Portfolio

Weekly review

By Josh White

Date: Friday 03 Dec 2021

(Sharecast News) - The FTSE 100 ended the week 78.29 points higher, closing at 7,122.32 on Friday.
Equity view

Petropavlovsk said the UK's High Court had rejected a bid by its major shareholder JSC Uzhuralzoloto Group of Companies to stop the sale of a stake in iron ore subsidiary IRC. JSC wanted a court order to force Petropavlovsk into a general meeting at which it would try to prevent the company offloading its 29.9% share in IRC to the Stocken Board, a Liechtenstein-incorporated investment company, for $10m.

Hargreaves Lansdown said on Friday that Amy Stirling will succeed Philip Johnson as chief financial officer. Stirling, who will also join the board as an executive director, is currently CFO of the Virgin Group, where she has been part of the senior leadership team since September 2016. She is a qualified chartered accountant with extensive financial leadership, management and board experience, HL said.

3i Group is reportedly considering the sale of French natural health products manufacturer Havea Group, which could be valued at approximately €1.1bn. Bloomberg cited people familiar with the matter as saying that the private equity firm is speaking with potential advisers to help gauge interest in the business. It was understood that a sale process could start as soon as the first half of next year.

Home improvement retailer Wickes on Friday lifted full-year profit guidance as it continued to trade well in the fourth quarter to date. The group, which in April demerged from Travis Perkins, said it expected 2021 pre-tax profit of no less than £83m, compared with analyst estimates of £74m - £75million.

Royal Dutch Shell has launched a $1.5bn share buyback as the first stage of returning cash to shareholders from the sale of its Permian business in the US. Shell said the buyback would last until 28 January. The FTSE 100 oil group said it would announce the form and timing for returning a further $5.5bn from the Permian sale to shareholders, plus any unused funds from the buyback, in early 2022.

Aston Martin Lagonda announced on Thursday that Kenneth Gregor will step down as chief financial officer and as an executive director no later than 30 June 2022, for personal reasons. A process to appoint his successor has been initiated and the company will provide an update once that has concluded.

GlaxoSmithKline said its treatment for Covid-19 was effective in treating all tested variants of the virus including key mutations of the Omicron strain. The FTSE 100 drugs company said it had tested Sotrovimab on specific individual mutations found in Omicron and that the treatment had shown activity against all variants of concern defined by the World Health Organization.

Abrdn is reportedly on the verge of finalising a £1.5bn takeover of Interactive Investor. According to Sky News, abrdn was on Wednesday applying the finishing touches to a takeover, in a move that will transform the asset manager's personal investing capabilities.

Vehicle rental provider Redde Northgate reported a jump in interim profit and revenue on Wednesday as it hailed a "strong" performance across the group. In the six months to the end of October, underlying pre-tax profit rose 94.4% to £78.9m, while total revenue including vehicle sales grew 10.2% to £612.9m. Trading was ahead of the board's expectations, the company said.

Online gambling firm 888 Holdings said it had been awarded a provisional sports betting licence from the Virginia Lottery. 888 will operate in the state via its partnership with SI Sportsbook from 2022.

Sirius Real Estate, which owns and operates branded business and industrial parks in Germany and the UK, has completed the acquisition of a business park in Neckartenzlingen in Stuttgart for €34.5m. The transaction reflects an EPRA net initial yield of 5.6%.

Motor retailer Pendragon lifted its full-year profit guidance on Wednesday as it hailed a strong performance to date in the fourth quarter. Although it remains cautious about potential further disruption from Covid-19, the company now expects underlying pre-tax profit for the year to the end of December 2021 of around £80m, up from previous guidance of £70m.

WPP said it has bought UK-based technology company Cloud Commerce Group (CCG) for an undisclosed sum. CCG helps brands to market, sell and deliver their products across ecommerce platforms and marketplaces globally, such as Amazon, eBay, Etsy and Wayfair, WPP said on Tuesday.

