Finance

Is it Time for British American Tobacco to Say Goodbye to London?

Published

2 years ago

March 16, 2023

Harry Williams

Tobacco has been a controversial industry for decades, and British American Tobacco (BAT) is no exception. However, the recent pandemic-induced shift towards remote work has left many questioning whether BAT should continue to call London their home base. Is it time for this multinational corporation to bid farewell to one of the world’s most iconic cities? In this blog post, we’ll explore the reasons behind such a move and evaluate its potential consequences. So buckle up and join us as we delve into this hot topic!

British American Tobacco’s London Roots

British American Tobacco’s London roots go back to 1902, when the company was founded by two tobacco merchants, James Buchanan Duke and Edward Harcourt. The company’s first factory was built in Lambeth, South London.

Today, British American Tobacco is one of the world’s largest tobacco companies, with over 200 brands sold in more than 180 countries. The company employs over 55,000 people and has a market capitalization of over £70 billion.

Despite its global reach, British American Tobacco remains headquartered in London, where it has been based for over 115 years. The company is a major contributor to the city’s economy, employing around 2,500 people in its London offices.

However, there have been calls for the company to relocate its headquarters out of London, due to the UK’s high taxes on tobacco products. In 2017, British American Tobacco paid £357 million in tax on its profits of £5.7 billion. This works out at a tax rate of 6%, which is significantly higher than the 20% rate paid by most other UK companies.

There are also concerns that London’s strict smoking regulations could impact British American Tobacco’s business. In 2015, the UK introduced a nationwide ban on smoking in all enclosed public spaces. This includes workplaces, bars, restaurants and clubs. The ban has been credited with reducing smoking rates in England by 1.9% since it was introduced.

With anti-smoking sentiment running high and taxes on tobacco products

The company’s recent struggles

The company’s recent struggles:

British American Tobacco (BAT) has been a powerful force in the tobacco industry for over a century. But the company is now facing significant challenges, including declining sales, increasing regulation, and public health concerns.

BAT’s share price has fallen by nearly 30% over the past year, and the company has announced plans to cut jobs and close factories. These difficulties have led some to question whether BAT should remain headquartered in London.

There are a number of reasons for BAT’s recent struggles. First, smoking rates in developed countries have been declining for years. This trend is expected to continue as health consciousness grows and more people quit smoking or switch to less harmful alternatives such as e-cigarettes.

Second, governments around the world are enacting stricter regulations on tobacco products. These regulations can take the form of higher taxes, bans on advertising, and restrictions on where cigarettes can be sold. These measures make it harder for tobacco companies to sell their products and reduce demand for their products.

Finally, there is a growing public awareness of the health risks of smoking. This awareness has led to calls for greater regulation of tobacco products and increased public pressure on companies like BAT to do more to reduce the harmful effects of their products.

BAT is not the only tobacco company facing these challenges, but it is one of the largest and most well-known firms in the industry. The company’s ability to navigate these challenges will be critical to its

The possibility of relocating

There has been speculation that British American Tobacco (BAT) could be planning to relocate its headquarters from London. This would be a huge blow to the city, which has already lost a number of major companies in recent years.

BAT is one of the world’s largest tobacco companies, with a long history in London. It is currently headquartered in Piccadilly, in the heart of the city. However, it is reported that the company is considering moving to either Dublin or Geneva.

This comes as a result of increasing pressure from the UK government on tobacco companies. The government has introduced a number of measures aimed at reducing smoking rates, including banning smoking in public places and increasing taxes on cigarettes. These measures have had a significant impact on BAT’s bottom line, and it is thought that the company is looking for a friendlier regulatory environment.

If BAT does decide to leave London, it would be a huge loss for the city. BAT employs over 3,000 people in the UK, and its headquarters are an iconic part of Piccadilly Circus. The company also pays millions of pounds in taxes every year, which would be sorely missed by the cash-strapped British government.

Implications of a move

The potential implications of a move for British American Tobacco (BAT) are numerous and far-reaching. For one, it would signal a dramatic shift in the company’s operations and could lead to the loss of jobs in the UK. It would also likely have an impact on BAT’s share price and could result in increased regulation of the tobacco industry by the British government. Moreover, a move would be sure to generate significant media attention and could damage BAT’s reputation among its customers and investors.

