BP profits down as pandemic hits oil industry

Liam Roche
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BP profits down as pandemic hits oil industry

Profits fell by 96% in final quarter of 2020

BP slumped to an overall loss of $5.69bn in 2020 as the coronavirus pandemic took its toll on the energy market.

The company’s underlying replacement cost profit, a barometer for net profit/less, was at $0.1bn over the final quarter of the year. This compared to a $2.6bn profit for BP over the final three months of 2019. 

The company’s share price fell 2.7% to 259p in mid-morning trade on Tuesday.   

BP has said the results were caused by a fall in energy prices, significant exploration write-offs, reduced demand and weaker refining margins. 

The company wrote off assets valued at $6.5bn in anticipation of falling oil prices over the long-term, as well as confirming 10,000 staff would be let go across the world.

The oil industry was one of the worst affected by the pandemic during 2020 with the price of crude oil falling as low as $20 per barrel after lockdowns cut demand.

Bernard Looney, chief executive officer of BP, retained a sense of optimism over the company’s performance, while acknowledging the damaging impact of the pandemic on the oil industry. 

“Our sector was hit hard as well. Road and air travel are down, as are oil demand, prices and margins. It was also a pivotal year for the company. We launched a net zero ambition, set a new strategy to become an integrated energy company and created an offshore wind business in the US,” Looney said.

“We began reinventing bp – with nearly 10 thousand people leaving the company. We strengthened our finances – taking out costs and closing major divestments.”

Having cut their dividend in 2020, BP maintained their dividend of 5.25 cents per share in Q4. 

Analysts have mixed views on the results as Russ Mould, investment director at AJ Bell, highlighted the destruction to the oil market in the short-term but the progress in realigning their long-term strategy.

“There are two ways of looking at full year results from BP. On the one hand the pandemic’s hit to oil demand contributed to the kind of loss that the market just can’t ignore,” said Mould.

House prices fall 0.3% in January

Safiya Bashir
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House prices fall 0.3% in January

This January saw house prices fall for the first time in six months.

The house price index from Nationwide reported a 0.3% fall in the average UK property price to £229,748.

It is the first time that house prices have declined since June, which may be as a result of the upcoming end to the stamp duty holiday.

The housing market has boomed over the past year and UK mortgage approvals hit the highest level since 2007. New data from the Bank of England showed a surge in mortgage applications in the second half of the year as the stamp duty holiday was introduced. 

Commenting on the housing market, Nationwide’s chief economist Robert Gardner said: “To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.

“While the stamp duty holiday is not due to expire until the end of March, activity would be expected to weaken well before that, given that the purchase process typically takes several months (note that our house price index is based on data at the mortgage approval stage).”

 “Looking ahead, shifts in housing preferences are likely to continue to provide some support for the market,” he added, “However, if the stamp duty holiday ends as scheduled, and labour market conditions continue to weaken as most analysts expect, housing market activity is likely to slow, perhaps sharply, in the coming months.”

The stamp duty holiday is set to end at the end of March.

Hargreaves Lansdown posts 10% profit rise

Safiya Bashir
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Hargreaves Lansdown posts 10% profit rise

Hargreaves Lansdown has reported a rise in half-year profits.

The retail investment company has seen a growth in younger clients. The group added 84,000 new clients over the past six months – many of whom are aged between 30 and 54.

Stock trading volumes surged 123% in the second half of 2020, which led to the 10% rise in pre-tax profits to £188m.

Hargreaves Lansdown said that the vaccine hopes and the US election result led to a growth in younger clients.

Chief executive Chris Hill said: “The Covid-19 pandemic has […] reinforced the importance of saving and investing and the need for individuals to be financially resilient. Over the course of the pandemic, many have found the time and seen the need to prioritise household savings which has enabled and led them to invest for the first time.

“In turn, this change in behaviour is leading to a dynamic shift in the broader investment and wealth market. Younger people are taking a greater interest in investing for the future, recording an increased appetite for investment, and prioritising financial resilience and saving.

“Whilst events at the end of 2020 provided further stability to the external environment, with the conclusion of the Brexit deal and the completion of the US election, the Covid-19 pandemic and the resulting economic consequences will continue to impact markets and businesses over the remainder of this financial year and beyond,” he added.

