Global equities look half-baked on Thanksgiving

Jamie Gordon
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Global equities look half-baked on Thanksgiving

Still mulling over Monday’s gains, global equities had to settle for an uneventful Thanksgiving Thursday, as US traders busied themselves with carving turkey.

In a directionless session, lacking much in the way of either volume or movement, non-US stocks didn’t post any performances worth noting, with any developments likely to be reversed once the Dow gets into full swing from next Monday. Commenting on the quiet day, IG Chief Market Analyst, Chris Beauchamp, said:

“Perhaps this year they will be thankful for the rest after the craziness of 2020 and all the volatility that has come with it. November has not been exactly quiet either, with stock markets finding their springboard to a fresh rally thanks to the election and vaccine news.”

“That rally has cooled this week, leaving indices to drift back from their recent highs but without any real conviction.”

“Without the US today and (mostly) tomorrow we can look forward to more drift, especially since investors are expecting more gains in December.”

As the final bell rang, Eurozone indexes were broadly flat, with the CAC and DAX down by 0.081% and 0.024% apiece. Likewise, the FTSE had a fairly uneventful day, though the 1% drop in Brent Crude weighed on oil stocks, and saw the UK index shed 0.44%. Now at 6,362 points, it the top British equities now sit around 10 points ahead of where they began the week.

Friday will likely be much of the same for global equities, though the effects of the UK’s loosening lockdown restrictions may provide some optimism for hospitality and travel stocks – provided case numbers don’t rise fast enough to inspire another full-scale lockdown in the new year.

Low Carbon Innovation Fund backs efficient LED lighting as part of £760k funding round

Jamie Gordon
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Low Carbon Innovation Fund backs efficient LED lighting as part of £760k funding round

Environment and energy efficiency specialised merchant bank, Turquoise, announced on Thursday that it had completed its fifth deal on behalf of the Low Carbon Innovation Fund 2. This latest deal was part of a £760,000 funding round, and saw the European Regional Development Fund-backed organisation invest in LED light specialists, Kubos Semiconductors.

Using technology derived from the University of Cambridge, Kubos develops LEDS in cubic Gallium Nitride, in order to deliver efficient green and amber devices. The company’s technology enables the production of ‘high-end, low-cost, highly-efficient LEDs’ by solving the green gap problem (efficiency is often lower in green and amber devices versus their blue and red counterparts).

The company said that the main applications of its technology are in general lighting, micro-LED displays, automotive, street lighting and digital signage settings.

Speaking on the announcement of new Low Carbon Innovation Fund 2’s investment, Turquoise Directors, Axel de Mégille, commented: “Kubos LED technology will represent a massive improvement in lighting and displays efficiency, significantly reducing energy consumption and accounting for less CO2 emissions. This investment fits very well in the investment strategy of LCIF2 into technologies helping to reduce greenhouse gases (GHGs).”

Kubos chief executive Caroline O’Brien added: “We are delighted to welcome LCIF2 as an investor in Kubos. This investment will enable us to further our development program to deliver a commercial proof of concept and start engaging with potential customers. LCIF2 will also enable us to strengthen our links with local and national government.”

Funded by the European Regional Development Fund, the Low Carbon Innovation Fund 2 is managed by the UK Ministry of Housing, Communities and Local Government. This latest round of investment follows previous contributions to agritech startup, KisanHub, and £350k in funding towards EV battery recycling specialists, Connected Energy.

First Property posts 30% profit plunge

Safiya Bashir
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First Property posts 30% profit plunge

First Property shares (LON: FPO) were down over 5% on Thursday as the group reported a 30.2% drop in pre-tax profits.

For the six months to 30 September 2020, the group reported a fall in profits from £3.0m to £2.1m.

The group reduced net debt from £57.19m in March to £19.83 and also increased net cash reserves to £21.21m.

Commenting on the results, Ben Habib, Chief Executive of First Property Group, said: “The sale of Cha ubińskiego 8 (CH8) in April released some GBP17 million in cash and put the Group in a strong position from which to navigate the economic fallout of the COVID pandemic.

“As a consequence of the sale there has been a reduction in rental income, which is the primary reason for the reduction in earnings reported today.

