Alibaba, Xpeng and other Sino stocks are getting hammered by Chinese and US politics

Jamie Gordon
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Alibaba, Xpeng and other Sino stocks are getting hammered by Chinese and US politics

Depending on your perspective, Chinese stocks like Alibaba, Tencent, JD.com, NIO and Xpeng, are either tenacious super-growers or worrying adversaries. These super Sino equities have followed the lead of US ecommerce, media and EV titans, but all gained scale at frightening speed. The wind appears to have been temporarily knocked out of their sails, though, by a combination of Chinese and US political challenges.

In the longer term, big Chinese tech stocks are nurtured, and constrained, by the ‘Great Firewall’. This expression, catchy and apt as it is, describes the conditions under which Sino tech companies have been insulated from the challenges of overseas competitors – and allowed to flourish within the domestic market, on two conditions. First, they must do what they are told, and second, they don’t become too powerful.

Alibaba taken down a peg

While these conditions may help growth-stage companies in some ways, they pose major risks for the strategic autonomy of companies who have made a name for themselves. For instance, the world’s third largest ecommerce site, Alibaba (HKG:9988), has (for now) had its fintech moment in the sun snuffed out by the Chinese state.

Alibaba wanted to list its sister company, Ant Group, on the Shanghai Exchange, in an IPO expected to be worth around $310 billion – the largest in history. But on the brink of listing its online payments service, Alibaba was denied by Beijing officials. One of the reasons cited for suspending the IPO was that its CreditTech service accounts for about 40% of its revenues, and Beijing was unhappy that state-owned banks had to underwrite the loans that Ant facilitated between consumers and banks. Further, Chinese officials were concerned about the macro-economic implications of adding greater debt load to an already highly leveraged economy, with the state-run Financial News publication saying any problems faced by Ant Group could prompt “serious risk contagion” in the Chinese economy.

Another explanation for the IPO being cancelled, are set out by reasonable speculations of Alibaba threatening Chinese state interests. Indeed, Kaiyunn Capital CIO, Brock Silvers, said that the IPO posed a “real challenge” to banking and brokerage interests. He added: “We don’t know how much of the regulatory pushback was instigated by banking interests, but it wouldn’t be an unreasonable supposition”. Back in 2008, Jack Ma compared Chinese state-owned banks to “pawn shops”, and said he wanted to make them “feel unwell”. Overall, then, they were due a pushback – because they heavily overstepped.

Hardly electric growth for EV entrants?

More recently, budding Electric Vehicle superstars, NIO (NYSE:NIO) and Xpeng (NYSE:XPEV), have been hampered by Chinese authorities’ decision to probe the investments and land use of EV contender, Evergrande Auto. While not directly concerning either company, the move is a stiff reminder that the Chinese state are proactive in their enforcement of the law, especially in strategically significant sectors – and those who have received state subsidies.

In the fast-rising EV sector, in which China looks set to have a considerable stake, it looks as though the state doesn’t just want growth, but growth on their terms. Between a surge of new entrants into the EV industry, and state interference, manoeuvrability and short-term upside could be quite limited for Xpeng and NIO – both of whom have enjoyed stratospheric growth until the latter stages of November.

Tencent has the state’s favour, for now

Looking ahead, Tencent (HKG:0700) may regret getting as cosy as it has done with the Xi Xinping cabal. Seen by many as the Chinese state’s gestapo with a cute logo, Tencent messaging platforms are infamous for passing on messaging data to the Chinese state – which have been used by police to identify religious minority groups. Far from fearing retribution from international authorities for their actions, Tencent’s main worry should be their current competitive advantage.

Not only are more middle-class, minority and pro-democracy citizens becoming increasingly wary of using the company’s QQ and WeChat platforms, but its strategic flexibility is highly constrained. For instance, its film and media offerings are very limited by censorship laws, which mean that any non-Chinese content being shown on the platform is often spliced and muddled beyond recognition or coherence (see: The Game of Thrones finale in China).

