a “bad” investment depends entirely on the investors’ use of them.


Will we see bond issuance diminish over the next decade? Almost certainly not. Bonds are a great way for borrowers to raise money at a fixed cost, and for investors to purchase a stream of returns. While the returns may not be 100% guaranteed, and may lose value in a relative sense, this aspect of certainty is still likely to be more attractive than the equity market for more cautious investors.

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UK’s New Dawn Looks Set To Make Gold More Attractive


ritain has begun a new chapter following last week’s referendum. The UK is independent again following several decades of being part of the European Union. What will it mean for citizens? Will ‘Project Fear’ become true? We are entering uncharted and possibly turbulent times. It is still though very early days. Investors had already been nervous about the state of our economy since the beginning of the year. The gold prices reflected this with general increases in the precious metal over that time - although gold did fall back slightly when the Remain camp looked like it had the edge before polls opened last Thursday. By Friday, the price of gold had shot up by 11.6% in reaction to volatile stock markets. Mark Carney, Governor of the Bank of England, speaking on Friday, said: "Some market and economic volatility can be expected".

Gold Shining For New Investors

For first-time investors such as 45-year-old IT specialist Namit Kaur from Harrow, gold had already been looking particularly attractive this year. With the volatility of the markets following

of economic uncertainty. The markets do not like instability and that’s traditionally when gold has become attractive for investors. For someone like Namit, it could seem like a good time to invest now especially as gold prices have been increasing. But our advice would be to think of gold as more like an insurance policy. In other words for the medium to long-term rather than for the short-term. Gold prices can go up as well as down.” Mr Oliver Temple Temple said the build-up to the last week’s poll would have had a major impact on gold prices but there are also other factors at play too. “Of course Brexit will now be sending ripples through the world economy but gold has also been affected by crude oil prices, China’s slowing economy and the Greece bail-out situation. The US possible interest rate rise may have also had some bearing. Some analysts predicted that gold would have reacted sooner in 2015 but our view, which proved right, was that investors were waiting to see what would happen before buying into gold. This has now changed,” said Temple.

Major Investors Backing Gold

Temple says that major investors are now coming out and publicly backing gold. “When major investors such as Jim Cramer, who claimed in

Brexit, Namit and others like him, are now seriously looking at the yellow metal as a way of protecting their assets. “My family has always invested in gold - it’s part of our own tradition. I’ve two young children and for a while I wanted to buy gold as a nest egg for them. I’ve been watching closely gold prices generally increasing since January. I’ve waited until now before purchasing. With Brexit, it now makes sense to protect my portfolio with gold.”



Senior gold bullion dealer, Oliver Temple, from Gold Investments says that the climb in gold prices this year has prompted many to turn to the yellow metal, some for the first time. Temple, however, strikes a note of caution to those looking to buy and sell gold quickly on the back of Brexit. “Historically, gold has indeed always performed well in times Asian Voice & Gujarat Samachar

2005 to be worth between $50 to $100 million, say they are returning to gold, other investors will sit up and take notice. This will in turn have an effect on gold prices because of increased demand.”

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Temple advises investors like Namit not to make their portfolios entirely ‘full of gold’. Instead, the senior bullion dealer advises that the precious metal should make up no more than 15% of individual investment portfolios. “It’s also worth pointing out that we offer a wide range of gold coins and bars to suit different budgets – in other words the view that you have to be rich for buying gold is not true.” Temple also fears that un-reputable bullion dealers will flood the market which could put investors at serious risk. Temple offers this advice for choosing the right bullion dealer. 1) Make sure the dealer’s website is secure and starts with https 2) Does the dealer have a physical address? 3) How long have they been trading for? The longer the better. 4) What gold products do they sell? Are they the highest purity. 5) Is their storage secure? Can you see their facilities? 6) Can you sell back to the bullion dealer should you want to? 7) How easy do they make buying gold? On their website is it easy to use, can you check live prices? 8) Do you feel you can trust them? Do you know anything about them? Are they family-run, for instance? 9) When you contact them, are they approachable and knowledgeable? “I would also like to add that gold can also be used as part of Self-invested personal pensions and that Britannia and Sovereign gold coins are exempt from capital gains tax. For Namit, and other similar investors, we would advise that they talk to a reputable dealer such as Gold Investments before purchasing their gold. We also offer secure storage at the London Silver Vaults, Chancery Lane.” Namit says he will talk through his gold options with the team at Gold Investments. He said that he has so far been impressed with their website and their physical address, near to Bank, which has already given him confidence about the bullion dealer. “Gold Investments just seem to come across as so knowledgeable and the fact that they have been around for such a long time is another bonus.”

Gold Investments, Your Trusted Bullion Dealer

Trading since 1981 and with offices in the City, Gold Investments is the trusted gold bullion dealer. With continued economic instability, more people are choosing to protect their portfolios and self-invested personal pension (SIPP) by investing in physical gold. Gold Investments’ dealers offer friendly impartial and yet expert advice for buying gold, whatever size your budget is. The still family-run business also offers the ability to sell gold as well. With Gold Investments’ crisp and clear website, it’s never been easier to buy and sell gold online securely and with confidence.

Take a look now at their vast range of quality gold bars and gold coins – www.goldinvestments.co.uk Help secure your family’s future with quality gold bars and coins from one of the oldest bullion dealers in the UK – Gold Investments. To discuss your gold options, get in touch with Gold Investments’ knowledgeable team today: Email: info@goldinvestments.co.uk www.goldinvestments.co.uk (Case study for illustration purposes only.)

Trusted to buy and sell gold for over 30 years. Gold Investments is a family-owned business, which has been trading gold since 1981. Headed up by Mike Temple, who has over 50 years’ experience and knowledge in the investment markets, the business prides itself in offering a personal service to all its clients, both private and institutional. Moving forward with the Internet era, Gold Investments is the only bullion house who now offer the ability to buy and sell gold online with live prices via their website, backed up with the same professional service. You can have your gold delivered to you worldwide or collected from our City office. We also offer storage services in our bank vault.

For a no obligation chat or for more information, please contact our dealing team on:

Tel: 020 7283 7752 Fax: 020 7283 7754 Email: info@goldinvestments.co.uk

Join our Gold Club

www.goldinvestments.co.uk Connect with us online:

Asian Voice & Gujarat Samachar


14-Forex Trading.qxp_A4 Temp 27/06/2016 17:08 Page 14

Forex Trading For Capital Growth

Rakesh Shah

Chart 1. GBP/USD. The pound breaks out of the downtrend on Brexit day elections


Asian Voice & Gujarat Samachar

Here&Now-UnionBank.qxp_A4 Temp 23/06/2016 17:00 Page 1

16-17-Ragu Dharmaratnam.qxp_A4 Temp 27/06/2016 16:08 Page 16

Movement in currency rates and the GBP/USD forecast By Ragu Dharmaratnam, ACMA CGMA

Executive summary:

The exchange rate is one of the most important determinants of a country’s relative level of economic health. It is one of the most analysed, and viewed economic measures. It is not only important to governments, banks, hedge funds, import and export businesses but also vital to private individuals. In this article we will be addressing the currency pair relationships, the factors that affect their rate movements, the prediction of future rates and how the long term forecasts are determined.

