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Transcript: Could Scottish Independence Derail Your Investments?

With Scottish Nationalists being told a full currency union with the UK will not be possible if the Scottish people vote for independence, we’re hearing more pundits warning of a possible hit to the country’s massive financial services sector if the “Yes” campaign wins the day. But Owain Bennallack hears from his Foolish colleagues Stuart Watson and Mark Rogers that it’s probably far too soon to panic about any financial interests you have north of the border. Plus our latest look at the UK’s febrile housing market, and the best and worst countries for equity investors over the past 114 years.

The following is an unedited transcript of this podcast:

Owain Bennallack: Hello, and welcome to Money Talk, the regular investing roundtable from The Motley Fool! I’m Owain Bennallack, and with me in the studio today I have not one, not three, but two of my esteemed Motley Fool colleagues; long-time Motley Fooler, Stuart Watson, and the still young and idealistic Mark Rogers. Welcome to the studio, chaps.

Stuart Watson: Owain, good to be here again.

Mark Rogers: Hey, Owain.

Bennallack: The Winter Olympics are over, and didn’t we do well?

Rogers: Did we?

Bennallack: Did we? Nobody seems to know.

Watson: I think four medals was one above the target — although it sounds, as you say, a bit weedy, compared to the Summer Olympics.

Bennallack: Is that four golds, or four in total?

Watson: Four medals in total, yes.

Bennallack: Yes. Back in the Summer Olympics we got, what was it, 2,700 golds?

Watson: It was about that, yes.

Bennallack: Yes, so nobody really …

Rogers: It’s the taking part that counts, right?

Bennallack: As Eddie “The Eagle” showed us, back in the day.

Watson: And Vanessa-Mae, who took part this time as well.

Bennallack: I saw that.

Watson: And came last, obviously.

Bennallack: She was in the skiing, wasn’t she, for Singapore?

Watson: I don’t know if she was on the violin as she came down the slopes, or something like that. That may be why she came last.

Bennallack: I think she just basically had a good chance because nobody else in Singapore has ever been skiing, so she was able to get in and cling to the 2,700th position in that race. Well done, Vanessa!

Well, while some of us have been bewitched by the Russian events in Sochi — not us, but other people — back here in Blighty it’s been business as usual, really.

First of all, Alex Salmond has continued to argue the case for Scottish independence, while it seems everyone you’ve ever heard of is on the other side of the fence, urging the Scots to vote no; not least including some investment managers, as Stuart will explain.

It’s also a business as usual, if not déjà vu all over again, for the U.K. property market, where house prices are romping away, once more. Whilst also wringing your hands, which I do every day about this, is it too late to invest in the housebuilders that are seeking to capitalise on those higher prices?

Then, if you happen to know any incredibly old investors who’ve done really well by investing in equities around the world, we might be able to tell you where they put their money. Listen on to this podcast, and we’ll tell you what countries did best and what countries did worst over the last 114 years.

Then, finally, we’ll run through three companies that we’re interested in, right now. That’s a packed agenda.

Rogers: Yes, sounds good.

Watson: It certainly is.

Bennallack: It sounds pretty exhausting, so let’s crack on to it.

After decades of sometimes rather heated debates — obviously sometimes fisticuffs, I think is the technical term — the date when Scottish people will vote yes or nae to Scottish independence approaches. Mark’s shaking his head at my attempt. That’s very wise, Mark!

On September the 18th, we’ll find out whether we’ll need a passport to pop north of the border to the Edinburgh Festival, whether Scots terriers will count as an exotic breed of foreign dog, whether the U.K. will lose the on-going contribution of all the brilliant Scottish engineers, scientists, and all the others who’ve done so much for Britain over the last few hundred years — maybe not the politicians.

But, on the bright side, British schoolchildren will never have to listen to Robbie Burns again!

Rogers: The Naked Trader?

… You knew I was going to make that joke!

Bennallack: Well, it’s funny, because when I wrote “Robbie Burns” — and I had to Google some of his works and check again that they were written in English — only then did I realise that Robbie Burns was also named after the Naked Trader.