Further, their political friend may well be their undoing. While the company’s Founder, Pony Ma, currently sits on the National People’s Congress, one can’t imagine Tencent’s contribution to issues such as gaming and mobile addiction, will continue to go unchecked by Beijing authorities. With a focus on high productivity from a young age, encouraging China’s next generation to enjoy the myriad ideas of the online world, and extensive leisure time, puts at least some of Tencent’s products at odds with the Chinese state’s grand plan. As one blogger amusingly put it: “They’re like the Chinese who turned to growing opium in the late Qing [Dynasty].”

Sino stocks aren’t shown much love overseas

The main problem with instances of domestic hostility towards Chinese companies, is that many Sino equities have sought to base themselves in China due to the hostility they face in foreign markets – especially in the US. This hostility, heightened as it has been under the Trump administration, has reached a fever pitch at the end of November, with the Wall Street Journal reporting that the US House of Representatives will vote on legislation on Wednesday that could see Chinese stocks delisted from US indexes, should they fail to comply with audit regulations. Should the legislation pass, Chinese companies and their auditors would have three years to comply with inspection conditions, or face expulsion from exchanges such as the NYSE.

Over the last six years, more than 170 Chinese and Hong Kong companies have completed IPOs in the US, raising almost $60 billion between them. With China condemning any non-Sino oversight or regulation of its companies – even rules which all other countries comply with – this legislation could be a painful sucker punch, and Donald Trump’s dream goodbye kiss.

Following the vote, and Trump’s departure, the overseas outlook is hardly peachy for Chinese equities. Though the Joe Biden presidency is expected to herald a return to more ‘predictable’ trade and foreign policy, and a resurgence in emerging markets, BlackRock analysis suggests that stiff Sino-US competition will continue regarding tech, trade and investment. Similarly, US optics might demand that Biden maintains at least a modicum of Trump’s highly suspicious handling of Chinese affairs.

In light of recent Chinese state interference, and news the seminal US legislation vote, China’s most popular stocks have all shed value over the past few weeks. Down 7.99% from its post-pandemic high on November 16, JD.com stock is now 4.02% below its weekly high. Following suit, NIO and Tencent shares are now 9.50% and 9.92% below their recent, respective highs. Alibaba has fallen 14.9% since its high at the end of October, and 4.87% from its weekly high-point. Taking the crown for biggest drop, though, is Xpeng, with the volatile young EV stock now 21.76% short of its all-time-high, posted last Monday.

Oil falls on OPEC deal loggerheads

Jamie Gordon
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Oil falls on OPEC deal loggerheads

Brent Crude and WTI oil prices fell on Monday, with the hopeful mood surrounding the latest OPEC meeting undone by unsettling disunity. The OPEC+ summit finished the day without a decision on whether to delay production increases, and the ensuing discomfort of commodities traders was reflected in price movements as the day progressed.

Making its round on the news cycle was the idea that Saudi Arabia is considering withdrawing from its role as the OPEC+ Joint Ministerial Monitoring Committee co-chair. This update will do little to settle any nerves ahead of the final decision on supply, with Algerian energy minister, Abdelmajid Attar, saying that the road to recovery may be long and bumpy.

“The Saudis have been the ringmaster, so to the extent that they are going to step back, it will be potentially seen as a bit of a fraying of the newfound unity,” said John Kilduff, a partner at Again Capital LLC. “The OPEC+ meeting is front and center, it’s not great that they’re going to wait until tomorrow to make the announcement.”

Though nothing is set in stone, the current wobble in the bloc’s mood points to some participants not feeling satisfied by the current status quo. Indeed, while some of the delegates appeared to be in favour of maintaining current supply limitations during an informal meeting on Sunday, Kazakhstan and the UAE appeared to oppose this strategy.

