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OPINION

Seven Days

Seven Days
August 14, 2015
Seven Days

Cashing out

Pearson sells

Education and publishing company Pearson (PSON) agreed to sell its 50 per cent stake in The Economist Group for £469m. Italian-based investment company Exor, which is controlled by the Agnelli family, has bought 27.8 per cent of the company's ordinary shares for £227.5m and all of its B shares for £59.5m. Pearson's remaining ordinary shares are set to be repurchased by The Economist Group for £182m. The move comes just weeks after the FTSE 100-listed company announced it had agreed a deal to sell the Financial Times to Japanese publishing group Nikkei for £844m.

 

Greece lightning

Done deal

A tentative deal between Greece and its creditors - readers will be forgiven for thinking they have heard this before - spurred the country's banking shares last week, following their recent pounding. The sector had endured the maximum amount of falls allowed - 30 per cent - in the first three days of trading from 3 August after the market had been closed for five weeks. But ever since they have been recovering strongly, fuelled by a proposed €86bn (£61.5bn) rescue package for the country. The deal will involve a series of reforms and will last three years, meaning the likelihood of the Mediterranean nation crashing out of the eurozone has been put on hold.

 

China unpegged

RMB shock

The People's Bank of China caught markets off-guard this week with two consecutive currency devaluations which brought the renminbi to its lowest level against the dollar for four years. A formal 'hard' peg with the dollar was abandoned in 2005 but the country has since enacted what is known as a 'daily fix' at which it rates its currency against the greenback. This was lowered by 1.6 per cent on Wednesday to 6.3306. While the PBoC said there was "no basis for persistent depreciation", markets were jolted and the yield on German two-year bunds, perceived as a safe haven, hit -0.29 per cent.

 

No Brazil carnival

Rating cut

More pressure was lumped on Brazil after Moody's cut the country's sovereign debt rating to Baa2 with a negative outlook, mimicking the move by S&P a fortnight ago. The corruption scandal surrounding state-owned oil company Petrobras has weighed on its Bovespa stock market in recent months while the Brazilian real has had a tough time against the US dollar, slumping to $0.29. Beyond this, inflation is rampant, leading to high interest rates, and the country is trying to fight its way out of recession despite its budget deficit. These factors have driven president Dilma Rousseff's approval ratings to a record low of 8 per cent.

 

Supermarkets swept

Profits drop

The supermarket sector was the dominant drag on UK plc's profitability as FTSE 350 profits fell again, according to the latest Profit Watch UK report from The Share Centre. Total annual revenues for FTSE 350 companies with year-ends up to the end of March 2015, and that reported them during the second quarter, were £354.9bn - down by 0.4 per cent on a like-for-like basis compared with a year ago. A total of 13 sectors saw declines compared with the 10 that registered rises, but the food retail sector was the clear laggard, with a massive £10.7bn wiped off the majors' profits.

 

Safe as houses

Zoopla CEO commits

The future of British property website Zoopla (ZPLA) is as firm as bricks and mortar for the time being after Alex Chesterman, founder and chief executive, agreed a long-term deal to lead the business. The news sent the shares up nearly 5 per cent in early trading, showing how important investors believe Mr Chesterman is to the company. Zoopla is writing to shareholders with a revised remuneration plan for Mr Chesterman in order to "appropriately incentivise and reward his continued substantial contribution". It said it had already being received "indications of support" from a majority of shareholders, but all shareholders would be consulted.