UK house prices forecast to rise in 2021

Bronte Carvalho
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UK house prices forecast to rise in 2021

Real estate firm Rightmove has projected a further climb in UK house prices in 2021 despite Brexit, the ongoing coronavirus pandemic and whether or not the government chooses to extend the current stamp duty holiday.

Asking prices rose almost 7% this year, but are expected to gain a further 4% over the next twelve months as the UK property market enjoys the continued trend in city goers moving to suburban and country locations to escape city infection rates.

Graph courtesy of rightmove.co.uk.

Rightmove cited the pandemic as forcing Brits to reconsider their accommodation needs, after months of lockdown during the spring and again in the autumn drove up demand for larger properties with outdoor space.

It confirmed that while the stamp duty holiday introduced in July had added some extra momentum to the property market, demand was already strong before that – and remains ‘resilient’ even as the chances to capitalise on the holiday deadline in March quickly dwindle.

Nevertheless, there is still mounting concern amongst estate agents that 2021 could see a stall in sales enquiries as the government’s furlough scheme and the stamp duty holiday both draw to a close in the spring.

The New Year is expected to be a busy period for sales, however, as some 650,000 properties are still currently changing hands. Rightmove’s 2021 House Price Index report explained:

“It will be a busy start to 2021. The New Year is typically a time for resolutions for the year ahead, and many will see it as an opportunity to draw a line under 2020, which may well include a fresh start in a new home for those who have not already acted. Many have already done so since the English market re-opened in May, and many more are continuing to do so despite the seasonally quieter run-up to the Christmas period and the declining chance of completing a purchase before the stamp duty deadline”.

Rightmove CEO weighs in

Even with house sales expected to slow in the second quarter, Rightmove CEO Tim Bannister remains adamant that the property market has proved resilient through years of uncertainty, and states that the evidence suggests appetite to buy is still strong despite Covid-19 restrictions:

“Pandemic-related uncertainties have been around for nearly a year, and Brexit uncertainties for far longer, and record activity month after month has proved that movers are willing and able to act on their new or existing housing priorities. Demand has therefore exceeded supply in 2020 with the number of properties coming to market for the year to date down by 0.6% on the same period in 2019, and the number of sales agreed up by 8.3%. As a consequence the number of available properties for sale is at a record low, indicating scope for some further modest price increases overall in 2021 despite those uncertainties”.

“Despite these headwinds,” Bannister added, “Ongoing demand still remains very high, indicating that there’s plenty of fuel left in the tank for the housing market. Interest rates remain at near-record lows, and we expect greater availability of low-deposit mortgages at competitive rates next year. These two factors will help to oil the wheels for home purchases by the ‘accidental savers’ who have collectively saved £100 billion that they couldn’t spend during the pandemic restrictions.

“With the expectation of a return to more normality in the second half of 2021 and a likely ‘fresh start’ mentality for some, there are sound reasons for continued positive market sentiment that will outweigh the economic, political, and health challenges ahead. Rural, countryside, and coastal demand will remain high for those re-appraising their lifestyle, but more normality will also help the recovery of those aspects of city-living that have seen a dip in their appeal”.

Agents’ views

Nick Leeming, Chairman of Jackson-Stops, commented:

“The start of the new year is traditionally a busy time in the housing market, with buyers and vendors alike taking the festive period to plan for the year ahead. However, we are expecting the first months of 2021 to be particularly active as buyers try to squeeze in their deals before March 31st. Those looking to make savings on the stamp duty holiday must act now, we are advising any serious house hunters to have their offers in by January latest.

“Buyers and vendors at the prime and super-prime end of the market will continue to move throughout 2021 due to a change in lifestyle aspirations which have been spurred on by the COVID-19 pandemic. Many of these clients will be entering the housing market for the first time in decades as they haven’t had a pressing need to move or buy a second home so have held off doing so until now. Whilst the introduction of a viable vaccine will act as a shot to the arm for the housing market, restoring confidence at every level, the return of SDLT will slow transactions down at the lower end of the market although the top end will remain resilient”.