What other companies have done in similar situations

In recent years, a number of large companies have chosen to leave London and relocate elsewhere. Some notable examples include:

– HSBC Holdings, which announced in 2015 that it would be moving its headquarters to Hong Kong
– Barclays, which revealed in 2016 that it was considering a move to Dublin
– Standard Chartered, which is also considering a move to Dubai

There are a number of reasons why these companies have chosen to leave London. Firstly, they are all looking to reduce their costs. Secondly, they are all seeking to gain a greater foothold in Asia – where growth prospects are much stronger than in the UK or Europe. And finally, they are all looking to escape the increasing regulatory burden that has been placed on them by the British government.

It is not just banks and financial institutions that have been leaving London – a number of other large companies have also made the decision to relocate elsewhere. For example, Unilever – one of the world’s largest consumer goods companies – announced in 2018 that it was moving its HQ from London to Rotterdam. And earlier this year, Japanese company Sony confirmed that it was relocating its European headquarters from London to Amsterdam.

With so many companies leaving London, it is perhaps no surprise that British American Tobacco is also considering its options. The company has already said goodbye to its iconic Piccadilly Circus site, and with Brexit looming large on the horizon, it seems increasingly likely that BAT will follow suit and

Conclusion

In conclusion, it is clear that the decision for British American Tobacco to leave London is complex and will not be an easy one. The company must weigh the pros and cons of remaining in a city with historically low taxes but ever-increasing uncertainty against cheaper locations elsewhere which may lack the same level of brand recognition or opportunity for growth. Ultimately only time will tell whether this iconic tobacco giant makes its move from London or chooses to stay put.

Author

Harry Williams

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Finance

Top Trends in Financial Technology for 2024

Published

9 hours ago

September 19, 2024

Gil Villa

Reviewed
By Nora Mike

In 2024, the financial technology (fintech) landscape is evolving rapidly with technological advancements, shifting consumer expectations, and changing regulations. As digital financial services continue to expand, keeping up with the latest trends in fintech becomes increasingly important for businesses, investors, and consumers alike. This article explores the top financial technology trends for 2024, outlining how each trend is expected to impact the industry and reshape the financial ecosystem.

1. The Rise of Embedded Finance

Embedded finance is the integration of financial services into non-financial platforms and applications. Instead of accessing financial services through traditional banks, consumers can now interact with services like lending, insurance, or payments directly within apps they already use, such as retail platforms or ride-hailing services.

In 2024, embedded finance is expected to further blur the lines between financial and non-financial services. This allows companies to offer a seamless customer experience while potentially increasing their revenue streams. For consumers, this means easier and faster access to financial services without the need to interact with a standalone financial provider.

Photo by Karolina Grabowska: https://www.pexels.com/photo/calculator-and-notepad-placed-on-usa-dollars-stack-4386366/

Benefits of Embedded Finance

Convenience: Users can access finance options without leaving their preferred platform.
Customer retention: Businesses can offer value-added services, keeping customers within their ecosystem.
Growth opportunities: Startups and non-financial companies can tap into financial services without the complexity of becoming licensed financial institutions.

2. Artificial Intelligence and Machine Learning in Finance

Artificial Intelligence (AI) and Machine Learning (ML) are transforming the fintech landscape by enhancing automation, decision-making, and customer service. In 2024, AI and ML are expected to play a larger role in financial forecasting, fraud detection, and personalized financial advice.

For example, AI can help financial institutions analyze vast amounts of data to identify potential risks, while ML models can predict consumer behavior and offer tailored financial products. Robo-advisors, which use AI to provide automated investment advice, are also growing in popularity.

Key AI Applications in Financial Technology

Fraud detection: AI can analyze transaction patterns to detect fraudulent activities in real-time.
Personalized services: AI-powered systems can recommend customized financial products based on an individual’s financial behavior.
Automation: Routine tasks such as loan approvals or customer inquiries are automated, improving efficiency and reducing operational costs.