Shaftesbury restored its progressive dividend policy as the West End property company reported improving trends and a narrower annual loss. Pretax loss for the year to the end of September was £194.9m compared with £699.5m a year earlier as rental income fell to £105m from £114.4m. Valuation deficits fell to £196.8m from £698.2m.

AstraZeneca said that its Lynparza breast cancer drug's supplemental new application had been accepted and granted Priority Review by the US Food and Drug Administration. Lynparza is used to treat patients with early breast cancer who have already received chemotherapy either before or after surgery, the company said on Tuesday.

Irish convenience food group Greencore posted a jump in full-year profit and revenue on Tuesday following a return to growth in the food to go categories. In the year to 24 September, adjusted pre-tax profit rose 30.6% to £22.6m, while adjusted operating profit was up 20% at £39m, with a strong recovery in the second half. Group revenue increased 4.8% to £1.3bn, driven not just by a return to growth in food to go, but also solid growth in other convenience categories.

Property company Hammerson on Monday confirmed it is in talks on a potential sale of the Silverburn shopping centre near Glasgow, Scotland, which is held in a 50/50 joint venture with CPPIB. It also confirmed that pricing under discussion is £140m and added "there can be no certainty that a transaction will take place". Hammerson is looking to sell non-core assets to boost its balance sheet in the aftermath of the Covid pandemic.

Venture capital tech specialist Molten Ventures on Monday reported a rise in net asset value (NAV) for the six months to September 30 on the back of a sharp rise in cash investments. The company, formerly known as Draper Esprit, said NAV rose to 887p from 743p a year ago as gross portfolio value increased to £1.35bn from £984m. Molten invested £165m in the period, compared with £32m last year.

Investment platform AJ Bell has announced the launch of commission-free mobile trading app Dodl in the first half of next year. The company said on Monday that Dodl will have an annual charge of 0.15% and there will be no commission for buying and selling investments and no tax wrapper charges. The new app is designed for anyone looking for a low-cost, easy-to-use investment tool, it said.

IP Group recorded a large gain on the value of one of the largest companies in its portfolio following a funding round. The intellectual property commercialisation company disclosed that it had recorded a £27.4m net unrealised fair value gain, adding that the company in question was one of the top twenty most valuable within its stable of investments.

Economic news

Ofgem has launched an investigation into power firms' responses to Storm Arwen as it removed a limit on compensation for thousands of Britons impacted by associated power cuts. The industry regulator stated that efforts to restore supplies "must continue" and that companies were governed by "strict rules" as to how they must respond to the crisis.

One of the most hawkish top Bank of England officials said at the end of the week that it might be best to wait for more information on the implications of the new Covid-19 variant, Omicron, before hiking short-term interest rates. In remarks prepared for a speech, Michael Saunders said: "At present, given the new Omicron COVID variant has only been detected quite recently, there could be particular advantages in waiting to see more evidence on its possible effects on public health outcomes and hence on the economy."

UK taxpayers face billions of pounds of losses after the government failed to implement anti-fraud measures on its £47bn small business Covid emergency loan programme, a watchdog said on Friday. The bounce-back loan scheme, launched in May 2020 to stop firms collapsing during enforced lockdowns, did not include credit checks or fully verify the identity of small businesses applying for loans, according to the National Audit Office.

Growth in the UK services sector eased a touch in November but remained strong amid the fastest rise in new business intake in five months, according to a survey released on Friday. The IHS Markit/CIPS services purchasing managers' index dipped to 58.5, little changed from the flash reading of 58.6 and down only a little from October's three-month high of 59.1.

Visits to UK shops fell in November as bad weather kept shoppers away and Black Friday failed to boost footfall, a survey showed. Retail footfall was 15.7% lower than in November 2019 and 2 percentage points lower than in October, the British Retail Consortium said.

Footfall in UK retail destinations fell in November but was still a "much improved" result when compared to July, when footfall was 24.2% below 2019 levels. Retail footfall in November slipped 14.5% from 2019, compared to October's 13.4% decline, with footfall declining 15.8% on high streets, 22% in shopping centres and 3.6% in retail parks when compared to pre-Covid comparatives.