Hargreaves Lansdown shares closed 4.51% lower at 1.631,50.

Klarna set to come under government scrutiny

Safiya Bashir
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Klarna set to come under government scrutiny

‘Buy now pay later’ firms such as Klarna are set to come under government fire following the results of a report to be published on Tuesday by the former Financial Conduct Authority (FCA) interim chief executive Chris Woolard.

Sky News reported that the sector will be coming under higher scrutiny after concerns that the company is encouraging customers to buy products that they cannot afford.

Woolard was commissioned by the FCA board to carry out a review on firms such as Klarna and Clearpay. Klarna now has 1m monthly active users and has been valued at $11bn (£8.5bn). It has been hugely successful among young customers shopping online.

A spokesman for Klarna said that it was “very comfortable operating in a regulated environment and wholeheartedly supports further regulation of the buy now pay later sector in the UK”.

“We agree that regulation has not kept pace with new products and changes in consumer behaviour and it is now essential that regulation is modern and fit for purpose, reflecting both the digital nature of transactions and evolving consumer preferences.”

To use Klarna, shoppers only have to provide a name, email, date of birth, mobile number and billing address to have their payment deferred up to 30 days.

Alice Tapper is campaigning for tougher regulation of ‘buy now pay later’ firms and said:

“Since launching the campaign, these cases of fraud have been worryingly common. This is largely thanks to just how easy it is to use these products and the little information required to access them. It’s a honeypot for fraudsters and it simply shouldn’t be this easy.”

Silver rallies to eight-year high as retail traders go again

Liam Roche
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Silver rallies to eight-year high as retail traders go again

Silver up by 11% to $30 per ounce

The price of silver is at its highest point since 2013 following a community of online traders turning their attention towards the precious metal. 

Big fund managers will be on alert after Redditors drove the price of GameStop up earlier this month, causing hedge fund Melvin Capital to post losses of 53%.

Last week the price of silver jumped by 6%, followed by an 11% rise on Monday, bringing its value briefly above the $30 per ounce mark.

Many coin selling websites were overrun by the increase in demand and reported difficulties in meeting delivery times. The Silver Mountain, a Netherlands-based bullion dealer, stated on its website that ‘due to extreme market volatility we cannot accept any new orders at this moment’.

The dramatic increase in demand also caused the share price of various silver mining companies to shoot up over the same period of time. This includes Silver Mines Ltd., an Australian company currently working on an undeveloped deposit, which saw a 50% rise in its share price. 

The surge of new investors in silver came about as a result of a Reddit user encouraging other members of the r/WallStreetBets forum to buy into the precious metal. In the same vein as the movement to buy stocks in GameStop, the goal was to buy the precious metal in order to put a ‘short squeeze’ on the banks. 

Ross Norman, a veteran precious metals trader, believes the Redditors are misguided this time around and that some could pay a price. 

‘There is a misnomer here that banks are constantly running short positions, but from a price perspective they are neutral, they have a long and a short that cancels each other out,’ Norman said.

‘It’s a fool’s errand, it’s financial anarchy; somebody is going to get hurt.’

Alternative markets smart investors should consider

UK Investor Magazine
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Alternative markets smart investors should consider

If you are an active investor then you probably are fairly comfortable with investing in the stock market but there are a series of alternate investment streams that you may find offer great value for the canny investor.

With most markets being available to retail investors and plenty of information out there about investment strategies, it makes sense to have a look at alternative possibilities.

A small health warning here though – these markets are for sophisticated investors and if you aren’t confident in your ability then please wait until you have completed your research before investing!

The Alternative Investment Market 

OK so this is a bit of a cheat because it is still a market that trades in shares on the London Stock Exchange, but as the name suggests the investment opportunities are different to those offered on the main market.

The Alternative Investment Market (AIM) features small and medium-sized companies that haven’t reached the size required for listing on the LSE.

The regulatory requirements are lighter and so it makes it more suitable for small, high-growth companies in new and emerging sectors.

There are investors who have made their careers by simply investing in the AIM as the returns can be significantly higher than other options but as you would expect, higher growth means higher risk.

