Novethic launches sustainable funds database

Jamie Gordon
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Novethic launches sustainable funds database

‘Sustainable Transformation Accelerator’, Novethic, announced on Thursday that it has launched ‘MARKET DATA’, a quarterly summary of three trends within the European sustainable funds market.

The organization said that the three thematic Market Data publications are based on ‘in-depth’ research and new additions to the Novethic databases. It added that investors will benefit from the quarterly summary, and its mapping and analysis of responsible investment products (SRIs).

With the demand for ESG growing from individual and institutional investors, and regulatory pressure mounting, the number of funds classifying as sustainable is ‘continuously multiplying’, according to Novethic. To protect consumers and fund managers from greenwash marketing campaigns, Market Data seeks to separate pretenders from those that have sustainable transformation at the heart of their business model.

Novethic says that its reliable and qualified data will help investors to address sustainable funds from three angles: Green Funds Europe, Sustainable Labels Europe, and Sustainable Funds France.

On Green Funds Europe, the organization says that the growing number of supposedly eco-friendly funds come in ‘different shades of green’ and that investors often struggle to separate the wheat from the chaff. Its analysis considers the evolution of the sector, for stance: the number of funds on the market, their environmental characteristics, and impact indicators. It then analyses the individual wording, documentation, and verifies whether each fund has an investment strategy that explicitly focuses on the environment and climate.

Its Sustainable Labels Europe publication acknowledges the attempt by the financial sector to ‘normalise’ the market with their sustainable finance labels. This analysis is similar to the previous publication in the areas it covers, but focuses mainly on listed investment funds, and excludes unlisted funds, savings products and insurance funds.

Finally, and unsurprisingly, the Sustainable Funds France publication focuses on the sustainability credentials of French UCITS funds, excluding employee investment funds.

Concluding its statement, the organization said: “As a long-time observer of the responsible investment market, Novethic has reviewed best market practices since 2004, comparing fund strategies and carrying out studies to identify best practices and compare different approaches. Following the publication of the French Responsible Investment Market Figures and the Novethic Indicator for Sustainable Funds available to individual investors, the launch of Market Data helps us support a new stage in the development of sustainable finance by offering accurate and reliable market data.”

Sterling quakes amid no-deal Brexit fears

Bronte Carvalho
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Sterling quakes amid no-deal Brexit fears

Sterling broke on a bad note on Thursday morning after the highly-anticipated talks between UK Prime Minister Boris Johnson and European Commission chief Ursula von der Leyen failed to culminate in a Brexit trade deal. Although an agreement to continue negotiating has reportedly been reached, hopes of a deal are becoming slimmer by the moment, as Foreign Secretary Dominic Raab warns that talks are “unlikely” to continue beyond Sunday.

“The pound weakened in the absence of a breakthrough during the talks,” says Khatija Haque, Head of Research & Chief Economist at Emirates NBD, “growing Brexit concerns continue to weigh on the GBP”.

The UK currency has weathered a significant drop over the past 24 hours, with the Pound-to-Euro exchange rate sinking 0.75% to trade at 1.09702 and the Pound-to-Dollar dropping 0.70% to 1.32917. The past few weeks have seen Sterling struggle with turbulence, after the allocation of post-Brexit fishing rights ended in a stalemate two weeks ago and pushed the currency down to fresh lows.

Today’s publication of the European Union’s no-deal contingency plan has added fuel to speculation that the UK will leave without a deal, stating: “While the Commission will continue to do its utmost to reach a mutually beneficial agreement with the UK, there is now significant uncertainty whether a deal will be in place on 1 January 2021”.

Meanwhile, the European Central Bank launched a €500bn stimulus package on Thursday afternoon, which has already seen the Euro gain 0.3% within minutes of the announcement.

Both the UK and the EU have confirmed that the obstacles ahead remain substantial as negotiations appear to enter another final phase at the end of the week. A statement from the office of the Prime Minister read:

“The PM and Mrs von der Leyen agreed to further discussions over the next few days between their negotiating teams. The PM does not want to leave any route to a possible deal untested. The PM and Mrs von der Leyen agreed that by Sunday a firm decision should be taken about the future of the talks”.

Doubts that the UK will leave without a deal have ramped up in recent days nonetheless, with Joseph Capurso, Head of International Economics at CBA, commenting on what this means for Sterling: “We are not confident of a deal because the same three issues (fishing, governance and competition) remain unresolved. The bottom line is the near term risk to GBP/USD is for a sharp fall, something one week risk reversals are increasingly pricing”.

