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Seven Days: 28 February 2020

A round up of the biggest business stories of the past week
February 27, 2020

Coronavirus knocks markets

Airline stocks among worst affected

Financial markets around the world have endured a turbulent week amidst ongoing fear about the spread of the coronavirus outbreak, known as Covid-19. This followed a spike in the number of cases in Italy, and reports that Iran’s deputy health minister has tested positive for the virus. Airlines and travel companies were among the stocks worst affected, as we explore in our news pages this week. The oil price was also in decline. In an interview with CNBC, US National Economic Council Director Larry Kudlow indicated that the stock market sell-off could represent a buying opportunity for longer-term investors.

 

Countrywide and LSL in merger talks

Discussions ongoing

Countrywide (CWD) and LSL Property Services (LSL) confirmed that they are in talks over an all-share merger at the start of the week. Shares in the former troubled estate agency services group – which had agreed the sale of its commercial business in November – were down 4 per cent in early trading on the release of this news. Discussions between the two parties are ongoing, and – at this stage – the groups said that there can be no certainty that any offer will ultimately be made for Countrywide.

 

Urban house prices rise

Up 3.9 per cent

House prices in all cities in England have climbed above their 2007 peak for the first time since the financial crisis, according to the latest Zoopla UK Cities House Price Index. The annual rate at which property values are rising across all UK cities reached a 33-month high of 3.9 per cent in January 2020. Richard Donnell, head of research and insight at Zoopla, said: "An imbalance between supply and demand is supporting the current rate of house price growth – a trend we expect to remain in place in the first half of 2020”.

 

GSK and Clover join forces on coronavirus

Research partnership

China-based clinical-stage biotech company Clover has entered into a research partnership with GlaxoSmithKline (GSK) for its protein-based coronavirus vaccine candidate, ‘COVID-19 S-Trimer’. “We are proud to contribute to cutting-edge research from scientists at Clover Biopharmaceuticals in China as part of our strategy to make our adjuvant technology available to selected partners who have a promising vaccine candidate against the newly emerged coronavirus,” said Thomas Breuer, chief medical officer of GSK Vaccines.

Ted Baker updates strategy

Cutting roles

Ted Baker (TED) has unveiled an update to its strategy. The group’s shares plummeted late last year as it announced a profit warning alongside the departure of its chief executive and chairman. Now the group has carried out a review and plans to cut 102 roles, alongside a further 58 that are currently vacant. Cost reduction initiatives will cost £2.7m upfront, but are expected to strip out £5m in the current financial year, and £7m on an annualised basis.

 

Fintech investment hits $136bn

KPMG report

According to KPMG’s latest ‘Pulse of Fintech’ report, global financial technology investment in 2019 fell just short of 2018’s results – with $137.5bn invested across 2,693 deals. Still, fintech investment remained more than double every year prior to 2018. Two deals that fuelled most of this investment were the $42.5bn takeover of Worldpay by Fidelity National Information Services (FIS) and the $22bn acquisition of First Data by Fiserv. In the US, fintech investment set a new high of $59.8bn across 1,144 deals. In Europe, fintech investment climbed to a record $58.1bn.

 

New competition in plant-based meat

Enter, Cargill

US food and agriculture company Cargill is launching private-label plant-based burger patties and ground products, which will hit retailers and restaurants in early April. Cargill said that these new offerings are part of its inclusive approach to the future of protein – working to meet the expected 70 per cent growth in global demand for protein over the next three decades. “We’ve created some of the best tasting products available in the plant-based category today,” said Elizabeth Gutschenritter, managing director of Cargill’s alternative protein team. The move pits Cargill against faux-meat makers Beyond Meat (US:BYND) and Impossible Foods.

 

The Baltic Dry Index (BDI), seen as a bellwether for the shipping industry and – more broadly – for global trade, has fallen considerably since the start of the year. 

This is perhaps unsurprising, given rising fears about the rapid spread of the coronavirus outbreak, and its potential impact on the supply and demand of raw materials. 

The BDI saw a small uptick in the days leading up to 25 February, although it’s difficult to say how long this will be sustained.