“This reduction should be temporary and last only until we reinvest the cash. We expect to do so in association with clients of the Group. Our aim is to invest some 10-20% of the equity required in any acquisition which, when coupled with bank debt, should enable us to acquire up to some GBP300 million in property.

“There is a great deal of flux in the market at the moment and we expect interesting opportunities to emerge next year,” he added.

First Property shares (LON: FPO) are trading 5.97% down to 36,20 (1611GMT). In the year-to-date, shares have fallen from highs of 49,00.

Hedge fund managers are divided over an airline recovery in 2021

Jamie Gordon
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0
Hedge fund managers are divided over an airline recovery in 2021

Trading platform, IG Prime, published a white paper laying out the views of 253 hedge fund managers, on which sectors are most likely to grow over the next twelve months.

Within the 41-page document, titled ‘Hedge fund trends: Covid-19 vs the global financial crisis’, 73% of those surveyed said that health and pharma will increase in value – making it hedge fund managers’ top ranked sector for growth over the next year. This, the report states, should come as little surprise given the attention and resources thrown behind COVID vaccine candidates, as well as treatments and PPE.

Similarly – and perhaps surprising to some – the airline and travel sectors ranked as the third most likely sector to grow during 2021, within 50% of hedge fund managers and 82% of UK investors backing a resurgence in the pandemic-suffering sector.

With EasyJet recording a 200% increase in flight and holiday package searches over the Christmas period, the easing of travel restrictions should provide a boost over the year-to-year transition period – though the longevity of these relaxed measures remains to be seen.

IG said that financiers’ outlooks were largely positive, with 52% of hedge fund managers and 94% of UK investors surveyed saying that it was ‘very unlikely’ that COVID will affect their funds’ performances over the next ten years.  

Other noteworthy stances include a 66% positive outlook for digital tech – with many questioning the sustainability of this year’s surge in tech growth equities – and a 15% positive prediction for oil – as OPEC said manufacturing demand for oil would not recover until at least mid-2021.

Here is the full list of hedge fund managers views on the likelihood of an increase in value over the next 12 months will be for the following sectors:

Health and Pharma – 73%

Digital Technology – 66%

Airline/Travel – 50%

Financial Services – 46%

Retail – 40%

Real Estate – 38%

Automotive – 36%

Cryptocurrencies – 23%

Precious Metals – 18%

Indices – 17%

Oil – 15%

Forex – 13%  

Pebble Group shares soar on resilient pandemic trading

Jamie Gordon
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0
Pebble Group shares soar on resilient pandemic trading

Tech service provider to the promotional products industry, The Pebble Group (AIM:PEBB), watched its shares soar on Thursday as it published a performance update illustrating determined performance during the pandemic, and revealing that full-year results were on track to meet market expectations.

Its Facilisgroup segment – an ecommerce platform for promo products businesses in North America – performed ‘robustly’ through the COVID crisis. Its number pf participating partners rose from 149 to 169 during the year-to-date, with an additional 6 contracted and awaiting implementation.  

Gross Merchandise Value processes by it partners are now expected to hit $1 billion by the end of 2020, which would make Facilisgroup a ‘major consolidator’ in the promo [products industry. Similarly, partners’ sales are returning to pre-pandemic levels, with this indicating a positive outlook for the promo products industry in 2021.

 The company’s statement added: “We continue to invest in Facilisgroup to further improve its valued services to Partners and Preferred Suppliers and are increasingly positive about the business’ prospects.”

Its Brand Addition segment – which provides promo products and related services to large brands – have ‘continued to improve’ since the update delivered in September, with the two major clients secured in Q1 now successfully launched and contributing to FY20 revenue.

So far during the second half of 2020, sales orders have averaged 70% of the previous year, though the company noted that there was positive momentum going into 2021.

Pebble Group stated: “We believe this demonstrates the inherent strength of our clients’ businesses and their appetite for our products and services. Client retention has remained strong with all major clients that entered the COVID-19 affected period in March 2020 continuing to be clients today.”

 In total, the company said its balance sheet remains strong. Having paid off £6.5 million of its £10 million credit facility since its last update, the group said it expects to have repaid all of the outstanding sum by the end of the year. It added that it expects its cash balance to be similar to the prior year position of £8.9 million, after a settlement of £2.4 million of IPO costs included in the previous year’s balance.