There is still not total consensus, however, as Jordan Rochester from Nomura adds: “We continue to expect a deal to be the final outcome, the timing is the tricky issue. If we are wrong and the UK opts for a no-deal Brexit, GBP would have a long way to fall”.

Pound Sterling LIVE weighed in, explaining: “If the EU and UK do find a way forward and strike a deal the Pound is widely expected by foreign exchange analysts to strengthen into year-end and through 2021 as a cloud of lingering uncertainty is finally lifted”.

BiON breaks into the solar power market

Jamie Gordon
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BiON breaks into the solar power market

Environmental engineering, wastewater treatment and renewable energy solutions company, BiON (AIM:BION), has made its first strides into the solar photovoltaic market, with the establishment of its new subsidiary, BiON Suria Sdn Bhd, and the conditional acquisition of solar assets.

Through BiON Suria, the company hopes to leverage the market opportunity offered by Malaysian government support for solar PV, and the country’s natural sunlight and irradiance levels, to be part of the push to increase solar PV from 194 GWh today, to 13,540 GWh by 2050.

By acquiring existing assets that have completed the Feed-in-Tariff bidding process, and secured a power purchase agreement, BiON says that all of its acquisitions will be immediately earnings accretive and support company cash flow upon completion.

The company’s first conditional acquisition is a 77% interest in the right-of-use assets of rooftop solar panels that supply 0.95MW to TNB under the government’s NEM programme. Acquired for RM6 million, the solar panels are situated on top of 54 religious buildings in the state of Perak and state of Sabah. Both have long-term power purchase agreements in place, all of which expire between the end of 2038 and end of 2040, with expected annual profit after tax of RM0.4 million per annum, from 2021.

Speaking on the news, CEO of BiON, Datuk Syed Nazim bin Syed Faisal, said: “The establishment of our BiON Suria subsidiary and acquisition of solar PV assets marks an important milestone for BiON as we enter into a new renewable energy sector for the first time – delivering on our stated strategy to diversify our portfolio.”

“We believe solar PV offers great potential for supporting our cash flow while we continue to focus on developing our biogas power plants and expanding into further waste-to-energy activities. The solar PV opportunity is demonstrated by this acquisition, which is earnings accretive and provides a secure income for the next 20 years. With the solar market in Malaysia expected to grow substantially, supported by government incentives, we look forward to expanding our portfolio in this sector.”

Supermarket shares are vulnerable to online entrants

UK Investor Magazine
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Supermarket shares are vulnerable to online entrants

Alan Green joins the UK Investor Magazine Podcast to discuss changes to consumer trends in the UK and a number of UK-listed equites.

As Ocado releases a trading statement highlighting significant growth in sales driven by the coronavirus pandemic, we question the longer term impact on traditional bricks and mortar supermarkets listed in London.

Ocado trades at a materially higher price-to-sales ratio than the UK’s supermarkets and we explore whether this premium is due to Ocado’s technology offering or is it investors pricing in disruption to supermarket businesses in the future.

The UK high street has been decimated by the growth of online shopping, particularly for clothes, but will this spread into food and grocery retailing?

We also discuss Eddie Stobart Logistics LON:ESL, Katoro Gold LON:KAT and I3 Energy LON:I3E

Register for the UK Investor Magazine Virtual Conference here.

Tui sinks to €3bn loss

Safiya Bashir
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Tui sinks to €3bn loss

Tui (LON: TUI) has sunk to a €3bn (£2.7bn) full-year loss.

The holiday operator posted a 58% slide in revenues to €7.9bn (£7.2bn) amid the pandemic and warns it does not expect to return to normal trading levels until 2022.

The company is raising its cost-cutting targets to €400m per year as winter bookings this year are down 82% from last year.

“Very rapid cost and liquidity measures, an accelerated realignment and our flexible business model have enabled us to steer the group through the crisis,” said the Tui chief executive, Fritz Joussen.

“Tui is ready for a speedy and successful resumption of travel activities as soon as the lockdowns are lifted and destinations reopen.”

“The prospect of vaccinations from the beginning of the year will significantly increase demand for summer holidays in 2021,” he added.

Joussen added that he hopes all customers will have tests before they fly: “Vaccination protects you but on top of that you need testing, low-cost high-quality tests which are immediately available is absolutely an important thing for us.”

Last week, the group confirmed a third bailout thanks to the German government, private investors and banks. Tui will receive an extra €1.8bn, on top of the €3bn it has already received.

In September, Tui said it would be will be refunding all cancelled holiday packages following a CMA investigation.

