In an unusual set of circumstances befitting this month's surprise election result, the Conservatives delivered their legislative programme with no guaranteed majority. With the government yet to agree terms for the support of the Northern Irish Democratic Unionist Party, there were some notable absences from the speech. Mentions of tighter legislation around corporate takeovers, governance and executive pay were missing. The government's earlier pledge to freeze energy bills was downgraded to a green paper looking at options, while policies such as cutting free school meals were axed completely. However, the repeal bill, giving government powers to convert EU legislation into UK law was mentioned, as well as an immigration bill allowing the government control of the number of income earners from Europe.
Introducing Standard Life Aberdeen
Merger approved
Shareholders at Standard Life (SL.) and Aberdeen Asset Management (ADN) approved the mega-merger to create the UK's largest active asset manager, Standard Life Aberdeen. More than 95 per cent of Aberdeen shareholders and almost 99 per cent of Standard Life's shareholders voted in favour of the deal, which is set to complete on 14 August. Management at both groups have pointed to the diversification benefits of the deal by geography and asset base. Around £200m in annual pre-tax synergies are also expected three years after the deal completes. This will come partly from the simplifying and combining of investment platforms, which could result in a reduction in funds and/or fund managers.
Sainsbury/Nisa in talks
Following Tesco's lead
Another supermarket giant could be about to make a defensive land-grab. J Sainsbury (SBRY) is in exclusive talks to buy convenience chain Nisa for £130m, according to press reports. More than 50 per cent of the group's 3,000 members would need to accept the offer for it to proceed. Nisa appointed investment bank Lazard, after receiving offers from potential buyers following Tesco's (TSCO) proposed £3.7bn takeover of Booker (BOK), which operates the Londis and Budgens brands. Both Nisa and Sainsbury's have declined to comment on the deal, first reported by The Guardian.
London market calling
Quiz/Rockpool to IPO
Another round of companies have announced their intention to list in London. Fast fashion womenswear retailer Quiz has announced plans to join the Alternative Investment Market and conduct a placing with institutional investors. Management hopes to raise cash to accelerate growth and allow its founders to sell down part of their investment. Meanwhile, Rockpool, a cash shell hoping to acquire businesses in Northern Ireland, intends to raise £1.5m. The first company purchased will be done so via reverse takeover, followed by a re-application to list on the main market. Dealings for both companies are expected to commence in July. We'll be updating on both companies during the coming weeks.
Chinese breakthrough
MSCI entrance
Following three years of rejection, Chinese A shares have finally been accepted for inclusion by the MSCI in its emerging market index. The US stock index provider has agreed to include 222 mainland domestic Chinese companies in the MSCI Emerging Markets index, but will make up just 0.7 per cent of the index's value. The MSCI EM has around $1.6 trillion tracking it at present, which will mean investors will be able to gain direct exposure to Chinese corporates. The inclusion of Chinese companies had previously been rejected over concerns around governance and accessibility for global investors.
Taxing times
Cairn seeks damages
Shares in oil and gas explorer Cairn Energy (CNE) dipped after management updated the market on its tax dispute in India. In March, the government had said via the international arbitration tribunal that $53m (£41m) of dividends from Cairn India Ltd (now Vedanta Ltd) were no longer restricted. On 9 June, the tribunal issued a formal order to the same effect, but on 16 June the India Income Tax Department directed Vedanta Ltd to pay the sum due to Cairn to the government instead. International arbitration proceedings are progressing - Cairn says it is owed $104m, including $53m in historical dividends, and is seeking damages of around $1bn. The tribunal's final hearings are scheduled for January 2018.
Rates held
Carney warns against hike
Sterling faltered against the US dollar after Bank of England governor Mark Carney reasserted that "now is not yet the time" to raise interest rates. In his Mansion House speech, Mr Carney said falling wage growth and uncertainty surrounding the impact of Brexit meant he would like to hold off on a rise. This followed a split decision by the monetary policy committee earlier that week on whether to increase rates. Three members voted in favour of a hike and five to hold the benchmark rate, compared with just one member voting for a rate rise in March.
For the first time in 10 years, global sales projections for the pharmaceuticals industry have been cut amid signs drug price inflation in the US is starting to ease. This follows years of public pressure. Market forecaster Evaluate Pharma still expects global prescription drugs sales to rise in the next few years, but has wiped $390bn (£307bn) of sales from its forecasts for the period between 2017 and 2022.
Swiss giants Novartis (CH: NOVN ) and Roche (CH: ROG) and US-group Pfizer (US: PFE) are expected to lead the drugs sales ranking in the next five years thanks to their strong new drugs pipelines.