Looking ahead, the Pebble Group outlook read: “Facilisgroup continues to deliver in line with expectations and we are actively seeking opportunities to build on this success by strengthening its services organically and through acquisition.”

“The current trend in order patterns of Brand Addition’s blue-chip client base gives us real confidence as we approach 2021.”

“Coupled with a strong balance sheet and the long-term nature of our Partner and client relationships, we are confident in managing the Group responsibly through the current volatility, meeting market expectations for FY 20 and continuing to deliver on the Group’s strategy in FY 21 and beyond.”

Following the update, the company’s shares rallied by 20.66%, to 104.38p apiece 26/11/20. This is below its post-lockdown high of 115.00p, but ahead of its recent nadir of 71.00p a share.

TClarke PLC shares surge as orders grow

Safiya Bashir
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0
TClarke PLC shares surge as orders grow

TClarke PLC shares (LON: CTO) surged almost 13% on Thursday as the group released its latest trading statement.

The group said in a statement that trading has been resilient and that trading continues in line with expectations for the full year ending 31 December 2020.

TClarke PLC anticipates turnover for 2020 to be circa £240m. Over the second half of the year, the group has won new projects from clients and the forward order book has increased by 17% to £422m.

Mark Lawrence, the group’s chief executive said: “TClarke has once again demonstrated the direct benefits of our excellent reputation within our industry that has helped drive our clients’ continued confidence to work with us and award the Group significant new projects.

“Looking to the future, we have a well-balanced approach to winning work with projects from a range of sectors and I am delighted that we have been so successful in the Healthcare and Technology sectors in particular.

“The UK Government recently announced a long-term commitment to developing further green initiatives covering clean energy, transport, nature and innovative technologies, that will help the UK to forge ahead with eradicating its contribution to climate change by 2050. TClarke is well positioned to benefit from these initiatives and is already working on a wide range of exciting projects that support these moves.”

TClarke PLC shares (LON: CTO) are trading +12.88% at 99,00 (1310GMT).

FTSE 100: The influences of vaccines and Brexit on London’s leading index

UK Investor Magazine
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2
FTSE 100: The influences of vaccines and Brexit on London’s leading index

Alan Green joins the UK Investor Magazine Podcast as we explore the key influences on the FTSE 100 including vaccines, Brexit, Sterling and Rishi Sunak’s latest spending plans.

We also discuss in detail Power Metal Resources (POW), Venture Life Group (VLG) and Itaconix (ITX).

Mulberry narrows loss, shares rise

Safiya Bashir
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0
Mulberry narrows loss, shares rise

Mulberry shares (LON: MUL) opened higher after the group posted reduced half-year losses in twenty-six weeks ended 26 September 2020.

In the latest trading update, the luxury retailer said that sales were hit by the most recent lockdown and fell by 19% in the eight weeks to October.

As store closures and reduced demand amid the pandemic hit the retailer, revenue was down by 29% to £48m. Digital sales increased by 68% from £13.9m to £23.4m.

Mulberry chief executive, Thierry Andretta, said:

“I am proud that in spite of the devastating effects of the global pandemic, we have made further progress on our long-term strategy to build Mulberry as a sustainable global luxury brand. This is focused around: a truly omni-channel network and market leading digital platform, increased presence in Asia, and a relentless focus on innovation and sustainability, offering our customers beautiful products, made to last in our Somerset factories.

“This strategy enabled us to withstand some of the pressures that we, and indeed the wider retail and hospitality sectors, have been faced with. In particular, using our market leading global digital network to replace retail sales with digital wherever possible,  achieving high growth in China and Korea, and reacting quickly to flex our agile supply chain, enhancing market reactivity and reducing lead time, to match the increase in digital demand.

“In spite of all of these self-help measures, we cannot avoid the fact that the damage the coronavirus has caused to business, decimating high streets and the tourism industry, is severe. For this reason, in order to ensure that the business was able to navigate through this difficult time, we took the painful decision to implement a far-reaching cost reduction and optimisation programme.

“As we look to the future, we remain confident in our strategy and in the relevance and durability of the Mulberry brand. There are of course many obstacles ahead, not least the upcoming changes to tax-free shopping in the UK that could hamper the wider retail and economic recovery,  but we are grateful to be able to open our doors again in England on 2 December and to be able to trade across all our platforms in this crucial Christmas trading period. I would like to take this opportunity to thank my colleagues for their resilience, their hard work and their dedication to Mulberry.”