The chief executive of the CMA said: ”It’s absolutely essential that people have trust and confidence when booking package holidays and know that if a cancellation is necessary as a result of coronavirus, businesses will give them a full, prompt refund. The CMA’s action ensures that Tui UK customers will get their refunds by the end of the month.”

Tui shares (LON: TUI) are trading -0.93% at 437,60 (1052GMT).

Ocado reports sales boom and “exceptional demand”

Safiya Bashir
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Ocado reports sales boom and “exceptional demand”

Ocado (LON: OCDO) has posted a boom in sales over the nation’s second lockdown.

The group has raised its full-year forecast as the retailer benefitted from the move to online shopping and saw sales surge 35% in the three months to 29 November.

Retail revenue jumped to £579.6m and the average order spend across the period grew to £133.

Ocado is jointly owned by Marks & Spencer, its own range proving to be most popular.

Ocado Retail chief executive Melanie Smith said: “We continue to make good progress bringing even greater choice, quality and value to our customers following the switchover to M&S at the beginning of September.”

“Despite exceptional demand during the period, we have high rates of on-time customer delivery and low rates of substitutions.”

To deal with the growing sales, Ocado has three new warehouses that will contribute to operations next year and add 40% capacity.

Earnings before interest, tax, depreciation and amortisation is expected to increase from last years £60m to £70m.

Shares in the group opened lower on Thursday’s trading update, however, is expected to grow throughout the day.

John Moore, senior investment manager at Brewin Dolphin, said: “While there are indicative figures to suggest customer demand and volumes are beginning to normalise, the direction of travel remains positive and there is a lot of evidence that the shopping habits people have taken on in lockdown will endure beyond it.”

“The addition of extra capacity will help Ocado support its growth and, with a strong balance sheet and buoyed by the super-accelerated shift towards e-commerce… the company remains in a great position going into the key Christmas trading period.”

Ocado shares (LON: OCDO) are currently trading -4.85% at 2.213,11 (0948GMT).

ONS: Economy rose just 0.4% in October

Safiya Bashir
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ONS: Economy rose just 0.4% in October

The UK economy rose just 0.4% in October, according to new figures from the Office for National Statistics.

As a second lockdown halted economic recovery and shutdown the hospitality sector, GDP growth fell from September’s 1.1%.

The GDP is 7.9% lower than pre-pandemic levels and whilst October was the sixth consecutive month of growth, it is the slowest rate of recovery since June. GDP is 23.4% higher than its April low.

“The pace of growth has fallen considerably since the relative highs seen in August and September – with accommodation and food services continuing to face significant difficulties,” said James Sproule, chief economist of Handelsbanken.

“The spike in restaurant activity in August, driven by the ‘eat out to help out’ program, was successful in driving revenues up at the time. This rate of recovery was clearly not sustainable and we are seeing all face to face activities lagging. The wide-spread roll out of the vaccine is clearly going to be necessary for a full recovery.

“The November GDP numbers will reflect the impact of the secondary lockdown and only as we look at the data post this can we begin to assess the impact of the UK’s departure from the EU. A rocky few months ahead seems certain,” he added.

Production was up by 1.3%, construction grew by 1.0%, whilst the services sector grew by just 0.2%.

ONS deputy national statistician Jonathan Athow said: “The UK economy has now grown for six months running but still remains around 8% below its pre-pandemic peak.

“Public services output increased, while car manufacturing continued to recover and retail again grew strongly. However, the reintroduction of some restrictions saw services growth hit, with large falls in hospitality, meaning the economy overall grew only modestly.”

The OECD recently predicted that the UK’s economic recovery would be among the slowest across the world, due to the high number of Coronavirus cases and the potential of a no-deal Brexit.

Sports Direct reports surge in sales

Safiya Bashir
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Sports Direct reports surge in sales

The Sports Direct owner has raised the lower end of its annual forecast thanks to strong sales since the end of lockdown.

The group is now expecting bottom end growth to be between 20% to 30%.

Sports Direct traded well over the pandemic, despite having to close many stores. Leisure wear sales were boosted over the pandemic as people bought clothing online.

For the six months to 25 October the group reported a EBITDA of £226.3m, which was an increase from the previous year of £181.2m for the same period in 2019.

The group is currently in talks to save Debenhams from collapse.

Frasers, the owner of Sports Direct, said in a statement: “it is in negotiations with the administrators of Debenhams’ UK business regarding a potential rescue transaction for Debenhams’ UK operations”.

“While Frasers Group hopes that a rescue package can be put in place and jobs saved, time is short and the position is further complicated by the recent administration of the Arcadia Group, Debenhams’ biggest concession holder. There is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly.”

