A managed coup d'état
Entrenched interests
A group of the UK's biggest fund managers has ousted Investment Association (IA) chief executive Daniel Godfrey, who had been trying to push through reforms. Mr Godfrey had been pressing for greater transparency over fund manager fee charges and had asked fund managers to sign up to an April 2015 statement of principles that included putting clients' interests first and ahead of their own. Schroders and M&G Investments had been threatening to quit the IA in a dispute over Mr Godfrey's leadership style, with other fund groups rumoured to be joining them. The latest list of 25 companies that have signed up to the IA's statement of principles, dated August 2015, does not include Schroders, M&G, Fidelity, Aberdeen Asset Management or Invesco Perpetual. Guy Sears has taken on the role of interim chief executive until a permanent replacement is appointed.
Flighty Blighty
Data weak
The flag-bearer of the UK economy - its services sector - may be hitting a wall. The purchasing managers' index for the sector fell to 53.3 in September, which still points to growth but represents the weakest figure for nearly two-and-a-half years. The fall from August's 55.6 reading was a surprise for economists, who had been expecting a reading of 56. BNP Paribas's Dominic Bryant said that while there would be some recovery in the PMI it was "unlikely" it would fully regain ground lost in the past two months. Citi's Michael Saunders said the result was "no better than average".
Austerity survivor
Portugal poll
The bite of austerity in Portugal may have been deep in recent years, but the man dishing out the punishment has been rewarded with re-election. Pedro Passos Coelho managed to steer his centre-right coalition to victory in the European country's general election on Sunday 4 October, making him the first eurozone prime minister to be re-elected after steering his country through a bailout. But Mr Passos Coelho's Forward Portugal alliance only won 37 per cent of the vote, meaning he will have to rule with a minority government instead of the majority he previously commanded.
Changing stakes
Trimming hand
Colorado-based fund group Janus Capital Management - now the home to 'bond king' Bill Gross - has started hedging its bets on gambling group Bwin.Party Digital Entertainment (BWIN). The company had recommended an offer by rival Aim-listed group GVC Holdings (GVC), which beat 888 Holdings (888) to the punch. Bwin's share price has risen 8 per cent since 25 September on the back of bullish sentiment surrounding the imminent takeover. A stock market filing shows Janus now holds 73.8m shares, down from more than 77m prior to the move.
Trade deal
Pacific boost
Fears about the strength of economic growth in parts of Asia could be assuaged thanks to a major trade deal struck between the US, Japan and 10 Pacific Rim nations. The Trans-Pacific Partnership covers roughly 40 per cent of the global economy and will reduce trade barriers for those who signed up. One major winner, according to T Rowe Price's frontier markets fund manager Oliver Bell, is Vietnam. He said it could be the "largest beneficiary", with the deal potentially boosting GDP by "over 13 per cent by 2025". The deal was struck between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.
Upping ante
Deal challenged
Gambling software company Playtech (PTEC) has said it will "formally challenge" the decision by the Central Bank of Ireland (CBI) to oppose the company's move to acquire rival Ava Trade. Playtech had announced to the stock market that the CBI had opposed the proposed acquisition, but stated the body's issues "can be addressed". It subsequently told the market the CBI had clarified its position with the group, and "having taken legal advice, the company intends to formally challenge the decision". Playtech is also in the process of acquiring Plus500 - a deal now subject to just one outstanding approval.
We've flagged Carillion (CLLN) as a potential key play on the promised infrastructure boom in the UK thanks to its £40bn pipeline of contract opportunities. But as highlighted by IC reader Steven Oliphant, the company is currently the most shorted stock in London, with at least 18.6 per cent of its shares out on loan, according to Financial Conduct Authority data.
Seven institutional investors – including BlackRock and Och-Ziff – were short the company when we flagged Carillion’s bears in April. That number has now doubled to 14. JPMorgan Cazenove analyst Emily Biddulph’s view that Carillion’s indebtedness would continue to weigh on margins regardless of expected revenue growth this year seems to be gaining traction. The shares are down 8 per cent year-to-date but with the cost of shorting the bears are yet to be fully vindicated.