Looking ahead, pundits question whether oil pricing should be pegged more against future optimism or current challenges. IG Senior Market Analyst, Joshua Mahony, said:

“Recent vaccine announcements have helped lift hopes of a sharp rebound in demand for crude, yet the question now is how much energy should be priced based on the future prospective demand or current reality.

“From an OPEC perspective, the question is whether they foster this recovery or send energy prices lower once again.

“The two-million barrels per day increase that would come in the absence of a deal would [deliver] a serious blow to market sentiment as much as supply/demand levels themselves, indicating that the group are unwilling to support energy prices until demand returns.”

While the upshot of this round of OPEC talks will have serious implications for the supply side of oil, the effectiveness of vaccine roll-outs will surely have a decisive part to play in pegging the level of demand – with COVID prevalence determining how quickly travel and industry can recover in 2021.

At present, Brent Crude is down by 1.78%, to $47.41. Meanwhile, WTI has fallen by 1.45%, to $44.86.

Will Baillie Gifford follow through on its ethical enforcement?

Jamie Gordon
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Will Baillie Gifford follow through on its ethical enforcement?

Last Friday, fund management group Baillie Gifford joined ranks of investors and social media users in criticising the CSR and sustainability credentials of online fashion store, Boohoo Group (AIM:BOO).

This followed the announcement that Boohoo would be bringing in renowned judge, Sir Brian Levison, and auditors KPMG, to probe the company’s internal ethics. The decision came after the company was reported to have been paying some staff just £3.50 per hour, while not properly protecting them from the risks of COVID-19, and also admitting supply chain “failings”.

Following the developments, Baillie Gifford UK Growth Fund (LON:BGUK) posted an update which said that its portfolio managers had been “closely involved in detailed and extensive engagements [with Boohoo over] unacceptable practices carried out by some suppliers”.

At the same time, the trust announced that it had been in talks with mining blue chip, Rio Tinto (LON:RIO), following an inquiry into its plans to destroy an estimated 124 sacred Aboriginal sites, with some dating back an estimated 46,000 years. Having previously gained consent from the WA government to destroy two ancient rock shelters back in May, questions have since been asked about the validity of the government’s approval, with opposing WA MPs saying that the government could be liable for a compensation claim from the traditional owners of the Juukan George area.

Responding to both instances, Baillie Gifford rejected the idea of selling off its holdings in the two companies with controversial operational practices, and instead took the view that it can leverage its position of influence to generate positive change.

The company’s statement read: “Our experience of engaging with companies on sensitive governance matters is that commenting publicly when the engagement is ongoing destroys trust and consequently weakens our ability to influence. […] Yet we also understand that this approach could be misunderstood.”

“So, let us be clear: we have as supportive long-term shareholders expressed in direct language our strong disappointment at serious governance failings at each, but we also acknowledged in our meetings with both that it is what happens next that really matters.”

The company said that it was: “encouraging and expecting significant improvements in some business practices”.

And added that this is “what serious long-term investors should be trying to do in the first instance with companies that in our view exhibit attractive investment potential rather than selling and moving on”.

The company treads a fine line in what is a contentious a topical dilemma for institutional investors. With consumers becoming increasingly aware of the companies their money is being invested in, and fund managers keen to maximise returns while minimising risk, the contentious behaviour of some blue chip equities puts fund heavyweights like Baillie Gifford in a bit of a pickle.

It is undeniable that institutional investors make up the lion’s share of holdings in the world’s biggest companies. Correspondingly, we must understand that they have a large proportion of the agenda-setting power, to influence and adjudicate whether the CSR policies of companies such as Boohoo and Rio Tinto are substantive enough.

At the same time, the discussion surrounding Responsible Investment (RI) has only gained such traction in the institutional investment community, because a new generation of investors and future pensioners are demanding more stringent criteria for ethical and sustainable investment. Therefore, it is the voice and material backing of individual investors that really brings fund strategy to life.

In the words of Baillie Gifford, “it is what happens next that really matters”. Investors must keep a keen eye on the meaningful ESG and RI enforcement of fund managers. And should progress prove insufficient, investors have a moral duty – and the power – to sway funds in the right direction.

