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A rights issue, also known as a “rights offering”, is a method that companies use to raise additional capital from their existing shareholders. It involves offering the right to purchase additional shares of the company's stock at a discounted price while maintaining their proportional ownership in the company. This is how the rights issue process typically works: Announcement: The company announces its intention to conduct a rights issue, often through an exchange announcement.

It may, or may not, involve a temporary trading halt by the exchange prior to the announcement for a specified period of time. The rights issue announcement includes details such as the number of additional shares being offered, the price at which these shares can be purchased (usually at a discount to the current market price), and the ratio of shares offered for each share held. Subscription Period: During a specified subscription period, existing shareholders can decide whether to exercise their rights to purchase the additional shares.

The number of additional shares each shareholder is entitled to purchase is determined based on the ratio specified in the announcement. Discounted Purchase Price: The purchase price for the additional shares is typically lower than the current market price of the company's stock. This discount serves as an incentive for shareholders to participate in the rights issue.

For example, assume you already own 100 shares in Company A. Shares in Company A are currently trading at $25. The company wants to raise money, so it announces a rights issue at $20 a share, with the offer open for 30 days.

It sets a conversion rate of one for five. This means eligible shareholders can buy one additional share for every five shares they currently own. The result is you can buy 20 new equity shares for $400, a discount of $100 on the current market price.

Proportional Ownership: By participating in the rights issue, shareholders can maintain their proportional ownership in the company. If they choose not to participate, their ownership percentage might decrease as the total number of shares outstanding increases. The Rights Issue Discount The discount offered in a rights issue can vary widely depending on various factors, including the company's objectives, current market conditions, and the urgency to raise capital.

There is no standard discount that applies to all rights issues, and the discount offered can vary considerably, ranging potentially from around 10% to 40% below the current market price of the stock. Factors impacting the level of the discount offered include: Company's Financial Situation: If the company urgently needs to raise capital, it may offer a larger discount to incentivize participation. Market Conditions: Prevailing market sentiment and volatility can influence the discount.

In a bearish or uncertain market, a more significant discount might be required to attract investors. Investor Sentiment: If the company is well-regarded and the rights issue is perceived positively, a smaller discount might suffice. Purpose of Raising Capital: The reason behind the capital raise (e.g., funding an exciting growth opportunity versus covering debt) can impact investor interest and, therefore, the required discount.

Size of the Issue: The number of shares being issued can affect the discount. A larger issue might require a bigger discount to ensure full subscription. Regulatory Considerations: In some jurisdictions, regulations might set guidelines or limitations on the discount that can be offered.

Recent examples of ASX rights issues Rights issues are common. Here are a few examples from 2022 including the discount offered and purpose. Atlas Arteria Group (ASX: ALX) conducted a 1 for 1.95 non-renounceable rights offer to raise $3,098 million to fund its acquisition of a 66.67% interest in the Chicago Skyway toll road.

Domain Holdings Australia Ltd (ASX: DHG) conducted a 1-for-12.33 non-renounceable rights offer to raise $180 million needed to acquire Realbase Pty Ltd, a real estate campaign management technology platform. Regal Partners Ltd (ASX: RPL) conducted a 1-for-5 non-renounceable rights issue to increase the free float and shareholder base and fast-track the execution of its diversified growth strategy. Healthia Limited (ASX: HLA) conducted a 1-for-12.5 non-renounceable rights issue to provide additional cash reserves to fund near-term acquisition opportunities and provide financial flexibility.

GUD Holdings Limited (ASX: GUD) conducted a 1 for 3.46 non-renounceable rights issue in conjunction with an institutional placement in late 2021, raising $405 million to acquire AutoPacific Group, a designer and manufacturer of automotive and lifestyle accessories. The Market Response to a Rights Issue: The market's view of a rights issue can be influenced by several factors and can vary widely based on individual investor perspectives, market conditions, and the specific details of the rights issue. As part of the announcement and as previously referenced, it is in the company’s interest to effectively communicate the purpose and potential benefits of the rights issue to address investor and market concerns, so creating positive sentiment in an attempt to both support the current share price and encourage participation.

Positive Views: Opportunity to Increase Ownership: Investors who believe in the company's growth prospects might view a rights issue as an opportunity to increase their ownership at a discounted price. This can be seen as a way to acquire more shares at an attractive valuation level. Capital Injection: A rights issue can provide the company with additional capital that it can use to fund expansion, invest in new projects, or reduce debt.