3. Blockchain and Cryptocurrency Expansion

Blockchain technology and cryptocurrencies continue to revolutionize the way transactions are conducted and recorded in the financial industry. In 2024, the adoption of blockchain for secure, decentralized, and transparent transactions is expected to grow, not only for cryptocurrencies but also in areas such as cross-border payments, smart contracts, and tokenization of assets.

While cryptocurrencies have faced regulatory challenges in recent years, blockchain’s underlying technology is being recognized for its potential to enhance efficiency and security in financial systems. Many financial institutions are now exploring how to integrate blockchain into their operations, from clearing and settlement processes to digital identity verification.

Blockchain Applications in Finance

Cross-border payments: Blockchain reduces transaction costs and settlement times for international transfers.
Smart contracts: Automated contracts that execute when predefined conditions are met, increasing efficiency and reducing legal costs.
Tokenization: Real-world assets, such as property or stocks, can be digitized and traded on blockchain platforms, increasing liquidity.

4. Open Banking and API Integration

Open banking refers to the practice of allowing third-party developers to build applications and services around a financial institution, through the use of Application Programming Interfaces (APIs). This enables the secure sharing of financial data with authorized third-party providers, giving consumers more control over their financial information.

In 2024, open banking is expected to continue growing as more countries adopt regulations that promote data sharing between financial institutions. This trend is driving innovation by allowing fintech startups to develop new solutions that improve consumer access to financial services, such as budgeting tools, lending platforms, and payment services.

Advantages of Open Banking

Enhanced competition: Traditional banks face competition from fintech startups offering innovative solutions.
Better customer experience: Consumers can easily manage multiple financial accounts and services from different providers.
Increased financial inclusion: By allowing third-party access to financial data, more people can gain access to credit and financial services.

5. Decentralized Finance (DeFi)

Decentralized Finance (DeFi) refers to a blockchain-based financial system that operates without intermediaries such as banks or brokers. DeFi allows for peer-to-peer transactions, lending, borrowing, and trading using smart contracts, without the need for traditional financial institutions.

As DeFi continues to evolve, 2024 will likely see the rise of more sophisticated decentralized applications (dApps) that offer services such as lending, borrowing, and derivatives trading on blockchain platforms. DeFi offers the potential for a more open and inclusive financial system, though it also presents regulatory challenges and risks related to security and volatility.

Growth of DeFi in 2024

Increased adoption: More users are expected to engage with DeFi platforms as they offer lower fees and greater access to financial services.
Risk management: DeFi platforms are improving security and risk mitigation, addressing concerns related to hacks and volatility.
New financial products: Innovative financial products, such as decentralized insurance and prediction markets, will emerge, enhancing the DeFi ecosystem.

6. Sustainable and Ethical Fintech

As sustainability becomes a global priority, the financial technology sector is increasingly focusing on sustainable finance and ethical fintech solutions. In 2024, there is a growing demand for green financial products, such as carbon credits and renewable energy investments, as well as platforms that promote socially responsible investing (SRI).

Ethical fintech platforms focus on transparency, inclusivity, and responsible lending, providing consumers with financial services that align with their values. This trend is driven by a new generation of consumers who prioritize environmental, social, and governance (ESG) factors in their financial decisions.

Examples of Sustainable Fintech

Green finance: Fintech platforms that help consumers and businesses track their carbon footprint or invest in sustainable projects.
Socially responsible investing: Platforms that allow users to invest in companies with strong ESG credentials.
Inclusive finance: Fintech startups focusing on underserved communities, providing access to credit and banking services in remote areas.

7. Regulatory Technology (RegTech)

With increasing regulation and compliance requirements, financial institutions are turning to Regulatory Technology (RegTech) to streamline processes and ensure compliance. In 2024, RegTech solutions will continue to evolve, helping companies navigate complex regulatory environments more efficiently through automation and data analytics.

RegTech solutions can monitor transactions for compliance, manage reporting requirements, and help companies stay up-to-date with changes in regulations. This reduces the risk of fines and penalties while enhancing the overall transparency of financial operations.

RegTech Innovations in 2024

Automated compliance: AI-driven tools that monitor regulatory changes and ensure ongoing compliance.
Data security: Advanced encryption and secure communication protocols to safeguard financial data.
Real-time monitoring: Continuous monitoring of transactions to detect compliance issues or fraudulent activities.