World currencies and their nicknames:

Investors and traders often refer to currencies by nick names mainly for the ease of use, to give additional meaning, added value or the ability to memorise historical events. The GBP/USD currency pair is called “cable” since there was a cable under the Atlantic Ocean linking UK with USA which was used to synchronize the Pound with the Dollar by a telegraph. The U.S Dollar is called a “greenback” because of the paper notes issued during the American civil war in 1861, and those notes had a distinctive green colouring on the back. The Canadian Dollar is called a “loonie” as the one dollar coin carries an image of a bird called a loon that is a popular species in Canada. The New Zealand dollar is called a “Kiwi” as a bird called a kiwi represents the national symbol of New Zealand.

Factors affecting the exchange rates:

There are various factors responsible for movements in currency pairs and some of the important ones are listed below:

Differentials in interest rates:

A rise in interest rates in one country can offer investors a higher return, relative to other countries. This can make that country’s currency value rise as it becomes more attractive to investors. In theory Interest Rate Parity (IRPT) claims that the difference between the spot and the forward exchange rate is equal to the differential between interest rates available in the two countries.

Differences in inflation:

As a general guide, countries with high inflation rates have low currency values. This is explained by the Purchasing Power Parity Theory (PPPT), the expected future spot rate can be calculated by current spot rate and the inflation rates in both currency pairs. Australia’s inflation rate is currently higher than U.K, and this means the price of goods in Australia increases quicker than the U.K’s goods, so UK goods will be less competitive. Demand for


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Ragu Dharmaratnam

U.K exports will fall, and so there will be less demand for Sterling Pounds.

Government Debt:

Countries with large public debts are less attractive to foreign investors, due to fears of high inflation and the chance of defaulting. This will decrease the currency’s value. A government may print money to settle parts of a large debt, but increasing the money supply inevitably causes inflation.

Government intervention:

Central banks around the world influence exchange rates by buying or selling the domestic currency to stabilise it. In February 2016 the People’s bank of China intervened in the offshore Yuan market, raising the interest rates to prop up the weak currency. For the currency to become a real international currency like the US Dollar, Euro, Sterling Pound or Yen, it needs to be widely accessible and easily used as an investment currency. The PBOC’s actions in the offshore Yuan market will definitely slowdown that process.

Current account Deficits:

A deficit in the current account shows the country is spending more on foreign imports/trade than its own exports/trade. If the country is making up the deficit by borrowing capital from foreign sources, its currency will depreciate in value.

Predicting future exchange rate movements:

Both fundamental and Technical analysis can be used to predict or forecast future exchange rate movements. A fundamental

16-17-Ragu Dharmaratnam.qxp_A4 Temp 27/06/2016 16:08 Page 17

analysis means analysing the country’s inflation, trade balance, gross domestic product, growth in jobs and even their central bank’s benchmark interest rate. Technical analysis means employing models and trading rules based on price and volume transformations, such as the relative strength index, moving averages, regressions, inter-market and intra-market price correlations, business cycles, stock market cycles or, classically, through recognition of chart patterns.

Sterling Pound / US Dollar – future rates forecast based on technical analysis:

As you can see from the 50 year old history chart of GBP/USD most of the readers may remember the violent move we experienced during the 18 months credit crunch period 2007 to 2009. Cable exchange rate plummeted almost 7700 pips from 2.1200 to 1.3500.

At the time of writing, GBP/USD was trading around the 1.4500 mark and by the time you get to read this article, we would have known the outcome of the EU vote. In the meantime there will be high volatility in the movements of the exchange rates driving up to the referendum. Which way it will breakout depends on the outcome of the referendum vote, whether we stay in or not.


Based on various chart patterns 1.3500 is a very important support area for GBP/USD. This level has been a very strong long term support level for the past 30 years, We do not want to see Cable trading below 1.3500 level and if it breaks below then based on “head and shoulder chart pattern” and “support and resistance level” it may drop very quickly to 1.1500 and below. rge of La ance & l Refin entia rty Resid prope c r ial e m Com olio portf


Advising Companies and Private Clients

G Corporate Finance Solutions G Commercial Mortgages G Property Finance

G Development Finance

G Bridging Finance for Auction Purchases

G Residential Buy-to Let Mortgages for High Networth clients Mr Darshan Roy Director

M: 07961 022 448 Member of

For more information visit www.zoomfinanceltd.com Email: darshan@zoomfinanceltd.com We are Credit Brokers sourcing from whole of the market

Zoom Finance Ltd

9 Devonshire Square, 3rd Floor, London, EC2M 4YL

Zoom Finance Ltd is Authorised and Regulated by Financial Conduct Authority (Reference number: 663760) Registered office: 116A Rickmansworth Road, Watford, Hertfordshire WD18 7JG

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18-19-Alpesh.qxp_A4 Temp 27/06/2016 17:21 Page 18

Time to Buy British


By Alpesh Patel, Trader Mind

wenty years ago I wrote my first of 200 columns in the Financial Times and it began, ‘I am selling all my shares in UK companies and buying US ones’. Well after Brexit, that is now ‘I sold all my US holdings, including Apple, Amazon and Google and bought British banks and housebuilders’.

Why? They and the pound dropped so much that they were so cheap I expect a 50% return in 12 months if not sooner.

Whatever you think of Brexit – one thing is clear - £140 billion pounds was wiped off the value of British companies in an instant – that is more than 10 years of UK net contributions – and that is why I had dozens of people asking me to buy shares.

So here it is… Spread trading is tax free. But being tax free won’t make you rich. You first need to know how to make profits. As the person behind the award winning http://inter.tradermind.com and author of How to Win At Spreadbetting which analyses 10 years’ worth of individual traders’ trades to see the characteristics of the winners and losers – I know a thing or two about how to turn private investors into profitable ones. Indeed from initial

Alpesh Patel

1. They Pick Brokers Which Give Them Free Money

Trading is hard. The best traders pick brokers which are easy to navigate and give them free money, some as much as £10,000, to open and fund an account. This is why I for instance in setting up brokers http://etx.tradermind.com and http://inter.tradermind.com – made sure people got money from the broker for funding their account.

introduction to spread trading to profits of £100,000 has for some of my students taken only a couple of months. Of course it also helps I run my own asset management company and have been trading since age 12. So building on years of research, including from my time lecturing at Oxford University on how financial education can make you a better trader, these are the most important characteristics of private investors, like you, who become rich profitable traders: Before we begin, some basics. Spread trading is easy. You go to a website, like the one above, you open an account (takes about 5 minutes), you fund it (with as little as £1,000), you then buy something, say Apple, Vodafone, Lloyds, USD against GBP, for a certain profit for every point the price moves eg £1 for every penny Vodafone goes up. You can also just as easily bet £1 for every penny it falls. Of course the risk is you can lose more than your initial capital – so we need to know which traders get rich doing this and how do they do it?