AstraZeneca shares rise on Japanese approval of heart disease treatment

Jamie Gordon
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AstraZeneca shares rise on Japanese approval of heart disease treatment

AstraZeneca (LON:AZN) watched its shares rise on Monday, on news that its Forxiga chronic heart failure treatment has been approved in Japan.

The company said that heart failure affects around 64 million people worldwide, with at least half of whom suffering from a reduced ejection fraction (when the left ventricle cannot contract adequately and therefore expels less oxygenated blood into the body). The new treatment will aid in chronic sufferers of reduced ejection fraction, with the recent approval by the Japanese Ministry of Health, Labour and Welfare based on positive results from the DAPA-HF Phase III trial.

Masafumi Kitakaze, Director of Hanwa Daini Senboku Hospital, Guest Professor of the Graduate School of Medicine, University of Osaka and Investigator of the DAPA-HF Phase III trial in Japan, said: “Heart failure is a condition affecting 1.3 million people in Japan. Many patients have considerably reduced heart function, such as left ventricular reduced ejection fraction. Approximately half of patients will die within five years of diagnosis, which is worse than some cancers. With no known cure except for heart transplant, a new effective treatment option on top of the current standard of care may offer hope for people struggling with this disease and a new tool for cardiologists.”

Forxiga is the first sodium-glucose co-transporter 2 inhibitor to have illustrated a statistically significant reduction in the risk of composite cardiovascular death or worsening of heart failure events. The Phase II trial showed that Forxiga reduced the risk of the composite outcome versus placebo by 26%, with the treatment’s safety profile consistent with the well-established safety profile of the medicine.  

Already approved in the US, Europe and elsewhere, AstraZeneca said the treatment is advancing cardiorenal prevention, with Forxiga also being tested as part of DapaCare – a trial programme designed to assess its potential in treating kidney conditions.

Mene Pangalos, Executive Vice President, BioPharmaceuticals R&D, added: “Forxiga’s efficacy in reducing the risk of cardiovascular death or worsening of heart failure events could result in life-saving benefits for many heart failure patients in Japan. Today’s approval will shift the way we manage the disease by providing a treatment option that is urgently needed to improve outcomes and symptoms for these patients.”

Following the update, AstraZeneca shares rallied 2.15%, up to 7,894p 30/11/20 14:18 GMT. This is short of its recent high of 8,785p on November 11, and some 7.04% short of analysts’ consensus target price of 8,450p.

Analysts currently have a consensus Hold rating on the stock, while the Marketbeat community has a 52.32% ‘Underperform’ stance on the company. The Group has a p/e ratio of 41.82, and a dividend yield of 2.70%.

Tremor International shares soar on 40% revenue growth

Jamie Gordon
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Tremor International shares soar on 40% revenue growth

Video advertising specialists, Tremor International Ltd (AIM:TRMR), watched their shares boom on Monday, with the company announcing a bumper end to their full-year 2020.

Among its key performance indicators, the company noted that private marketplace revenues grew dramatically year-on-year, up 1,519% in the third quarter and 1,095% during the fourth quarter. Similarly, the Group watched its connected TV revenues spiked by 140% in Q3 and 115% in Q4, while its self-service platform revenues increased by 647% and 551% respectively.

In its statement, Tremor International said that it: “[…] continues to drive substantial customer momentum in the second half of the current financial year, demonstrating strong organic growth despite the impact of Covid-19. Revenues generated across October and November 2020 were the highest in the Company’s history. Overall, it is anticipated that the Company will now achieve 37-43% revenue growth in the second half of 2020, compared to H2 2019.”

“As a consequence of this performance, the Company expects trading for the year ending 31 December 2020 to be significantly ahead of the ranges outlined in its October 2020 trading statement, which were $340-360 million for revenues and $30-36 million in Adjusted EBITDA, and provided under caution due to the uncertainty surrounding the US election. The Company now expects revenues, net revenue and Adjusted EBITDA to be in the ranges of $390-400 million, $171-175 million and $50-52 million respectively.”