Although we’ve looked at the London AIM there are alternative stock markets on almost every exchange around the world so if you have a particular favourite then have a look and see what alternative listing they operate.

Peer-to-Peer Lending

The peer-to-peer lending sector has come on leaps and bounds during the last few years and the range of types of lending has expanded massively.

Essentially this is a way of getting money from the investor to the borrower/company with little or no intermediary taking a cut.

Investments in this area can range from microloans to private individuals through platforms like Ratesetter to equity investments directly in the businesses using organisations like Funding Circle.

The investments tend to be safer than the stock market (as long as you diversify your portfolio) and outperforms most standard retail investment like deposit accounts.

Shout out to the charity sector too. There are a number of platforms that give microloans to people around the world to help them develop their businesses. Check out Kiva for example if you want to do some good.

Forex Trading

If you are looking for something that requires a much more active investor then foreign exchange trading could be the market for you.

The premise is simple, forex trading relies upon capitalising on movements (sometimes micro-movements) in exchange rates and then making your move.

There are a variety of indices to get involved in and successful day traders usually specialise in a basket of specific currencies so that they can build up a successful trading strategy and the knowledge that demands.

Crypto Asset trading

Crypto assets are digital assets that behave largely like physical assets.

Arguably the best known of these would be the cryptocurrency Bitcoin but there are a large number of different markets that you can look at.

Crypto isn’t confined to currencies either with a variety of different types of investment;

  • Cryptocurrencies – brands such as Bitcoin, Ethereum, Ripple or Litecoin 
  • Stablecoin – like Gemini Dollar or Paxos Standard tied to specific physical currency
  • Utility tokens – used to pay for services or time on platforms
  • Security tokens – digital bonds, equities, and other securities that trade peer to peer without financial intermediaries
  • Natural asset tokens – representing tangible goods like gold, oil, or carbon
  • Cryptocollectibles – unique digital assets like CryptoKitties, an app that enables users to purchase, raise, and even breed unique virtual pets

Again, you can make a lot of money in crypto but as with all things investing, the higher the return the bigger the risk!

Gold, Silver and Other Commodities

The easiest way to get into trading in precious metals is simply to buy some, but that doesn’t mean to say that it is the most profitable.

Instead, it is possible to invest in the metals market without ever taking possession of the physical asset and in this way, it is very similar to forex or crypto trading.

Speculators buy a set amount of metal at a set price in the hope that the underlying asset will become more sought after and in times of uncertainty this is where the smart money often goes.

Because there is a physical asset it is difficult to see a way that the investor would lose all of their money but it is true to say that the more aggressive your trading approach, the more risk you run.


Alternatively, it is possible to buy metals and simply hold them in the knowledge that over the long-term prices generally rise significantly.

Commodity trading is something that has been shrouded in mystery in the past and has largely been the domain of institutional traders but it doesn’t have to be that way.

It’s a lucrative sector and the market increased between 2019 and 2020 by some 24.12% so it’s clear that there are opportunities.

Again, this is a market that is very much for the sophisticated investor as disaster await the unwary but if you are prepared to do your research and build an investment strategy then a significant profit could await.

Investment doesn’t just have to be stocks

We hope we’ve given you some food for thought.

The investment opportunities highlighted in this article feature a variety of different risk profiles and some require more sophistication than others.

As always it pays to do your research so we’d never suggest you put your cash into anything that you don’t fully understand and for some of these sectors it is important not to risk more than you can afford to lose.

Health warning aside, it’s true that investors have made good money in all these areas and so for those prepared to go the extra mile and do their research, carefully developing a strategy along the way, there are some excellent opportunities waiting to be seized.

Mortgage approvals hit record highs in 2020

Safiya Bashir
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Mortgage approvals hit record highs in 2020

UK mortgage approvals hit the highest level since 2007 last year, as people took advantage of the stamp duty holiday.

Over the course of 2020, mortgage approvals reached 818,500, which is up from the 789,100 approvals made in the year previously.

New data from the Bank of England showed a surge in mortgage applications in the second half of the year as the stamp duty holiday was introduced. The stamp duty holiday is set to end at the end of next month and will likely lead to a cooling down in the housing market.

