UK Stockmarket 2009 and beyond

Thrugelmir

StevieJ wrote: »

What do those pension liabilities mean? I know for example that Shell have more than 100% fully funded pension scheme.

Is that both in the Uk and the Netherlands?

StevieJ

Thrugelmir wrote: »

Is that both in the Uk and the Netherlands?

After a little investigation I found a hard copy of a webcast and also the report above.

1. Q: There have been several media/website reports during the past year or so on the SCPF deficit, ranging from 8 to 11 billion USD (Reuters articles). Other reports say that the ‘Dutch’ pension fund has received substantial company support. Can you explain how the SCPF operates it funding assessment; either as a national fund or as a global arrangement, as it is difficult to follow such media reports?

A: These questions are probably referring to some press articles around the time of the release of a consultant’s report in July, which analysed the pension position for FTSE 100 companies for end 2008.

Firstly, and most importantly, the numbers referred to are the position for the whole of Royal Dutch Shell plc, and so include the UK pension fund (SCPF) and the defined benefit pension funds in the Netherlands, the US, Australia, Canada etc and also some unfunded liabilities. It is important to note that all the pension funds are separate legal entities and the SCPF assets are securely ring-fenced and cannot be used to fund deficits in other Shell pension funds. Despite the crisis in the financial markets, the UK pension fund is still in a small surplus as you’ve heard during the presentation, but other Shell pension funds have not been as fortunate. However the company remains in a strong position and committed to all the pension funds, and has recently put more money into some of the underfunded Shell pension funds. Also note that the position for most companies’ pension funds is likely to have improved since end 2008 due to the rebound in many financial markets (e.g. equities and certain fixed income markets) during 2009.

The SCPF funding position compares very well to other pension funds in the UK – the same consultant’s report showed that most UK plcs have funds in deficit

www-static.shell.com/static/gbr/.../pensions/reports/spt_webcast_qanda_1.doc

Just found this as well, so it looks like the Dutch pension fund is also in surplus, as at end of 2009 - 121%, so looks like the Shell overall pension fund is likely back in surplus.

The scheme reported 2009 results today, showing a recovery that was almost as steep as its losses the year before. Shell's in-house investment operation, Shell Asset Management Company, achieved its best returns for a decade - 26% - and the pension scheme reported a funding level of 121% at the end of the year.

http://www.efinancialnews.com/story/2010-04-13/shell-dutch-fund-chairman-risk

sabretoothtigger

Shell is far larger then BT so its more justified like you say. BT owes payout to employees in future more then four times the total value of company today which would appear to be very unbalanced and unlikely to be honoured.

Im sure theres more detail to it but it must come off the profits unless their pension trust rapidly catches up, I presume this means they are short 40bn

BP owes 20bn and had to cancel its dividend, with less fanfare this is similar for bt?

blinko wrote: »

isnt india banking on a rainy season though to put pressure on increasing food prices, they have raised rates to try and combat booming food prices/inflation,

my FSTE 5700 close on Friday seems to be holding, i think weds and thurs will be sideways and a mini rally on Friday

GCM and CKP on the move, SEY took a big hit
MATD on the move too and PELE backtracked no idea why

India I cant be sure, I think stocks have high PE but with high growth this can be justified.
If rupee is strong they will export inflation more rather then suffer from it completely internally as is the usual for them (uk rice price will rise)



FTSE and usa today was a topping day for me. If you were rabid with bearishness it certainly could look negative but its a rest point either way.
It was like a sell on news event I think. Fed rates, etc & market roughly dropped. One trader calls it fatigue

The dollar is weak, has been and looks to continue so how can anything dollar priced fall.


Weak western currency is why I went ahead with investec emerging debt. This roughly replaces the india fund, should be better value.

Its really to replace Artemis balance fund but I havent cashed this in yet as its still could go up with the market I think but I wanted something a bit more different then ftse 100 shares. I own them anyway

I sold a bit of pacific tracker. Held some of this over 2 years now. I might move it into global tech, its cheaper?



