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What are the best UK shares to buy in August 2020?

British blue-chips and mid-table stocks have taken a battering as a result of the coronavirus pandemic, with the FTSE 100 and 250 still lingering 19% and 22% down respectively on a year-to-date basis.

British blue-chips and mid-table stocks have taken a battering as a result of the coronavirus pandemic, with the FTSE 100 and 250 still lingering 19% and 22% down respectively on a year-to-date basis.

However, there are a number of UK stocks that have remained resilient despite the myriad of challenges they face and have seen their share prices soar and even retain dividend pay-outs to shareholders.

We take a look at some of the most attractive UK stocks to invest in throughout August.

Boohoo shares likely to rebound after it addresses working conditions

The online fashion retailer saw its shares take a serious knock after allegations surfaced about its supply chain and the working conditions of factory employees in Leicester who were being paid below minimum wage.

However, some would argue that the sell-off is overdone and arguably presents a major opportunity for investors looking to buy the stock at a discount, especially when you consider the impressive growth it has already accomplished and its resilience in the face of the Covid-19 pandemic.

Prior to the allegations, Boohoo was trading at a 52-week high of 443p per share, with the stock looking particularly cheap, after closing at 270p on Wednesday.

It is also worth nothing that even prior to the sell-off, the online fashion retailer was up 37% year-to-date and even after its crash is only down 9% over that period and still outperforming the broader market.

Tesco continues to deliver a healthy dividend in dreadful conditions

The British supermarket chain hasn’t seen its share price soar amid the Covid-19 crisis, with it down 13% year-to-date. But it continues to outperform the broader market and more importantly has retained a healthy dividend while many UK stocks have been forced to cancel theirs to shore up their balance sheets.

Tesco has remained a dividend play for investors for some time now, with the stock moving very little over the last five years – trading just 2% higher to where it was half a decade ago.

The supermarket certainly has challenges ahead of it and is facing increased competition from low-cost rivals like Aldi and Lidl. But it has managed to maintain its grip on the grocery market and its adaptability amid the Covid-19 crisis highlights just how difficult it will be for challengers to take market share away from it no matter how hard they try.

AstraZeneca continues to be immune from the Covid-19 fallout

AstraZeneca has seen its shares exceed analysts’ forecasts this year, and with the company’s partnership with Oxford University seeing their vaccine produce a ‘strong immune response’ its stock could soar even higher in 2020.

AstraZeneca shares closed at £86.15 per share on Wednesday, with the stock outperforming the broader market with the drug maker trading 12% higher year-to-date, while the FTSE 100 index is down 19% over the same period.

AstraZeneca shares are likely to get a boost after its partnership with Oxford University has shown promising results from early stage trials for a potential coronavirus vaccine.

In fact, a new study published earlier this month in the scientific journal, The Lancet, showed that a team of scientists from Oxford University’s Jenner Institute and Oxford Vaccine Group have created a Covid-19 vaccine that induces a strong immune response to the virus.

The drug maker continues to see its share price go from strength to strength, with the stock exceeding analysts’ forecasts in 2020.

Analysts’ consensus price target for AstraZeneca sits at £83.31 per share, implying a potential downside for the stock of -3.4%. However, with the company’s strong performance of late and its potential breakthrough with Oxford University in finding a vaccine for Covid-19 means the future looks bright for the British-Swedish drug maker.

British American Tobacco well-placed to become a market leader in vaping

Analysts at Goldman Sachs contend that British American Tobacco (BAT) shares could rally as much as 47% after reiterating their ‘buy’ rating for the stock and issuing a target price of £40 a share earlier this month. But is the stock really capable of hitting such a lofty price target?

According to Goldman Sachs analysts, BAT could see its shares soar due to being well-positioned in next generation products (NGP) like vapes and e-cigarettes, with the company capable of emerging as a ‘relative leader’ within that market.

In a July note to investors, analysts at the US-based investment bank said that BAT was ‘amongst the highest-quality companies in Europe’ and boasted a ‘strong product and geographic portfolio’ within NGPs that could help drive signifcant revenue growth.

‘We believe a multi-category approach and strong brands leaves BAT well positioned to deliver profitable growth as the nicotine industry pivots away from combustible cigarettes,’ Goldman Sachs said. In fact, the bank forecasts that NGPs will generate £4.25 billion in revenues for the BAT in 2025.

‘We believe the direction of travel is clear, and we are confident in BAT’s competitive positioning,’ the bank added.

How to trade stocks with IG

Looking to trade the Boohoo and other stocks on our list? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs and spread bets in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘Boohoo’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade
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Don’t Count On JPY Correction; Staying Long GBP/JPY

The path of the potential pace of the JPY decline may still be underestimated by markets, which continue trading the JPY long.

While the 10% USDJPY advance from September lows looks impressive from a momentum point of view, it may no thave been driven by Japan’s institutional investors reducing their hedging ratios or Japan’s household sector reestablishing carry trades.

Instead, investors seemed to have been caught on the wrong foot, concerned about a sudden decline of risk appetite or the incoming US administration being focused on trade issues and not on spending. Spending requires funding and indeed the President-elect Trump’s team appears to be focused on funding. Here are a few examples: Reducing corporate taxation may pave the way for US corporates repatriating some of their USD2.6trn accumulated foreign profits. Cutting bank regulation could increase the risk-absorbing capacity within bank balance sheets. Hence, funding conditions – including for the sovereign – might generally ease. De-regulating the oil sector would help the trade balance, slowing the anticipated increase in the US current account deficit. The US current account deficit presently runs at 2.6% of GDP, which is below worrisome levels. Should the incoming government push for early trade restrictions, reaction (including Asian sovereigns reducing their holdings) could increase US funding costs, which runs against the interest of the Trump team.