If the market sees these moves as value-enhancing, it could view the rights issue positively. Strengthened Financial Position: If the company uses the proceeds from the rights issue to improve its balance sheet or address liquidity concerns, the market may see it as a positive step toward financial stability. Neutral Views: Dilution Concerns: Existing shareholders might be concerned about potential dilution of their ownership if they choose not to participate in the rights issue.

However, this concern might be mitigated if the discount offered in the rights issue is attractive enough to compensate for the dilution. Market Conditions: The market's overall sentiment and conditions can impact how a rights issue is perceived. In a bullish market, investors might be more willing to participate, while in a bearish market, they might be more cautious.

Negative Views: Sign of Financial Difficulty: In some cases, a rights issue might be interpreted as a sign that the company is facing financial challenges and needs to raise capital urgently. This could lead to concerns about the company's stability and future prospects. Misallocation of Funds: If investors perceive that the proceeds from the rights issue are being misused or not being deployed in a value-accretive manner, it could lead to scepticism about the company's management decisions.

Stock Price Reaction: The announcement of a rights issue can lead to a significant decline in the company's stock price, especially if investors are concerned about potential dilution or question the company's motives. Summary: Participation in a rights issue is a strategic decision that must take into account multiple factors, and there is no one-size-fits-all answer. Shareholders considering participating in a rights issue should evaluate the discount in the context of their understanding of the company's value and prospects, possibly in consultation with a financial professional.

Backwardation and contango are terms used in the context of futures markets to describe the relationship between the prices of futures contracts with different expiration dates for a specific underlying asset, such as commodities, currencies, or financial instruments. In this article, we aim to explain these terms within the context of futures contracts. Futures Contracts Revised Let's start with a brief overview of futures contracts.

A futures contract is an agreement to buy or sell an asset at a predetermined price at a specified time in the future. These contracts are traded on organized futures exchanges and can relate to a wide variety of underlying assets, including commodities, currencies, stock indices, interest rates, and more. Futures contracts can be settled in two ways: either through physical delivery, where the underlying asset is physically delivered on the specified date, or through cash settlement, where the difference between the contract price and the market price on the settlement date is paid in cash.

Each futures contract expires on the third business day prior to the 25th calendar day of the month preceding the delivery month. There are five key components of a futures contract namely: Underlying Asset: The specific commodity, currency, or financial instrument being bought or sold. Quantity: The amount or size of the underlying asset in the contract.

Price: The price agreed upon today for the asset's delivery at a future date. Delivery Date: The future date on which the asset will be delivered or settled. Delivery Location (if applicable): The place where the physical asset will be delivered if the contract involves physical delivery.

Futures contract participants are generally of three types Hedgers: Futures contracts can be used to mitigate the risk of adverse price movements in an underlying asset. For example, airline companies, which use a lot of fuel and are sensitive to changes in oil prices, can buy oil futures to lock in current prices and protect themselves against future price hikes. If oil prices increase, the gains from the futures contract can offset the increase in fuel costs.

Speculators: These are traders who seek profits by predicting market movements and opening positions accordingly. For example, a forex trader might think that the EUR/USD currency pair is going to rise in the next week based on economic indicators. The trader buys a futures contract on EUR/USD with the expectation of selling it later at a higher price.

Arbitrageurs: These individuals aim to profit from price discrepancies in different markets or times. For instance, if natural gas is trading at $3.00 per million BTU in the U.S. market and at $3.10 in the European market, an arbitrageur could buy natural gas futures in the U.S. market and simultaneously sell in the European market, profiting from the price difference. What are Backwardation and Contango?

Backwardation and contango describe the relationship between the spot price of an asset and the prices of multiple futures contracts for that same underlying asset with different expiration dates. Simply put, these states are determined by more than one price level. Backwardation Backwardation occurs when the futures prices for contracts with near-term expiration dates are higher than the prices for contracts with later expiration dates.

This situation suggests that the market anticipates a shortage of the underlying asset in the near future. Reasons for backwardation include: Supply Concerns: If there are expectations of a supply disruption or scarcity of the underlying asset in the near term, the immediate futures contracts might be bid up in price relative to those further out. Storage Costs: For commodities with carrying costs, such as storage costs for physical delivery, backwardation can occur when the convenience of holding the physical asset immediately outweighs the cost of holding it for delivery in the future.