Comparative Table: Fintech Trends in 2024

Trend	Impact on Industry	Key Benefit	Key Risk
Embedded Finance	Integrates financial services into other sectors	Convenience for users	Potential overreliance on platforms
AI and Machine Learning	Enhances automation and customer service	Efficiency and personalization	Data privacy and ethical concerns
Blockchain and Cryptocurrencies	Improves transparency and security	Faster, cheaper cross-border payments	Regulatory uncertainty
Open Banking and APIs	Promotes data sharing and competition	Greater innovation and access	Data security risks
Decentralized Finance (DeFi)	Creates a decentralized financial system	Lowers transaction costs	Security and volatility issues
Sustainable and Ethical Fintech	Supports green and ethical finance	Aligns financial services with values	Limited regulation
Regulatory Technology (RegTech)	Streamlines compliance processes	Reduces compliance costs	Overdependence on automated systems

Analytical Table: Key Drivers and Barriers to Fintech Trends in 2024

Fintech Trend	Key Drivers	Barriers to Adoption
Embedded Finance	Consumer demand for convenience	Integration complexity with platforms
AI and Machine Learning	Need for automation and better data analytics	High cost of AI technology
Blockchain and Cryptocurrencies	Demand for secure and fast transactions	Uncertain regulatory framework
Open Banking and APIs	Regulatory push for open data	Consumer concerns over data privacy
Decentralized Finance (DeFi)	Desire for financial inclusion and transparency	Security concerns and lack of trust
Sustainable Fintech	Increasing focus on ESG and sustainability	Limited awareness and market maturity
Regulatory Technology (RegTech)	Complex regulatory environment	Lack of expertise in RegTech solutions

Conclusion

As we move into 2024, the financial technology sector will continue to experience rapid growth, driven by innovations in embedded finance, AI, blockchain, open banking, and sustainability. These trends are set to reshape the way financial services are delivered and consumed.

Author

Gil Villa

View all posts

Finance

The Benefits and Risks of Emerging Markets Investment

Published

21 hours ago

September 19, 2024

Gil Villa

Reviewed
By Mike Henery

The Benefits and Risks of Investing in Emerging Markets

The United States is the largest economy in the world by far, accounting for more Emerging Markets Investment than a quarter of the world’s gross domestic product (GDP) in 2022. Yet we make up less than 5% of the global population.

Most of humanity doesn’t enjoy the same standard of living that we do — at least, not yet. Developing countries are full of people working hard to offer their children the kind of life we take for granted in America. And every year, more of them succeed.

In investing parlance, these developing countries are called emerging markets. Investing in emerging markets isn’t just good for the conscience — it can also be a potentially profitable way to diversify your investment portfolio.

Image by : Yandex

What are emerging markets?

Emerging markets are countries with fast-growing economies. They’re also called developing economies or developing countries. Emerging markets are often contrasted with so-called “established markets” or “advanced economies” like the U.S., which tend to be wealthier and more stable, but slower-growing.

Five countries that make up the “BRICS” acronym — Brazil, Russia, India, China and South Africa — are some of the most prominent examples of emerging markets, and they’re good examples of why emerging markets are of interest to investors.

The U.S. economy grew about 58% between 2012 and 2022, the latest year for which complete international data is available

The slowest-growing BRICS economy, South Africa, grew about 86% over that decade . The other four all had growth rates above 100%.

Country
GDP growth, 2012-2022
United States
58.39%
Brazil
109.35%
Russia
125.32%
India
175.64%
China
123.69%
South Africa
85.86%

Source: Federal Reserve Bank of St. Louis. Data is current as of Apr. 5, 2024.

Index provider MSCI classifies 24 countries as emerging markets

. They’re listed below:

Brazil
Chile
China
Colombia
Czechia
Egypt
Greece
Hungary
India
Indonesia
Kuwait
Malaysia
Mexico
Peru
Philippines
Poland
Qatar
Saudi Arabia
South Africa
South Korea
Taiwan
Thailand
Turkey
United Arab Emirates

You may notice that certain notable emerging markets, such as Russia, are missing from the list above.