Mulberry shares (LON: MUL) jumped 10% to 278.6p in early trading on Thursday.

Mitchells & Butlers swings to £123m loss

Safiya Bashir
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0
Mitchells & Butlers swings to £123m loss

Mitchells & Butlers (LON: MAB) said today that it has cut 1,300 jobs this year after the group reported a £123m pre-tax loss for the year to 26 September.

The pub and bar operator, which owns chains including Toby Carvery, All Bar One, and Harvester. The group said that store closures and lower levels of sales amid the pandemic led the group to swing from a £177m profit in the same period a year ago.

Earlier this year, Mitchells & Butlers said that it would close 20 of its 1,700 sites across the UK.

“Throughout a very uncertain and challenging year our businesses and teams have adapted quickly, creating a safe environment for guests and putting us in a strong position to benefit when consumers are able to eat out again. We saw direct evidence of this from a strong trading period in July and August before further restrictions came into force,” said chief executive Phil Urban.

“With our great estate, balanced portfolio of brands and proven management team, we remain optimistic that we will be able to regain the momentum previously built and continue to achieve sustained market outperformance, when the current operating restrictions are eased.”

Mitchells & Butlers shares (LON: MAB) are 0.35% higher at 224,29 (0849GMT). This year to date, shares have fallen from highs of 468,00.

Platinum prices rise as global Hydrogen Fuel demand could require 600koz of supply by 2030

Jamie Gordon
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1
Platinum prices rise as global Hydrogen Fuel demand could require 600koz of supply by 2030

This year has seen the rise of hydrogen fuel cell backers such as Nikola Corp and Plug Power, and recent entries from forward-thinking blue chips like Hyundai. In fact, the latter is committed enough that in October, it announced that it would use around 70,000 ounces of platinum per year in its fuel cell stacks by 2030 – with this demand alone being equal to the total annual production of one of South Africa’s biggest platinum mines.

This commitment, though non-binding, may well be a sign of things to come. Though Nikola Corp investors are nervously awaiting confirmation of a $2 billion deal with GM, the idea that hydrogen fuel cells could operate a considerable portion of non-fossil-fuel market share within the next decade is not out of the question.

Indeed, this week marks the first ever European Hydrogen Week, which is designed to showcase the role of hydrogen fuel cells within achieving the EU’s ‘Green Deal’ objectives. Under the deal, there is an initiative which roadmaps new jobs and sustainable growth under a new, hydrogen ecosystem, which includes a pledge to install at least 40GW of hydrogen electrolysers by 2030. With this goal in mind, the EU plans to produce around 10 million tonnes of ‘green’ hydrogen per year.

The greatest limiting factor of hydrogen fuel cells – other than the process of achieving scale – is the initial shock factor of costs. Fortunately, the Platinum World Investment Council just reported that a more efficient and cost-effective platinum-iridium catalyst has just been developed.

The new technology requires 90% less iridium than previous Proton Exchange Membrane electrolysers, while performing ‘up to three times better’. According to the Platinum World Investment Council, the new technology: “not only reduces costs, making green hydrogen production at the scale envisaged by the EU’s Hydrogen Strategy more affordable, but also removes concerns about the availability of iridium, of which only a small amount is produced annually, ensuring PEM electrolysers remain at the forefront of electrolyser technology as the market expands.”

With the new catalyst technology, and its reduced iridium requirements, PEM electrolysers stand a better chance of widescale adoption – and in turn, this would bring increased demand for platinum. In fact, FTSE 100-listed chemical specialists, Johnson Matthey, believe that PEM electrolysis could achieve 30-60% market share.

The Platinum World Investment Council concluded by saying that: “Platinum’s role in the hydrogen economy is crucial both throughout the EU and beyond; it is used in fuel cells for fuel cell electric vehicles, as well as in the production of green hydrogen. The global platinum demand impact of announced green hydrogen policies is clearly sizeable over the longer-term; current EU and China green hydrogen generation capacity targets alone would require, cumulatively, between 300 koz and 600 koz of platinum by 2030.”

Following the commencement of the EU’s Hydrogen Week, platinum prices rose by 0.94% on Wednesday, up to over £725 per ounce.

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