The ‘significant’ sales traction being generated by the company is being primarily led by its Self-serve, PMP and Connected TV core segments. The Group say that its recent performance ‘provides clear validation’ of the company’s video, data and CTV focus – with the former accounting for more than 80% of company revenues.  

With the company’s management saying they believe the current growth trajectories will continue, Tremor International shares rocketed 26.43%, up to 290.80p a share 30/11/20 13:18 GMT.

On the one hand, the company currently has a p/e ratio of -26.35, and insiders have sold £526,635 of the company’s stock – while buying £0 – in the last three months. On the other hand, the Marketbeat community has a 55.56% stance on the stock, and it boasts a strong 4.73% dividend yield.

Aviva finalises £1.5bn sale of its Singapore business

Jamie Gordon
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Aviva finalises £1.5bn sale of its Singapore business

Multinational insurance firm, Aviva plc (LON:AV) announced on Monday that it had completed the sale of a majority shareholding in Aviva Singapore to a consortium headed up by Singapore Life Ltd.

The company will be renamed ‘Aviva Singlife Holdings Pte Ltd’. The transaction was completed for a total consideration of SGD 2.7 billion (£1.51 billion), comprised of SGD 2.0 billion in cash and securities, SGD 250 million in vendor finance notes and a 26% equity shareholding in Aviva Singlife.

The group said that as per its Q3 announcement, the cash proceeds from the Singlife transaction will be put towards reducing the company’s debt. With the deal first confirmed on September 11 2020, the company’s statement on Monday added:

“This is the third transaction Aviva has completed so far this year and follows the recent announcement of the sale of our entire shareholding in Aviva Vita S.p.A., an Italian life insurance joint venture. Aviva continues to work at pace, taking decisive actions on its portfolio to transform the company for the benefit of its shareholders.”

Following the news, the company’s shares rallied modestly, up by 0.68% or 2.20p, to 326.30p a share 30/11/20 12:20 GMT. This is just shy of its post-lockdown high of 337.80p posted last week, and around 13.5% short of analysts’ target price of 369.82p a share.

Analysts currently have a consensus Buy rating on the stock, while the Marketbeat community has a 62.94% “outperform” stance. Its stock looks to be undervalued, with a p/e ratio of 5.24 comfortably below the financial sector average of 20.91.

Barclays shares slide amid update on net zero ambitions

Bronte Carvalho
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0
Barclays shares slide amid update on net zero ambitions

Shares at British multinational investment bank Barclays (LON:BARC) have slipped almost 2% on Monday morning after the London-based firm released an update on its strategy and targets to combat the climate crisis.

Earlier this year, the bank announced it would limit its funding to fossil fuel projects after pressure from investors forced Barclays to realign its portfolio with the climate-conscious impetus of shareholders. The new resolution included a pledge to achieve net zero carbon emissions by 2050.

Monday’s update saw Barclays group chairman Nigel Higgins restating its commitment to ‘help address the climate challenge’ and ‘align all our financing activities with the goals of the Paris Agreement’, although warned that the economic impact of the coronavirus pandemic had ‘not made it easy to progress the work beyond what we indicated in March’.

He added that the bank was still ‘committed to continuous improvement in our response to the climate challenge’, even in the face of significant financial and logistical obstacles.

What are the details of Barclays’ climate pledge?

Barclays today confirmed that it is so far on track to reduce ‘CO2 intensity’ across its portfolio by 30% by 2025, as part of the company’s two-tiered approach to measure its carbon production; ‘CO2 intensity’ being ’emissions per unit of output’ and ‘absolute emissions’ being the more comprehensive unit of measurement.