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2. They make sure their profitable trades do not turn into losing trades

The best most profitable traders do not let profitable trades become losing ones. Once they have a profit of 1% of their total trading risk capital, they say, ‘I will exit one a worst case at the price I initially go into this trades, so now, I cannot lose money’.

3. They Add to Winning Positions

The richest traders will add to a winning trade. They say ‘every time each trade I have makes profit of 1% of my risk capital (eg £100) I will open a new trade to add to my existing winning position’.

4. They Have No Big Losing Positions

Rich traders make sure they never have big losing trades. What is the definition of ‘big’? They never lose more than 1% of their

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6. They Only Place a Trade Where Their Reward is Likely to Be Large

Now assume your win/loss ratio (how often you win to how often you lose) is 70:30 (you win 7 times out of 10) because you have a good strategy – more on that later). Now assume your average loss on a losing trade is the full £100. Assume, because you always set your potential reward target for a trade as part of your strategy as greater than your potential loss, let’s say you win £150 each time you win. That’s conservative, given your loss is £100 for a losing trade, so we are not assuming big profits. Now assume you place 100 trades. Therefore 70 will make profits of £150 each, which is £10,500; and 30 will make losses of £100 ie £3,000. Therefore over 100 trades, your net profit is £7,500. Now you need to find strategies to make 100 trades. If these are done over a week you are a day-trader, because you likely would be in front of your screen and not at work. But if you are a day-jobber (someone with a day job) then you probably only do 100 trades in a year. Let’s take the person who does 100 trades in a week. Over a year assume therefore 5,000 trades. Making a net £7,500 per 100 trades, that means £375,000 per annum – tax free. That is a plan to aim for.

7. They Know When They Will Be Wrong and So Exit At a Quick Small Loss

But can reading this article make you rich? Of course not, you need to be trained. I did an experiment with 25 traders over 100 trades before and after training (I’ll explain what kind of training shortly). All the traders after training increased their average profits they made in winning trades. All the traders also reduced the

total risk capital. If they think they are right, and the trade will return to profit, then they still exit, but re-enter when the price moves back above their original entry price. They would rather have some small losses, then their big profit, than have the risk of a big loss.

5. They reduce stress by having only 2 or 3 strategies

To make money trading you must know these things: 1- When to buy 2- When to sell 3- When to exit at a profit 4- When to exit at a loss The rich traders only followed a couple of strategies regularly and didn’t complicate matters with hundreds of strategies. For instance, ‘momentum’, ‘breakout’ and ‘pullback’ strategies were the most popular for their simplicity and profitability.

The richest traders would enter a trade only where they saw the likely reward is likely to be larger than the loss they could suffer if wrong. They may know this because of the trend in the price they see online, or positive news about the company.

The richest traders like small losses, because they hate big losses. They do this by looking at each trade and deciding ‘when will I know I am wrong, given I want to keep my losses small, I must know this quickly; is there some area the price could quickly hit which tells me my strategy has not worked?’

10. How to Get Rich Trading – Training Is Key

8. They Never Bet Too Large

Rich traders do not make big bets. You may be shocked to read this. But our research was clear and in line with the best hedge funds, including my own. They work out how much to bet by making sure they never lose more than 1% of their total risk capital. So if their total risk capital for all their trading is £10,000, then 1% is £100. They would place a bet of say £1 per point if they think that ‘I will know I am wrong and my strategy is not working if the price drops 100 points, since I must only lose £100, then my bet size should be £1 per point.’ The reason for this is that they know to be rich, you cannot suffer big losses along the way. In other words they were very well aware of risk.

9. Have a Business Plan for Profit

When I left practice as a Barrister to trade full-time one of the first calculations was to work out a plan of profit. For example: Let’s say your maximum loss on any trade will be 1% of your total capital. Let’s assume your total risk capital is £10,000. Therefore your maximum loss per trade is £100.

size of the average losses. All the traders, after my training, also increased their biggest winning trades too. We found that after training they also cut the number of big losing trades drastically. After training they also said that their confidence in having a good strategy increased, their stress levels dropped, their clarity on when to enter a trade and when to exit improved and they knew when to take profits and place a stop loss more clearly. Finding this research led me to establish a comprehensive trader training programme. We did this because the feedback from the richest traders was clear – video training showing winning trades was the best way for them to learn to trade profitably. My training can be found here: www.tradingchampions.com Good luck!

Asian Voice & Gujarat Samachar


20-Darshan Roy.qxp_A4 Temp 27/06/2016 16:10 Page 20

Commercial Property Finance New Beginning, Newer Options!


By Darshan Roy, Zoom Finance Ltd

am writing on the eve of BREXIT vote, but by the time you are reading this we all would have known where we are heading. It will take time for dust to settle & really study the impact of the success of BREXIT vote if it has happened, but even without the impact of BREXIT vote, the Residential Property Investment market, popularly known as Buy to Let Market has already witness seismic changes in recent time.

The changes include:

1 April 2013 - introduction of the annual tax on enveloped dwellings which seeks to tax certain property ownership, not just income and gains. 4 December 2014 - removal of the old slab system for stamp duty land tax (SDLT) on residential property. 6 April 2015 - extension to capital gains tax (CGT) for nonresident persons disposing of UK residential property. 1 April 2016 - 3% SDLT surcharge for second or further residential properties. 6 April 2016 - effective 8% CGT surcharge when disposing of residential property. 6 April 2017 - restriction on the tax relief available on the financing costs for a buy-to-let residential property. 6 April 2019 - accelerated CGT payments for residential property disposals. These above changes have made Investment in Commercial Property back in fashion. Investors have shown strong faith in acquisition of Commercial Properties in the recent Auctions. All Auction Houses have been doing roaring business and this is not only due to less attractive options available to Investors in Residential Buy to Let Market but also because on advent more financing options available in the Commercial Property Finance market. Further, financing Commercial Properties have now become a specialised business. Due to recent changes by Financial Conduct Authority (FCA), Commercial Finance Brokerage had to go thru rigorous and exacting standard to register for fresh certification process, thereby increasing the credibility of industry that the Commercial Finance Brokers operates. A lot of firms have lost their capability to introduce business to Lenders in absence of these certifications. All this has led to more reputation to broker led business in Commercial Property Market. Lenders have acknowledged that the quality of new business introduced has been high due to the recent changes at FCA & has affected the Commercial Finance Industry, favourably.