Marc von Grundherr, Director of Benham and Reeves, also weighed in:

“We’re certainly seeing a sprint finish this year where the UK property market is concerned. This has been primarily driven by government stimulation in the form of the stamp duty holiday, protecting the market against the traditional air of lethargy that comes as we approach the Christmas period, and keeping it fighting fit both where transaction levels and price growth are concerned.

“We expect to see this tidal wave of market momentum spill over into next year and keep the market buoyant, as homebuyers race to cross the line before Rishi Sunak’s chequered flag falls on the chance of a stamp duty saving. While the end of this initiative will lead to an understandable drop in demand over the months that follow, it will be more a return to pre-pandemic normality rather than a dramatic market crash. This will be largely due to the firm foundations laid this year which should enable strong and consistent growth throughout 2021.”

Will 2021 be a boom year for UK SMEs?

Bronte Carvalho
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Will 2021 be a boom year for UK SMEs?

Through an ongoing global pandemic and a seemingly never-ending Brexit negotiation process, small and medium-sized businesses (SMEs) across the UK have been forced to operate in a climate of uncertainty. Rules and regulations are changing by the day, and as a new strain of Covid-19 emerges and the UK prepares to dive out of the EU on New Year’s Day, it is no wonder some business owners are finding it hard to stay positive.

But could 2021 be a boom year for UK small businesses? Analysts from private equity house IW Capital and tax advisory firm Cornerstone Tax certainly think so.

With a no-deal scenario now looking “likely” – following UK Prime Minister Boris Johnson’s failure to reach a deal with EU representatives over the weekend – the UK will have to pay tariffs on imported goods, increasing prices and potentially forcing UK-based suppliers to become more competitive. IW Capital and Cornerstone expect UK small business to handle the changes well, having managed to adapt to the uncertainties of the past few years with commendable proficiency, and assures that there will be opportunities to invest in small businesses poised to capitalise on the situation.

IW Capital and Cornerstone believe that private investment is a “vital catalyst” for wider growth in the aftermath of the UK economy’s largest decline on record – with the UK’s high net worth community providing “essential early indicators for the direction of wealth at a time where the distribution of capital is key”. Despite widespread concern over when the economy will make a full recovery, there was reportedly a 12% increase in new businesses starting up in 2020 compared to 2019, suggesting that the the new year ahead could bring some “exciting investment opportunities” for investors that may help to boost the wider British economy.

Throughout the year, amidst immense pressure, UK SMEs have “shown resilience and have adapted quickly” to the pandemic and the changes it has forced on how Brits do business. A no-deal Brexit, IW Capital and Cornerstone say, represents yet another opportunity to “adapt and grow”. Both firms also emphasise that the number of online job advertisements has reached 1.4 million for the first time in 2020, highlighting business growth across the country and the potential for productivity to catch up to pre-pandemic levels.

CEO of IW Capital, Luke Davis, commented on the road ahead for SMEs as 2021 hurtles closer:

“Each period of disruption offers opportunity for companies to adapt quickly to the changing times and although there has been a lot of worry and negativity surrounding a no-deal Brexit, it would be unwise to believe that there will not be any benefits to come out of it, especially for businesses and industries here in the UK.

“Working with both entrepreneurs and investors, there is a clear desire from the small business community for growth investment and to take a big step growth-wise in 2021. Small businesses grow by hiring and this sector will be key not only to growing the economy but also combating unemployment. Each problem or crisis will have winners and losers but those that are adaptable and in position to take advantage of the situation could see a big increase for business in 2021.

“Making growth investment more easily available to small businesses that are looking to grow should be a priority. The last time that the Government-backed EIS was extended, it resulted in a significant jump in private investment into small businesses. Replicating this effect with new, or increased, incentives would provide a much needed boost to a section of the economy that is most in need, and so we hope this will be addressed in the near future”.

Founder and Principal Consultant of Cornerstone Tax, David Hannah, added:

“The UK is a nation of shopkeepers who have shown their resilience throughout a year that has brought financial hardship and have still been able to make it out the other end. There has been a huge amount of discussion around potential recessions but this period is totally different to any previous recession and business owners and consumers alike know this. I would be surprised to see any economic downturn last beyond March. 

