Friday, December 6, 2019
Telecommunications and Regional Economic Development Ã¢â¬ Free Samples
Question: Disucuss about the Telecommunications and Regional Economic Development. Answer: Introduction: For the current year 2018, economy of United Kingdom looks decent in shape and however, it is likely to lose its momentum because fixed investment and private consumption is depressed by uncertainty of Brexit. The slowdown in the economic growth would be cushioned by robust growth in exports and loose monetary policy. A gross domestic product rate of 1.5% in year 2018 is estimated and 1.4% in year in 2019 (McKay et al., 2017). GDP growth rate stronger than expected in the quarter by the modest historical standards. Global support provided strength for the supporting the business investment and net trade. The uncertainty surrounding Brexit appear to be weighing on investment and fall that is associated with the exchange rate of pound sterling and thereby dampening the growth of consumption and squeezing real income of household. Fourth quarter growth rate of GDP is projected to be average around 13/4% (Berry, 2016). The economic growth of UK slowed down in year 2017 that resulted in s queezing of household spending power and sharp rise in inflation. The projected growth rate of UK in the main scenario is to remain modest around 1.5% in year 2018 and 1.6% in 2019 respectively. Such rate of growth is projected due to dragging on of business investment from ongoing political and economic uncertainty and subduing of real consumer spending growth relating to the outcome of negotiations of Brexit (Bank et al., 2015). It is expected that growth of service sector would remain positive and modest for the fiscal year 2018-2019 while the manufacturing sector remained to be momentum after the year ending 2017. However, due to weakness in the investment of commercial property, the construction sector has fallen back and it is projected that such looks of construction sector would continue in the upcoming year. Exports should be boosted by competitive value of pound against euro and stronger Eurozone and global economies. For the past twenty years, London has outperformed, compared to other regions of UK, London has outperformed. The growth rate of London is expected to fall to close to average of UK in year 2018-2019. Strong growth in manufacturing sector is likely to benefit the region of Midland and North UK. It is projected that spending of household will be over 30% of their budget on utilities and housing by year 2030 that is up from 27% in 2017. Over time, there will be rapid increase in spending on personal care and household services while in the long run, the spending on personal care and financial services also tends to increase. Furthermore, in the long run, retail jobs in the country could be majorly impacted by automation along with bringing benefits to consumers in the form of lower prices. It will assist companies in increasing their real level of spending and creation of jobs in services that are less automatable such as personal and health care. Business can face greater competitive advantage with the help of emerging technologies such as artificial intelligence by deploying them effectively (Tsukada, 2017). In the first few months of year 2018, the economic growth of UK is expected to slow due to weak consumer confidence, higher inflation rate and uncertainty surrounding around Brexit that discouraged high speed investment and spending. A survey of customers by Lloyds bank indicates that household were struggling to cope up with the rising prices that forced increased spending on heating bills, petrol and foods. It is projected this year that United Kingdom will remain relatively laggard among developed countries driven by the after effects of Brexit. It is indicative of the fact that economy will be able to enjoy limited benefits resulting from upswing in global growth. UK will be pulled in two separate directions during 2018 after the growth has been fostered around 1.5% (Gullifer Payne, 2015). This is so because growth of UK will be reduced by the uncertainty over the outcome of negotiations. Investment in spending is expected to be muted because it would be known by business that c onsumers will struggle with higher price of imports following the exit of UK from Britain. The robust global growth would help in relative better performance of the traded sector assisted by competitive exchange rate. Since real wages is continued to be squeezed, it is expected that there will be slow consumer spending. The reason associated with the lagging growth of UK compared to US and Eurozone is because of poor performance of productivity of country. Structural growth of UK is hold by the challenges faced by economy of overturning a decade of lost growth in productivity. The performance of UK is expected to lacklusture with expected growth rate of 1.4% in year 2018 compared to other countries (Clapham et al., 2014). Furthermore, there is likelihood that economic growth of county would be hampered by considerable uncertainties resulting from Brexit that will have diminishing impact on investment. Domestic political uncertainties are also expected to weigh down on behavior and s entiments of business. Modest positive contribution is expected made to be made by net export because of healthy global growth and pound transacting at relatively competitive level. The amount of damage pertaining to economy of UK is dependent upon precise shape and uncertainty associated with Brexit that will continue to weigh heavily on prospects. Continued growth in day to day business investment will contribute to high upfront in the new investment for generating long-term return such as contracts for new high end commercial offices and additional factory capacity. Economy is expected to underperform that is growing at the rate of 1.5% in year 2018 (Skidelsky Fraccaroli, 2017). Power to include sectors: Gas, water and multi utilities- The water industry in UK is hit by the supply of water with the day of static regional water monopolies ending. It is planned that there will be liberalization o water market indicating that customers will be allowed with choice. The two biggest water utilities of Britain are Severn Trent and United Utilities. There is no fundamental change in the current structure of UK water industry and nothing has been changed in the past forty years. Mining- For the economic and social development of nation, it is essential to have steady and adequate supply of minerals. The mineral and mining industry of UK is economically significant and the most dominant sector comprised of construction materials, oil, and gas. However, the coal production of UK is much diminished and one of the important contributions of energy mix of county is the production of coal. Import and production of minerals is evolving continuously in the country and there are ranges of factors influencing the demand such as political, social, economic, technical and other environmental factors. In the fortunes of extractive sector such as construction, oil and gas, metals and industrial materials have witnessed major changes in the past decades. For the past thirty years, there have been substantial changes in the mineral industry of UK. In terms of consumption and production of minerals, the trend has been declining (Cooper et al., 2014). Oil and gas producers- The total value of production of minerals in UK is dominated by the energy sector particularly offshore oil. Projected range of total oil reserves of nation involves probable, possible and proved reserves. Cumulative oil production in year 2011 was recorded at around 3.5 billion tones. In case of natural gas, the major issue faced is low level of storage. Storage capacity has risen to only fifteen days of supply despite the fact that considerable amount of investment has been made in the industry and this is continuing in the formation of surface geological. Retail and personal consumption including sectors: General retailers- Retailer sector is the largest private sector employer of United Kingdom and the total worth of sales generated by the sector in year 2016 stands at ? 358 billion. The four biggest retailers of UK are Sainsbury, Tesco, Morrison and Walmart and this is indicative of the fact that the chain of supermarkets closely followed by the departmental stores dominates the industry. Retail sector is witnessing transformation driven by the challenges faced in terms of rising costs and squeezing spending by consumers. For retail operations, year 2017 was tough, however, it is expected in year 2018 that there will be reduced rate of inflation along with rising wages, which would induce betterment of the retail sector in terms of growth opportunities. A further acceleration could be witnessed by retail sector as the online market continues to outperform the rest of market. Increased competition is also faced from several consumer brands operating in the market. Travel and leisure- In recent years, the success of travel and leisure sector in UK has been driven by the theme of rising and high consumer income and their confidence. Factors supporting this particular industry are the number of current market factors such as higher disposable income of consumers and lower oil price. Expansion of wealthy middle class in emerging market such as China has resulted in the success of the sector. The domestic boost to leisure and travel stocks of UK by the explosion of Chinese tourism at both national and international level (Clarkson Coleman, 2015). However, tourism related stocks also face risks from the movement in foreign exchange market. Personal goods- Over the past few years, sales of personal goods using online platform have soared and online fashion sales have increased to 24% in 2017 compared to 17% in year 2013. It is required by retailers to make the elevation of online shopping experiences as consumers crave experiences and making use of technology for creating personalized customer service and virtual reality and social media platforms. The consumer market of UK is impacted by several factors such as better connectivity and adoption of wearable by consumers (Damodaran, 2016). Technology and communication including sectors: Technology hardware and equipment- The demand for industry products in the nation is driven by factors such as ubiquity of computer technology and rising income levels of consumers. It is expected that over the next five years, information technology industry would be benefitted by greater acceptance of digital information and broader economic growth. Revenue growth in several regions will be fuelled by growing information technology demand and innovation of products (Hillier et al., 2014). Software and computer services- The system software and information technology industry is witnessing diminishing revenue resulting from shifting to shelf products from proprietary software. Due to shift towards long-term contracts and contract staff, strong growth is experienced in the management staffs. There is subsequent development in the software and computer industries due to trend towards contract staffs and outsourcing growth. Biggest growth area of UK about software and computer services are information service providers and value added services (Tricker Tricker, 2015). Electronic and electric equipment- UK is the market where electronic goods have the largest European market for high-end consumer electronics. For the power electronics, strength and future opportunities of country lies in energy generation, transportation, consumer electronics, transportation, and distribution. Media- The media and entertainment industry of UK is expected to grow at compound rate of 3% per annum and is projected to be a worth of ? 