Frasers shares (LON: FRAS) are trading +6.10% higher at 465,80 (0821GMT).

Bitcoin miners’ monthly revenues surged to $551m

Jamie Gordon
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Bitcoin miners’ monthly revenues surged to $551m

Data provided by Dutch financial services platform, Bankr , showed that between November 9 and December 8, Bitcoin miners collected a total of $551.45 million in revenue, with a daily average of around $18.38 million.

The highest daily figure corresponded with a Bitcoin surge, which saw revenues hit $21.76 million on December 3. Meanwhile, the lowest earnings booked during the period were on November 14, at $15.59 million.

According to Bankr Editor, Justinas Baltrusaitis, “miners earned money by successfully creating the next block of transactions, making both the built-in subsidy as the combined fees paid alongside the transactions included in the block.”

Bitcoin mining fees have risen through 2020, much as they did during the previous crypto spike back in 2017, where the alternative currency hit its all-time high, just short of $20,000. With fees being what they are, and Bitcoin hitting $19,700 in early December, miners’ earnings over the last 30 days have been among the highest in around three years.

Between institutional investors seeking to obtain holdings in Bitcoin – as a diversification away from fiat currencies – and payment giants like PayPal expressing their support for cryptos, there has been a lot of tangible momentum driving the recent price surge.

Speaking on the Bitcoin mining state of play and outlook, Mr Baltrusaitis added that: “It is worth mentioning that the Bitcoin mining revenue is encouraging, considering that the industry witnessed a decline in profitability over recent years. Small miners made losses as institutional miners built large arrays to mine. The continued growth of large-scale miners, mainly from China, has led to the wiping out of small-scale miners.”

“Analysts continue to project that bitcoin’s current rally is sustainable with the strong possibility of continued upward price movement. In this case, miners are looking at continued revenue growth through the end of 2020. Notably, the current mining revenue figures and hash-rate recovery mirrors well for the bull market’s continuation. Bitcoin proponents continue to predict another all-time high for the asset before the year ends.”

JPMorgan Japanese IT boasts 41% total returns

Jamie Gordon
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JPMorgan Japanese IT boasts 41% total returns

Despite COVID uncertainty, FTSE 250 listed JPMorgan Japanese Investment Trust (LON:JFJ) boasted ‘very strong returns’ during the financial year ended 30 September 2020.

The company said that its benchmark, the TOPIX, had fallen by as much as 30% by late March, having hit an all-time-high just four months prior.

Despite this, the company reported that its return on assets was +35%, which it said represented a ‘remarkable outperformance’ of the benchmark which only returned +2%. Likewise, its share price to NAV narrowed, seeing its discount ratio fall from 11.4%, to 7.0%. These two developments mean that – with dividends accounted for – existing JPMorgan Japanese Investment Trust (JIT) shareholders saw a total return of 41.8% for the full-year.

Meanwhile, the company also noted that during the February/March sell-off, its portfolio fell by around 23%, though it said this kind of drop represented around half of that experienced by equivalent trusts. The fund added that this performance means that it has now achieved a three, five and ten-year cumulative NAV outperformance of the TOPIX, of +49.1%, +74.7% and +168.2% respectively.

JPMorgan JIT continued, saying that its achievements are being increasingly recognised by analysts. For instance, Morningstar awarded the company its highest Analyst rating and Sustainability rating among Japanese investment trusts, while Citywire awarded it the ‘Best Japanese Equities Trust’.

Speaking on its outlook for the future, following a successful year, JPMorgan JIT’s management report said: “Whatever challenges lie ahead, Japanese companies remain relatively well positioned with their robust net cash balance sheets. This is even more true for your Company’s holdings. The companies we have invested in have strong structural growth outlooks and we are positive about their prospects on a long-term basis. We believe they are well positioned to benefit from future trends, many of which COVID-19 and government policy may well accelerate.”

“Even though the Company has delivered very strong returns this year, we still believe that the long-term outlook for the stocks we own is materially better than for those that we don’t own. The portfolio differs substantially from the benchmark index, so there will be times when our relative performance suffers. However, we are confident that, over the long term, our positioning should deliver better returns than the benchmark and will continue to reward patient investors wishing to invest in the next generation of Japanese ideas.”

The JPMorgan JIT has an ongoing charges figure of 0.68% and an annual charge of 0.65%. Its shares are currently trading down 0.17% on Wednesday, at 711.01p apiece. The Marketbeat community offers a 57.80% ‘outperform’ rating on the fund.

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