“This year these SMEs have shown their resourcefulness with many having a big uptick in revenues. From working with a plethora of small businesses across the country, I have been able to talk to the owners and have found that even they feel that they will see an increase in business and expect to see growth going into the new year. There of course will be a transition period, but overall 2021 looks like a year when business owners will look to capitalise on their adaptations without as much disruption.

“We have seen SME growth over a year plagued with a pandemic and financial unrest, so I believe that small businesses will adjust to whatever the trading reality is. The UK just needs to support its small businesses through this period and then we will be sure to see them grow and flourish in the next quarter”.

Investors predict worse Covid fallout in 2021

Bronte Carvalho
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Investors predict worse Covid fallout in 2021

A new study commissioned by trading broker HYCM has revealed how anxieties surrounding the coronavirus pandemic and Brexit has affected UK investors’ plans for 2021, with the majority believing the true impact on the UK economy will not be seen until next year.

The survey was conducted across 885 UK-based investors, all of whom have investments “in excess of £10,000”, excluding their property and workplace pensions.

The research found that 65% of UK investors believe the effects of COVID-19 on the UK economy will be worse in 2021 than they have been this year, despite long-held hopes of a sustained FTSE recovery. With the Covid-19 vaccination programme beginning last week, the UK index ticked up amid a fleeting breath of optimism, only to tumble towards the weekend as ongoing Brexit negotiations failed to produce a concrete deal.

Even with the relatively smooth progress of the Pfizer vaccine rollout so far, it is expected to be some time before the bulk of the population are able to be inoculated, as older and vulnerable groups are currently front of the queue. 62% of UK investors said that they will wait until a vaccine is widely available before making any “major financial decisions”, after which 43% said they plan to invest into the sectors “worst-affected” by the pandemic, such as travel and hospitality.

Potentially putting hopes of normality at risk, however, is the news that the UK has identified a new strain of Covid-19. While authorities have cautioned that there is not yet any evidence to suggest this strain is any more severe or will have any impact on the efficacy of current vaccines, the nerves are present.

Meanwhile, 58% of investors want to see the Brexit deadline pushed back from 31st December to allow for more negotiating time, even though the UK is set to leave the EU – regardless of whether a deal is reached or not – at midnight on New Year’s Eve. UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed to continue talks over the weekend despite an initial deadline on Sunday, but time is swiftly running out, and a UK source reported that there has still “not been significant progress in recent days”.

Three in five (60%) investors plan to adopt a “conservative investment strategy” by focusing on security rather than returns in the coming 12 months, while a third (34%) said that they will be looking to invest in renewable energy stocks and shares in 2021. This figure rises to 46% among those aged between 18-34.

Giles Coghlan, Chief Currency Analyst at HYCM, commented on the report’s findings:

“With 2021 fast approaching, it is clear investors are preparing for another year of market volatility as a result of COVID-19. What’s more, investors are quite reasonably fearing that the worst is yet to come with regards to the pandemic’s economic damage.

“The arrival of one or more vaccines will be an interesting development. Once this happens, I’d anticipate a flurry of activity on the financial markets as investors hope to take advantage of sectors posed for recovery.”

The growing interest in green investment is set to be a focal point in investment portfolios across the next year. Stavros Lambouris, CEO at HYCM International, explained:

“The research is an important reminder of the pandemic’s impact on investors. Aware of the uncertainty that lies on the horizon, the majority of investors are evidently taking a cautious approach to managing their investment strategies.

“That said, a significant proportion are looking to invest in green energy stocks and shares, which has no doubt been influenced by both Prime Minister Boris Johnson and US President-elect Joe Biden both tabling ambitious green strategies recently. This will be a key trend to watch in 2021″.

New Covid Strain: should we be worried?

Jamie Gordon
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New Covid Strain: should we be worried?

Speaking in the Commons on Monday, Health Secretary, Matt Hancock, said that the UK government had informed the WHO about a new strain of the Covid virus spreading in southeast England.