Instead of counting on risk aversion to stop the JPY depreciation, we expect nominal yield differentials and the Fed moderately hiking rates to unleash capital outflows from Japan.The yield differential argumenthas become more compelling with the BoJ turning into yield curve managers. Via this policy move, rising inflation rates push JPY real rates and yields lower, which will weaken the JPY. Exhibit 12 shows how much Japan’s labor market conditions have tightened. A minor surge in corporate profitability may now be sufficient, pushing Japan wages up and implicity real yields lower.

JPY dynamics are diametrical to last year . Last year, the JGB’s “exhausted”yield curve left the BoJ without a tool to push real yields low enough to adequately address the weakened nominal GDP outlook. JPY remained artificially high at a time when the US opted for sharply lower real yields. USDJPY had to decline, triggering JPY bullish secondround effects via JPY-based financial institutions increasing their FX hedge ratios and Japan’s retail sector cutting its carry trade exposures. Now the opposite seems to be happening. The managed JGB curve suggests rising inflation expectations are driving Japan’s real yield lower. The Fed reluctantly hiking rates may keep risk appetite supported but increase USD hedging costs.Financial institutions reducinghedge ratios and Japan’s household sector piling back into the carry trade could provide secondround JPY weakening effects

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Mexico raises interest rates, cites Trump as risk

The head of Mexico’s central bank says U.S. Republican candidate Donald Trump represents a “hurricane” sized threat to Mexico.

Banco de Mexico Gov. Agustin Carstens told the Radio Formula network Friday that a Trump presidency “would be a hurricane and a particularly intense one if he fulfills what he has been saying in his campaign.”

Trump has proposed building a wall along the border and re-negotiating the North American Free Trade Agreement.

Mexico’s central bank raised its prime lending rate by half a percent to 4.75 percent Thursday, citing “nervousness surrounding the possible consequences of the U.S. elections, whose implications for Mexico could be particularly significant.”

Mexico’s peso had lost about 6 percent in value against the dollar since mid-August. It recovered slightly after the rate hike

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Africa’s first Fairtrade certified gold co-operative offers hope to gold miners living in poverty

Syanyonja Artisan Miners’ Alliance (SAMA) has become the first artisanal small scale mining co-operative in Africa to become Fairtrade certified, bringing much needed hope to impoverished communities who risk their lives to mine the rich gold seam that runs around Lake Victoria.

SAMA is one of nine previously informal groups from Uganda, Kenya and Tanzania which has benefitted from a pilot project launched by Fairtrade in 2013. This innovative program aims to extend the benefits of Fairtrade gold to artisanal miners across East Africa.

In that short time, SAMA has undergone training in business and entrepreneurship, as well as safe use of mercury, internal control systems, labour rights and better working conditions, health and safety and more. Previously, daily contact with toxic chemicals used to process gold meant members risked disease, premature births and even death.  Fairtrade gold was first launched in 2011, and SAMA now joins Fairtrade certified gold mines MACDESA, AURELSA and SOTRAMI in Peru.

The co-operative produces just 5 kg gold per year, but nevertheless has the potential to significantly benefit many people in the local community through better conditions through certification. It is expected that Fairtrade and organizations like Cred Jewellery will support the miners, ensuring their gold can be refined and made available to jewellers in the UK and other markets.

Gonzaga Mungai, Gold Manager at Fairtrade Africa said: “This is a truly momentous and historical achievement and the realisation of a dream that is many years in the making. Gold production is an important source of income for people in rural economies. Congratulations to SAMA, it sets a precedent which shows that if groups like this can achieve certification, then it can work for others right across the African continent.”

The Fairtrade Gold Standard encourages better practice and changes to come in line with international regulation around the production and trade of so-called ‘conflict minerals’. Under the Standard, miners are required to:

  • Uphold a human rights policy preventing war crimes, bribery, money laundering and child labour
  • Clearly represent where the minerals were mined
  • Minimise the risks of conflict minerals through robust risk assessments and collaboration across supply chains
  • Report to buyers and trading partners regarding the risks of conflict minerals

Now in its second phase, the programme will focus on supporting other mining groups in the region to access affordable loans and explore a phased approach to accessing the Fairtrade market, allowing more mining co-operatives across Africa to participate in the programme.

Gonzaga added: “Sourcing African metals from smallscale miners in the Great Lakes Region is the responsible thing to do. For a long time companies have avoided buying gold from this region, with devastating consequences for impoverished communities who were already struggling. It has driven trade deeper underground, as unscrupulous buyers pay lower prices and launder illegal gold into legitimate supply chains. That’s why we have chosen to work with these groups to help them earn more from their gold within a robust compliance system that offers social, environmental, and economic protections.”

The Fairtrade gold programme offers a small but scalable solution to sustainable sourcing of gold from the region in line with Section 1502 of the Dodd-Frank Act in the US, OECD Due Diligence Guidance and recent EU Supply-Chain Due Diligence proposals which could come into effect in 2016. This means that up to 880,000 EU firms that use tin, tungsten, tantalum and gold in manufacturing consumer products could be obliged to provide information on steps they have taken to identify and address risks in their supply chains for so-called ‘conflict minerals’.

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