🤏 Citi's small-cap stocks

Unexpectedly heady inflation in Tokyo could rattle the Japanese central bank | A French pharmaceutical firm lost billions fast | [Love Finimize? Refer a friend (and get cash 💰)]( [Finimize](   TOGETHER WITH   Hi {NAME}, here's what you need to know for October 28th in 3:07 minutes.   🔮 The world is changing – and personal finance is no exception. So join us for [Peer-to-Peer Lending: The Next Opportunity]( in partnership with Prosper on October 31st, and find out how lending cash could outdo even traditional investments. [Grab your free ticket]( Today's big stories - Higher-than-expected inflation data emerged from Tokyo, which could force Japan’s central bank to abandon its current tactics - There’s an opportunity in small stocks that other investors have overlooked – [Read Now]( - French pharmaceutical company Sanofi announced a plan to separate its businesses, and its stock price was punished Shock The System [Shock The System] What’s going on here? Inflation in [Tokyo]( jumped out from the shadows in October, taking the country’s central bank by surprise. What does this mean? After lying low for the last four months, inflation in Tokyo leapt into action during October. Goods – excluding volatile food prices – were 2.7% more expensive than the same time last year, while services prices rose at their fastest pace in nearly 30 years. Now, these figures just cover Japan’s capital city, but they’ll likely foreshadow the national data that’ll come out next month. Either way, whispers are already circulating: markets are wondering if the Bank of Japan (BoJ) might be forced to break away from its current inflation-fighting tactics. Why should I care? For markets: The name’s Bond, inflation-fighting Bond. So far, the BoJ’s been striking a balance between tackling inflation and protecting economic growth by preventing its 10-year government bond rate from moving any more than a percent away from its target on either side. That should, in theory, keep prices relatively level without jeopardizing domestic growth. But now that inflation’s threatening to blow past the central bank’s forecasts, the BoJ’s hand might be forced. That could mean widening the limits on those bonds, or bringing that strategy back to the drawing board completely. The bigger picture: Japan’s making lemonade out of lemons. Japan’s pulled interest rates up a lot slower than the US, UK, or Europe, which has directly caused the country’s yen to lag behind the dollar and euro. Thing is, that’s been a win for major Japanese companies that rely on exports, because a weaker yen makes their products more attractive to foreign buyers. And even with the threat of higher interest rates and the stronger currency that could come with them, corporate reforms in the country are buoying up businesses even more. No wonder big-name investors like Warren Buffett are still exploring the country. You might also: [Buffett didn’t simply buy big in Japan, he left a trail of investing ideas for you](. Copy to share story: [( 🙋 [Ask a question](mailto:questions@finimize.com?body=Ask us a question: Where are you writing from? Let us know and we'll mention it when we reply.&noapp=true&subject=Shock The System&utm_campaign=daily-global-28-10-2023&utm_source=email) Analyst Take Why It’s Time For Small-Cap Stocks To Sparkle [Why It’s Time For Small-Cap Stocks To Sparkle]( [Photo of Carl Hazeley] Carl Hazeley, Analyst The US stock market’s [gains this year]( are partly thanks to a handful of massive and buzzy stocks. That’s left small and mid-cap stocks ignored and overlooked – and [created an opportunity](. See, analysis by Citi Wealth found that [“high-quality” smaller stocks]( typically outperform their bigger peers in the long run. And with valuations looking attractive and interest rates slated to start dropping next year, [now could be the time]( to buy. So that’s today’s Insight: [how to pick out the high-quality small stocks that could outperform, and two strategies you could use to take advantage](. [Read or listen to the Insight here]( SPONSORED BY CROWDCUBE Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. [Take 2 minutes to learn more](. Your gateway to pre-seed startup investments [Crowdcube]( is one of the leading private market investment platforms. Just check out the stats: over 1,300 successful raises, 1.6 million-plus members, and more than £1 billion raised on the platform to date by startups like Revolut, Monzo, Mindful Chef, and Nutmeg. And now thanks to [a fresh partnership with Haatch](, investors can buy into [pre-seed round companies]( that are solving existing pain points for consumers through Haatch’s SEIS fund. These funds are usually exclusive and expensive. But now, you can [invest from £2,000 — five times cheaper than the typical entry point]( in a diversified portfolio of 10 to 15 pre-seed firms. And get this: SEIS funds can let investors claim up to 50% upfront income tax relief, depending on individual circumstances. Luckily enough, [the waitlist only opened on October 26th](. [Find Out More]( Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. [Take 2 mins to learn more](. Information is for guidance only and is dependent on individual circumstances. It is always recommended that you take professional advice regarding tax reliefs for your individual circumstances. When you support our sponsors, you support us. Thanks for that. Split Decisions [Split Decisions] What’s going on here? Sanofi announced plans to [spin]( off its consumer healthcare business, and that cost the French pharmaceutical company a few billion overnight. What does this mean? Sanofi’s plan to sell off its consumer healthcare business was never going to make the company a quick buck. Quite the opposite: it’s a long-term game plan that could allow the pharmaceutical firm to pour more cash into drug research. And while that may well pay off in the future, Sanofi did need to sacrifice the 32% profit margin target it had set for 2025 as a result. Next year’s outlook, too, ended up roughly 9% worse than analysts expected. Investors can be patient when they need to be, but not this time: they sent Sanofi’s stock down 16% after the news. Why should I care? For markets: That’s an expensive decision. That knock cost Sanofi’s market value €20 billion in a single day, and the firm won’t be able to rest easy for a while. See, investors are already uneasy about companies' risk management during these dicey days of business-bruising high interest rates. What’s more, shaky stock markets and high interest rates aren’t exactly a dream dealmaking environment, which casts some doubt over Sanofi’s ability to make the most of the sale and make decent returns on its resulting investments. The bigger picture: You win some, you lose some. In fairness, businesses can’t simply rest on their laurels in this risky environment. Money’s only getting more expensive to borrow, which puts a cap on how much firms can invest in themselves. So while major strategic changes will be painful in the short term, risk-taking companies may emerge from the downturn at the top of the pile. And for investors who manage to spot the most promising strategy adjustments, the future could look just as lucrative. You might also: [The big opportunities behind big pharmaceutical companies](. Copy to share story: [( 🙋 [Ask a question](mailto:questions@finimize.com?body=Ask us a question: Where are you writing from? Let us know and we'll mention it when we reply.&noapp=true&subject=Split Decisions&utm_campaign=daily-global-28-10-2023&utm_source=email) 🪧 Forget the billboards Old-school tactics won't engage [modern investors](. Capturing the attention of clued-in whippersnappers takes something a little more [up-to-date]( – like a [promotional partnership]( with Finimize. [Find Out More]( 💬 Quote of the day "Mistakes are always forgivable, if one has the courage to admit them." – Bruce Lee (a Hong Kong-American martial artist and actor) [Tweet this]( SPONSORED BY CHAIKIN ANALYTICS Discover Wall Street’s stock indicator for free Marc Chaikin has street cred. Specifically, Wall Street cred. Chaikin’s [stock indicator]( – the “Power Gauge” – helped tip early traders onto Tesla, Moderna, Riot Blockchain, and Nvidia. And now, you can [get a glimpse into the system](. 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