Discovered by Porton Down Laboratory scientists, the new Covid strain is not currently viewed as more serious than previously-known variants. Mr Hancock added that it is “highly unlikely” that the new strain will add complications to the NHS vaccine roll-out programme, which commenced last week.

The Health Secretary said: “Initial analysis suggests that this variant is growing faster than the existing variance. We’ve currently identified over 1,000 cases with this variant, predominantly in the south of England, although cases have been identified in nearly 60 different local authority areas and numbers are increasing rapidly.”

Health pundits are roughly in consensus thus far – mutations are expected and natural, and not necessarily something to worry about. Indeed, virologists are already considering at least 40 variants of the Covid virus, and while this strain appears to be linked with a faster spread rate, there is no suggestion that it has increased potency.

Summing it up best, BBC Medical Editor, Fergus Walsh, commented: “So what we don’t know is whether it’s associated in any way with more serious disease. And Matt Hancock said that there was no evidence of that at the moment.”

“And also the vaccines we have (and there are three that we now know have efficacy) – there’s nothing to suggest that a variant would make the vaccine less effective.”

“Nothing to panic about now but absolutely right that the geneticists at Porton Down and elsewhere do all the due diligence and look at this.”

“It sounds immediately very scary but I don’t think there’s anything to be unduly alarmed about.”

While we shouldn’t be fear-stricken following the announcement of a new Covid strain, we, equally, cannot afford to be complacent. Indeed, the WHO said that a mutation may be the result of a virus becoming better-adapted to its environment.

Once again, though, the organisation said that; “This process of selection of successful variants is called ‘viral selection’ and this is a natural process all viruses go through.”

It’s all about the Fundamentals…Don’t Confuse the Pause Button for a Full Stop

UK Investor Magazine
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It’s all about the Fundamentals…Don’t Confuse the Pause Button for a Full Stop

COVID has pushed the pause button on global growth: but it’s a pause, not a full stop. And it’s not the first time either. Lockdowns, travel bans and closed theatres were common currency a hundred years ago as well, as were closed pubs, cancelled Christmases and even a mutton headed US movement against facemasks. But back then it wasn’t COVID, it was Spanish Flu: and back then it was the protective measures themselves (much more than any direct impact of the virus) that caused a sharp decline in economic activity…just like today.

Between 1918 and 1921, when Spanish Flu was at its virulent worst, global GDP fell by 19% annually and manufacturing output slumped by 8% year on year. And since COVID broke earlier this year, GDP in the United Kingdom has fallen by 19.5% with manufacturing output in the United States down by 6.7%. The figures are strikingly similar and offer important clues for the future, especially since after 1921, with the virus in retreat and protective measures easing, the US economy grew by 5% annually, construction went into overdrive and stock markets across the planet soared to an all time high. Of course by the end of the decade the roaring twenties had crashed spectacularly on Wall Street, but that wasn’t because of the virus: that was a bunch of investment bankers in spats who unleashed more economic harm than Spanish Flu ever could.

Thankfully we don’t have bankers like that anymore (not outside the prison system anyway), which means that based on historical data we can expect a significant (and substantially pent up) growth in GDP across international markets as COVID measures are progressively relaxed. Precisely because those measures aren’t a full stop at all…they’re just a pause: storing up and then accelerating growth, like forcing down and releasing a spring: just like equivalent measures a hundred years ago.

And when that bounce back happens (likely in the near term given new vaccines are coming on stream by the week), the economies that come fastest out of the blocks will be those with the strongest fundamentals. Think German economic expansion in the decade after the devastation of the Second World War (compared with the UK’s faltering growth over the same period); and think of the spectacular economic growth in India following the global financial crash of 2008 (rogue bankers again). Over the last decade India has been consistently ranked as the fastest growing large economy on the planet, with the turbulence of the worldwide crisis merely priming it to become an economic powerhouse.

Despite the significant market turbulence left in the wake of the crash, GDP on the subcontinent grew by 8% in 2015, 8.2% in 2016 and 5.2% in 2019: far ahead of every other advanced economy in the world, catapulting India to fifth place in the global GDP league table (overtaking the former mother country for the first time). And think back to that coiled spring again: COVID protective measures might have temporarily borne down on economic growth in India (as they have elsewhere), but the country’s underlying fundamentals are still strong, and likely to emerge stronger still as measures are eased.

