Trump trade tiff
The trade dispute tit-for-tat continued this week, after the US announced plans to start levying tariffs on imports of steel and aluminium from Mexico, Canada and the European Union. The latter has proposed extra duties on €2.8bn of US imports on products ranging from motorbikes to food. However, the plans will need to be reviewed by national governments before they can take effect. Mexico also this week unveiled tariffs against a range of US agricultural products – as well as targeting steel imports – causing the peso to tumble further in response.
Battle ahead
Bids cleared
Sky (SKY) looks set to be the subject of a bidding war, after the UK government cleared two separate bids for the media group by Comcast (US:CMCSA) and 21st Century Fox (US:FOXA). Culture Secretary Matt Hancock waved through the former proposal, saying there were no broadcasting standards or public interest grounds upon which to intervene. Meanwhile he agreed that Fox’s pledge to divest Sky News to Walt Disney (US:DIS) was enough to allay concerns about UK media plurality. However, Comcast is also separately competing with Disney to buy Fox’s entertainment assets, which include a 39 per cent stake in Sky.
Boardroom fight
Russian support
The battle lines are hardening ahead of the annual general meeting of Petropavlovsk (POG), due at the end of this month. In a statement late on Monday night, the gold miner said it had received a letter “from certain Russian employees of Petropavlovsk's operating subsidiaries” voicing support for an overhaul of the board. In response, the group’s board defended chief executive Roman Deniskin, who was appointed to the post on 16 April, arguing he had “barely six weeks to deliver any results”.
Litigious environment
Knights plans IPO
Law firm Knights has announced its intention to float on the junior market – the fifth of its kind to do so since Gateley (GTLY) listed in 2015. The firm is expected to have a market capitalisation of more than £100m upon IPO, which should take place later this month. It reported revenue of £34.9m for the year ending April 2018, with adjusted operating profit of £6.8m – excluding Manchester firm Turner Parkinson, which it acquired in May this year. Over the past three years its revenue has grown at a compound annual rate of 30 per cent.
TSB under spotlight
IT blunders
TSB’s disastrous IT system switch is due to be formally investigated by the Financial Conduct Authority, with the regulator’s chief executive, Andrew Bailey, asserting that the banking group had failed to meet requirements to compensate customers quickly enough. TSB chief executive Paul Pester and chairman Richard Meddings and the chief operating officer of its parent group, Sabadell, will also face questioning by the Treasury Select Committee for a second time. The problems occurred following the transfer of customer data from a legacy IT system, controlled by TSB’s former owner Lloyds (LLOY) in April. The new platform was unable to manage the volume of customers trying to access it upon its launch.
Risers and Fallers (%)
| RENOLD | +16.73 |
| PURECIRCLE (DI) | +15.44 |
| BIFFA | +13.78 |
| ENTERTAINMENT ONE (DI) | +10.66 |
| INMARSAT | +10.49 |
| ALFA FINANCIAL SOFTWARE HOLDINGS(WI) | -48.84 |
| PHOTO-ME INTL. | -26.29 |
| OPHIR ENERGY | -20.77 |
| FIRST GROUP | -19.11 |
| XAAR | -13.11 |
Week to 5 June 2018
QE end in sight
Hawkish sentiment
The odds of the European Central Bank (ECB) pausing its bond-buying programme before the end of this year increased following hawkish comments from two senior policymakers. German Bundesbank president Jens Weidmann, also a member of the ECB’s governing council, said market expectations that it could stop its quantitative easing programme were “plausible”. Meanwhile fellow ECB board member Peter Praet pointed towards the “underlying strength” of the eurozone economy, which made it more likely inflation would move closer towards its target. The officials were speaking ahead of the ECB’s meeting next week, where QE will be debated.
OXB acceleration?
US partnership
Shares in Oxford Biomedica (OXB) enjoyed a double-digit rise on news of a new licensing deal with US biopharmaceutical group Axovant Sciences. The two companies are joining forces to develop OXB-102, a gene therapy developed by Oxford BioMedica for Parkinson's disease. Initially, Oxford Biomedica will receive $30m (£22m) for the project, but could receive up to $55m if the drug is able to meet certain targets. This could then accelerate to $758m if it clears regulatory processes and generates good sales. Oxford Biomedica would also be eligible for between 7 and 10 per cent in net royalties on future sales.
