Tougher odds
Bookies shaken
Shares in UK bookmakers took a knock after a cross-party group of MP’s demanded tougher regulations on controversial fixed-odds betting terminals. A six-month inquiry by politicians has now led to a series of interim recommendations, including reducing the maximum stake that may be gambled from £100 to £2, and a slowdown in the speed at which money can be spent. A full report is expected next month. Shares in both William Hill and the newly merged Ladbrokes Coral remain lower than where they were prior to the announcement.
Raise a glass
Heineken’s Punch bid
Reports surfaced this week of a bid by Dutch-based brewer Heineken for large pub group Punch Taverns. The shares in Punch spiked as much as 37 per cent to 176p on the back of the speculation. Heineken’s UK business already owns 1,100 leased pubs through its Star Pubs & Bars division while Punch owns roughly 3,300. A rival bid by Emerald Investment Partners at 185p a share might mean Heineken needs to up its 174p bid. The board is in discussions with both parties.
Compensation overhaul
FCA scrutinises FSCS
The Financial Conduct Authority has proposed a shake-up of the funding of the UK’s £3.5bn compensation scheme which acts as a backstop for retail investment. The FCA proposed extending the guarantee scheme – and the levies that fund it – within fund management, doorstep lenders and the Lloyds of London syndicate in its first review of the FSCS for three years. It is also eyeing forcing the riskiest companies to stump up more fees, which are now calculated by the size of the company. This would be popular with the industry, which argues good companies pay for bad ones under the current system. The total annual levy in 2015-16 was £338m.
Italian yo-yo
Banks bounce
Anyone watching Italian bank shares in the past week will no doubt feel for investors on what is a veritable rollercoaster ride. Shares in UniCredit, Italy’s biggest bank, plunged earlier this week on reports of a radical restructuring plan. But just hours later, once the market had digested the news, the stock rose more than 12 per cent on the €12.2bn (£10.2bn) turnaround plan which will include thousands of job cuts and the shedding of a vast bad-debt portfolio ahead of a rights issue next year.
Bullish growth
Trump effect
Fashionable hiring
Brexit shrugged off
Those who voted against the UK leaving the EU were worried about various economic issues, including business investment. There hasn’t been a major impact yet and on the corporate investment front, there’s been some good news. This was added to this week by online fashion retailer Asos, which said it would hire an additional 1,500 people in the next three years at its Camden-based headquarters in London. It has expanded its Greater London House base by an extra 40,000 sqft and said it would invest £40m on renovations. It currently employs 2,500 staff at its headquarters.
Lloyds sale
Shares banked
The ongoing drive by the government to reduce its stake in Lloyds Banking hit another milestone this week. The Treasury offloaded more than 758m shares in recent days, taking its stake in the bank below 7 per cent. In October, chancellor Philip Hammond scrapped plans to offer the public cut-price shares in the bank and instead opted for a drip-feed approach. The Treasury said it has now recouped over £17.5bn from the original £20.3bn of public funds pumped into Lloyds during the financial crisis. The latest tranche of shares sold were worth around £465.7m at Monday’s closing price.
There are some parts of Europe where buying a home is actually becoming less affordable than the UK. The accompanying chart shows that Germany’s housing prices have increased by 27 per cent relative to average incomes since 2010. At the other end of the spectrum, we find that Spain’s property market has become more accessible to the populace, at least those Spaniards that find themselves in gainful employment.
The basic price-to-earnings ratio for a number of markets, including the UK, are now well in advance of their long-term average. This suggests that large numbers of existing mortgagees would be locked in negative equity if the ratio reverted to its historic average.
