Brian Tora column

It is hard to see the Government intervening to keep utility prices down. This would be artificial

I WENT sailing in the English Channel last weekend. The weather was hardly conducive to the type of gentle sea-born trip which I seek. Rolling waves thundered on to the shore, driven by the south-westerly wind. Venturing into the forecabin to retrieve a pair of waterproof trousers gave me such an up-and-down experience that I was put off my food for the rest of the day.

The stock market has had much the same effect this week.

A 200 point shift in prices is nothing these days. With still more gloom from the Far East, Wall Street had a seriously nervous day at the start of the week, only to have the position reversed when US Treasury Secretary, Robert Rubin announced a support package for the Yen.

Our own market merely trailed in the wake, taking quite a buffeting as a consequence. I know how it felt. We have seen some retrenchment, with the markets proving even more unforgiving than usual when companies err.

Yet after a set-back, prices can rally at the slightest excuse, demonstrating just how much liquidity has been building up and proving that not only can "pinstripe sheep" appear an accurate epithet for institutional fund managers, but that the risks of being out of line with the rest of the crowd has not been worth a candle.

Recent pension fund management statistics have shown many of the big houses under-performing their smaller rivals. This appears due in no small part to the cautious approach taken by a number of firms -1,000 points or more lower on the FTSE-100 index.

If you are managing tens of billions of pounds of pension fund money it is quite difficult to turn on a sixpence. The beneficiaries have been the index fund managers, like Barclays, but I remain concerned that these products have yet to be tested in a real bear market.

Meanwhile, we are faced with the dilemma of where to invest money. Moreover, problems in Asia and the emerging economies remain - and are perversely driving money into our own and other developed markets.

Last week, I wondered whether utilities would prove quite the defensive sector they have in the past. Since then it seems they have done nothing but hog the headlines. Electricity, in particular, has come in for considerable publicity, with further speculation on the Government's stance towards gas fired power stations and the regulator calling for more competition in power generation.

As with so many investments, good arguments exist on both sides. Utilities offer high yields and less demanding share valuations than elsewhere. On the other hand, they are subject to regulatory interference and could have a conflict between customers and shareholders - or so the consumers associations would have you believe.

In practice it is hard to see the Government intervening to force prices down. Such a move would be artificial, with the result that price rises might be needed later - perhaps just ahead of a general election. There are other issues - such as how to keep capital expenditure up for the water companies and to accelerate the restructuring of the electricity industry.

I am inclined to add utilities to the list of defensive sectors I believe private investors should conside it. United Utilities gives you a taste of both - with a high yield to boot. But there are others worth considering. Even Scottish Hydro, which must be worried about its pounds 200m planned investment in the gas-fired power station at Peterhead, has its attractions. One thing you can say for privatisation - it has sharpened up management. And good management is often the best reason for choosing a share.

Brian Tora is chairman of the Greig Middleton investment strategy committee

News
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
artCultural relations between Sydney and Melbourne soured by row over milk crate art instillation
News
A scene from the video shows students mock rioting
newsEnd-of-year leaver's YouTube film features playground gun massacre
News
Two giraffes pictured on Garsfontein Road, Centurion, South Africa.
i100
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
ebookA wonderful selection of salads, starters and mains featuring venison, grouse and other game
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
Travel
travel
News
Kenny Ireland, pictured in 2010.
peopleBenidorm, actor was just 68
Arts and Entertainment
Adèle Exarchopoulos and Léa Seydoux play teeneage lovers in the French erotic drama 'Blue Is The Warmest Colour' - The survey found four times as many women admitting to same-sex experiences than 20 years ago
arts + entsBlue Is The Warmest Colour, Bojack Horseman and Hobbit on the way
News
i100
Arts and Entertainment
arts + ents
News
people
News
Morrissey pictured in 2013
people
News
i100
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
News
i100This Instagram photo does not prove Russian army is in Ukraine
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Hydraulic Power Pack Design Engineer

    competitive: Progressive Recruitment: I recruit for contract mechanical design...

    SQL DBA/ C# Developer - T-SQL, C#.Net

    £45000 - £55000 per annum + Benefits: Ashdown Group: Working with an exciting ...

    SCO Supervisor Electrical

    competitive: Progressive Recruitment: My client based in the Midlands is looki...

    Ecommerce Executive

    £20000 - £24000 per annum: Ashdown Group: Ecommerce Executive Working with an...

    Day In a Page

    Dress the Gaza situation up all you like, but the truth hurts

    Robert Fisk on Gaza conflict

    Dress the situation up all you like, but the truth hurts
    Save the tiger: Tiger, tiger burning less brightly as numbers plummet

    Tiger, tiger burning less brightly

    When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
    5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

    In grandfather's footsteps

    5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
    Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

    Martha Stewart has flying robot

    The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
    Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

    Do women cyclists need 'pootling lanes'?

    Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
    A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

    A tale of two presidents

    George W Bush downs his paintbrush to pen father’s life story
    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

    The dining car makes a comeback

    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
    Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

    Gallery rage

    How are institutions tackling the discomfort of overcrowding this summer?
    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

    Eye on the prize

    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
    Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

    Women's rugby

    Tamara Taylor adds fuel to the ire in quest to land World Cup
    Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

    The day America’s love of backyard tigers led to a horrific bloodbath

    With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
    Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

    How Samuel Beckett became a French Resistance spy

    As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
    We will remember them: relatives still honour those who fought in the Great War

    We will remember them

    Relatives still honour those who fought in the Great War
    Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

    Kodak's last-ditch bid to keep celluloid alive

    Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
    Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

    Acting in video games gets a makeover

    David Crookes meets two of the genre's most popular voices