Export boost
As China entered fresh trade talks with the US this week, the country’s banking regulator ordered lenders to boost credit to infrastructure projects and exporters to bolster economic confidence. The China Banking and Insurance Regulatory Commission urged banks to support companies facing “temporary difficulties”, to promote “stable employment and stabilise foreign trade and investment”. So far only 10 per cent of Chinese annual exports have been hit with the tariffs, but President Trump has threatened to extend taxes on half of all Chinese exports to the US by the end of October.
All change at the top
Capita CFO appointed
Go-Ahead Group (GOG) is on the hunt for a new chief financial officer after the transport group announced that Patrick Butcher would be leaving the company to help lead Capita’s (CPI) turnaround. Mr Butcher will stay on over the next few months to help the transport company find a successor. Outsourcer Capita is in the midst of a lengthy restructuring – shedding non-core businesses and trying to cut debt and improve free cash flow – after a profit warning earlier this year resulted in an emergency rights issue and the 2017 final dividend being cut.
July surplus
18-year record
Government borrowing fell by two-fifths during the fiscal year so far, according to data from the Office for National Statistics, with the Treasury reporting the biggest July surplus in 18 years. Public sector borrowing was in surplus by £2bn last month, double the amount at the same time last year. Government spending rose at an annual pace of just 0.7 per cent during the fiscal year to the end of July, compared with forecast growth of 3.7 per cent by the Office for Budget Responsibility. Central government also received £237bn in taxes during that period, up 5 per cent on the prior year.
Master disruptor
Insurance entrance?
Amazon (US:AMZN) has gained a reputation as one of the kings of market disruption and the price comparison sector could be next. Shares in comparison sites, including Moneysupermarket.com (MONY) and Gocompare.com (GOCO), weakened on the day of reports that the tech giant was in talks with European insurance providers “to see if they would contribute products to a UK price comparison website”, according to Reuters. Earlier this year, Amazon set up a joint venture with Berkshire Hathaway and JPMorgan aimed at cutting US healthcare costs.
Disappointing reality
EVR posts debut sales
Half-year results from EVR Holdings (EVRH) sent the group’s shares tumbling nearly a tenth. The creator of virtual reality music content reported its first ever revenue since joining the Alternative Investment Market (Aim) in 2016 – at £6,831. This followed the official launch of its flagship platform, MelodyVR, “only a matter of weeks” prior to the June year-end, in tandem with the launch of Facebook’s (US:FB) Oculus Go VR device. This meant sales were influenced by the “initially limited distribution and accessibility” of Facebook’s headset. Pre-tax losses widened from £2.6m to £4.4m, reflecting both the cost of sales and higher administrative expenses.
Risers an fallers (%)
Hikma Pharmaceuticals | 18.25 |
On The Beach | 13.41 |
Marshalls | 11.5 |
Wood Group (John) | 6.91 |
Aggreko | 6.75 |
Kaz Minerals | -22.72 |
Ferrexpo | -10.88 |
Indivior | -10.12 |
Antofagasta | -7.4 |
Contourglobal | -7 |
Week to 22 August 2018
Retail leads decline
Services sector suffers
The woes of the UK retail sector have been well documented, following a string of high-profile store closures at House of Fraser and electronics retailer Maplin this year. Struggling retail sales were highlighted by the Office for National Statistics as one of the reasons for a drop in the net rate of return for services companies during the first quarter. Net returns fell to 17.2 per cent during the first three months of the year, the lowest since 2013 and down on 18.4 per cent during the fourth quarter.
Unfashionable Italy
Foreigners shed bonds
Italian government bonds may have rallied after Moody’s extended the deadline for its review of a potential downgrade of the country’s credit rating, but that followed heavy sales from foreign investors. Net sales of the country’s sovereign debt climbed to a record level for the second consecutive month in June at €38bn, according to the European Central Bank. The credit rating agency – which said it typically concludes its reviews within three months – initially placed the country under review for a ratings cut in May, but pushed back the deadline until October, while it seeks “better visibility on the country’s policy direction” as the government negotiates its debut budget.