Rogers: He must get that joke every single time, right?

Bennallack: But he’s been in the studio room, and I didn’t make that joke.

Rogers: You didn’t make that pun?

Bennallack: I should have said, “Robbie, a ‘twixt, a twain, a blah blah …” But I didn’t. I just said, “What shares are you buying?”

Rogers: What a wasted opportunity.

Watson: That’s his sort of joke.

Bennallack: It is.

Stuart, there will be all sorts of political and cultural ramifications if Scotland votes yes to independence. Perhaps some of these sorts of jokes will be illegal in Scotland, because you won’t be allowed to make Scottish jokes.

Rogers: I hope so.

Bennallack: But what could it mean for our investments?

Watson: Well, the Scottish financial sector is huge. The two big banks are up there — Lloyds and RBS, obviously — but you’ve also got Standard Life, fund managers like Aberdeen Asset Management, and the investment trust sector. I know we’re both very fond of investment trusts. You’ve got Edinburgh Investment Trust, Caledonia Investments, Alliance Trust, so it’s a big sector there. They’re all wondering, what’s going to happen if independence goes ahead.

Bennallack: It’s a bit interesting with Lloyds, that they moved their headquarters when they bought HBOS, to Scotland, thinking “What could happen?”

Watson: I think they’ve now registered TSB in England, as an English company, rather than as a Scottish company.

Bennallack: Have they? They can move back and forth.

Well, I’ve read of multiple ways in which investors, north and south of the border, might be affected by Scots voting yes. For a start, Scotland could lose the pound. Scottish financial companies could lose access to U.K. regulation which will, at the very least, create a cost for them. And Scottish fund managers could lose assets because nervous investors could pull all their money out of Scotland. Is there anything else that I’ve missed out?

Watson: I think that broadly covers it. I think the main thing is, it looks at the moment that they won’t be able to use the pound in the currency union. They could still just use the pound, but they wouldn’t have the Bank of England. They wouldn’t have the lender of last resort, so that makes having big banks like Lloyds and RBS … that’s pretty unfeasible, to carry on with that, so they could lose, south of the border.

Bennallack: Because just in sheer, relative to the GDP of Scotland …

Watson: Just too big.

Bennallack: They just can’t. It would be like Iceland all over again.

Rogers: Yes, the banking assets are 12 times the size of the Scottish economy. Remarkable.

Watson: Yes, it’s just huge. And obviously there’s regulation as well. No one knows what’s going to happen. You could say, “Well, having a different regulator might not be a bad thing,” but it could be tougher regulation, it could be easier going forward.

There are other things like compensation schemes. Obviously we’ve got the Financial Services Compensation Scheme here. There’s an EU scheme as well, but there’s also doubt as to whether Scotland is going to be allowed … will it have to re-enter to go back into the EU? There’s another doubt there.

Bennallack: I think on the compensation scheme they might be okay, in that I think financial firms fund that scheme. You’d still need the government backstop, which we’ve decided they can’t forfeit.

Watson: Yes, unless there’s a lot of conversation to play out. It’s something like the ISA situation they had a few years ago. It would be a big hit.

Bennallack: It’s stuff that’s external to the rules. They just don’t have the firepower.

Watson: Yes, and taxation as well. If a lot of these companies want to move south of the border, will their corporation tax come with them? You could also say most of their customers will be in the U.K. as well — or the rest of the U.K. — so, will they be happy dealing with a Scottish company?

Bennallack: To me it does sound like a lot of faff, but I guess you could look at somewhere like Switzerland and say that there weren’t a lot of Swiss people, and they were Switzerland, and they had a lot of financial assets over the years. They’ve had a thriving financial services sector.

Watson: Yes. I think it’s the uncertainty at the moment. There’s pretty much an information vacuum, and no one’s really sure what’s going on; the old saw that investors hate uncertainty, so they tend to act first and think later.