Immediate Demand: If there is strong demand for the physical asset in the current period, futures contracts that reflect this demand might trade at a premium. Contango Contango refers to a situation in which the futures prices for contracts with later expiration dates are higher than the prices for contracts with nearer expiration dates. Contango suggests that the market expects the supply and demand dynamics of the underlying asset to be more balanced in the near term and potentially oversupplied in the future.

Reasons for contango include: Storage and Carrying Costs: If the cost of storing the physical asset for delivery in the future is higher, it can result in contango, as later contracts would need to compensate for these costs. Interest Rates: In some cases, the yield curve and interest rates might influence contango. If the cost of borrowing to buy the physical asset is lower than the expected gains from holding it, contango can occur.

Market Sentiment: Contango can also emerge from market sentiment indicating that the current supply-demand balance is sufficient, but future uncertainties might lead to a higher price expectation. The Futures Curve Backwardation and contango are often illustrated through the use of a futures curve, which shows how the prices of futures contracts change over different time horizons. This curve begins with the current spot price and includes the prices of futures contracts with various expiration dates.

By connecting these points, the curve's shape—whether in backwardation or contango—reveals market expectations about future supply and demand, the cost of carry, interest rates, and other factors. Oil futures Example The following table below shows a snapshot of oil futures prices from August 2023. Expiry Month Futures Prices by Expiry Month Sep-23 81.4 Oct-23 80.73 Nov-23 80.22 Dec-23 79.81 Jan-24 79.32 Feb-24 78.92 Mar-24 78.57 Apr-24 78.11 May-24 77.75 Jun-24 77.39 Jul-24 76.98 Aug-24 76.56 Sep-24 76.19 Oct-24 75.82 Nov-24 75.5 Dec-24 75.17 Although this is useful, the picture is far clearer when these prices are plotted on a graph (See below) As you can see the slope is downwards and so would be described as in backwardation.

Where Can I Get Information on the Curve? Most major financial exchanges that trade commodity futures, such as CME Group and Intercontinental Exchange (ICE), provide information on current futures curves. Conclusion Contango and backwardation are relevant to a wide spectrum of market participants, from speculative traders to long-term investors and from individual investors to companies and institutional entities.

Understanding these market conditions is valuable for decision-making, risk management, and identifying potential opportunities. GO Markets offers a wide range of CFD futures contracts that you can trade on platforms like MT4 and MT5, and we would be delighted to assist you with any questions you may have.

What is a P/E Ratio? The Price-to-Earnings (P/E) ratio is a indicative valuation metric that measures a company's current share price relative to its earnings per share (EPS). It is relatively simple calculation and is simply worked out through dividing the current share price by the Earnings per share.

There are two common variations of the P/E ratio: Trailing P/E: Based on the past 12 months of earnings. Forward P/E: Based on analysts' forecasts of earnings for the next 12 months. Why is it Potentially Important?

Valuation Insight: The P/E ratio may help investors assess whether a stock is overvalued or undervalued relative to its earnings. In simple terms, a high P/E ratio might indicate that the stock is overvalued, while a low P/E ratio could suggest undervaluation.It is not only the number itself which may be important but also the underlying trend of how PE ratio may be decreasing or increasing which is worth consideration. Comparative Analysis: By comparing the P/E ratios of different companies within the same industry, it is suggested that investors can identify relative bargains or expensive stocks.

This issue of the same industry is an important point. If we look at the PE ratio of the S&P500 as a whole the forward 12-month P/E ratio (August 2023) for the S&P 500 is 19.2 (For context the 10 year average is 17.4).However, to look at this number as a benchmark for valuation judgements on a specific company is flawed as if we look at the trailing and forward PE of individual sectors it tells a very different story. The table below provides this (as of August 2023) to illustrate this point (source: Finviz.com).

PE Forward PE Energy 7.21 9.55 Financial 13.41 12.34 Basic Materials 13.74 17.02 Utilities 18.57 2.97 Industrials 20.56 16.45 Healthcare 20.9 17.51 Consumer Cyclical 22.45 20.93 Consumer Defensive 23.08 20.49 Communication 24.9 16.98 Real Estate 30.72 27.64 Technology 34.33 22.62 As you can see, there is a gross disparity between sectors. Comparing two companies' P/E ratios is like comparing apples with oranges. Therefore, consideration against the sector norm is a far more legitimate comparison than against either the index as a whole, any random stock, or an arbitrary number e.g. above or below 10.