So what exactly are these fundamentals? Well, for a start India has the fastest growing population on the planet (forecast to overtake China and become the biggest in the world within a year): the demographic is increasingly urbanised, increasingly wealthy and increasingly technology hungry, which has fuelled an unprecedented consumer boom on the subcontinent over the last decade…and it hasn’t gone away. India is also an increasingly important technology and distribution hub for international markets, benefitting not only from logistical positioning (a bridge between Asian and Western Markets), but an enhanced technical skill base in markets such as Bangalore and Chennai…and that hasn’t gone away either. Add to that a raft of measures introduced by Prime Minister Modi’s Government to improve transparency and competitiveness across capital and financial markets and it’s hard to imagine the spring being kept down much longer. 

Suchit Punnose is Founder and CEO of Red Ribbon Asset Management,which has been investing in Indian business throughout that explosive decade of growth: “Our success as a company has always been inextricably bound up with India’s emergence as a leading economy on the world stage. Seismic demographic changes on the subcontinent have opened up increased investment opportunities, driven forward in turn by an expansion in capital flows between the United Kingdom and India. I’m sure that’s a trend that will continue in the future.”

So don’t confuse that pause button for a full stop…history has clear pointers for where we’re heading, and for the future it’s all about fundamentals.

Schroder AsiaPacific cuts dividend by 17.5%

Jamie Gordon
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Schroder AsiaPacific cuts dividend by 17.5%

Setting out what has been a challenging and resilient year of trading, Schroder AsiaPacific Fund (LON:SDP) Chairman, Nicholas Smith, walked investors through the fund’s 2020 results and dividend payments.

In what will be Mr Smith’s final year at the helm, he stated that the fund’s NAV produced a positive NAV return of 17.7%, outperforming its benchmark of 12.3%.

Meanwhile, having started the financial period between 435p and 440p, the company’s share price finished the year to September 30 at 510.00p a share, up 19.7%. Likewise, having fallen as low as 348.00p in mid-March, its share price now stands at 612.00p, up by 75.9% in nine months.

Organic increases in the in the share prices of Schroder AsiaPacific’s respective holdings, and gaining permission to buyback 14.99% of its own shares, saw that company’s discount narrow from its year-under-review average of 10.7%, to its year-end level of 5.82%.

Other positive news for the Group’s shareholders included the announcement that its management fee would be cut from 1 April 2021, down to 0.75% per year for the first £600 million of net assets and 0.70% per year on net assets thereafter.

On a less positive note, the fund that several of its portfolio members cut their dividends during the pandemic, causing the Group’s net revenue after tax to fall by 20.1%, down from 9.90p to 7.92p a share. With the directors’ decision to distribute all revenue as dividends, and supplement this total with revenue reserves, Schroder AsiaPacific shareholders will receive a final dividend of 8.00p, down 17.5% from the 9.70p dividend paid at the previous year-end.

Further, the company also notes that it began the year with 2.4% net cash, and ended the year ’slightly geared’, at 0.2%. Capping off the main points of his statement, Mr Smith added that he will retire at the company’s next AGM, and will be succeeded as Chairman by current Board-member, James Williams.

Giving his thoughts on the future, Mr Smith said that: “After a very hard year for financial markets, the Company is in good shape and is ready to take advantage of the opportunities in the region over the coming years. You, as shareholders, are participating in a region with outstanding prospects and with a team that is second to none.”

“You can look forward to 2021 with some investment optimism. The latest vaccine news is very encouraging but rollout will take time. 2022 and 2023 may be the years when life in Asia returns to normalcy.”

Following the update, Schroder AsiaPacific Fund shares added up to 0.50%, up by 0.33%, to 612.00p, at the time of publication 14/12/20.

Codemasters on verge of £945m EA takeover

Jamie Gordon
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Codemasters on verge of £945m EA takeover

British videogame developer, Codemasters (AIM:CDM) watched its shares soar on Monday, as it announced it would turn down a takeover offer from Take-Two Interactive, in favour of the bid made by Electronic Arts Inc. (NASDAQ:EA).

