Torrid Telit's trouble
To say Telit Communications (TCM) has had a bad news week would perhaps be an understatement. After announcing a pre-tax loss and scrapping its dividend for the first half, there is also trouble at the top. The self-described enabler of the ‘internet of things’ issued a statement in response to speculation around historical indictments in the US of Telit’s chief executive Oozi Cats. The Israel-based group said the allegations were unrelated to Telit and significantly pre-dated its establishment. Telit’s board has appointed independent solicitors to conduct a review and approved Mr Cats’ request for a leave of absence from Telit, pending the outcome. Finance director and president Yosi Fait will serve as interim chief executive. The shares fell by a further 30 per cent on the day of the latest announcement.
US v N Korea
Safe haven assets rise
Demand for safe haven assets including precious metals was propelled upwards as we went to press, as tensions between North Korea and the US worsened. Following reports from Pyongyang’s official news agency that it was considering carrying out a missile strike on the US Pacific territory of Guam, gold rallied back to its two-month peak, while the Swiss franc strengthened by 1.5 per cent against the euro. Conversely, South Korea’s main stock index fell 1 per cent, with its currency down 0.8 per cent against the US dollar.
Asos looks west
Expanding distribution
Asos (ASC) is trying to make strides stateside. The fast fashion ‘etailer’ has signed an agreement to open a new North American e-commerce fulfilment centre in Union City, outside of Atlanta, Georgia. Fit-out is expected to commence shortly, with operations officially up and running by autumn 2018. This will hopefully allow the company to offer faster and more convenient delivery options to US customers. The cost will total around $40m (£30.6m). During the first six months of the year, Asos’s US business grew sales by 39 per cent at constant currency.
Sky’s setback
New evidence presented
21st Century Fox’s takeover of SKY (SKY) has suffered yet another setback. Culture secretary Karen Bradley has written to Ofcom requesting further clarification on its representations made on her decision on whether to refer the deal to the Competition and Market’s Authority. This follows the filing of a US lawsuit alleging Fox News colluded with the Trump administration to disseminate ‘fake news’ on the murder of Democratic aide Seth Rich.
Another bright spark in Tokyo
Mazda’s conventional play
Following a succession of announcements in recent weeks about the future shape of motoring, Japanese carmaker Mazda – pioneer of the Wankel rotary engine – has just revealed a technological breakthrough that could make petrol engines up to 30 per cent more efficient. The new discovery will be known as Skyactiv-X, or the more prosaic homogeneous charge compression ignition. It primarily differs from conventional petrol engines in that it doesn’t require spark plugs to ignite vaporised fuel, merely compression, leading to greater efficiency and fewer harmful nitrogen oxide emissions.
Polling ahead
Revenue ahead ofexpectations
Yougov (YOU) may only make a small proportion of its revenue from election polling, but the recent global political turbulence has served it well. High demand for data services and an improvement in profitability in the custom services division means trading results for the 12 months to the end of July are likely to come in ahead of expectations. Shares in the market research and data analytics group jumped 9 per cent on the day of the pre-close update.
On theLondonmarket
Online agency IPO
Online estate agencies ZPG (ZPG) – formerly known as Zoopla – and Purplebricks (PURP) have rapidly increased their value since listing in London. It’s unsurprising then that rival OnTheMarket is seeking to raise £50m in new capital by floating a minority stake in the company on Aim. Management intends to use the cash to grow its property portal, which is already the UK’s third-largest for residential property. The initial offer is open to institutional investors only. Management estimates the group would have a market capitalisation of between £200m and £250m, if the offer goes ahead.
Asia has outperformed developed markets so far this year, with China and Korea generating the highest market returns (see chart).
North American countries have produced the weakest returns, with Canada producing the lowest at 7.7 per cent and the US generating 11.8 per cent. That’s against a market average of 17.6 per cent, returned by the MSCI’s All Country World Index.
Despite the US index generating below-average returns, it is one of the most expensive countries to buy into, trading at 23.6 times forward earnings. South Korea is the most lowly valued at nine times.