Commercial Property Finance is required in 2 instances (a) To buy or refinance a Property from where it trades. (Required by Entrepreneurs or Business Owners) (b) To buy or refinance a Property bought as an investment for Rental Yields. (Required by Property Investors) Each of the above has different criteria, be it Loan to Value (commonly called as LTV) Interest Rate Margin, etc. A good Commercial Finance Broker will help to


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navigate from the maze of lenders and their terms and conditions, called Financial Covenants. Market has expanded & different types of lenders have come in fray for lending in Commercial Property Market. 1. High Street Banks (Barclays Bank, Lloyds Bank, RBS, HSBC, Santander) 2. Private Banks (Handelsbanken, UBS, Investec, EFG & many more) Darshan Roy 3. Challenger Banks (Shawbrook Bank, Aldermore Bank, Metro Bank, Etc.) 4. Peer to Peer Lenders (Funding Circle, Rate Setter, LendInvest, Assetz Capital, Etc.) 5. Alternative Finance Lenders (Bridging Finance Companies, Property Funds & Specialised Development Finance Companies) There is a plethora of Bridging Finance Companies, Property Funds & Specialised Development Finance Companies that now operates in this market. Borrowers would be spoiled for choice! A borrower for commercial property has many options to choose for raising monies for their mortgages. Each of above Lenders has their own Risk Appetite, Sector Speciality, LTV, Interest Margin, and various other parameters that they operate from. A simple chart on 2 of the main criteria’s for borrowing amongst many are Loan to Value and Interest Rate Margins, This chart will help investors to know which type of Lender to approach for their borrowing needs.

The chart shows that compare to High Street Banks and Private Banks, the Challenger Banks and Peer- to Peer Lenders has a higher risk appetite on LTV but similar the borrower will end up paying higher Interest Margin. In case of Alternative Lenders they are the most expensive but take higher risk as well. The concept of Risk & Reward is clearly demonstrated by these lenders. This chart will help borrowers to make proper decision on choosing appropriate lenders to match their borrowing needs. The complexities of the borrowing needs can be address fittingly by selecting an astute Commercial Finance Brokerage who will help to select the correct lender.

21-Abolition Rakesh-1 .qxp_A4 Temp 27/06/2016 16:55 Page 21

Abolition of permanent non-UK domicile status for UK tax purposes


he new deemed domicile provisions will apply to all individuals who are UK resident from 6 April 2017, regardless of when they first commenced UK residence. The exception to this is the increase in the length of time for which previously UK domiciled individuals are deemed to be UK domiciled for inheritance tax purposes, which will apply to UK domiciled individuals who leave the UK after 5 April 2017.

The measure

The Chancellor has announced that non-UK domiciled individuals who have been UK resident for 15 of the previous 20 tax years will be deemed to be UK domiciled for all tax purposes (ie this will apply from the 16th consecutive year of UK residency). In addition, individuals who have a UK domicile at birth and subsequently become domiciled overseas will revert to being UK domiciled for tax purposes if they become UK tax resident. UK domiciled individuals who have been UK tax resident for at least 15 tax years and then emigrate from the UK and establish a domicile of choice overseas will be deemed to be UK domiciled for five years after departure, instead of three years under the existing rules.

from the eighth consecutive tax year of UK residency). b) £60,000 per annum for individuals who have been UK resident for 12 of the previous 14 tax years (i.e. it applies from the thirteenth consecutive tax year of UK residency). c) £90,000 per annum for individuals who have been UK resident for 17 of the previous 20 tax years (i.e. it applies from the eighteenth consecutive tax year of UK residency). The first two of the above remittance basis charges will remain. The £90,000 remittance basis charge is now obsolete and so will be abolished.

2. Inheritance tax

Under existing rules, non-UK domiciled individuals become UK domiciled for inheritance tax purposes once they have been UK resident for 17 out of 20 tax years (i.e. this applies from the 17th consecutive year of UK residency). Individuals who are domiciled (or deemed to be UK domiciled in the UK) for inheritance tax purposes are within the scope of UK inheritance tax on their

Who will be affected? There are two key aspects to this change:

1. Income tax and capital gains tax

This change will affect long-term UK residents with sufficiently high levels of foreign income and gains that they would have claimed the remittance basis of taxation, such that most foreign income and gains are only chargeable to the extent they are remitted, or brought into, the UK. All individuals who claim the

remittance basis of taxation lose their personal allowances and longer-term UK residents must also pay a remittance basis charge for each tax year they wish to claim the remittance basis of taxation. The remittance basis charges are currently: a) £30,000 per annum for individuals who have been UK resident for seven of the previous nine tax years (i.e. it applies

worldwide assets, whereas non-UK domiciled individuals are only within the scope of UK inheritance tax purposes on their UK situated assets. This change means that individuals will become deemed domicile for inheritance tax purposes a year earlier than would otherwise have been the case. In addition, under the existing rules individuals who are deemed to be UK domiciled for inheritance tax purposes, but who are not domiciled in the UK under general law, cease to be deemed UK domiciled for inheritance tax purposes once they are non-UK resident for at least four tax years. This will increase to more than five tax years following enactment of the proposals. Also, under existing provisions, UK domiciled individuals who emigrate from the UK and establish a new domicile of choice overseas remain UK domiciled for inheritance tax purposes for three years following their departure from the UK. Under the changes announced, individuals who have been UK resident for at least 15 tax years prior to departure from the UK will remain deemed UK domiciled for inheritance tax purposes for five years following departure from the UK (i.e. an increase of two years). Asian Voice & Gujarat Samachar


22-Kaushik Desai .qxp_A4 Temp 27/06/2016 16:11 Page 22

The Inheritance Tax - Residence Nil Rate Band (RNRB)


