The Business News Source

According to Investment news …

During the point of maximummarket turmoil earlier this month, the Daily Mail reassured us all. TheUK property market is not like the US market: there has been no boom inbuilding and so there will be no UK property market crisis, itsuggested.

And yet many, including the IMF, ABN Amro and Fitch, have warnedthat the UK is more vulnerable to a property market slowdown than theUS.

The Nationwide now predicts house price rises of 2 to 4 per centthis year, Home track is forecasting 1 to 2 per cent, and Rightmovepinpointed a 0.1 per cent fall in house prices in London.

The City suffers from financial turmoil. According to Challenger,Gray and Christmas – a consultancy firm – there have been 90,000 jobloses in financial services this year. We all know how reliant the UKis on business services these days, in fact the latest data from theOffice of National Statistics says this sector now makes up a third ofthe economy.

Recently the FT headlined that US sub prime problems could hit London property.

And then there’s buy to let. The FT has calculated that the averagegross on a property is now 5 per cent, but after costs such asmaintenance and voids, net yields are just 3.5 per cent.

This is significant for more than one reason. First it highlightsthe danger of buy to let landlords selling property and secondly themodest level of rent suggests the massive demand from immigrants forour homes is not as great as had been warned. Demand outstrippingsupply is supposed to mean house prices will carry on rising, but ifthis is so, why is rental inflation so modest?

The most telling data came from the Council of Mortgage Lenders.

Re-mortgaging lending has reached a new record for June - at £34.4bn it was 13 per cent up on a year earlier. And yet according to theBuilding Societies Association, mortgage approvals fell in July.

In other words, people are still using value tied up in theirproperty to fund their expenditure - maybe even their debt repayments.

This means the danger that demand will continue to be greater thansupply remains, inflation pressures remain, and the Bank of England maynot be able to lower rates after all.

But sooner or later, and sooner especially if the credit crunchspreads, people won’t be able to just keep on using high asset pricesas a way to prop up their spending.

Right now, the UK property market is in a great deal of danger, and as of now, this danger has been largely ignored.

By the end of last week HMV was being touted as the most shorted stock on the London Stock Market. The weekend news was full of gloom about the company. It seemed that HMV was, just like Superman, trapped and doomed - then we switch to the next week and suddenly - just like Superman the company bounds free in an instance. Whilst we may not fully be seeing the creation of a new superhero stock, certainly HMV seems to have bounded free in an instant.

Check the reports:

HMV Group has now sold its considerable interests in Japan, a move that pulls the retailer from an incredibly important music market.  According to deal terms revealed Tuesday, HMV is selling its 62-store footprint to Daiwa Securities Group and Sumitomo Mitsui Financial Group for ¥17 billion (£71 million, $144 million, €106 million).  The all-cash deal is expected to close by September, and will allow the beleaguered HMV to pay down debt and focus on core markets.   "The sale enables the group to focus on the markets where it has market-leading positions,” chief executive Simon Fox said.  "The proceeds will be used to pay down the group’s debt, which is an important step towards meeting our medium-term leverage targets."

and then

LONDON  - Music retailer HMV was on song Tuesday, helped by buoyant equity markets and company bosses picking up shares not far from all-time lows. Chief executive Simon Fox paid £198,000 for 183,233 shares at 108.23p each, taking his stake in the group to 249,194.  Meanwhile, non executive chairman Carl Symon forked out almost £27,000 for 25,000 at 107.5p a pop. He now owns 101,392 shares in total.

Execs investing in companies is always seen as a positive move by the markets - so perhaps there is more to Simon Fox’s turn around plan than the market initially thought.

and then …

An outlet of music and book retailer Fopp is set to reopen in the city after the chain was bought by HMV. The high street giant vowed to maintain Fopp’s "unique identity and trading culture" after it struck a deal to buy six stores, including one in Edinburgh.

Next we’ll be hearing that HMV are removing DRM from their download site. [they are].

The retail market is a tough place at the moment, even more so for record stores - let’s hope that Harry Potter sales can sprinkle some magic into HMV’s performance.