I saw SEY got beat up, was that overdone or is it really that bad. They are carrying on drilling anyway right. price looks to be near 2009 lows


http://www.youtube.com/watch?v=l7iyM_6T5yE&feature=player_embedded

Nikkei futures market has been a great guide to SPY movements and general bearishness for the moment. Yen stabilises movements ?
http://img823.imageshack.us/img823/4114/img12850979609604801945.gif

Ceiling, limit or rest? http://img801.imageshack.us/img801/5761/img12851028691177288024.gif

StevieJ

sabretoothtigger wrote: »

Shell is far larger then BT so its more justified like you say. BT owes payout to employees in future more then four times the total value of company today which would appear to be very unbalanced and unlikely to be honoured.

Im sure theres more detail to it but it must come off the profits unless their pension trust rapidly catches up, I presume this means they are short 40bn

BP owes 20bn and had to cancel its dividend, with less fanfare this is similar for bt?

I think we are missing something here, the BT pension fund was 88% funded at the end of June 2009, with the recovery in the markets it would not be a surprise if it was now 100% funded (as I think Shell is). Your figures appear to show the liabilities but not the funds built up to finance those liabilities, althought with BT if there was a shortfall the govt would cover it anyway.

The bt funding deficit was,

BT (3,973) 88% ie only around 12% of that 40+ billion you stated above was unfunded.

sabretoothtigger

They been private long enough to bear the burden I thought. Yes I think its not showing everything, I didnt save the original article sorry.
Potential liability, I dont think it can be quite this bad as people are still paying into it. A growing company will maintain a pyramid cashflow


Also the old pensions were on nicer terms, fixed to final pay. These new ones including uk basic pension will be eroded by inflation and will not keep up with wages

http://www.guardian.co.uk/money/2010/may/19/ftse-firms-pension-deficits


FOMC, FED, QE, Dollars and all that voodoo

Breaking News

Fed ready to aid US economy
The Federal Reserve took no action at its September meeting but sent a signal that it may soon restart large purchases of Treasury bonds by changing its policy statement.

After its meeting on Tuesday, the rate-setting Federal Open Market Committee said that it “will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”

http://link.ft.com/r/5F39HH/26Y1LX/NFIEB/UUMESO/LQUOP3/W1/h?a1=2010&a2=9&a3=21

StevieJ

sabretoothtigger wrote: »

They been private long enough to bear the burden I thought. Yes I think its not showing everything, I didnt save the original article sorry.
Potential liability, I dont think it can be quite this bad as people are still paying into it. A growing company will maintain a pyramid cashflow

I cannot see the point of referring to liabilities, what surely matters is Surplus/Deficit i.e. the net of funding and liabilities, it says that Shell has liabilities of £39billion, so what, it has funding of over £40 billion. BTW the BT pension fund is guaranteed by the UK govt, at least for the oldies.

blinko

FTSE close

5551.91
-24.28
-0.44

i need 75 tomorrow and 75 friday please for my 5700

worldtraveller

This latest FTSE bull run, like the last, is totally irrational IMHO. Then again, if the market was rational, we would all be millionaires, wouldn't we Rodders! Just sold even more equities into cash today and still awaiting the correction and start of equity buy back around 4600 later in the year.

That said, short term, I'm also jumping in and out of my favorite punt, FXP (ProShares UltraShort FTSE/Xinhua China 25), as the range bound markets dictate.

blinko

worldtraveller wrote: »

This latest FTSE bull run, like the last, is totally irrational IMHO. Then again, if the market was rational, we would all be millionaires, wouldn't we Rodders! Just sold even more equities into cash today and still awaiting the correction and start of equity buy back around 4600 later in the year.

That said, short term, I'm also jumping in and out of my favorite punt, FXP (ProShares UltraShort FTSE/Xinhua China 25), as the range bound markets dictate.

why is it irrational,

worldtraveller

blinko wrote: »

why is it irrational,

How long have you got? In a nutshell, basically because, IMHO, any recent growth in most of the worlds economies is largely false, based on stimulus plans and other Government interventions. The massive sovereign debt issues in the EU have not gone away. The U.S. economy is still a basket case. Many companies in the FTSE, and other worldwide markets showing any improvements in their profit figures is largely down to aggresive cost cutting, not improved revenues. That can't continue of course beyond the short term. These are just a few reasons why I see the bull run as irrational and the market being way ahead of the level it should be at realistically.