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Press tips & headlines: RWS Holdings, GlaxoSmithKline, Barclays...

Here is a selection of today's business press headlines.
April 15, 2014

As Chinese companies increasingly look to rigorously protect their intellectual property claims in the western world companies such as RWS Holdings (RWS) will benefit. The firm obtains 70 per cent of its sales from translation services for corporates that allow them to protect their copyrights across a range of territories. The latest data from the World Intellectual Property Office showed that patent filings jumped five per cent last year to 205,000, while those in China did so by almost 16 per cent.

Riding on that trend the company is managing organic growth of 7 per cent, its latest trading statement shows. More importantly, that trend rate of growth looks to be sustainable. Nonetheless, the stock is now selling on more than 23 times’ earnings. “This begins to look a touch expensive, even if the long-term drivers for growth are there. Hold,” The Times’s Tempus says.

Nothing lasts forever. Fortunately for GlaxoSmithKline (GSK), that includes bad news. Bribery allegations in China, Iraq and now Poland have been weighing on the shares during the past six months. Worse even, pharmaceutical shares have basically been trading sideways over the last 12 years. During that time companies have been grappling with lower profitability as their patents expire and, as a result, they are faced with competition from generics.

Nonetheless, the industry has high barriers to entry and has a formidable wind in its sails – ageing populations in the Western world. The father of value investing, Benjamin Graham, always recommended “to ignore the glamour stocks of the day and look for companies that were out of favour, misunderstood or apparently priced too cheaply”. At 13 times’ next year’s earnings and on a 15 per cent discount to its European peers the Daily Telegraph’s Questor team is still comfortable holding the shares for the long term. Buy, says Questor.

BUSINESS PRESS HEADLINES:

In an attempt to placate shareholders’ ire over the recent 10 per cent increase in its bonus pool, Barclays (BARC) is to announce that it will change the head of its remunerations committee, Sir John Sunderland. He is to be replaced by Crawford Gillies, a director at Standard Life, Scottish Enterprise and Mitie Group. The announcement may come as soon as today, according to a report from Sky News cited by The Times. Gillies is also set to take over the chairmanship role later this year.

The commodities complex is seeing significant buying pressure as a result of recent events in Ukraine, which it is feared might disrupt global supplies for many such goods. Wheat futures rose by 3 per cent to $6.80 a bushel on the heels of the escalation in tensions between Russia and Ukraine and have gained 14 per cent since the start of March. Ukraine, which is often dubbed the breadbasket of Europe, is the world's third largest exporter of wheat. Farmers in that eastern European country are already struggling to secure the credits they need, which may impact on production, The Times reports.

The European Parliament is set to vote today on the Markets in Financial Instruments Directive or Mifid. It is to include some of the toughest curbs on the controversial use of high-frequency trading (HFT). The European Union's financial services commissioner, Michel Barnier, yesterday said, "While HFT trading might bring some benefits, we need to make sure that it doesn't cause instability, and isn't a source of market abuse. That's what these rules set out to achieve, according to The Daily Telegraph.

Toscafund, the hedge-fund led by former Royal Bank of Scotland Chief Executive Sir George Mathewson, has liquidated its entire holding in online dating outfit Cupid. Over the last year the investment group had built up a £5.1m, 11.2m share stake in the company, representing 16 per cent of its capital. The above was revealed by the firm itself, whereas the hedge-fund refused to comment, The Scotsman reports.

US President Barack Obama and his Russian peer Vladimir Putin held a call yesterday, at the request of Putin, the first between the two since March 28th. Obama told his Russian counterpart that a diplomatic solution was still possible. At the same time, he warned against further escalation. In parallel, the White House confirmed that Central Intelligence Agency Director John Brennan had travelled to Kiev over the weekend, The Wall Street Journal Europe reports.

Data from the British Retail Consortium revealed that overall like-for-like UK retail sales dropped by 1.7 per cent last month when compared with March 2013, hit by a decline in demand for products that normally sell well during the Easter holiday, such as household accessories and furniture. Online sales, however, increased by 12.8 per cent against a year earlier, as workers strapped for time sought to buy summer outfits on the web. Internet orders made up 17.3 per cent of total non-food sales during the month, 1.5 percentage points more than last year, The Daily Express writes.