Copper reaches $9,000 for first time in nearly ten years

Liam Roche
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Copper reaches $9,000 for first time in nearly ten years

Copper now 10% below peak reached in 2011

Copper shot up on Monday by over 3%, moving above the $9,000 per tonne mark for the first time in nearly a decade. 

The news follows a recent rally of the brown metal. At the end of last week, copper made a third consecutive weekly gain.

The base metal is now 10% lower than its peak of $10,190 a tonne, reached in February 2011. 

The news is further evidence of the “commodities supercycle” expected by analysts.  

This is a phenomenon which is expected to continue well into 2021, as copper becomes more useful, according to Brian Kloss, a portfolio manager at Franklin Templeton. 

“We expect to see a stunning economic upswing and a supportive environment for the copper market and for investors as the year unfolds,” Kloss said. 

“Longer term, copper is an important component in renewable energy and electromobility,” he added.

Led by massive and increasing demand from the growing Chinese economy, as well as the world’s transition to renewable energy resources, analysts are making bullish predictions for the metal. 

Canaccord Genuity mining analysts are predicting a significant price increase over 2021.

“We now expect copper prices to average $3.50/lb in 2021, an approximate 17% increase on our previous forecast of $3.00/lb,” Canaccord said. 

The recent copper resurgence has also benefited from a weakening dollar and expected inflation in the US.

With copper’s increasing value as a commodity, mining companies are being tipped for major gains over the coming year.

Investors could look to capitalise on funds which have significant holdings in mining companies.

Major mining companies have been among the FTSE 100s top performers in recent weeks as investors anticipate a strong year for the sector.

Dechra posts robust financial results amid pandemic

Liam Roche
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Dechra posts robust financial results amid pandemic

Dechra’s outlook for 2021 remains positive

Dechra (LON:DPH) has announced a 22% increase in group revenue to £299m for the second half of 2020. This figure is up from £248.5m the year before.

The veterinary manufacturer also saw a substantial profit rise of 32.2% to £80.8m.

Underlying earnings (EBITDA) rose by 30% to £88.2m, up from £67.9m over the second six months of 2019. 

Dechra’s outlook for 2021 remains positive, as market conditions are favourable and with forward progress being made in the pipeline. 

The company has said it expects its current financial year to be weighted in the first half as it is beginning to see the pre-Brexit inventory build unwind. 

Dechra’s interim dividend was raised by 8% to 11.11p per share, a continuation of steady year-on-year increases.

In early-morning trade on Monday the Dechra share price is down by over 2% to 3,538p per share. Year-to-date the company’s share price remains at around the same level, despite a spike to 3,802p in mid-January.

However, over a longer period of 12 months, Dechra’s share price has made steady gains, despite a drop to 2,168p per share in March.

Ian Page, the chief executive at Dechra, described the results as “pleasing”. 

“Despite 2020 being one of the most challenging years in Dechra’s history, it is pleasing to report that the calendar year ended strongly resulting in an excellent performance in the first half of our financial year,” Page said. 

Dephra Pharmaceutics, dedicated to developing and manufacturing veterinary equipment, is a constituent of the FTSE 250.

Founded in 1997, the company is headquartered in Northwich. Dechra Pharmaceuticals is organised into two divisions; European Pharmaceuticals and US Pharmaceuticals.

Cake manufacturer Finsbury Food sees revenue drop by 4%

Liam Roche
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Cake manufacturer Finsbury Food sees revenue drop by 4%

Finsbury Food pre-tax profit down to £17.4m

Finsbury Food Group (LON:FIF) posted a fall in revenue of 4% to £152m on Monday.

This followed an increase in revenue of 4.7% to £159.5m recorded the previous year.

Finsbury Food Group also announced a 16% fall in its pre-tax profits to £7.4m.

The London-listed company’s share price was up 0.34% at 74.25p on Monday despite opening down on the previous day’s close. After crashing by nearly 50% in March, Finsbury Food Group  has struggled to make a full recovery over the past 12 months. 

The company has previously confirmed its dividend payment for the year to 27 June 2020 was being suspended to ensure the business could consolidate in the short-term. Finsbury Food has confirmed the company will review its dividend ahead of June 2021 in the coming months. 