Market Sentiment: The P/E ratio also reflects market expectations to some degree. A high P/E ratio may indicate optimism about a company's growth prospects, while a low P/E ratio might reflect pessimism. However, many would question using P/E ratios alone as a measure of this without the context of other data.

Viewing a P/E ratio without some reference to growth numbers and trends is an approach that is unlikely to yield good outcomes. Factors Contributing to a Rising or Falling P/E Ratio Earnings Growth and Stock Price Movement: Although there are minute-on-minute small fluctuations in price, and thus P/E ratios, clearly the most influential time in terms of moves in P/E ratios is that of earnings releases. At this time, both trailing and expected forward EPS will be recalibrated, and significant changes may be seen in the P/E ratio.If a company's earnings grow and the stock price stays the same, the P/E ratio will fall, reflecting a company at value.

Conversely, if earnings fall and the stock price rises, then the P/E ratio will rise, potentially indicating overvaluation. It would seem logical, if earnings are imminent, to reserve judgment on valuation until after any such news. Market Expectations: If the market becomes more optimistic about a company's growth prospects, investors might be willing to pay more for the stock, increasing its P/E ratio.

For example, with a policy shift to increase renewable energy, it would be reasonable to expect forward growth expectations to rise across the board for all stocks in that sector, rather than perceiving a particular stock as overvalued.However, if growth and P/E ratio are rising because of a specific competitive advantage for that company, then it is not necessarily indicative of overvaluation despite the high P/E. Judging based on a high P/E ratio alone could lead to significant missed opportunities. Once again, this reiterates the need to look beyond just a simple P/E ratio to make judgments.

Interest Rates: Lower interest rates often lead to higher P/E ratios, as investors are more inclined to invest in equities. Conversely, higher interest rates usually lead to lower P/E ratios, as bond yields become more attractive than the dividend yield offered by many stocks, and interest rate hikes potentially impact sales, the cost of servicing debt, and subsequent potential impact on earnings. Traditionally, growth stocks are likely to be more interest-rate-sensitive, and therefore the impact on stock price and P/E ratios may differ from sector to sector, and depending on whether business is conducted locally versus globally.

Economic Conditions: A strong economy might lead to rising earnings expectations and P/E ratios. Conversely, economic uncertainty or recession might cause P/E ratios to fall. Key data trends are likely to be a useful gauge.

This is particularly the case for the “big” data points such as GDP, CPI and jobs data. Other Company-Specific Factors: Changes in management, product launches, legal issues, or other company-specific news can affect both the current stock price and anticipated effect on earnings, thus impacting the P/E ratio.As many of these types of corporate events are unpredictable, when they do occur, it merits not only an evaluation of any prospective investment ideas but also of currently open positions when the P/E ratio may have been part of your decision-making process. In summary, although the P/E ratio is noteworthy for many investors, judging value and entering a stock with a low P/E ratio requires a rigorous and systematic approach, blending both quantitative and qualitative analysis of the issues discussed above.

A simple approach of comparing the P/E ratio of one company against another is unlikely to produce good outcomes. Focusing purely on this may mean that a low P/E ratio may be indicative of a company whose outlook is far from favourable, subjecting you to risk. Conversely, a high P/E ratio alone may not only indicate overvaluation compared to the current price but may also signify a company whose growth prospects are very positive.

Ignoring this based on the P/E ratio alone may result in missing out on opportunity. For those interested in a further exploration of evaluation of stocks with a low PE ratio, we have published an article that may help. “Look before you leap..FIVE reasons why a low PE may be a reason NOT to jump in” and can be accessed HERE

As traders and investors one of the important facts you need to get to grips with is the difference between Consensus (sometimes termed “expected”) and actual data. Variations in these can have a profound impact on asset prices and so are often part of your decision-making. In financial markets, the "consensus" refers to the average or median expectation of market analysts, economists, or other experts regarding a specific economic indicator or financial metric, such as corporate earnings, or market data that is indicative of economic growth or contraction.