Bennallack: Yes. I guess it could be a bit like the Y2K bug, which we’ll remember from the turn of the century, where everyone thought all computers were going to crash, and then partly because people did something about it, and partly because it was completely over-hyped, no computers crashed. A couple of pocket calculators couldn’t do log functions anymore.

Watson: At the moment, it’s a situation to be aware of, I think really. It’s something to watch. I don’t think you really need to take too much action there.

Bennallack: Mark, is there any evidence that any investors are taking too much action at the moment?

Rogers: I haven’t seen too many signs of money pouring out of Scottish shares. Just thinking of a few examples of Scottish companies; IRN-BRU maker A.G. Barr is up 6% so far this year. Royal Bank of Scotland, that’s another obvious one. Their shares, again, are up about 7% in 2014. So, I don’t think there’s too much evidence, at the moment at least, that market sentiment towards these shares is being depressed by this, either rightly or wrongly.

But I do think there are quite a few things, as Stuart says, that investors need to be aware of, where nobody really knows just yet, exactly how things — like for instance tax, pensions, and things like ISAs as well — are actually going to pan out for investors on the other side of the border.

Bennallack: It could be interesting, Stuart, with those investment trusts. If they did start to see fund withdrawals they could have to start selling assets. You could end up in a situation where they move to a bit of a discount because people got nervous about them. I guess, if you were really ultra-cautious, you could look for an English equivalent of, say, an Alliance Trust.

Watson: Possibly, although I think one thing; it’s going to take at least 18 months — even if there is a yes vote — for Scotland to actually become independent, so there is quite a long transition period for all these sort of things to take effect, and for people to work out. So I don’t think, until the vote actually happens, that these issues will actually start to crystallise.

Bennallack: I guess that’s when you would see the share price hit, so if you wanted to get ahead of the share price …

Watson: Possibly.

Bennallack: Possibly.

Yes, I think if I was a worried person … I don’t think they’ll get a yes vote, so I think that’s the major reason not to worry. But you could take something like a Caledonia or an Alliance Trust and swap it into an RIT Capital Partners, or another global fund.

Watson: Possibly, yes.

Bennallack: Well, the “unitedness” of the United Kingdom may hang in the balance, but some things never change. Mark, it seems like we’re in the midst of yet another property boom.

Rogers: Yes, you’d think so, looking at the housebuilding shares over the last 12 months. A few examples: Redrow is up 73% over that time, Barratt Developments is up 82%, so there’s a real boom taking place in those share prices, certainly — and maybe quite rightly considering, according to the ONS, the average U.K. house price just hit a new all-time high of £250,000, on average.

Bennallack: That’s incredible. I can remember when it hit that in London.

Watson: It’s remarkable.

Bennallack: What is it in London now, do you know, Stuart?

Watson: It might be over £500,000 now. I’d have to check that, though.

Bennallack: Good grief.

Rogers: Yes; 70,000 mortgages in the last month alone were taken out as well. That’s not too far off the 2007 levels, so I think it’s fair to say at this point that, after spending the last couple of years recovering, the U.K. housing market is back, at least.

Bennallack: The thing about it is, as always — certainly in my lifetime — it doesn’t feel particularly sustainable. I’ve got friends in London who’ve seen their houses go up by like 30%. Some friends of mine bought a house two streets away from me in 2010 for about £500,000. Now there’s one next door for £725,000 I think it’s on for, Zone 3 in London. It’s a terraced house.

Watson: I can see you going green!

Bennallack: I’m just slowly scrunching my face! But I mean, the economy has not changed that much in two or three years. I guess we’re not going completely bust — that’s what we’ve decided. Is that enough to justify these kind of rises, Stuart?

Watson: Possibly. It’s still an attractive place for our money, as well, especially in Central London. I think you see a lot of foreign buyers. We’re still not building enough houses; that’s the simple reason. We’ve still got low interest rates, you’ve got extra boosts now like the Help to Buy scheme, so it’s all just pushing prices ever-higher.