The baking manufacturer’s revenue was impacted by economic uncertainty brought about by a number of factors. 

This is according to John Duffy, the chief executive of Finsbury Food Group. 

“The current operating environment continues to be characterised by near-term uncertainty and a challenging economic backdrop that is likely to remain for some time, but a combination of progress in the roll-out of the vaccine and the avoidance of a ‘no deal’ Brexit provides comfort around the Group’s medium-term prospects,” Duffy said. 

Duffy also praised the company’s ability to immediately adapt to the challenges caused by the pandemic. 

“The first half was a period in which Finsbury again demonstrated its resilience and ability to manage and adapt to the effects of the pandemic. Through careful management of resources, anticipating and responding quickly and effectively to changes in consumer demand, and maximising the benefits of operational initiatives both new and historical, we were able to deliver a robust performance.”

Finsbury Food Group is one of the largest ambient cake manufacturers in the UK, a market valued at over £963 million

Kanabo looks fully valued

Andrew Hore
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Kanabo looks fully valued

It took nearly two years to complete but the reversal of Israel-based cannabis-based products supplier Kanabo Research into standard list shell Spinnaker Opportunities, but it has been well received by investors. Kanabo Group (LON: KNB) has a significant valuation, but is there more to go in the short-term?
The reverse takeover was first announced on 27 February 2019 and completed on 16 February 2021. The initial value of the deal is £15m in shares and the company also raised £6m at a share price of 6.5p. Kanabo was valued at £23.4m when it was admitted to trading.
The share price has risen to...

Moonpig sparks upgrades

Andrew Hore
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Moonpig sparks upgrades

Little more than a fortnight after Moonpig (LON: MNPG) floated it has sparked a forecast upgrade with its trading statement. More customers are buying gifts as well as online cards.
Third quarter trading was strong and the growth rate in the period was inline with the first half figure. A deceleration of the growth rate had been anticipated. Valentine’s Day week trading was the best ever week for the company.
There have been additional costs due to higher marketing spending and staffing levels.
Revenues are expected to reach £350m in the year to April 2021, which is double the previous year. E...

British Honey builds distilling scale

Andrew Hore
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British Honey builds distilling scale

Gin and spirits supplier British Honey Company (LON: BHC) is acquiring Union Distillers for an initial £8m in cash and shares. This adds to the range of brands that Aquis Stock Exchange-quoted British Honey owns and provides scope for significant expansion.
The deal will give British Honey greater scale and Union Distillers will be able to use the group’s software. The group will also have greater opportunities in the UK off-trade.
The enlarged group production capacity will be three million bottles, seven million cans and five million miniatures. There is potential for cross-selling brands.
U...

Rising bond yields a warning sign for investors in US stock market

Liam Roche
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Rising bond yields a warning sign for investors in US stock market

The benchmark yield on 10-year Treasury notes up to 1.31%

The S&P 500 index climbed to an all-time high earlier this week amid optimism around the US economy. With high oil prices, along with a positive mood around vaccine roll-outs and a pending stimulus package, confidence in the US economy is growing.

However, despite the recent rally, the US stock market could be in a vulnerable position. Investors are remaining cautious over equity markets, as bond yields rise on the possibility of inflation. 

Since 2009, high prices for bonds and low yields have provided support for equity markets, as they compete for capital. However, this changed with forecasts of rising inflation, which could be exacerbated by Joe Biden’s $1.9trn stimulus package. 

“Yields rise when bond prices fall, and the potential for increased government spending implies increased government borrowing, thus a larger supply of bonds driving the price down,” said Toby Sturgeon, Global Head of Fiduciary Investment Services at ZEDRA.

The benchmark yield on 10-year Treasury notes climbed to 1.31% on Friday, having reached its  highest point in 12 months earlier this week, on concerns about the prospect of higher inflation. The yield on the 30-year Treasury bond rose to 2.1% on early Friday trading.

With yields creeping over 1.3%, it is a warning sign for investors looking to make gains from a strong recovery in the US economy over the coming year. 

A sharp rise in yields “is something that certainly poses a significant risk,” said Padhraic Garvey, head of research, Americas at ING.

