FTSE falls as Omicron concerns grow
The increasingly bleak mood music around the sheer scale of the wave of Omicron infections washing across the UK has hit sentiment hard at the start of the last trading week before the Christmas holiday. The FTSE100 shed more than 2 per cent in morning trading with all the other main UK indices following suit, although most had regained some of their losses by midday to trade around 1 per cent lower.
Unsurprisingly, companies who have the most to lose from increasing restrictions on populations across Europe were amongst the biggest fallers with the likes of International Consolidated Airlines, Rolls Royce and Whitbread among the biggest fallers with only the likes of Royal Mail and Ocado attracting positive support. Away from equities, oil fell back by around 3 per cent on fears of the longer term effect of Omicron on the global economy.
Despite a lack of firm government guidance yet on restricting social contact, anecdotally UK consumers are already taking it upon themselves to pull back their activities in the run up to Christmas with restaurants and pubs reporting widescale cancellation of bookings and retail footfall reported to be 19 per cent below pre-pandemic levels over the past week.
Rio Tinto hires Canadian ambassador to China as chair
Iron ore giant Rio Tinto (RIO) first stared down Australian government demands for an antipodean chief executive when replacing Jean-Sebastien Jacques last year and has now picked the Canadian ambassador to China as its new chair. Dominic Barton resigned from that role earlier this month after spending years pushing for the release of the ‘Two Michaels’, Canadian academics arrested in China in retaliation for the arrest of Huawei’s CFO.
Barton, who spent years at McKinsey before taking on the China role, will take over from Brit Simon Thompson. The outgoing chair announced his departure earlier this year, saying he was “ultimately accountable for the failings that led to the tragic events at Juukan Gorge”.
The destruction of a sacred Aboriginal site in West Australia in 2020 will likely define his time at the top, as it also led to the resignation of Jacques, while his tenure has also included struggles at the Oyu Tolgoi underground copper mine in Mongolia and, on the positive side, record dividends as the iron ore and copper prices surged this year.
Barton said he was keen to return to the private sector at a time of change. “I look forward to working with Jakob and the Board to implement a strategy that puts decarbonisation at the heart of the business and positions Rio Tinto to be a leader in addressing complex global problems, while building and sustaining trust with host communities,” he said. AH
Employees join Wetherspoon’s board
In a surprisingly egalitarian move, JD Wetherspoon (JDW) has appointed four front-line employees to its board of directors.
The group received over 100 applications after deciding that it would benefit from more hands-on pub experience at board level. It eventually chose two regional managers, an area manager and a pub manager to fill the roles.
From 20 December, two of the recruits will have full plc director status and two will act as associate employee directors for an initial three-year term.
Chairman Tim Martin said the employee directors will “help to preserve the culture of the company for the future”. He added that a successful pub company “depends primarily on gradual improvements, based on suggestions from employees”.
While campaigning to be prime minister in 2016, Theresa May promised to give workers representation on British company boards. She argued that because non-executive directors are “drawn from the same narrow social and professional circles as the executive team”, the scrutiny they offer is “just not good enough”. However, May later backtracked and the reforms were never implemented.
Some argue that forcing companies to put worker representatives on boards would undermine shareholder interests, as job protection would be prioritised over performance. JS
Rolls-Royce confirms Qatari investment in nuclear consortium
Rolls-Royce (RR) has announced that the consortium it is leading to build a series of small nuclear reactors around the UK has secured investment from Qatar’s sovereign wealth fund.
The Qatar Investment Authority is putting in £85m for a 10 per cent stake in Rolls-Royce SMR, a consortium that also includes BNF Resources and Exelon Generation. The consortium has now secured £495m in equity and grants, including a £210m injection of government funding last month.
It is developing plans to build small modular reactors that are about one-tenth the size of a conventional nuclear plant, which will each generate about 470 megawatts. This equates to about 150 onshore turbines and is enough to power one million homes.
Business and energy secretary, Kwasi Kwarteng, said the consortium would help the UK’s plans to strengthen its energy independence.
S&P Global said last week that Europe urgently needs to find ways of replacing its ageing fleet of nuclear reactors. Nuclear power generation in western Europe is forecast to decline 11 per cent by 2030 and 27 per cent by 2040. Small modular reactors offer a role for nuclear in Europe’s energy transaction “if they prove technically viable, economic and acceptable from the regulatory standpoint”, the ratings agency’s report said.
Despite the announcement, Rolls-Royce’s shares fell by 4 per cent on Monday as market fears grew over the potential disruption to the global economy from the Omicron coronavirus variant. MF.
Car parts maker set for float
Portsmouth-based car parts maker CT Automotive said it has secured £33.6m from investors through an initial public offering set to take place this week. Shares in the company will be floated on the Alternative Investment Market on Thursday.
CT Automotive has sold almost 22.9 million shares at 147p per share. It is floating a 45 per cent stake in the company in a deal that gives it a market cap of £75m.
Proceeds will be used to pay down debt.
CT Automotive makes interior panels and other parts such as arm rests and cup holders for end customers including volume manufacturers like Ford and Nissan as well as luxury brands Bentley and Lamborghini. The company has two factories in China and other manufacturing arms in Turkey, the Czech Republic and the UK. MF
*The Trader is taking a Christmas break and will be back week commencing 4 January"