The "actual data" refers to the real value of that indicator or metric as it is released by the relevant source, such as a government agency or a company. The market response to the difference between consensus and actual data can vary significantly and depends on several factors: Surprise Factor: The extent to which the actual data differs from the consensus is often referred to as the "surprise." If the actual data is significantly different from the consensus, it can lead to a stronger market response. A larger surprise could result in more pronounced market movements.

Direction of Surprise: Whether the actual data is better or worse than the consensus also matters. For example, if economic data is better than expected it might lead to positive share market reactions, as it indicates a healthier economy. Conversely, worse-than-expected data could lead to negative market reactions.

However, it is worth pointing out that this is a little simplistic, as it is the reality that different asset classes may respond in contrary directions. A prime example of this would be data that impacts positively on the USD (e.g. higher than expected interest rate decision), is likely to have the opposite impact on gold price. Importance of the Indicator: Some economic indicators have a more significant impact on market sentiment and investor behaviour than others.

For example, employment numbers, GDP growth, and central bank interest rate decisions are typically closely watched and can trigger significant market movements. Conversely, auto sales numbers as an example. are less likely to impact on the market overall but may impact primary on car manufacturers. Most economic calendars have a grading of market sensitivity to data to help the trader.

Underlying Market Sentiment: Market sentiment, which includes factors like investor psychology, risk appetite, and current trends, can influence how traders and investors react to economic data releases. Positive sentiment might mitigate negative reactions to negative surprises, or vice versa. You may hear some market commentators refer to ‘good news’ really being ‘bad news’ for the market.

For example, in an interest rate sensitive environment, strong jobs data, although logically one would assume is good news may mean it is more likely that a central bank is in a more favourable position to raise rates and therefore may have a negative impact on the stock market. Economic Context: Related to the above the broader economic and geopolitical context also plays a role. Market participants might interpret data differently based on prevailing economic conditions, global events, or the current stage of the business cycle.

Long-Term vs. Short-Term Impact: The immediate market response to data releases can be volatile and short-lived. However, if the data implies a shift in the underlying economic trajectory, it might have longer-term effects on market trends.

Therefore, if a longer-term investor rather than short term trader you will view economic data releases very differently. Sector and Asset Class: Different sectors and asset classes can react differently to economic data releases. For example, currency markets will be particularly sensitive to central bank decisions and interest rate expectations (or those data points which may influence such decisions e,g, jobs data), while equity markets although may fluctuate significantly to the same data are likely to react more strongly to corporate earnings reports.

In summary, the actual market response can include fluctuations in stock prices, bond yields, currency exchange rates, commodity prices, and more. Rapid and significant market movements can occur within seconds of a data release, but these may be short lived. As a trader/investor, recognising that data is unpredictable, there is two key tactics to employ, namely: Ensure you have access to and use an economic data calendar and know earnings dates of stocks you are in, so you have awareness of significant data releases prior to these happening.

This means you are able to make judgments about any potential risk management actions you should take. As part of your decision-making process make a judgment as to the potential degree to which data may have on your open positions and take remedial action as required, including portfolio balancing and appropriate position adjustment. We always discuss the potential and actual impact of economic data both before and after release at our daily LIVE update webinar sessions.

You are very welcome to join us every lunchtime (AEST) to get the latest events that may impact on your decision making. Check out our Education Hub for more information. (Keywords: Market data, economic data.)

‘Trading the news’, is a phrase that is often said, but to new traders it can be a confusing statement without much context. What does it mean to trade the news? Is it simply trading a News Company, or is it trading based on a news report, this article will explain some of the intricacies of the famous strategy of ‘trading news’.

What is it? Trading the news is simply using an event, whether it be a global news event relating to a stock or sector news or an announcement from a company as a reason to enter a trade of a on a security or a derivative. A trader can only make money on a trade if the price of the chosen asset is moving.

If the price is stagnant then there is no use trying to trade it as there will be no money to be made. This is also known as volatility. In addition, traders and investors like to trade when there is a high level of liquidity as this allows for larger position sizes and easier movement in and out of a trade.

Why do some traders ‘trade the news’? There is multiple reason that trader will trade the new, but it is largely as news events act as catalyst for a shift in share price and increase in volatility. A general rule of the efficient market is that all information that is available is priced into the share price.