By Kaushik Desai, Chown Dewhurst LLP


t is a well-known fact that if the value of your estate, after reliefs like Business Property Relief, is more than £325,000 the Nil-Rate Band - Inheritance tax (IHT) is payable at 40% on the value of the assets exceeding £325,000. Successive governments have been conscious this is a tax on tax which means that any income which has suffered tax, say, at 40% will Kaushik Desai suffer a further tax of 40% on the balance of 60% which effectively means that for every £100 of income that is earned, on be transferred. In order to mitigate this, you must review the death your beneficiaries will receive £36 giving a marginal tax total assets between husband and wife such that the total value rate of 64%. of the combined estate on second death is less than £2 million – The Tory government has been at the forefront of trying to If the estate exceeds £2m or more, you should consider, eliminate effectively this double tax and have promised to raise depending on the circumstances, using the RNRB and possibly the Nil Rate Band but have been unable to do that because of the nil rate band on first death. political pressures. In fact the Nil Rate Band has been static The government is keen for people to downsize or who since April 2009 at £325,000 and has now been frozen at the have sold their property to move into residential care or to a same level until 5 April 2021. Instead of increasing the nil rate relative’ home and therefore the family home does not have to band, the government has introduced a new £175,000 per be owned at death to qualify. The RNRB will be available person transferable allowance for an individual’s main residence provided the property disposed of was owned by the individual if it is passed on to children (including adopted, foster step and would have qualified for RNRB had the individual retained it children or linear descendants) on death. In addition, the rules and the replacement property and or assets form part of the have been extended to accommodate situations where the estate and is passed on to the descendants. The downsizing or family home passes into the joint names of the deceased’s the disposal of the property has to take place after 8 July 2015. children and their spouses. However there is no time limits between the disposal and when The new Inheritance Tax Residence Nil Rate Band (RNRB) is death occurs. introduced with effect from April 2017 but is being phased over As with principal private residence relief for capital gains tax, four years such that the allowance will start at £100,000 and will only one residential property qualifies which your personal increase by £25,000 each year until 2020 (see table below). representative will need to nominate. These are the maximum Overall the RNRB is a welcome relief on amounts available so that if Maximum residence estates of £2m and less but does not solve the the value of the property is nil rate band problems of larger estates where with increasing less the available allowance house prices particularly in London and low rate is reduced. 2017-2018 £100,000 of investment returns, people need to retain a The RNRB is 2018-2019 £125,000 significant amount of assets to maintain their transferrable between lifestyles unless they have good pension spouses and civil partners 2019-2020 £150,000 arrangements. Where people have good pension on death in the same 2020-2021 £175,000 arrangements or have sufficient income to live, it manner as the standard Nil is always a good idea to consider giving assets Rate Band. It is the unused as for every £1m given away without a tax cost, assuming you percentage from the estate of the first spouse to die which can survive for at least 7 years, leaves your beneficiaries £400,000 be claimed on the death of the second spouse. So for example, better off. But don’t give away what you cannot afford as you if a mother dies and leaves her 50% share of the family home may not be able to get it back as your children may have spent it which is owned as tenants in common with her husband/civil or even worse the gift becomes part of a divorce settlement. partner to her son which is valued at £100,000 (her share) the On a final note, there is little point living on a tight budget as unused RNRB of the £75,000 may be transferred to her widower. you grow older and then the beneficiaries get taxed at 40% on This assumes that the value the estate was less than £2 million. some of your assets. If you have worked hard to build up your With assets transferring between husbands and wives assets, then you should consider enjoying them to the utmost without any immediate IHT consequences on first death, the knowing that for every £1,000 you spend, the tax man is a general thinking was to have cross-wills so that on the death of partner in your spending and contributes £400 of it as your the first spouse the assets transfer to the surviving spouse children will only get £600 if you saved the money and passed it without any IHT and worry about IHT on second death. However, to them assuming that your marginal rate of Inheritance tax is the RNRB is reduced by £1 for every £2 where the value of the 40%! And yes make sure you have a valid will which sets out deceased’s net-estate exceeds £2 million such that no RNRB is your wishes as to how your estate should be distributed! available where the net-value of the deceased’s estate exceeds Kaushik Desai is a principal in Chown Dewhurst LLP, a firm of £2.35 million in the year ended 5 April 2021 or £2.7m on the UK Independent and International Tax Advisers. death of the surviving spouse where the full RNRB is available to Asian Voice & Gujarat Samachar

23-24-25-UK Budget.qxp_A4 Temp 27/06/2016 17:02 Page 23

A quick snap shot of 2016 UK Budget Income tax and National Insurance contributions The personal allowance will increase to £11,500 and the higher rate threshold will rise to £45,000 for 2017/18. The National Insurance contribution (NIC) upper earnings limit will also increase to remain aligned with the higher rate threshold. Employment allowance – employing illegal workers One year’s employment allowance (worth up to £3,000 of NICs in 2016/17) will be removed from employers who are charged civil penalties by the Home Office for employing illegal workers from April 2018.

Property and trading allowances

From April 2017 there will be a new £1,000 allowance for property income and also a £1,000 allowance for trading income. Individuals with property income or trading income within this allowance will no longer need to declare or pay tax, and they can choose to pay tax on the excess income over the allowance rather than calculate their actual profit.

Termination payments

From April 2018, employment termination payments over £30,000 liable to income tax will also be subject to employers’ NICs. Restriction on landlords’ interest relief The phased restriction of tax relief on interest payments by residential property landlords will start in April 2017 as already legislated. Finance Bill 2016 will make some clarifications and amendments to ensure it operates as intended. So beneficiaries of deceased persons’ estates will be entitled to the basic rate tax reduction.

Employee benefits

Voluntary payrolling will be extended to non-cash vouchers and credit tokens from April 2017. Employers must use any specific statutory provisions for calculating the tax charge on benefitsinkind. The exemption for trivial benefits (usually up to £50) will be introduced as planned from April 2016, with a corresponding NIC exemption later in the year. The changes to travel and subsistence expenditure for workers engaged through an employment intermediary will be legislated as planned in Finance Bill 2016, but the government has decided after consultation not to make further changes.


Non-UK domiciled individuals who become deemed UK domiciled in April 2017 will be able to treat the cost base of their non-UK assets as being their market value on 6 April 2017. There will be transitional provisions for those who become deemed domiciled under the 15 out of 20 years rule. This is intended to provide certainty on how amounts remitted to the UK will be taxed.

A rights issue related to shares received on the exercise of an EMI share option will be treated in the same way as other rights issues for the purpose of identification. The new shares will be treated as acquired at the same time as the original shares.

Tax-free childcare

Tax-free childcare will be rolled out for children under age 12 from early 2017. The existing employer-supported childcare scheme will remain open to new entrants until April 2018.

Transport benefits

Fuel duty remains frozen, but the fuel and van benefit charge multipliers will rise by RPI in April 2017. CO2 emissions will remain the basis for the company car tax charge from 2020/21. There will be a consultation on reforming the bands for ultra-low emission vehicles (below 75g/km) to refocus incentives on the cleanest cars.


Lifetime ISA and ISA limit

A new Lifetime ISA will be available from April 2017 for adults aged under 40. There will be an annual contribution limit of £4,000 and savers will receive a 25% government bonus, i.e. £1,000 bonus for every £4,000 contributed. Funds, including the bonus, can be used to buy a first home at any time from 12 months after opening an account. They can be withdrawn tax free from age 60 for other purposes. The overall annual ISA subscription limit will be increased to £20,000 from 6 April 2017.

ISAs – tax advantages during the administration period

The ISA savings of a deceased person will continue to benefit from ISA tax advantages during the administration of their estate.

Help to Save

Individuals in low-income working households (e.g. those receiving Universal Credit) will be able to save up to £50 a month in a Help to Save account and receive a 50% government bonus after two years. Account holders can then choose to continue saving for a further two years’ bonus.

Pension flexibility

There will be a number of changes to the pension flexibility rules. saver Check that you and your partner have optimised your ownership of investment and savings. The new personal savings Asian Voice & Gujarat Samachar


23-24-25-UK Budget.qxp_A4 Temp 27/06/2016 16:18 Page 24

allowance and dividend allowance mean a new approach could be required. These include making lump sums payable on serious illhealth tax free before age 75 and taxable at the individual’s marginal rate when paid at age 75 or more. It will be possible to convert dependants’ flexi-access drawdown accounts to nominees’ accounts when dependants reach the age of 23, thereby avoiding a 45% lump sum tax charge. A trivial commutation lump sum payment will be allowed for defined contribution pensions in payment, where total pension savings would be under £30,000. Top-ups to fund dependants’ death benefits will be classed as authorised payments. Changes will also be made to the treatment of charity lump sum death benefits. The measures will take effect from the date of Royal Assent to Finance Bill 2016.