Higgins outlined why the firm has decided to adopt this unconventional approach:

“[…] Each have their place in tracking the journey to net zero.  The most appropriate choice depends on the nature of the portfolio being measured, and how far its carbon intensity has already reduced. Generally speaking, we believe that most portfolios will be best measured primarily using an intensity measure – emissions per unit of output – at least in the earlier stages of decarbonisation. As the linked emissions of a portfolio reduce, we will also start to track an absolute measure, which will of course lead towards net zero”.

“We are now comfortable with the detail of the methodology we have developed to measure the absolute emissions and/or emissions intensity of different types of financing activity,” Higgins added, “although this is likely to continue to evolve and be further refined over time”.

The bank has continued to engage with a ‘number of industry initiatives’ throughout the year as part of its decarbonisation process, including the Two Degrees Investing Initiative’s Paris Agreement Capital Transition Assessment (PACTA) and the Partnership for Carbon Accounting Financials (PCAF). Barclays is also a member of the ‘Financing a Just Transition Alliance’ led by the Grantham Research Institute at the LSE. 

It has also committed to ‘acknowledge’ the role that Barclays plays in financing carbon-emitting projects, and has stated it will ‘take a proportion, generally one third, of the emissions linked to Barclays’ financing ‘against’ our own targets’ to ‘account for the underwriting of equity and debt securities, which generally leave Barclays with no residual exposure’.

Regarding the bank’s energy sector, Barclays has adjusted its initial pledge back in March, which will now ‘target a 15% reduction in absolute emissions by 2025, rather than in CO2 intensity’.

Higgins explained that the amendment ‘reflects the fact that the energy sector cannot so easily reduce its emissions intensity (you cannot de-carbonise a barrel of oil), and our energy portfolio has already reduced in intensity, such that only 2% of the fuel mix is now represented by coal’.

What happened with Barclays’ share price?

Shares at Barclays slipped somewhat on the news, down 1.84% to 136.94p at midday on Monday 30/11/2020. The bank has so far enjoyed a positive month overall, with its share price bouncing almost 8% in response to better-than-expected Q3 results released last week.

In the three months to the end of September, Barclays reported a pre-tax profit of £1.1bn – almost double analyst expectations, with income at the corporate and investment bank growing by 24%, while markets income surged by 52%.

During the initial crash during March when the UK government first imposed a series of strict lockdown measures, Barclays shares slid to a mere 80.24p, but have since regained considerable ground since the summer and now seem to be oscillating largely within the realm of 110p to 150p – still a far cry from its annual peak of 192.99p in December 2019, but at least it has weathered the second lockdown with some resilience.

Barclays has a dividend yield of 2.18% and a P/E ratio of 9.76.

Lloyds names new chief executive, shares edge up

Safiya Bashir
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Lloyds names new chief executive, shares edge up

Lloyds Banking Group (LON: LLOY) has said that Charlie Nunn will be joining the group as the next chief executive.

Current chief executive Antonio Horta-Osorio will be stepping down next year to replaced by Nunn, who has been at HSBC since 2011.

Horta-Osorio said: “Charlie will find a warm welcome at Lloyds Banking Group and a deep commitment from all of our people to deliver on our purpose and to help Britain recover. I am sure that he will find his time here as fulfilling and fascinating as I have done and I wish him the very best.”

Commenting on his new role, Nunn said: “Lloyds’ history, exceptional people and leading position in the UK means it is uniquely placed to define the future of exceptional customer service in UK financial services.

“I look forward to building on the work of António and the team and their commitment to helping Britain prosper.”

Nunn’s new appointment date has not been specified, however, his current role at HSBC has a six-month notice period.

Lloyds shares opened on Monday slightly higher at 38p. Shares in the lender have halved in the last year.

Robin Budenberg, the incoming chairman of Lloyds from January, commented on the news: “I am excited about Charlie’s vision for Lloyds Banking Group, as well as his passion for and commitment to our purpose of helping Britain prosper.

“Given his career track record, he will bring world-class operational, technology and strategic expertise to build on the strengths of the existing management team. I look forward to welcoming him to the group.”