The company statement said that “Following the announcement today of a recommended cash offer for Codemasters Group Holdings plc by Codex Games Limited, an indirect subsidiary of Electronic Arts Inc., for the entire issued and to be issued ordinary share capital of Codemasters, the board of directors of Codemasters confirms that it has withdrawn its recommendation of the offer for Codemasters made by Take-Two Interactive Software, Inc. and that it intends unanimously to recommend the EA Offer.”

EA have offered a takeover price of 604p per share, which represents a total acquisition value of £945 million, for Codemasters’ issued and to-be-issued share capital. The CDM Board said that it has taken ‘various aspects’ under consideration, and views the EA offer to represent a superior opportunity for it’s the Group’s shareholders.

The company said that it proposes to adjourn the Court Meeting and the Group General Meeting (in relation to the Take_Two offer), set to be held on 21 December 2020. It added that further announcements will be made ‘as and awhen appropriate’.

Following the announcement, Codemasters shares jumped 20.63%, up to 644.15p a share 14/12/20. This price is far-and-away the company’s all-time high, and around 36.7% ahead of analysts’ target price of 407.50p apiece.

Despite the apparent disparity between analysts’ most recent price target and its current level, analysts currently have a consensus ‘Buy’ stance on the stock, while the Marketbeat community issues an abnormally bullish 80.99% ‘Outperform’ rating on the Group’s shares.

Today’s acquisition news, though not finalised, rounds off a booming year for the gaming industry. With some big releases such as GTA VI, and Bethesda’s next Elder Scrolls instalment, not being released until 2021 and 2022, the pandemic has seen the rise of some unexpected entrants, and has caused some small competitors to become titans.

Unilever shareholders to vote on climate strategy

Jamie Gordon
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Unilever shareholders to vote on climate strategy

Consumer defensive giant, Unilever (LON:ULVR), looks to take its next step towards becoming the FTSE 100 sustainability trailblazer, as it asks its shareholders to vote on its climate transition action plan.

The company said that the move represents “the first time a major global company has voluntarily committed to put its climate transition plans before a shareholder vote”. It added that the decision has been taken on the basis that a shift to net zero emissions will require greater engagement between companies and investors on their climate transition plans.

Unilever says that it hopes the increased level of transparency and accountability will strengthen the dialogue with its shareholders and encourage other companies to follow its example. The decision also follows the company’s other, recent shifts to sustainable operations, such as; its intention to increase plant-based sales to $1.2 billion by 2025; its acquisition of non-profit-backed nutrition group, SmartyPants Vitamins; and its $1 billion investment in removing fossil fuels from its cleaning products.

The climate transition goals it will be putting to its shareholders in the vote, include net zero emissions from its own operations by 2030, a 50% reduction in average footprint of its products by 2030, and net zero emissions from sourcing to point of sale, by 2039.

The Group says that achieving these targets will require it to decarbonise its raw materials, transitioning to 100% renewable energy within its operations, eliminating deforestation from its supply chain, advocating for accelerated decarbonisation of global energy, and product reformulation “through compaction and concentration”.

Commenting on the climate transition vote, Alan Jope, Unilever CEO said: “Climate change is the most pressing issue of our time and we are determined to play a leadership role in accelerating the transition to a zero-carbon economy.”

 “We have a wide ranging and ambitious set of climate commitments – but we know they are only as good as our delivery against them. That’s why we will be sharing more detail with our shareholders who are increasingly wanting to understand more about our strategy and plans.”

“We welcome this increased transparency and in the plan we present, we will be clear both about the areas in our direct control where we have a high degree of certainty of our route to net zero, as well as more challenging areas across our value chain where systemic solutions will be required to achieve our targets.”

The company said that it will share its full climate transition action plan in Q1 2021, ahead of its AGM on May 5. It added that it will report on annual progress against the plan from 2022, and it will seek an advisory vote every three years on any material changes made or proposed to the plan. The Group continued, saying that to achieve its net zero by 2039 target, it will require high quality carbon removal credits “to balance any residual emissions from sourcing to point of scale”.