Automatic deduction of savings income tax

Open-ended investment companies, authorised unit trusts, investment trust companies and peer-to-peer loan platforms will be able to pay interest without deduction of income tax from April 2017.


Capital gains tax

The higher rate of capital gains tax (CGT) will be reduced from 28% to 20% and the lower rate will reduce from 18% to 10% with effect from 6 April 2016. The 28% and 18% rates will continue to apply to carried interests and to chargeable gains on residential property.

Entrepreneurs’ relief

Entrepreneurs’ relief will be available on a disposal of a privately held qualifying asset when the accompanying disposal of business assets is to a family member. This provision is backdated to disposals after 17 March 2015. This mitigates the effect of the Finance Act 2015 changes which adversely impacted on sales of a business to members of a claimant’s family under normal succession arrangements. Relief will also be available, subject to certain conditions, on gains on the goodwill of a business when that business is transferred to a company controlled by five or fewer persons or by its directors. This will be backdated to disposals after 2 December 2014. In some cases involving joint ventures and partnerships, it will be possible to claim relief even though the 5% minimum holding conditions are not met; this applies to disposals from 18 March 2015. The 10% rate of CGT will be extended to external investors who are not employees or officers of the company whose shares they acquire. The shares must be newly issued for new consideration, be in a trading company or holding company of a trading group, be issued after 16 March 2016, be held for at least three years from 6 April 2016, and be held continually for three years until disposal. This will be subject to a separate lifetime limit of £10 million of gains.

Employee shareholder status

An individual lifetime limit of £100,000 will be introduced for arrangements entered into after 16 March 2016 on gains eligible for CGT exemption through employee shareholder status.


Asian Voice & Gujarat Samachar

Stamp duty land tax

The extra 3% stamp duty land tax (SDLT) will apply to purchases of additional residential properties from 1 April 2016. Following consultation there will be no exemption from the higher rates for significant investors. Purchasers will have 36 months (rather than 18 months as originally proposed) to claim a refund of the higher rate if they buy a new main residence before disposing of their previous main residence.

Non-residential SDLT

The rates of SDLT on non-residential properties will be reformed from a slab to a banding system similar to that for residential properties. This takes effect from 17 March 2016 with transitional provisions for properties where contracts have already been exchanged. There will be a 0% rate up to £150,000, a 2% rate for the next £100,000, and a 5% rate above £250,000. A new 2% rate will apply to leasehold transactions with a net present value over £5 million.

Corporation tax


The corporation tax rate, which is currently 20% and due to fall to 19% in 2017, will be reduced to 17% from 1 April 2020. Corporation tax payment dates There will be a delay to the previously announced change to corporation tax payment dates for companies with taxable profits over £20 million. They will now apply to accounting periods starting on or after 1 April 2019.

Corporation tax loss relief

The current streaming rules will become more flexible. Losses arising on or after 1 April 2017 that are carried forward will be usable against profits from other income streams or the profits of other companies within a group. Also from 1 April 2017, companies will only be able to use losses carried forward against up to 50% of their profits above £5 million. For groups, the £5 million allowance will apply to the group. The proportion of a banking company’s annual taxable profit that can be offset by preApril 2015 carried-forward losses will reduce from 50% to 25% from 1 April 2016.

Capital allowances on cars

The 100% first year allowance (FYA) for businesses purchasing low emission cars will be extended for a further three years to April 2021. From April 2018 only cars with CO2 emissions of 50g/km will qualify for FYA (currently 75g/km). From the same date, the CO2 emission threshold for the main rate of capital allowances for cars will be reduced from 130g/km to 110g/km.

Addressing hybrid mismatches

From 1 January 2017 multinational enterprises will be prevented from avoiding tax through the use of certain cross-border business structures for finance transactions. Substantial shareholdings exemption The government will consult on possible reform of the substantial shareholdings exemption for corporate capital gains.

23-24-25-UK Budget.qxp_A4 Temp 27/06/2016 16:18 Page 25

National minimum wage

National minimum wage (NMR) rates will be amended in April each year to coincide with the uprating of the national living wage, starting from April 2017. The NMR rates for workers aged up to 24 and for apprentices will increase from October 2016 in line with the recommendations of the Low Pay Commission.

Business rates

From 1 April 2020 business rates in England will be uprated by reference to the CPI instead of the RPI. From 1 April 2017 small business rate relief (SBRR) will double and the SBRR threshold will be raised to rateable values of up to £12,000 tapering to £15,000. The government will aim to introduce more frequent revaluations of properties.


VAT registration and deregistration The VAT registration threshold will increase from £82,000 to £83,000, and the deregistration threshold will rise from £80,000 to £81,000, from 1 April 2016. VAT fraud The government will consult on a new penalty for participating in VAT fraud. To tackle online fraud in goods, HMRC will be given stronger powers to direct the appointment of a VAT representative and greater flexibility to seek security. HMRC will also be able to hold an online marketplace jointly and severally liable for the unpaid VAT of an overseas business that sells goods in the UK via the online marketplace’s website. The government will continue to engage with the EU and OECD to explore international solutions to VAT fraud.


Related party rules – partnerships and transfers of intangible assets The related party rules will be amended so that partnerships cannot be used in arrangements that seek to obtain intangible assets tax relief for their corporate members in ways that are contrary to the intention of the regime.

Loan relationships

The tax rules for company debt and derivative contracts will be updated to ensure they interact correctly with new accounting standards in various specific circumstances.

Tax evasion

The government will consult on new sanctions on those who repeatedly and deliberately participate in the ‘hidden economy’, including penalties and monitoring of repeat offenders. As previously announced, there will be a new criminal offence that removes the need to prove intent for the most serious cases of failing to declare offshore income and gains. Also as previously announced, civil penalties for deliberate offshore tax evasion will be increased. There will be a new penalty linked to the value of the asset on which tax was evaded. New civil penalties will apply to those who enable offshore tax evasion. There will be a new legal requirement to correct past offshore non-compliance within a defined period, with sanctions for those who fail to do so.

General anti-abuse rule

There will be a new penalty of 60% of the tax due to be charged in all cases successfully tackled under the general anti-abuse rule (GAAR). The GAAR procedure will be changed to improve its ability to counter marketed avoidance schemes.

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26-27-BOB Banking.qxp_A4 Temp 27/06/2016 17:05 Page 26

Difference between Indian banking and UK banking system T

hough this is very difficult to answer in short, stated in the article are some of the high-level differences.