72 billion in year 2021. It is predicted that in year 2021, there will be spending more on video content than cinema dimensions such as chill and Netflix. Moreover, the digital media and entertainment sector is expected to grow twice as fast as growth in GDP of nation. UK is the fourth largest television industry in the world after United States, Japan and China (Ferran Ho, 2014). Mobile communications- The total communication revenue of UK generated by Television, telecom and radio and postal services has increased in real terms in year 2016. Telecom market of UK is one of the largest markets in Europe characterized by fierce competitions in the broadband and mobile sectors. Relatively lower level of consumer prices supports the penetration of broadband and mobile market. Recent investment made Virgin media in next generation and British telecom have resulted in the expansion of networking capabilities. The principal operators in the mobile market are British telecom, Vodafone and O2 that are engaged in trialling of 5G technologies with the intention of making commercial launches in year 2020 (Gillespie Goddard, 2017). The report is prepared for analyzing the performance of investment portfolio worth ? 2 million. Analysis and explanation of portfolio is done in the context of sector analysis and the economic situation of United Kingdom. Valuations of shares are done at the outset and the sales of shares are done at the end of investment period. Strategy behind the construction of portfolio is to diversify the risks faced by the investors when making investment in each particular stock (Levi et al., 2017). For formation of portfolio of assets, three different companies from three different sectors are chosen. The sectors that are selected comprised of General retailers, gas, water and multi utilities and electronic and electrical equipment. Companies that are selected from each sector are Pennon group, Travis Perkins and Spectris respectively. The total amount of investment made by investors is $ 2000000. It can be seen from the table that investors made the purchase of shares of Pennon group, Travis Perkins and Spectris on 5th March at unit price of $ 608, $ 1300 and $ 2626 respectively. Value of beat of Pennon group, Travis Perkins and Spectris as on the given date stood at 0.78, 0.5 and 0.76 respectively. It can be deduced that stocks of Travis Perkins have lowest value of beta. However, the value of beta of all three stocks of different companies is less than one and this is indicative of the fact that security is less volatile that than market and such stocks are regarded as defensive stocks. Investors have made equal investment worth $ 666666.667 in all the three different stocks. Now, it can be seen that share price of all the three stocks of companies have fluctuated and the share prices are increasing. Share price of Pennon group, Travis Perkins and Spectris stood at $ 639.2, $ 1319.5 and 2633 as on 9th March, respectively. It can be seen that portfolio value of Pennon group is highest at $ 700877.19 compared to other Perkins and Spectris at $ 676666.67 and $ 668443.77 respectively. Therefore, total value of portfolio is increasing to $ 2045987.63. Furthermore, as on 16th March, it can be seen that share price of Pennon group and Travis Perkins is falling to $ 605.60 and $ 1283 respectively. On other hand, share price of Spectris is increasing to $ 2701 and thereby increasing the value of portfolio to $ 685707.03. On other hand, portfolio value of Pennon group and Travel Perkins is falling to $ 664035.07 and 657948.72 respectively. This fall in price of shares of two companies is contributing to overall decline in the portfolio value to $ 2007690.84. Now, looking the price of shares of chosen companies on 23rd March, it can be seen that there is further decline in the share price. Price of shares of Pennon group, Travis Perkins and Spectris is falling to $ 583.80, $ 1229 and $ 2648 respectively. This significant decline in price of shares o all three companies have resulted in decline in total value of portfolio. Portfolio value of all three stocks as on the given date stood at $ 640131.58, $ 630256.41 and 672251.84 respectively. Therefore, total values of portfolio have fallen to $ 1942639.83 compared to portfolio value of $ 2007690.84 as on 23rd March. It can be seen that there is considerable fall in price of shares of all three different stocks and giving different values of portfolio through the period of investment. This continuous fall in price of shares of all three different stocks have induced investors to sell the stocks. Hence, it is decided by investors to short sell the shares as on date 29th March. Nevertheless, th e price of all three shares of different companies on which it is being sold has increased to $ 643.4, 1234 and 2694 respectively. The selling value of each stock that is Pennon group, Travis Perkins and Spectris as on selling date stood at $ 705482.46, 632820.51 and $ 683929.93. The total value of portfolio as on selling date stood at $ 2022232.90. Comparing the total value of portfolio on selling date with the value on which investment has been made depicts a difference of amount of $ 22232.90. Since, the change is positive, it is indicative of the fact that investors have made a gain on investment of portfolio of assets. Shares of two companies that are Pennon Group and Spectris have generated positive return and indicates gain on their individual value by amount $ 38815.79 and $ 17263.26 respectively. On other hand, investment value of shares of Travis Perkins has generated negative return or loss of amount of $ 33846.15 respectively. Therefore, it can be inferred from the analysis of two companies have performed favorably that is Pennon group and Spectris and have benefitted investors as against Travis Perkins of retail sector that have performed unfavorably and have reduced the total amount of gain that investors could have warned at the date of selling the asset portfolio. 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