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News Review 27 Jan: Housing sales supply drops after new lockdown

Our selection of the biggest news stories this week
News Review 27 Jan: Housing sales supply drops after new lockdown
  • AstraZeneca accused of national bias by the European Commission in rollout of the coronavirus vaccine
  • Number of new homes entering the sales market declines by 12 per cent during the first two weeks of the year, according to Zoopla

 

AstraZeneca draws the ire of the European Commission

The disparity between supplies to the UK and the continent has less to do with implicit national bias than it does with contract scheduling, says Mark Robinson

Vaccine nationalism was to the fore this week, as the European Commission (EC) suggested that AstraZeneca (AZN) has been deliberately prioritising the UK for delivery of its Covid-19 vaccine. In response, it has threatened to withhold supplies of the Belgium-made Pfizer (NYSE: PFE) version unless the UK/Swedish group makes good on existing orders to the EU27.

It is worth remembering that it is only a month since AstraZeneca’s candidate was approved for use in the UK, which provides a pointer as to why supplies to the European Union (EU) have come up short of existing contractual obligations.

 The European Medicines Agency (EMA) is responsible for approving all new vaccines across the 27 EU member states, together with Norway, Iceland and Liechtenstein. Under EMA rules, which goes to the heart of the EU decision-making process, even when a vaccine passes all the rigorous clinical assessments, before it is put into general use it still needs to be approved by representatives of every EU member state and EC mandarins as well. MR

 

Home supply/demand imbalance intensifies 

Sales prices have been pushed higher by rising demand but activity could ease as the stamp duty break deadline approaches, writes Emma Powell

The number of new homes entering the sales market declined 12 per cent during the first two weeks of the year as the fresh lockdown deterred sellers, according to Zoopla, exacerbating the post-pandemic supply/demand imbalance.

The strength of demand during the second half of last year absorbed much of the supply,  the property portal said, resulting in 6 per cent fewer homes being available for sale at the start of 2021 compared with the same time last year. Meanwhile demand continued to rise, with enquiries and online searches up 13 per cent. 

Surging demand has continued to push up sales prices, which rose an average 4.3 per cent across the UK in December, according to the Zoopla House Price Index. Liverpool and Manchester recorded the highest annual growth at 6.3 per cent and 6 per cent, respectively, while sales prices in London rose 2.9 per cent. 

However, Zoopla predicts that up to 70,000 purchases agreed in 2020 may fail to complete before the stamp duty deadline on 31 March, assuming a four-month completion-period. However, it remains to be seen how many of these deals are solely reliant on securing the tax savings and may fall-through as a result of the deadline being missed, it said. 

 

Tullow Oil flags production decline

Tullow Oil (TLW) has announced its production will fall this year, as its lenders agreed to push back a key decision to February. Guidance for 2021 is 60,000-66,000 barrels of oil per day (bopd), compared to 75,000bopd last year. The drop is down to planned maintenance at the Jubilee field in Ghana later in the year and deferred development drilling at another asset.

Tullow, which has net debt of $2.4bn, said lenders would take another month to consider the redetermination of its reserve base lending facility, which determines how much it can borrow. AH

 

Ofgem recommends National Grid be stripped of ESO

Following a review, regulator Ofgem has recommended that the role of Electricity System Operator (ESO) be transferred away from National Grid (NG.) to an independent body. The ESO is responsible for balancing electricity supply and demand across Great Britain in real-time.

Ofgem says that the creation of an ‘Independent System Operator’ “would help ensure future decisions on how to manage the energy system are taken in the interests of consumers”. It estimates that such a move could save consumers up to £4.8bn between 2022 and 2050. As part of the energy transition, the body would take a more active role in planning new grid infrastructure and providing independent advice to the government. NK

 

Tesco returns £4.99bn to shareholders

Following on from the disposal of its shareholding in Tesco Stores (Thailand) Limited and Tesco Stores (Malaysia) Sdn Bhd, Tesco (TSCO) has confirmed that it will return £4.99bn to shareholders through a special dividend of 50.93p per ordinary share. It will be payable to shareholders on the register at 12 February 2021, and to ADR holders on the register as at 5.00 p.m. (New York time) on the same day.

The one-off payment will be accompanied by a consolidation of the group’s ordinary share capital on the basis of 15 new ordinary shares (with nominal value of 6 1/3 pence) for every 19 existing shares. This will reduce the number of shares in issue by approximately the same proportion of market capitalisation returned via the special dividend, therefore the market price of each share should remain at a broadly similar level following the pay-out and share consolidation. MR

 

Google threatens to pull search from Australia 

Google parent Alphabet (US:GOOGL) threatened to withdraw its search engine from Australia as it fights, along with Facebook (US:FB), a code that would force it to negotiate payments to news outlets for their content. Facebook has warned that if the laws were implemented, it could pull news from the feed of all of its Australian users. 

Google’s Australian managing director, Mel Silva, told a senate committee that the code would set an “untenable precedent” for the business, describing it as an “unmanageable financial and operational risk”. However, Prime Minister Scott Morrison hit back at the company in a press conference, saying that Australia would not “respond to threats”. LA

 

AJ Bell’s net inflows nearly double 

AJ Bell’s (AJB) push into multi-asset funds received a shot in the arm in the three months to December, as net flows rose 91 per cent year on year to £147m. Powered by the successful launch of the AJ Bell Responsible Growth fund, the investment business division’s asset pile now exceeds £1bn, up from £0.5bn in a year.

Trading in the core investment platform business also remained strong in the period, as customer numbers climbed 6 per cent and solid net inflows from both advised and DIY investors pushed the platform assets under administration to £55.2bn. AN

 

630,000 businesses in distress 

The latest Red Flag report from Begbies Traynor (BEG) makes for grim reading. By the end of December – and with a third UK lockdown yet to be announced – the insolvency practitioner found 630,000 businesses in significant distress, a rise of 13 per cent in three months and 27.5 per cent in a year.

Each of the 22 sectors monitored by the group were found to be struggling, with company distress in London rising at a faster rate than the national average. Worse still, Begbies believes it may be underestimating the true severity of the crisis, given difficulties in measuring county court judgments and winding-up petitions. AN

 

Pandemic headache for TP ICAP

Brexit, travel restrictions and stay-at-home orders have led to a perfect storm for TP ICAP (TCAP), which has been unable to move staff to the EU in line with a ‘readiness’ plan for the UK’s departure from the single market.

The group’s admission comes three days after its French regulators published post-Brexit guidance to UK financial services subsidiaries operating in the country. With the supply of broking services from the UK into member states no longer permitted, EEA-based subsidiaries have been told they must have enough staff to “ensure prudent risk management and effective supervision of their activities”.

Though some leeway has been granted for staff relocations, the interdealer broker says the pandemic has made it impossible to make all transfers or hire brokers to its new EU-based offices. This will now be done “at the earliest opportunity”. AN