1) Banking Regulation and Risk Appetite / Tolerance 2) Products offered by the Bank 3) Alternate delivery channels available to the end customer (Internet Only, Mobile, Branches) 4) The way Banking as a whole is conducted especially from a Retail Banking and Wealth Management perspective. Technology is leveraged but is not used directly to influence prospects - Loyalty, Cross-selling in the UK but in India that’s not the case yet. The Socio-economic conditions in both the regions are different and the opportunities available for the bank to cover the market are driven by this key factor apart from the Legal and Regulatory adherence. That said, the Banking governance is more mature in India than in the UK (in terms of how the banks conduct business and how they are governed). Each one has its own Pros & Cons and is not directly comparable. The predicament of the banks in the developed countries

owing to excessive leverage and lax regulatory system has time and again been compared with somewhat unscathed Indian Banking Sector. An attempt has been made to understand the general sentiment with regards to the performance, the challenges and the opportunities ahead for the Indian Banking Sector. The financial crisis has drawn attention to under-regulation of banks (mainly investment banks) in the developed world. However, the Indian story is quite different. Regulatory systems of Indian banks were rated better than China, Brazil, Russia, and UK; at par with Japan, Singapore and Hong Kong . In the past the Indian Regulatory system was seen below par the US and UK system, we see that post-financial crisis Indian Banks are more confident on the Indian Regulatory Framework. Over the last three decades, there has been a remarkable increase in the size, spread and scope of activities of banks in

India. The business profile of banks has transformed dramatically to include non-traditional activities like merchant banking, mutual funds, new financial services and products and the human resource development. As Indian financial markets mature over time, there is also a need for innovative instruments to deepen the market further. Suggestions ranged from micro saving and micro insurance initiatives, cash deposit machines, warehouse receipts, to prepaid cash cards, derivatives, interest rate futures and credit default swaps as a means to further the financial inclusion and expansionary process. Consolidation of operations continues to remain an important factor for Indian banks as they seek to improve their level of efficiency and correspondingly profitability. Consolidation in the banking industry has remained crucial to ensuring technological progress, excess retention capacity, emerging opportuniti es and deregulation of various functional and product restrictions. In the UK the growth in high risk trading of extremely complex financial products, including derivatives and options, and the increasing securitisation of assets, created what has widely been dubbed a shadow banking system, which increasingly operated outside of normal banking practices. Like all large businesses, banks are subject to regulation by the OFT and the Competition Commission. As early as 2001 the Competition Commission concluded that a number of the largest banks operated a complex monopoly in the supply of services to small and medium sized enterprises (SMEs) which resulted in reduced competition to the detriment of the customers. For example, customers were reluctant to switch banks because they all offered very similar benefits. Up until 2013, banking regulation in the UK involved three organisations - the Financial Services Authority (FSA), the Bank of England and the Treasury. Until the banking crisis, UK banking regulation could be described as light-touch - in other words, regulators do not engage in aggressive regulation, preferring to intervene only when necessary, and only in limited ways. The main problem for the regulators was that the heavytouch regulation might force global banks to seek out countries where regulations were less strict. In other words, they would move out of London, leading to huge job losses in the City. The main UK bank regulator is the Financial Services Authority (FSA). It has two main objectives: • To promote efficient and fair financial services. • To help consumers of financial services achieve a fair deal. To achieve this the FSA sets standards for the activities of banks and other financial businesses, and can take action to ensure these standards are met.

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Asian Voice & Gujarat Samachar

26-27-BOB Banking.qxp_A4 Temp 27/06/2016 16:16 Page 27

In order to protect depositors and to maintain financial stability, the Banking Act of 2009 gave those organisations responsible for banking regulation the collective powers to deal with the crisis in the banking system. One of these powers is the ability to put a failing bank under temporary public ownership. Since the financial crisis, the UK – along with the EU and US - has introduced measures designed to separate the risk-taking aspect of financial markets from the ordinary provision of financial services, as well as strengthen banking regulation. In the UK a new regulatory structure governing financial service provision came into effect in April 2013. Following the Financial Services Act (2012), the Financial Services Authority (FSA) ceased to exist, and two new regulatory authorities, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) were put in its place. The main objective of the PRA, which is part of the Bank of England, is to create a stable financial system for the UK. To help ensure stability, the PRA was given responsibility for the prudential regulation of around 1,700 financial institutions, including banks, building societies and credit unions – i.e. ‘deposit-takers’, insurers and large investment firms. The FCA, which is separate from the Bank of England, was given responsibility for ensuring that financial markets work effectively and that the conduct of firms in financial markets is acceptable, and meets the standards laid down in legislation. The FCA is, effectively, the watchdog that ensures competition is maintained, and that banks and other financial institutions do not abuse their dominant positions. The FCA is also responsible for the prudential regulation of financial services firms not supervised by the PRA, including asset managers. To help achieve the Bank of England's Financial Stability Objective and in support of the PRA, the Financial Policy Committee (FPC) exists to identify, monitor and take action to

remove or reduce ‘systemic risk’. The FPC can make recommendations and also give directions to the PRA and the FCA on actions that should be taken to remove or reduce risk. According to Citigroup, the UK had 25 bank branches per 100,000 adults, below the prevailing rates in southern European countries like Spain and France of 70 and 38 respectively but above the average of 17 in the Nordic countries where online banking is more advanced. About half of the UK's remaining branches may disappear in some years as people visit less frequently and increasingly bank online and lenders cut costs to increase profit. In developing nations like India, the stress is on Priority Sector Lending such as Agricultural and SME lending, therefore there is a lot of stress on creating bank branches to convert cash-based economies into banking economies. The majority of branches are opened in non-metropolitan locations, as lenders focused on expanding the reach in unbanked and under-banked regions.There is a need to improve the geographical reach in India. Hence, banks are trying to cover areas where they were not present earlier. Banks cannot service the rural population with alternate banking channels like mobile and internet banking so the banks ought to have physical presence. The Indian government's financial inclusion programme that aims to provide banking services across 625,000 villages has also led to the increase in numbers of rural and semi-urban branches.There are still about 300,000 villages in India that do not get banking services. Banks are expected to have presence across these villages in the next two and a half years. Hence, banks will continue to open more branches in these areas for the next few years. The Reserve Bank of India’s decision to relax the branch licensing norm had also aided their expansion.