Bennallack: Yes, those Help to Buy schemes could seem a little bit …

Watson: Unnecessary?

Bennallack: Yes, in a couple years’ time!

Mark, I’m guessing housebuilders are possibly a bit too inherently cyclical to interest you and the kind of shares you tend to like. But if we do have a structural shortage of homes, as Stuart says, then might even these kind of toppy-looking shares be on firm foundations? If they’re going to build hundreds of thousands of houses for years to come, maybe the prices are justified?

Rogers: Yes. Firstly, I don’t think there’s anything inherently wrong with cyclical businesses, by the way. I just think you have to make sure that, when you’re valuing them, that you’re not doing it just based on what they can earn in a terrific year. You have to be aware that they’re cyclical; that they have bad years as well as good years. There is that problem in estimating the value of these companies.

Instead, if you want to be looking at some of these, let’s say housebuilding shares, it makes sense to be looking at them when they’re relatively depressed. No one will doubt or deny that, over the last few years, they’ve been in a real slump, at least from 2009 until probably about early 2012.

So, I think when you look at how low, for instance, Redrow got during that period, I think it was about £160-odd million market cap, at the low point. And even in 2011 it was about £300 million.

Well, now, if you want to ask how depressed it is, it’s now over £1.2 billion, which is in excess …

Bennallack: Not depressed!

Rogers: Not depressed, which is higher than it was, even in the peak of 2007 when they were building loads of houses. So I think you have to say it’s not as depressed as it was.

Then again, it seems pretty clear that we do need to build more houses in this country, so if you were to say five years from now you expect Redrow — or any of these companies — to be building more, then perhaps there’s further to go if their profits are higher in a normal year, five years from now.

Bennallack: I’ve invested in a few of these housebuilders over the last two or three years, and done nicely. Originally, I bought them because they were priced below book value, which is not the case anymore. Now some of them are getting on closer to 2x than 1x book.

But, if you want to keep holding the shares, you persuade yourself that the book value is understated, because the land prices are going up so quickly. Does that cut any ice with you, Mark?

Rogers: Well, I know that Redrow’s book value is higher than it was in 2007. It’s around about £650 million, roughly, now — if I can remember that correctly. At the same time, as you say, that’s almost twice book now, so the extent to which you’re getting a bargain on those shares is obviously reduced.

Bennallack: No, they’re more like growth stocks now.

Stuart, in my memory — and this may be completely misremembering — do you have a family housebuilding business, or something like that?

Watson: Well, there’s a little bit of property development in the family, yes, going back a bit now.

Bennallack: So, would you be out building property now?

Watson: Me personally? Well, there’s still quite a lot of demand out there. Big schemes I think are probably tough to get off the ground now, but little bits here and there. But it’s very hard to get plan permission. Lots of people just want to build on the edges of towns and villages in the Green Belt, and there’s just on-going battles with planners, trying to get these through. It just takes ages to get even the smallest scheme through.

Bennallack: It’s conceivable that — certainly in the U.S., where I’ve also bought a housebuilder — lots of the little housebuilders went bust. Maybe that kind of thing in the U.K., if lots of the little people have thrown in the towel, that could see more business being done by these big builders, I guess.

Watson: Possibly, yes.

Rogers: Do you think it’s inevitable that we’ll start to see reversals on that Green Belt planning permission problem over the next few years? Do you think it’s inevitable that they will have to start building in these areas?

Watson: I think they may have to, but I think it’s still going to be a long time before you overcome the NIMBY effect. Because any time you see it, if you look at any sort of local paper, there’s always “evil developers” doing this and that.

Bennallack: It is incredible, though. Stuart, you live I think on the right side of the Green Belt.

If I visit friends in Beaconsfield or somewhere like that, and you leave London, it’s almost like pulling out of shantytowns. Then you go through half an hour of fields, and then you get to Beaconsfield or wherever, and the people there say to you, “How can you live in London? It’s so crowded. It’s so polluted.” Obviously, they’re enjoying all the benefits of that Green Belt being protected.