“What we don’t want to see in the very near term is (the 10-year yield) hitting 1.40%, 1.50% and still looking up,” Garvey added.

In that case, equities could become an unattractive proposition for investors. With pent-up demand, loose monetary policy, and bond yields on the up, Joe Biden’s fiscal stimulus could actually put the US stock market at risk.

Rishi Sunak hints at tax rises amid rising deficit

Liam Roche
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Rishi Sunak hints at tax rises amid rising deficit

UK debt at 100.6% of GDP

Chancellor Rishi Sunak has alluded to the possibility of a hike in taxes as the UK faces up to holes in its finances following the economic impact caused by nationwide lockdowns.

Public debt grew by £8bn in January, the Office for National Statistics has revealed.

Following the release of government figures recentlySunak said:

“We’ve been able to respond comprehensively and generously through this crisis because of our strong public finances.”

“Therefore, it’s right that once our economy begins to recover, we should look to return the public finances to a more sustainable footing and I’ll always be honest with the British people about how we will do this.”

While it is the first time there has been a deficit in January in over a decade, the figure was lower than the £24.5m forecasted by economists.

Government spending during January 2021 rose by over 30% from the year before to £81.9bn.

During 2020/21, the UK is forecast to record a deficit of £350bn, the highest as a proportion of GDP (17%) since the second world war.

In total, government debt stands at 100.6% of UK GDP, according to the ONS. UK debt is now in excess of £2.1trn, following continuously high rates of borrowing during the pandemic.

Pound up past $1.40 ahead of announcement by Prime Minister

Liam Roche
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Pound up past $1.40 ahead of announcement by Prime Minister

Pound strengthening ‘not a proxy’ for the FTSE 100

The pound edged past $1.40 on Friday, its highest level in nearly three years, in a show of continued optimism surrounding the UK economy.

As the close of Friday trading nears, Cable is sitting above the $1.40 mark, up over 0.3% on the day.

The pound has been steadily progressing upwards recently, reaching $1.39 at the beginning of the week, coinciding with a rise in the FTSE 100.

The pound is up to 1.16 against the Euro, a 1% rise from Thursday’s close. It is also up 3.56% against the Eurozone currency over the last three months.

This follows a heavy fall in the value of the pound in the lead up to an anticipated ‘hard Brexit’ from the European Union.

Simon French, chief economist at Panmure Gordon, said: “Brexit has given international investors an excuse since 2016 to reduce their holdings in sterling. As the UK progresses through 2021 it is likely to see more stability in its relationship with the EU as adjustment frictions begin to dissipate. This should translate to a greater upside for the pound against the euro than than against the dollar in our view.

Cable’s recent surge comes following vaccine roll-outs surpassing expectations, in addition to an expected easing of lockdown measures by the Prime Minister next week.

Russ Mould, investment director at AJ Mould, said:

“The run for sterling towards the $1.40 mark against the dollar reflects, in part, optimism about what a rapid vaccine roll-out would mean for reopening in the UK, setting quite high expectations ahead of Boris Johnson’s statement on the easing of restrictions on Monday.”

While the pound strengthening is a sign of economic optimism in the UK, the news has done nothing to rally the FTSE 100 index.

“A strong pound isn’t helping the index – crimping the relative value of its dominant overseas earnings in the latest reminder that the multi-national index is in no way a proxy for the UK economy,” said Mould.

WATR: Invest in the future of water technology

UK Investor Magazine
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WATR: Invest in the future of water technology

The UK Investor Magazine Podcast is joined by Glyn Cotton, CEO and Co-Founder or water technology company WATR.

WATR is setting out to improve the quality water on a global scale by working with the UK’s water companies in improving the health of our water, through to helping provide safe drinking water in the third world.

Astonishingly, one million people a year still die from poor water quality and the overall market in improving water sanitisation is estimated to be worth £4.29bn.

WATR has engaged in many years of development which saw them win a startup award at Web Summit and is now raising funds via Seedrs to propel growth in the coming years.

Having already met the Seedrs campaign target of £250,000, WATR is now in overfunding meaning investors can still secure an allocation.

Find out more on the WATR crowdfunding page on Seedrs here.

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