Shares in Lloyds (LON: LLOY) are currently trading +0.91% at 37,64 (1106GMT).

Oil prices rally ahead of Monday OPEC meeting

Bronte Carvalho
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0
Oil prices rally ahead of Monday OPEC meeting

Ministers from the world’s largest fossil-fuel producing nations are set to meet virtually on Monday to discuss what the future holds for the global oil market in 2021. After a turbulent year which saw prices crash to their lowest level in more than 20 years in so-called “Black April”, news of more lax lockdowns and a trilogy of high-profile Covid-19 vaccines almost ready to roll out offers a glimpse of the light at the end of the tunnel for the industry.

Earlier this week, oil prices climbed to their highest point since April, after battling a slump at the beginning of November when crude slid to just $33.64 a barrel. The disappointing figures did not last the month, however, with prices beginning to creep back up in recent weeks.

On Wednesday, Brent crude rose 47 cents – 1% – to $48.33 a barrel, although by Sunday evening it had settled at around $48.18. Despite the minor slip backwards, it was trading at $37.94 a barrel less than a month ago on 30 October, but have since been buoyed by the success of the latest vaccine trials and hopes that travel restrictions around the world may loosen over the Christmas period to allow people to visit their families.

West Texas Intermediate crude gained 80 cents – 1.8% – reaching $45.71 per barrel in the early hours of Wednesday, before sliding slightly to $45.52 on Sunday night. Prices have surged from a low point of just $35.79 at the start of the month, as lockdown across the UK and mounting infection cases in the USA dampened appetite for travel.

A return to the $50 a barrel mark before the end of the year is finally in sight, but part of reason why oil has managed to recuperate in recent months is due to the combined effort of OPEC nations to cut production rates. Back in April, they collaboratively agreed to the largest single output cut in history – rolling back production by 9.7 million barrels a day – to try to balance supply and demand.

In August, this was scaled back to 7.7 million less barrels, but analysts are expecting OPEC leaders to roll over the current plans into 2021 in light of the fact that mass vaccination is still likely to be some time away. CNBC reported that a planned 2 million bpd January production ramp-up looks “set to be delayed, according to market consensus, with analysts differing on whether that would be for three months or six months”.

Ravindra Rao, Head of Commodity Research at Kotak Securities, told MoneyControl that oil is “running too hot” ahead of the OPEC meeting:

“OPEC and allies are largely expected to extend the current production of about 7.7 million barrels per day for an additional three to six months. The current deal calls for curtailment in production cuts to 5.8 million bpd in January 2021.

“The recent rise in price indicates that market players have factored in that OPEC may defer further production hike so unless there is any major announcement, crude oil could become vulnerable to some correction. With a sharp rise in crude prices and signs of progress on the vaccine front, OPEC is unlikely to take aggressive measures.

“Additionally, there are other challenges in the form of rising virus cases and easing euphoria about vaccine amid efficacy concerns as well as logistical challenges”.

On the other hand, US banking giant Goldman Sachs believes that the oil market is “ripe for a comeback” in 2021 as demand for natural resources returns with increased travel and manufacturing, although analysts have warned that nothing is guaranteed:

“As another Opec+ meeting nears, uncertainty on the group’s decision is once again rising. Beyond the outcome of another quota decision, however, there are renewed concerns about the future of the organisation”.

Loungers bucks bars trend

Andrew Hore
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Loungers bucks bars trend

It has not been a good year for hospitality sector in general, but particularly for pubs and bars. Loungers (LON: LGRS) is reporting its first half figures on 2 December and it has done better than most. The most recent trading statement was much better than anticipated and the latest results will show how well trading is holding up.
Bristol-based Loungers operates café/bar/restaurants in England and Wales under two brands: Lounge and Cosy Club.
Like-for-like sales in the 13 weeks to the beginning of October were 25% ahead, when the pubs and bars sector sales were continuing to decline.
Tradin...

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