Really, what would be better? Would it be better to stick a housing estate on the edge of every village, or to just say, “Let’s build a new Milton Keynes?”

Watson: No government wants to be seen as the government that got rid of the Green Belt, though.

Bennallack: Yes, that’s true.

Well, let’s turn from the crazy, everyday noise of the markets, to the long-term big picture. When I say “long-term,” I mean ultra, super-duper, out-of-the-park long-term. Mark, you went along to the launch of the latest Credit Suisse Global Investment Returns Yearbook a couple of weeks ago. Can you give us a summary of what it was all about, and also what were the pastries like? Because I went three years ago, and they were really good!

Rogers: I was just interested in the presentation, so sadly, no pastries for me.

Bennallack: Mark, Mark, Mark.

Rogers: I know. Rookie error, right?

Bennallack: Definitely.

Rogers: Yes. It’s a really interesting presentation, for anyone who has an interest in long-term economic statistics. It’s basically a group of very experienced economists at the London Business School, who have gone back as far as 1900 to crunch the numbers on stock market returns in different countries around the world, over that time period.

It’s really interesting, because you can see how long-term investment has played out over the ultra-long term, and how power has shifted as growth and politics have shaped the world.

Bennallack: Yes, 114 years is obviously a lot longer than even I’m going to live — and I eat a lot of vegetables. Mark doesn’t eat any vegetables, so …

Rogers: Yes, that’s true.

Watson: I’m in the middle, I think of those two.

Bennallack: Yes, probably for Mark this is all science fiction.

Rogers: Yes.

Bennallack: Obviously, nobody could invest for 114 years, but a few family funds might have done so, I guess — estates. The Rothschilds, they probably had a bit salted away.

Rogers: Possibly.

Bennallack: Out of interest, even though nobody could have seen those returns, which countries would a wise investor 114 years ago have been best putting their money into?

Rogers: The U.K. and the U.S., as you’d expect, did quite well over that time period; about 5-6% — after inflation, that is — so you can think about that. That’s £100 in today’s money, which would have got you a nice meal out I suppose, invested in the stock market in 1900 in the U.K., would be worth £37,000 in today’s money.

Bennallack: I would have thought £100 in 1900 would get you a house in Mayfair!

Watson: Quite possibly.

Rogers: That’s what I mean. It’s £100 in today’s money, so that’s after inflation we’re talking about here; real returns.

Bennallack: Okay, got it.

Rogers: The same investment in bonds, interestingly, would be worth about £4,900 — compared to £37,000 — so, quite a big difference from the rates of return, compounded over the long term there.

The real winners were Australia and South Africa, which I thought was interesting. They had annualised gains of about 7%. Now, that doesn’t sound too different from the 5% I just quoted for the U.K.

Bennallack: 2%?

Rogers: Right. Not much difference.

Bennallack: No.

Rogers: However, in terms of the difference in the return that you get for that £100 put into the respective stock markets over time, that £100 would be worth over £370,000 today, invested in either Australia or South Africa’s stock market — so you can see the effect of compound interest over time, right there.

Bennallack: Yes, definitely. What about if you’d picked the wooden-spoon candidates?

Rogers: The most disappointing, without question, was China — where real equity returns were negative over that time period, obviously as a result of …

Bennallack: Becoming communist!

Rogers: Communist victory in 1949, which rather scuppered long-term plans there.

Bennallack: To be honest, about the only thing the communists got right was they destroyed capitalism, I guess, in China.

Rogers: Right, yes. If that’s “right.”

Bennallack: Well I mean, from their perspective; if somehow they’d managed to become communist, give up after 50 years, and somehow there had still been good equity returns.

Rogers: Yes, not good for stock market returns, anyway, if that’s what you care about.

Bennallack: Also, I noticed when I was looking through them, Stuart, that Russia, Germany — countries that were affected a lot by the war — they tended to do badly. You’re the most grizzled veteran of us, here. I haven’t called you a “veteran” for a while, so I put that in; not quite 114 years; what did you make of the results?

