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JUNE 2013


IN THIS SUPPLEMENT

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elcome to the first issue of our quarterly newsletter, designed to give up to date news and information in a short, easy read format. I would welcome feedback on what topics you would like to be covered in future issues and if you wish to be included in our direct mailing list, then please either call or email us. Regards,

Mark Hollingsworth, Director

FEATURES ■■

Sterling against the Euro

We are asked a lot to comment on currency FX and what we see ahead for sterling in particular ■■ Bank of Japan Shocks the Market The move by the Bank of Japan to stimulate the Japanese economy is affecting markets around the world

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Banks: Too Big to Fail?

Prior to 2008, banks took excessive risks and were then bailed out by the taxpayers ■■

eResidence Scheme

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Sound Bites

Natural Gas still seems as the markets “Sleeping Giant”


STERLING AGAINST THE EURO THE BATTLE CONTINUES IN 2013 We are asked a lot to comment on currency FX and what we see ahead for sterling in particular. So far this year sterling has fallen against the euro from the turn of the year at 1.22 dropping to 1.14 before Easter to be sitting now around the 1.18 mark. The value of these two currencies will vary depending on market confidence behind the strength or perceived weakness of the UK and European economies.

behind the economy and the currency itself. We would suggest caution during 2013 over which currency will prove the stronger and that any individual investing for income and looking for better returns should take practical, professional advice before making any decisions.

In Europe, economic confidence is low, interest rates have dropped again and comments from the European Central Bank suggesting that negative interest rates are not inconceivable in an aid to boost the Eurozone economy have seen the euro falter. In contrast a recent pick up in the UK economy has lessened the chance of further monetary easing and asset purchases in the near term by the Bank of England leading to strength

We will continue to update you in our regular feature on Foreign Currency.

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BANK OF JAPAN SHOCKS THE MARKET

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The move by the Bank of Japan to stimulate the Japanese economy is affecting markets around the world, sending bond yields lower in the US, the UK and in the Eurozone.

In essence, bond yields fall as bond prices rise, this also leads investors to look into buying stocks rather than bonds to enhance their return for their portfolio.

Broad market moves such as these are the latest evidence of

Economic stimulus is likely to continue to hurt bond yields

the powerful impact of a major central bank’ financial stimulus actions. The Bank shocked the investing community by rolling out a bond-buying programme. This continued stimulus has sent the price of Japanese bonds surging whilst at the same time having a negative impact on bond yields both in Japan and around the world.

during 2013 and therefore it is our view that investors should seek advice as to whether their portfolio if heavily weighted in bonds should be more diversified into the general stock market or funds which are non- correlated to the bond market.


BANKS:

TOO BIG TO FAIL? Prior to 2008 banks took excessive risks and were then bailed out by the taxpayer. As their profits were privatised, their losses were nationalized and public anger was at it’s height. It is now time to realise that should this happen again then banks must be allowed to fail. Currently EU finance ministers are debating a so-called industry wide “resolution fund” which is bank funded to the

tune of €100 bn. If this money is set aside for this fund then these funds are no longer available for borrowing.

In economic growth terms the availability of money for borrowing, in particular for small business and homeowners boosts the economy if these big banks have to set aside money for this resolution fund then money is not readily available. In essence an economy is strangled by poor money supply. There is much support from the new Bank Recovery and Resolution Directive including a new “bail-in” initiative which requires each bank to have a “resolution fund” within it’s company and that in future bank failure costs would be borne by the shareholders and creditors of any failed bank and not by the taxpayer. There will be much more information available in the coming months on this subject which we at Hollingsworth International will inform you about.

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eResidence Cards eResidence Cards are a new form of documentation covering all types of residency status. This update is effective from May 2013. The Department of Citizenship and Expatriate Affairs is no longer giving new appointments for the processing of documentation even if an application was submitted with no appointment allocated. EU/EEA/Swiss Nationals now have options to process their paperwork, by either going personally to the DCEA or through the post. Documentation requirements for EU/EEA/Swiss nationals If you already hold a Registration Certificate you need only to provide the appropriate application form, certified copy of your Registration Certificate + Form ID1A, +ID2 and two passport photos duly

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certified. Original Registration Certificate and existing IDs will have to be handed in when you collect your eResidence Card. If you are applying tor the first time, you have to provide all the documents listed on the appropriate application form + ID1A and Electoral Form. If you elect to process by post, you also have to complete ID2, provide 2 passport photographs and have all your copy documentation and photographs certified. Postal applications should be addressed to: Director of Citizenship and Expatriate Affairs, Department for Citizenship and Expatriate Affairs, 3 Castille Place, Valletta VLT2000. Tel: 22001800. Email: eresidence@gov.mt. Open Monday to Thursday 08.30 –15.30. We will provide additional information on this subject should it become available.


SOUND BITES A

report from the Royal Institute of Chartered Surveyors has suggested an upward trend in UK house prices for the first time in 3 years.

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urozone crisis: Bailout cash finally agreed for Greece and Cyprus, EU Finance ministers confirm that first tranche of €3bn for Cyprus and the next installment of the Greek deal.

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ew data suggests that the UK managed to avoid a double-dip recession.

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atural gas still seen as the markets “sleeping giant”.

avers turning to overseas equity funds to boost their income in retirement. Major players including Jupiter, Newton and M&G now have Global Income Funds available.

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ontinued turbulence in Gold markets as prices bounce back in April after a six month period of downturn. Price per troy ounce now around $1,420 still well down on the all time high of $1,920 from September 2011.

NATURAL GAS STILL SEEN AS THE MARKETS “SLEEPING GIANT”.

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CURRENT PRODUCTS AVAILABLE IN JUNE

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1 Year Income Products linked to Oil Companies paying 8% per annum 3 Year Phoenix Note linked to Luxury Products, paying 9% per annum 5 Year Autocall linked to Global Indices, maximum return up to 50% over term

CONTACT US

HOLLINGSWORTH INTERNATIONAL FINANCIAL SERVICES LTD Office 22, Regent House Bisazza Street, Sliema SLM1641, Malta T + 356 213298 info@hollingsworth-int.com www.hollingsworth.eu.com

Hollingsworth International licensed by the MFSA to provide Investment Services, Registration Number C32457. Past performance is no guide to the future and the price of your investment and the currency in which it is denominated may fall as rise. Your personal tax situation will depend upon residence. Always consult a professional adviser before making any investment decisions. Call us on 21316289 or email info@hollingsworth-int.com and ask for a prospectus on our products.

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Issue 1 - June 2013