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Council / Impact of Ronaldo cola move shows why council investments need to be viewed long-term, leader says

Lerwick Town Hall.

A REMINDER has been issued that the value of council investments needs to be viewed on a long-term basis after it rose by £109 million in the space of a year.

Football icon Cristiano Ronaldo was even brought up in discussion at Wednesday’s full council meeting by leader Steven Coutts as an example of the volatility of the financial market.

It comes after reports that by simply removing bottles of Coca-Cola at a Euro 2020 press conference and replacing it with water, the market value of the beverage company dropped by $4 billion due to the negative publicity.

Councillor George Smith stressed that the value rising by more than £100 million did not equate to a “windfall” for the local authority.

At 31 March this year the value stood at £423 million, making for an unusually large 40.3 per cent return. This was a rise from £314 million on the same date in 2020.

“That does not equate to a windfall. We’ve not physically received £109 million in cash, so that’s not sitting in the back account,” finance manger Manson said.

Manson stressed that in the space of a few months at the start of 2020 the value had dropped from £368 million to £314 million, which coincided with coronavirus starting to make an impact.

He said Brexit negotiations, the US election and further waves of the Covid pandemic has caused turbulence in the market.

Coutts stressed the council takes a “long-term view” of the value of its investments.

He said the Ronaldo example showed why this is the case – with the value of investments able to drop significantly at short notice.

“That provides a clear demonstration how quickly things can move in the market,” Coutts said.

“That shows you why we don’t need to look at this short-term, we need to look at this long-term and make sure we’re doing sensible investment strategies for the benefit for Shetland – today, tomorrow and long into the future.”

The leader added that the income from the investments go into the council’s budgets to pay for services.

Councillor Davie Sandison also warned against making assumptions on the return in 2020/21, suggesting that volatility could return with a “vengeance”.