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28-Suresh Vagjiani.qxp_A4 Temp 27/06/2016 16:19 Page 28

The Changing Terrain of BTL


By Suresh Vagjiani, Sow & Reap Ltd

ith the government's implementation of a new tax regime to be phased in from April 2017, the mortgage interest consequently can no longer be deducted from the rental income above the basic

rate of tax. If you are a basic rate payer this will make no difference, but if you are a high rate payer the implementation of this new assault on the property market could cause concern, to the point where many prominent property investors have chosen to offload their portfolio prior to implementation of the change. The reaction to this new raft of taxation has already been felt in the lending environment. Credit is vital to a typical property transaction. Pre-credit crunch only 15% deposit was required in order to purchase a BTL property. A lender called GMAC at the time even had a product which lent 89% of the property value, this too with an allowance of a 5% gifted deposit. This means in effect if the deal is structured the right way, you could purchase a property with only 6% deposit. Post-credit crunch the LTV has decreased to 75%, meaning you would need typically a quarter of the property value as a deposit. In-built within the mortgage product is something which is called a rental cover. This means on a BTL property the rental must be above the mortgage amount by a certain percentage. Typically up until recently this has been 125%, meaning if your mortgage payments are £1,000 per month the rental must be £1,250. If this criterion is not met the amount lent would be reduced accordingly. As property prices have increased massively since 2009, rents have struggled to keep pace with the capital growth, especially in London. Due to this the rental cover has steadily eroded the actual LTV required to purchase a property in London. This decrease in the amount being able to be borrowed has now been compounded by the implementation of the new proposed tax. Lenders have now increased the rental cover to a massive 145%. In locations like Mayfair or W1 this means you would need 2/3rd of the purchase price as a deposit due to the low rental yields. The increase in the deposits required for BTL properties will have the effect of slowing down the market. There has been a recent increase in stamp duty for BTL properties, but if the frequency of transactions decreases the amount of revenue collected by the government may actually come down.

What the Tax Changes Mean

l Tax Relief: As things stand, people buying to let can claim tax relief on their mortgage interest payments at their marginal rate of tax – so 40% relief


Asian Voice & Gujarat Samachar

for higher rate taxpayers and 45% for the most well-off. From April 2017 this will gradually be reduced to a flat rate of 20%, phased in over four years. A high street lender has recently estimated someone with a £150,000 buy-to-let mortgage, earning a rental income of £9,600 a year, will see their net profit fall from £2,160 to £960 a year. Once letting fees and voids are included, profits may disappear completely.

l Wear and Tear Allowance: Barely noticed in light of the cut in tax relief was the parallel cut Suresh Vagjiani in wear and tear allowances. Landlords will no longer automatically be able to deduct 10% of their rental profits as notional wear and tear, starting from April 2016. Previously, landlords could write off the 10% even if they had not spent any money repairing or replacing things for their tenants that year. From next April they will still be able to get tax relief, but only on costs they have actually incurred on replacing furnishings in their property. l Stamp Duty: In the autumn statement Chancellor George Osborne announced an extra 3% in stamp duty on purchases of buy-to-let and second homes, starting from April 2016. While owner-occupiers do not pay the tax on purchases up to £125,000, second-homebuyers will face a 3% bill. At each tier of stamp duty – £250,001, £925,001 and £1.5m – investors will pay the additional 3%, until above the final threshold they will pay 15%. On average, a buy-to-let property costed £184,000 last year, and the change will mean a bill of £6,700 instead of the current £1,180.

29-Pratik Dattani.qxp_A4 Temp 27/06/2016 16:19 Page 291

Indian economy is gathering pace faster than expected


Pratik Dattani, Director – UK, FICCI

he first week of June saw a fascinating panel discussion hosted by the City of London’s Advisory Council on India on the Modi government’s reform agenda.

Nasser Munjee, who is known for the creation and operation of large Indian financial institutions over a 27-year financial services career, made two astute observations in the content of assessing the tailwinds in the Indian economy. First, the distinction between growth statistics in the financial economy versus the real economy (say, credit growth versus growth in engine manufacturing). The second was the cumulative positive effect of small reforms. Let’s examine the impact of both on growth. Sales of fertilizers, steel, cement, engines and other key bellwethers of the manufacturing and real economy, fell in 2015. However, for the first time in Q4 2015-16, green shoots are being seen, with each of these sectors growing strongly. This is partly due a base effect (sales were so anaemic a year ago, current numbers look like they have been given a kick). But as Dr. A Didar Singh, Secretary General of industry body FICCI said, “The latest GDP numbers underscore that the economy is gathering pace at a much faster pace than anticipated”.

Indian manufacturing PMI, a key measure of manufacturing growth, still shows weakness. However, it is still performing better than in Indonesia, South Korea, China and Japan. Inflation has stabilised and the currency is also more stable now than in previous years. Elsewhere, credit card lending is at its highest for seven years, even as industry credit is at its lowest for eight. In terms of cumulative small reforms, while a lot has been written about the freeing up of the insurance and defence markets, as well as flagship government initiatives such as Make

Pratik Dattani

In India and Digital India, a lot of work has been done by the Modi government to reduce bottlenecks in the economy. The aim has been to improve the ease of doing business, partly by scrapping regulation, moving to a more transparent system of egovernance and cleaning up the banking system. With such reforms, a direct and immediate fillip into higher GDP growth is difficult because such reforms require patience. “The approach of the government has been to set the fundamentals right and a reform-to-transform approach”, according to Piyush Goyal at an Energy Technology and Investors’ meet in Singapore in May this year. Just as private investments have been slow, Nitin Gadkari’s public infrastructure spending has boosted the sales of engines, steel and the parts of the manufacturing supply chain. Industrial production growth is likely to rebound strongly in the coming years. A better monsoon that the previous two years means that, government forecasts agricultural growth to be 1.2% this year, up from zero or less earlier. According to the latest results from FICCI’s Economic Outlook Survey, leading economists expect the agriculture sector to grow even faster, with a median projected growth of 2.8% in 2016-17. Industrial growth is anticipated to grow by 7.1% in 2016-17, while services sector growth is estimated at 9.6%. As China slows, and India grows, India’s place at the top of the global growth rankings will solidify in the coming months. There are challenges remaining, but as FICCI’s President Harshvardhan Neotia commented in an interview in January this year, “Dil Mange More Reforms”. Asian Voice & Gujarat Samachar


30-Index page 30.qxp_A4 Temp 27/06/2016 17:14 Page 30

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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.

Editorial Index

Topics ................................................................................................Page No. Brexit could hit UK businesses, finances............................................ 4-5 Impact of China on global markets .................................................... 6 Commodities Investing, Outlook and Techniques for better investing 7 The Post-Brexit Commercial Property Investor's Checklist................ 8 Misconceptions of investing in bonds ................................................ 10 UK’s New Dawn Looks Set To Make Gold More Attractive .............. 12-13 Forex Trading For Capital Growth ...................................................... 14 16-17 Movement in currency rates and the GBP/USD forecast .................. Time to Buy British .............................................................................. 18-19 Commercial Property Finance - New Beginning, Newer Options! .... 20 The Inheritance Tax - Residence Nil Rate Band (RNRB) .................. 21 Abolition of permanent non-UK domicile status for UK tax purposes 22 A quick snap shot of 2016 UK Budget................................................ 23-25 Difference between Indian banking and UK banking system ............ 26-27 The Changing Terrain of BTL .............................................................. 28 29 Indian economy is gathering pace faster than expected ..................

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