Openreach ruling
BT spared split
UK telecoms regulator Ofcom has proposed that the Openreach division of BT be run as an independent, legally separate entity within the telecoms titan, complete with its own board, branding and control of its budget allocation. The shares responded positively, potentially because a forced split could have been suggested. BT had been accused of underinvesting in Openreach but just a day before the ruling, BT chairman Sir Mike Rake told BBC Radio 4 it was "absolutely willing to form an Openreach board that will have an independent chairman, a majority of independent directors".
Exotic yield
EM debt rush
A global hunt for yield coupled with a post-Brexit shift in economic sentiment in favour of emerging markets has helped drive record inflows and fuel bumper returns. Emerging markets sovereign bond yields plunged to a record low 4.47 per cent this week, according to Bank of America Merrill Lynch indices. The asset class has returned 5.7 per cent year to date. Emerging markets debt funds have seen a record $9.4bn of inflows in the past week, according to EPFR data. The attraction has been augmented by the fact yields on $13 trillion of developed market sovereign bonds yield less than zero.
Outflows continue
Aberdeen hit
A drop in assets under management of more than £1bn within its property division contributed to Aberdeen Asset Management's 13th consecutive quarter of outflows. Europe's third-largest listed fund manager saw net outflows of £8.9bn in the three months to 30 June with the Brexit vote unsettling those in bricks and mortar. The group suspended transactions in its UK property fund for a week which gave unitholders the opportunity to cancel their sell order if they wished or to sell at a price "more reflective of the short-term market conditions".
Brexit fallout
Ryanair UK chop
The cuts in airlines' UK growth plans kept coming after low-cost carrier Ryanair said it would pivot its growth away from UK airports and "focus more on growing at our EU airports over the next two years". It added that in winter it would cut capacity and frequency on many London Stansted routes "where we are already significantly ahead of our multi-year traffic growth targets". No routes would close, though, it added. Elsewhere, its first-quarter performance appeared robust, with passenger numbers up 11 per cent to 31.2m and pre-tax profit up 4 per cent to €256m (£214m).
GDP solid
Expectations exceeded
Britain's economy grew by a better than forecast 0.6 per cent in the second quarter, in a sign of robust activity ahead of the UK's referendum on 23 June. Consensus expectations had been for growth of 0.5 per cent but strong numbers from the industrial and services sectors helped counter construction's output fall. Growth was concentrated in April though and became more tepid in the latter two months of the period. This means the chances of a negative reading this quarter have risen but Martin Beck at the EY Item Club thinks a technical recession can be avoided.
Booster shot
Glaxo cash
The UK's largest drug company, GlaxoSmithKline, has said it will invest an extra £275m at three of its British manufacturing sites. The group said the investment would increase production in the UK of new respiratory medicines and biological products in Barnard Castle (County Durham), Ware (Hertfordshire) and Montrose (Angus). The bulk of what is produced will be exported globally. Sir Andrew Witty, chief executive, said his group wanted the UK to remain in the EU but the fact the UK was a leader in life sciences supported the rationale for the investment.
Cost control
Copper downturn
Copper prices remain challenged, but Antofagasta is doing what it can to keep costs as low as it possibly can. In the first half of 2016, the Chilean miner managed to bring copper cash costs before by-product credits down by 15 per cent, to $1.60 per pound, while net cash costs declined even sharper to $1.26. However, chief executive Iván Arriagada said full-year costs would be "at the lower end of the range announced in January". The statement pushed the stock up as much as 3 per cent in early trading.
While millions of people around the globe have been ignoring the real world around them in a bid to catch Pokémon in a virtual version of it, a statement from Nintendo has snapped them out of their trance.
The company said the impact of the phenomenon that is the Pokémon Go game would have a “limited” impact on its earnings given the franchise is owned by an affiliated company in which it has a 32 per cent stake – something Investors Chronicle highlighted in a piece last week warning investors about the likely limited impact on Nintendo’s bottom line. The shares dropped nearly a fifth on the back of the announcement, as can be seen in the chart.
