With the close of 2024, we see the end of an historic year with elections in 50 countries. More than 2 billion voters went to the polls in countries including the United Kingdom, India, Mexico, South Africa & most recently the US. The world now eagerly awaits President Trump’s second term in office after an emphatic victory. Last time round it was hugely beneficial for the US market, this time round is unlikely to be much different – especially with his new bestie, Elon Musk, on hand.
This year has seen further unrest in Ukraine/Russia, conflict in the Middle East with Israel/Hezbollah, Israel/Hamas and the fall of Syrian dictator, Bashar al-Assad, a close ally to Russia and Iran. Putin will be desperate to negotiate a deal with Syria’s new rulers that will allow him to retain control over naval and air bases that are vital for Russian interests throughout Africa and the Middle East. This cannot be great news for Putin with President Trump’s inauguration mid-January. President Trump has spoken of ending the war in a day, this does seem unlikely, however it feels as though Putin’s hand is getting weaker.
Meanwhile in the UK, inflation is back on the rise and the thought of growth has well and truly ended. Sir Keir denies the Budget is to blame for the undertones increasing mortgage rates, he obviously doesn’t follow the 10-year Gilt yield. Sir Keir spent a lot of the election campaign blaming the Conservatives and demanding time for “change” – gilt yields at their worst under Liz Truss short premiership were a mere 1% lower than current levels. With the Prime Minister’s personal polling ratings tumbling from a +7 in the post-election honeymoon to -29 now, you could say it has been a volatile 6 months.
With an impressive election win in the US, President Trump has selected Elon Musk to not only form part of his cabinet, but to also spearhead the newly created Department of Government Efficiency or “DOGE”. This is remarkably similar name to his crypto coin DOGEcoin – just a coincidence, I am sure. With this in mind, we have increased our US exposure and one fund we have bought to gain from the Musk factor is Edinburgh Worldwide Investment Trust (EWI). Part of the Baillie Gifford stable who did particularly well during the last Trump administration. Their quartile performance over the last year has been much improved, helped by their c. 12% exposure to Space X. The investment trust invests in private and listed companies with a high US focus.
Space X I mention is currently private, a recent fund raise has valued the company at $350 billion. Similar to the Elon Musk controlled Tesla in the early years, Space X is the market leader in its field with limited competition. The company’s ability to fire a 200-ton booster into space and land the rocket above ground, essentially caught by two “chopsticks” protruding from its launch tower is rather impressive. If the company were to IPO, the euphoria around this would be beneficial to all holders. The Edinburgh Investment Trust trade at a small discount to net asset value with a moderate/moderate high-risk rating.
At the close of another chapter, it seems apt to wish everyone a very Happy Christmas season and a healthy and prosperous New Year. Bring on 2025 !