However, when news/announcements are first announced, the market must evaluate the worth of the news to the share price and this can happen quickly, or it can take a few days to assess. This is where money can be made when ‘trading the news’. Example In this example we have a company ABC.

ABC is a publicly listed company listed on the ASX and it share price is currently $1.00. with a market capitalisation of $1,000,000 ABC is company that creates and sells bicycles. Now imagine that this company signs a contract to sell 1000 bikes to Company DEF for $100,000 Immediately the news will be announced and the market including traders’ investors and others will have to assess how to value the contract. This will see a rush of volatility and buying/selling of the company’s shares.

Similarly, traders can trade the news relating Foreign exchange. Specifically, news from relating to the economy or an announcement from a countries Central Bank can provide a shift to the currency which triggers traders on corresponding currency pairs. In the example below, the Reserve Bank of Australia had just announced an increase in the interest rate for the cash rate largely in line with analyst expectation.

Some notable observation about the chart includes an initial influx of volume and increase in range for the candles relative to average levels. What is ‘Selling the news?’ It has been established that trading the news is when traders will try and use news catalysts as a signal for volatility when trading, however sometimes a seemingly good news event creates a sell off that can often lead to confusion on the part of the trader who taken a buy position. The reason for much of this selling goes back to the first question.

Why do traders trade the news? The market is trying to put a value on the announcement. Furthermore, this can be compounded by what are known as ‘trapped sellers.

The concept of trapped seller is that when a stock creates a gap above a previous closing price based and that gap is above previous long terms resistance zones, sellers who have been stuck in the stock long term will sell their holding at the first opportunity. This of course creates downward pressure on the price. The downward pressure incentivises short sellers and more selling occur thus causing a ‘sell the news’ type of event.

Take the following example of ASX listed company BUB. The news events were that the company had signed a contract to supply the USA with baby formular at a time when the country was dealing with a massive shortage of the formula. As we discussed above, in this chart we can see that as the market opened.

The price gapped form the previous close of $0.485 to $0.780 as the market opened. As the day wore on it became apparent that there was a great deal of long-term sellers who were using the opportunity to either take profits or cover to cover a loss. Subsequently the stock price kept falling for consecutive days as sellers continued to ‘sell the news’ Risks ‘Trading the news’ can be an inherently risky strategy, as an influx of volume comes into a stock the volatility often increases in volatility.

This means that the momentum of. If a trader is on the wrong side of the move it can be a dangerous as the price can move very quickly. Therefore, traders should be weary and have clear stops and exits points for when a trade goes the wrong way.

Market response to any specific economic data release is far from standard even if actual numbers differ greatly from consensus expectations. Rather the market response is based on context of the current economic situation. This week’s non-farm payrolls, being one of the major data points in the month, is a great case in point.

There are many factors and of course the key one for you as an individual trader is your chosen vehicle you are trading (and of course direction i.e. long or short for open positions). The context of today’s impending non-farm payrolls from a market perspective is interest rate expectations going forward. This week the Fed gave the market the expected.25% cut that was already priced into currency, bond and equity market pricing.

The market response however, as this was already priced in, was as a result of the accompanying statement which was not as dovish as perhaps anticipated and a reduction in expectations of a further imminent cut. From an equity market point of view the result, despite the interest rate cut, was to sell off, whereas from the USD perspective this lessening expectation of further rate cuts was bullish. Perhaps this could be viewed as contrary to what the textbooks would suggest is a standard response.

So, onto today's non-farm payrolls (NFP) figure… Logic would suggest that a strong number is good news for the economy, and so should be positive for equities and perhaps bearish for USD. However, as this may be a critical number in the Feds decision making re. interest rate decisions, a strong NFP is likely to have the opposite effect. A weaker number is likely to be perceived as potentially contributory to thinking that another rate cut may be prudent sooner and so despite on the surface being “bad news”, it would not be surprising to see equities stronger and USD weaker.

It remains to be seen of course what the number is and the actual response but is perhaps a lesson in seeing new market information within the potential context of the current economic circumstances and of course incorporate this in your risk assessment and trading decision making. Mike Smith Educator Go Markets [email protected] Disclaimer The articles are from GO Markets analysts based on their independent analysis. Views expressed are of the their own and of a ‘general’ nature.

Advice (if any) are not based on the readers personal objectives, financial situation or needs. Readers should therefore consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.