Watson: It was quite interesting. Looking at it, China was one which stood out. Even in the last 20 years it’s been negative, which surprised me.

Bennallack: Considering all the hype.

Watson: Yes. It’s been one of the BRICs, but then Russia over the last 20 years or so has been one of the best.

But then, New Zealand did quite well — obviously Australia, New Zealand, South Africa — so you’ve got to play rugby and cricket, be part of the Tri Nations, and you’re sorted, I think.

Bennallack: Well, you’ve got to be good at rugby and cricket.

Watson: Yes, that’s true.

Bennallack: I think Scotland — to go back to them — they’ve been playing a bit of rugby recently, but maybe not such the beaming …

Watson: Well, they won last week-end.

Bennallack: They did, they beat Italy last week.

Watson: Yes. I don’t know about their cricket team, though. That’s not so good, I suspect.

Bennallack: People are often shocked that Italy play rugby — that’s all I’ll say about that. I’m going to get some mail about this one, aren’t I? I admired the Scots. I thought they did really well against the English, even though their score was rubbish — and I’m Welsh, by the way, so I’m on their side.

Watson: I’m a quarter-Scottish. Should I mention that?

Bennallack: Okay, good. So, I’m there spiritually. I just would like to see them do a little bit better.

At The Motley Fool we take the long-term perspective, as I say; even the century-long perspective. But when you go to the stock market and buy some shares, you can’t really invest in 114 years ago, unless you’re Doctor Who.

Mark, what’s catching your interest right now?

Rogers: Well, with us talking about Scotland so much today, I thought I’d have a look at a Scottish company; the oil services firm, Wood Group. Now, it’s been a difficult couple of years for Wood Group — which, by the way, supplies engineering services for the oil and gas industry. The shares have gone nowhere over the last two years.

But with a few new contracts being won in Canada and Central Africa, earnings are expected to pick up again. It’s trading around 12x forward earnings, which I think is quite attractive. Gearing is modest, and I think the shares are currently relatively undervalued.

Watson: What, in fact, would you see — Scottish independence, going back to that — I imagine a lot of their business is still based in the North Sea, so would that be a boon for them, or a disaster?

Rogers: There are probably a lot of worst-case scenarios that we could throw in there, but around about 20-odd per cent of their revenues are derived from the U.K., so presumably a lot of that would be North Sea.

Watson: That’s fairly well diversified, then.

Rogers: Yes. When you look at it from a global perspective, that’s still 70-odd per cent of their revenue is from elsewhere.

Bennallack: That’s definitely an interesting stat. I’ve been looking at this sector, because it is depressed, and the U.S. companies seem to have made a bit more of a recovery. If Wood Group is effectively globally diversified anyway, you might be able to get into that recovery cheaper by buying here versus, say, a National Oil Well or whoever in the U.S.

Rogers: Possibly, but I think you have to take it on a company-by-company basis. They all have different abilities to win contracts, etcetera, so you do have to be careful that you’re not ending up with the one or two companies that end up falling behind in terms of the contracts they’re winning, etcetera.

Bennallack: They’ve obviously got a good lineage, Stuart, Wood Group.

Watson: Yes, I think so. I think their chairman, or ex-chairman, has just done the main report on the North Sea industry for the U.K. and the Scottish government, yes.

Bennallack: There you go. Buying into oil services royalty, there.

Stuart, you’ve brought another venerable name to the studio this week.

Watson: Yes, Rolls Royce had a profit warning recently. I think the share’s off about 20% — obviously a maker of aerospace and marine engines.

Bennallack: Not the cars anymore — as you always have to say.

Watson: Not since the early ’70s, I think, so quite a long time. Yes, they re-floated back on the market in ’87, didn’t do much for about a decade and a half, but they’ve been a great growth share for the last 10 years.

Bennallack: It was mainly when they switched to this service model, wasn’t it?

