Trump tapping out?
Donald Trump appears to have backtracked in the US-China trade war, postponing some tariffs on Chinese imports. On Tuesday, he announced that levies on consumer goods – the implementation of which was planned for September – would not be enforced for a further two months. Trump said “we’re doing this for the Christmas season” in case the tariffs impact US consumers. This acknowledgment of the potential domestic effects of his trade war is an about-turn for the president, who has consistently taken a hardline view. The market responded positively, with shares in Apple (US:AAPL) rising 5 per cent.
FirstGroup comes first
West Coast Partnership
A joint venture between FirstGroup (FGP) and Trenitalia UK has been awarded the new West Coast Partnership, the Department for Transport announced this week. The franchise, of which FirstGroup owns 70 per cent, will replace Virgin Trains and begin operations in December. During the first seven years, the company will act as “shadow operator” on the planned High Speed 2 rail project, connecting London and the north, but this decision comes amid controversy – Stagecoach (SGC) launched its second legal action against the government in May following its disqualification from three franchise contests.
Peso plummets
Argentina flirts with populism
The Argentine peso fell as much as a quarter against the US dollar this week – the largest drop since 2015 – in response to primary elections that saw an unexpected victory for opposition candidate Alberto Fernández, fuelling concerns of a populist revival. Fernández’s running mate is the former leftwing interventionist president condemned by pundits, Cristina Fernández de Kirchner. The incumbent president Mauricio Macri has been written off by some after receiving only 32 per cent of the vote (against his rival’s 47 per cent). Argentine assets also took a tumble, with the century bond falling nearly 18¢.
Versace apologises
Hong Kong protests
Versace apologised to China after one of its T-shirts suggested that Hong Kong and Macau were independent countries. Facing a social media storm, the high-end brand halted sales of the offending garment and issued a statement claiming to “respect the sovereignty of China’s territorial state”. Other brands, including Givenchy and Coach, are facing similar criticism. The backlash against Versace came in the midst of escalating pro-democracy protests in Hong Kong. After a series of clashes between police and protesters at Hong Kong airport, Cathay Pacific has suspended two pilots for supporting the dissenters.
‘Special’ relationship
Post-Brexit trade deals
The national security adviser to the White House, John Bolton, assured the prime minister this week that the UK would be “first in line” for trade deals following Brexit. Despite having a non-economic role, Mr Bolton was keen to show that Donald Trump was prepared to make a quick arrangement, even in the case of a ‘no deal’. He advocated piecemeal deals made on a “sector-by-sector” basis for efficiency. Critics have questioned the generosity of the proposed deals, arguing that any arrangements would come with foreign policy expectations such as the UK joining the US in leaving the Iran nuclear deal.
Risers and fallers (%)
| KIER GROUP | +75.02 |
| TULLOW OIL | +19.02 |
| AVON RUBBER | +18.88 |
| PLUS500 | +17.75 |
| ULTRA ELECTRONICS HDG. | +17.46 |
| THOMAS COOK GROUP | -31.63 |
| ARROW GLOBAL GROUP | -28.57 |
| ON THE BEACH GROUP | -19.41 |
| TI FLUID SYSTEMS | -18.2 |
| NMC HEALTH | -16.12 |
Week to 13 August 2019
WeWork revelations
IPO prospectus
To much anticipation, We Company, parent of shared office provider WeWork, shared its prospectus for its initial public offering this week. It stated that the company was aiming to raise $1bn (£829m) from shareholders via its IPO, but the actual figure is expected to be a lot higher as the company must raise at least $3bn to receive additional debt financing that it has been seeking. The report also confirmed that founder Adam Neumann will continue to control a majority of voting rights despite the influence of Softbank, its primary investor. WeWork admited to a “history of losses”, with full-year net losses increasing from $900m to $1.9bn in 2018.
Auditor upheaval
Sports Direct and Staffline ditched
Sports Direct's (SPD) shares fell by as much as a tenth after management revealed that accounting group Grant Thornton – the retailer's auditor since it floated its shares in 2007 – had quit. Sports Direct previously admitted in a delayed set of full-year results that it had struggled to convince other groups to tender for its contract. Sports Direct is not alone; PwC resigned as recruiter Staffline's auditor (STAF) earlier this month. This is the beginning of an anticipated purge of potentially risky clients as the UK’s largest accounting companies have launched reviews to determine who to drop.