There is no universal standard for noting which countries are emerging markets, and indexers like Emerging Markets Investment MSCI often have geopolitical concerns to work around. Russia, for example, is an emerging market by most definitions. But it’s largely unavailable to Western investors for reasons related to the Russia-Ukraine war, so MSCI stopped tracking it in 2022.

Should I invest in emerging markets?

Investing in emerging markets might sound advanced or out-of-reach for novice investors, but there’s a strong argument for diversifying outside of the U.S. Even simple portfolios, such as those that contain only two or three funds, often include some exposure to international stocks. After all, a stock market crash in the U.S. might not hit international markets as hard.

In theory, faster GDP growth in emerging markets should also translate into faster stock market growth, but this doesn’t always work out in practice. Many of the ETFs listed above have underperformed the S&P 500 over the last five years, for a variety of reasons.

Some emerging markets, such as Kuwait and Saudi Arabia, have energy-dominated economies that tend Emerging Markets Investment to boom when oil prices are high, and decline when they’re low. Others, such as Poland and Turkey, have unique security risks because they border active war zones.

There’s a common thread between these underperformances: Emerging markets tend to be less stable than established markets. They may be faster-growing, but that fast growth is more vulnerable to interruptions, like shifts in global resource markets or armed conflict.

One way to manage this kind of risk is by investing in several emerging markets at once, through a diversified emerging markets ETF, rather than a country-specific one.

» Interested in ETFs? Check out the best ETFs by one-year performance.

9 top-performing emerging market ETFs as of August 2024

Below is a list of the nine best-performing emerging markets ETFs listed by Finviz, ranked by one-year return.

Ticker
Company
Performance (Year)
GLIN
VanEck India Growth Leaders ETF
41.39%
INCO
Columbia India Consumer ETF
39.90%
EPI
WisdomTree India Earnings Fund
36.88%
DGIN
VanEck Digital India ETF
36.44%
ARGT
Global X MSCI Argentina ETF
34.46%
NFTY
First Trust India Nifty 50 Equal Weight ETF
33.59%
SMIN
iShares MSCI India Small-Cap ETF
32.77%
FLIN
Franklin FTSE India ETF
30.91%
INDA
iShares MSCI India ETF
30.27%

Source: Finviz. Data is current as of Sept. 3, 2024, and is intended for informational purposes only.

Of course, it’s worth researching an ETF before you buy it, just as you would research stocks. Different Emerging Markets Investment emerging markets ETFs may have different holdings — and if you’re looking for exposure to a specific company in an emerging market, you may want to consider investing in it directly.

» More on index funds: Check out some of the best index funds in terms of long-term performance.

Investing in emerging market stocks

There are a few emerging market stocks that are directly listed on U.S. exchanges — largely bank stocks. For example, HDFC Bank, India’s largest bank, trades on the New York Stock Exchange under the ticker “HDB.”

Some others are available via over-the-counter (OTC) markets — although it’s worth checking an OTC emerging market stock’s trading volume on a website like Yahoo Finance or Google before buying it. Buying a low-volume OTC stock at a good price can be tricky.

Even large conglomerates like South Korea’s Hyundai (HYMTF) are largely overlooked by U.S. investors because they trade OTC. They may only change price a few times per trading day due to a lack of buyers and sellers. That can result in buy or sell orders going through at suboptimal prices, or not going through at all. Limit orders can somewhat mitigate this risk.

A third way to invest in individual emerging market stocks is to open an account with a Emerging Markets Investment broker that allows Americans to trade directly on foreign stock exchanges. However, only a few brokers offer this feature, and those that do may have special requirements for would-be foreign stock traders.

It’s also worth considering that you may be subject to the investment taxes and laws of the host country while investing directly in its stock market.

Neither the author nor editor owned positions in the aforementioned investments at the time of publication.

Frequently asked questions

Are emerging markets the poorest countries?

Emerging markets are often poorer than advanced economies, but on a global scale, they’re upper-middle-income countries, for the most part.

In economics terminology, countries with very low GDPs, such as Afghanistan or the Democratic Republic of the Congo, are referred to as “least-developed countries,” or LDCs.