House price growth continued at a brisk pace in November, buoyed by "robust" conditions in the labour market, but the multiple headwinds the sector was facing meant that the outlook was uncertain. The annual rate of growth in Nationwide's House Price Index picked up in November by one tenth of a percentage point versus the prior month to reach 10.0%.

UK manufacturing input prices hit a 30-year high in November amid supply chain issues, according to a survey released on Wednesday. The IHS Markit/CIPS manufacturing purchasing managers index rose to three-month high of 58.1 from 57.8 in October, but was below the flash estimate of 58.2. A reading above 50.0 signals expansion, while a reading below indicates contraction.

UK shop prices rose in November for the first time in two and a half years with increases predicted for Christmas and beyond, the retail trade body said. Prices rose 0.3% from a year earlier after dipping 0.4% in October, the British Retail Consortium said. The increase was the first since May 2019.

National Grid and Scottish Power have agreed to pay £158m in redress for delays to the Western Link power cable project following an investigation by Ofgem, the energy regulator announced on Tuesday. Western Link is a massive £1.2bn electricity transmission project consisting of a subsea link between Scotland and Wales, providing an additional 2,250MW of capacity, equivalent to powering more than two million homes.

International events

The Institute of Supply Management non-manufacturing purchasing managers' index came in at 69.1 in November, up from 66.7 a month earlier to a fresh record high. According to the report, economic activity in the services sector grew in November for an 18th month in a row, with the Services PMI setting its fifth time record for 2021. Previous records were set in March, May and July.

The US economy added less jobs than expected throughout November, indicating that hiring had already started to slow before the emergence of the Covid-19 omicron variant. According to the Labor Department, non-farm payrolls increased just 210,000 month-on-month, well and truly short of estimates for a print of 573,000.

Eurozone business activity picked up the pace in November but the acceleration could be short lived as the Omicron coronavirus variant and intensifying cost pressures knocked sentiment, according to a survey released on Friday. The IHS Markit eurozone composite output Index rose to 55.4 from 54.2 in October, but down from a "flash" estimate of 55.8.

The Organisation of the Petroleum Exporting Countries and its allies surprised some oil traders with their decision to go ahead with their previously planned output hike in January - despite the appearance of Omicron, the new strain of Covid-19. However, OPEC+, as the cartel and its main allies were known, dealt themselves a 'get out of jail free card'.

US jobless claims rebounded a little following a steep drop during the previous week that saw them fall to a level not seen since November 1969. According to the Department of Labor, in seasonally adjusted terms, the number of people filing for initial unemployment claims rose by 28,000 over the week ending on 27 November to reach 222,000.

On current evidence, the Omicron variant of Covid-19 did not yet appear to be any deadlier than previous ones, Australian health officials said. "In fact. the opposite may well be true," Australia's Chief Medical Officer, Paul Kelly, said.

Private sector employment in the US grew a little more than expected in November, according to the latest data from ADP. Employment rose by 534,000 from October, coming in ahead of expectations for a 525,000 increase. Meanwhile, the October total of jobs added was revised from 571,000 to 570,000.

Eurozone manufacturing growth rose slightly in November with worsening supply chain constraints hitting output and sending raw materials costs soaring, according to a survey released on Wednesday. Growth slowed at intermediate and investment goods makers, although consumer goods producers grew faster, IHS Markit's survey of purchasing managers revealed.

German retail sales undershot forecasts by a wide margin in October due to mobility restrictions and in part because of the drag from rising prices. According to the Federal Office of Statistics, in calendar and seasonally adjusted terms, retail sales turnover dipped at a month-on-month pace of 0.3% in real terms (consensus: 0.9%).

Economic activity in the Chicago area deteriorated more than expected in November due to a slowdown in new orders, according to data released on Tuesday. The MNI Chicago business barometer fell to 61.8 from 68.4 in October, missing expectations for a reading of 67.0 and marking the lowest level since February.

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