Watson: Yes, very much so. I think half the sales at the moment are the original equipment, and the other half is on-going service contracts. They’ve got a nice big order book. I think the order book is up about £70 billion, as opposed to annual revenues of about £15, so it’s about four or five times the size.

Bennallack: I’ve seen — as we’ve all seen — that the U.S. have been cutting back a little bit on defence. In fact, I even saw a stat saying it was going to go back to the lowest level since after World War II soon. Presumably, that’s going to affect Rolls Royce?

Watson: Yes. You could say that’s good news for us, generally, but not so great for defence manufacturers. I think BAE also had a bit of a warning recently. This was basically the reason behind Rolls’ recent warning as well. They’re expecting flat earnings in 2014, and then a resumption of growth in 2015. I think they’re about 14x profits at the moment, but quite a low dividend yield. It’s only just over 2%.

Bennallack: Okay, worth keeping an eye on them, then.

My share, last and least as always, is HSBC, which fell over 3% when it brought its results out last week. A global bank, absolutely massive, £120 billion in size; “The world’s local bank,” I think they call themselves. But they’re being hit primarily by the fact that they’re “the world’s local bank” that does a lot of business in China.

China is nobody’s favourite place at the moment. The stock market seems to fall every day, people are worried that there’s going to be a property collapse, people are worried they’re not going to buy iron ore anymore, all these kinds of things.

I think it’s kind of in the price. The P/E is less than 10, you get a dividend yield of about 5.5% and, interestingly, on a price-to-book value basis, it’s massively cheaper than Lloyds now. That’s not necessarily irrational; our economy is doing well, and some of the places where HSBC operates definitely are slower than they were.

But I think if you wanted to buy a big bank and tuck it away, it looks like future banking is going to be all about scale, so a really big bank would presumably benefit.

Rogers: Owain, do you know roughly what sales are generated in what you’d call emerging markets, as opposed to developed markets?

Bennallack: It probably depends on how you would define “emerging.” It’s well over half, probably, if you count Southeast Asian countries.

Rogers: Do you see that as more of a long-term opportunity than worrying about the current risks in the headlines, or are you maybe more cautious because of that?

Bennallack: I think there’s definitely issues in emerging markets at the moment. My gut feeling is that they’re overdone. I think they’re in a much stronger place than they were last time we had a sort of crisis in emerging markets. I think a lot of it’s in the price. I think they’ve got a lot more solid national balance sheets and whatnot.

But there is a danger, always with these things, that you do get kind of a contagion effect, and that does knock some of the emerging markets. If that happened, I think HSBC would be affected. I think a lot of shares would be affected, and maybe some of those aren’t priced for it.

Maybe if you were going to buy, you could buy in stages. You could buy some now, and some if the wobbles go, and if they don’t go, you could double up.

Rogers: That’s interesting.

Bennallack: Well, I’m off to go to the Longevity Calculator on the Internet to see if I can live for 114 years. I’m thinking … Stuart’s shaking his head. He doesn’t see that coming from me.

Rogers: You should switch to my diet, Owain. I’m pretty sure you’d make the 114 if you stuck to chocolate, Diet Coke, coffee — staples of my diet.

Watson: You’re just copying Warren Buffett.

Rogers: That works for me.

Watson: I think I saw a stat that almost half of people born this year will live to see 100 in the U.K. — something crazy.

Bennallack: Yes. I’m really sceptical of it. There are such stats around. The real gerontologists — is that what they call them? Gerontologists? — believe the first person who will not die has probably been born.

Rogers: That’s incredible.

Bennallack: It is incredible. He or she should be investing.

Watson: Robocop type thing.

Bennallack: I guess, yes, at some point you get put into an aquarium and fed flake food, that you have for tropical fish.

Watson: Futurama.

Bennallack: Exactly! Well, obviously, we’re looking forward to the future with that kind of rosy outlook ahead, so until the next fortnight — and all the fortnights to come — I’ll say goodbye.

Rogers: Bye, everyone.

Watson: Bye, guys.

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