Although LDCs may have the potential for rapid economic growth in the future, many are largely inaccessible (or extremely hazardous) to international investors today, due to some combination of lack of infrastructure, active conflict, or lack of a functioning legal or banking system.

Is investing in emerging markets the same as forex?

No — investing in emerging markets means investing in stocks from other countries, while forex involves trading the currencies of other countries.

Forex is a complicated and risky market that may not be appropriate for novice investors. But if you feel you’re capable of trying your hand at it, check out our list of the best forex brokers

Author

Gil Villa

View all posts

Finance

The Best Personal Finance Apps for 2024

Published

21 hours ago

September 19, 2024

Gil Villa

Reviewed
By Stacy Mike

The Best Personal Finance Apps for 2024

Meta Description Find the best budget apps for 2024. Discover free Personal Finance Apps available on the app store and google play with high store ratings. Learn about the features of these apps and how they can help manage your personal finances.

Understanding Budget Apps

Budget apps are cool tools that help you manage your money. They connect with your financial accounts, track what you’re spending, and show you where your money is going. Some apps even do more than that. They help you plan your finances and make smart decisions about your money

Top Choices for Budget Apps

There are many budget apps out there, but we’ve picked out the best ones for you. We didn’t include our own app in this list because we want to give you an unbiased view. These apps have great features and lots of people love them. Let’s take a closer look at some of them.

YNAB The Hands-On Budgeting App

YNAB is an app that helps you plan your money ahead of time. It uses a method called zero-based budgeting. This means you make a plan for every dollar you earn. As soon as you get paid, you tell YNAB how much you want to spend, save, and pay off debt. It’s a very hands-on app, but it has lots of resources to help you learn how to budget and use the app. The downside is that you need to be committed to keep up with it and it’s a bit pricey.

Benefits

– Connects with your checking and savings accounts, credit cards, and loans.

– Available on mobile, desktop, iPad, Apple Watch, and Alexa.

– Store rating 4.8 on iOS app store and 4.7 on Google Play.

Goodbudget The Envelope Budgeting App

Goodbudget is another great app that helps you plan your finances. It uses the envelope budgeting system, where you set aside money for different spending categories. It doesn’t connect to your bank accounts, so you need to add all the information manually. This could be a bit of work, but it can also help you be more aware of your spending.

Benefits

– Available on your phone and the web.

– Store rating 4.6 on iOS app store and 4.0 on Google Play.

EveryDollar The Simple Budgeting App

EveryDollar is a simple and easy-to-use app. It uses a zero-based budgeting method, but it’s simpler than YNAB. The free version requires you to enter all the information manually, while the premium version allows you to connect your bank account.

Benefits

– Allows you to connect your saving and investing accounts with the premium version.

– Store rating 3.8 on iOS app store and 3.3 on Google Play.

Empower Personal Dashboard The Wealth and Spending Tracker

Empower Personal Dashboard is an app that helps you track your wealth and spending. It’s primarily an investment tool, but it also has features that can help you track your spending.

Benefits

– Connects and monitors checking, savings, and credit card accounts, as well as IRAs, 401(k)s, mortgages, and loans.

– Store rating 4.8 on iOS app store and 4.3 on Google Play.

PocketGuard The Simplified Budgeting App

PocketGuard simplifies budgeting. It connects your bank accounts, credit cards, loans, and investments and Personal Finance Apps shows you how much you have left to spend after setting aside money for necessities, bills, and goals.

Benefits

– Tracks your net worth.

– Store rating 4.6 on iOS app store and 4.1 on Google Play.

Honeydue The Budgeting App for Partners

Honeydue is an app that helps you and your partner manage your finances together. You can both see your financial information in one place and set up monthly limits for different spending categories.

Benefits

– Allows you to sync bank accounts, credit cards, loans, and investments.

– Store rating 4.5 on iOS app store and 3.8 on Google Play.

How We Chose the Best Budget Apps

To create this list, we looked for apps that let users sync financial accounts, plan their finances, see their spending patterns, track bills, and share financial information with partners. We also checked the apps’ ratings on the iOS App Store and Google Play and read reviews from real users. We only included apps that had high ratings and lots of reviews. These ratings were last updated on Aug. 12, 2024.