May 2020 saw record lows in mortgage approvals, which were down to 9,400.

Laith Khalaf, financial analyst at AJ Bell, commented on the data released today: “You wouldn’t guess there was a devastating international crisis in 2020 simply by looking at consumer banking activity. All the dials suggest it was a great year for personal finances in the UK. Mortgage approvals were at their highest level since 2007, consumers paid down a record amount of debt, and at the same time saved almost £100 billion more in cash than last year.

“The reality is, for many people, the pandemic has seen their financial position improve, thanks to spending options being decimated by lockdown. Of course that’s not universally the case, and with unemployment at 5% and rising, there is clearly financial hardship at play as well. However an overall reduction in consumer debt, combined with high levels of cash savings, and pent up demand for holidays, meals out and other leisure activities, could prove to be an explosive powder keg that will help drive the economy when it finally opens up again.

“There are some warning signs in the data too though. The fact mortgage approvals are at their highest level since 2007 sets alarm bells ringing given what happened in 2008. The expiry of the stamp duty holiday at the end of March will likely take some steam out of the housing market, and many would view that as a positive thing, particularly those saving for a house deposit. The good news is that mortgage lending is much more responsible today than before the financial crisis, which means there should be no systemic problem with the banking sector as a result of a slowdown in the property market,” he added.

Nintendo profits almost double in 2020

Safiya Bashir
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Nintendo profits almost double in 2020

Nintendo profits almost doubled last year as the group emerged as a winner of the pandemic.

As more people are staying at home and playing games, the Video game giant saw profits surge from 196bn yen in 2019 to 376.6bn yen ($3.6bn) in 2020.

Nine month sales increased by 37% to $13bn whilst sales of the Switch games console rose over 10% to 26.5m.

“In the video gaming business, Nintendo is the clear corona winner,” said Serkan Toto, who is the founder of game industry consultancy Kantan Games. “Its titles are not only blockbusters but also Switch-exclusive system sellers.”

The Nintendo full-year forecast rose 24% to 560bn yen and shares in the group closed over 3% higher.

Ryanair on track for record losses

Safiya Bashir
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Ryanair on track for record losses

Ryanair has posted a €306m (£222.6m) loss for the last three months of 2020.

In what the airline referred to as “the most challenging year in its history”, Ryanair saw passenger numbers plunge almost 80% to eight million.

The €306m loss is compared to the €88m profits the group saw for the same period a year earlier. Revenues at the group fell 82% from €1.91bn (£1.7bn) to €340m (£302m).

As the pandemic continues to impact travel, Ryanair has said it was on course for a record loss of €850m and €950m.

A spokesperson for the group said: “As soon as the Covid-19 virus recedes – and it will over the coming months as EU Govts accelerate vaccine rollouts – Ryanair and its partner airports will rapidly restore schedules, recover lost traffic, help the nations of Europe to reboot their tourism industry, and create jobs for young people across the cities and beaches of the EU.

“We take some comfort from the success of the UK vaccine programme which is on target to vaccinate almost 50 per cent of the UK population (30m) by the end of March. The EU now needs to step up the slow pace of its rollout programme to match the UK’s performance.”

In the full financial year to the end of March 2021, Ryanair has said that it expects to fly 30 million passengers. This is down from 152 million.

Michael O’Leary, chief executive of the group told BBC Breakfast: “There’s extraordinary pent-up demand. People are fed up. Everyone is looking forward to the summer. The vaccine is the way forward here. Lockdowns aren’t.”

Ryanair shares (LON: RYA) are trading +0.14% at 14,22 (0835GMT). In the year-to-date, shares have fallen from highs of 17,10.

More to come from Fonix Media

Andrew Hore
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More to come from Fonix Media

Mobile payments and messaging services company Fonix Mobile (LON: FNX) has been quoted for more than three months and there has been an upward trend to the share price.
London-based Fonix was founded in 2006. Last October, shareholders in Fonix raised £45min a placing at 90p a share. The company did not raise any cash. Clients include Bauer Media, BBC, ITV and BT and it has a good track record of hanging onto these clients.
The cash figure in the balance sheet appears high but that is due to the payments going through Fonix. That is why creditors tend to exceed debtors – depending on the timin...

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