Following the update, Unilever shares dipped by 0.66%, to 4,390.82p a share 14/12/20. This price is around 9.30% short of analysts’ target price of 4799.09p, but is fairly consistent with where it has spent most of the year-to-date.

Its p/e ratio of 17.33 is fairly reasonable versus some of its consumer defensive peers, while its dividend yield of 3.44% remains fairly inviting. Happily, the company’s share price appears to have already priced in some of the costs of the Group’s sustainable transition, though analysts’ consensus ‘Hold’ rating would suggest that some feel there is potential for the company’s price to fall further still.

AstraZeneca shares drop on Alexion acquisition

Jamie Gordon
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AstraZeneca shares drop on Alexion acquisition

British pharma blue chip, AstraZeneca (LON:AZN), announced on Monday that it had entered into a definitive agreement to acquire Alexion Pharmaceuticals.

The company said that Alexion shareholders will each receive $60 in cash, and 2.1243 AstraZeneca American Depositary Shares for each Alexion share. Based on AZN’s reference average ADR price of $54.14, this implies a total consideration per share of $175, or $39 billion in total.

Subject to regulatory approval, the deal is expected to be completed by Q3 2021, at which point Alexion shareholders will own roughly 15% of the combined company.

Pascal Soriot, AstraZeneca CEO, commenting on the acquisition, saying: “Alexion has established itself as a leader in complement biology, bringing life-changing benefits to patients with rare diseases.”

“This acquisition allows us to enhance our presence in immunology. We look forward to welcoming our new colleagues at Alexion so that we can together build on our combined expertise in immunology and precision medicines to drive innovation that delivers life-changing medicines for more patients,” he added.

Combining the two companies will bolster their collective immunology, iologics, genomics and oligonucleotides capabilities. The Group added that, “AstraZeneca, with Alexion’s R&D team, will work to build on Alexion’s pipeline of 11 molecules across more than 20 clinical-development programmes across the spectrum of indications, in rare diseases and beyond.”

Following the in-part shares-based acquisition, AstraZeneca shares shed 6.13%, down to 7,660p a share 14/12/20. While a short-term knock for those looking to quickly capitalise on potential COVID vaccine price gains, the acquisition increases AZN’s presence in the rare diseases space, and it will use its global presence to leverage Alexion’s portfolio, which already boasted $5.0 billion in revenues in 2019.

Analysts currently have a Hold stance on the stock, and a consensus target price of 8,491.76p, 10.85% ahead of its current level. The Group also have a dividend yield of 2.65%, and a p/e ratio of 40.42.

Pound rises as Brexit talks continue

Safiya Bashir
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Pound rises as Brexit talks continue

Following Boris Johnson and Ursula von der Leyen’s UK-EU trade talks on Sunday, the pound has risen nearly one and a half cents against the US dollar at $1.336 and nearly one eurocent at €1.1.

As trade talks continue, there is relief that a deal could be in the progress od being made over the next couple of weeks grows.

“The pound is enjoying a bit of a relief rally at the start of this week. Relief, it seems, at not suffering a horrific plunge as the two sides call it quits on the talks and proceed on WTO terms,” said Craig Erlam from OANDA.

“That may still come to pass. But as long as the two sides are talking, there remains the belief that common sense will prevail and a deal will be reached that avoids the cliff edge on January 1st. I expect volatility will remain rather heightened in the coming days.”

Despite the Brexit deadline for talks passing over the weekend, both parties have agreed to continue talking.

“In reality the only deadline that matters now is 31 December, as the procrastination continues between EU and UK negotiators, with rules around the so-called level playing field and governance, still at the heart of the disagreements between the two sides,” said Michael Hewson, chief market analyst at CMC Markets UK.

“It defies belief that the EU can agree a deal with the likes of Hungary and Poland over threats to the rule of law, and yet are unable to come to some form of agreement with the UK, an ally of longstanding, on a trade agreement.”

The pound this morning is at its highest since last Wednesday.

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