Hong Kong bill leaves little to be thankful for, pound surges on MRP poll

Jamie Gordon
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Hong Kong bill leaves little to be thankful for, pound surges on MRP poll
Apparently on the cusp of at least phase one of a trade deal, the Trump administration sent markets reeling on Thursday morning, following the announcement of the Hong Kong pro-democracy bill. While the move can’t be completely lambasted on principle (at least on our end), China’s reaction was as you’d expect. So, has Trump set back negotiations even further, and if so, why now and what is he gaining? We’ll leave those questions for your interpretation. In other news, FTSE led the European indices losers after the bell, not helped by a turnaround in general election odds for the Conservatives, which sent the pound surging through the night. Speaking on the morning’s market movements, Spreadex Financial Analyst Connor Campbell commented,

“Thanksgiving didn’t get off to the happiest start for the European markets, which saw uniform losses after the bell.”

“The reason for the continent-wide decline is the latest mixed signals regarding a US-China trade deal. With Trump stating the two sides are in the ‘final throes’ of negotiations on Wednesday, and a senior administration official claiming a ‘phase one’ agreement is ‘millimeters away’, you’d expect more positivity.”

“However, the fact the US President has signed into law legislation backing pro-democracy protestors in Hong Kong may have caused another obstacle to arise at a crucial juncture. The move prompted Beijing to lambast the bill as ‘full of prejudice and arrogance’, potentially doing damage to the relationship between the superpowers just as things were starting to look up.”

“While not overly panicked, the DAX and CAC nevertheless fell 0.4% and 0.3% respectively. The FTSE suffered slightly more than its peers, a half a percent decline pushing it back below 7400.”

“The FTSE’s losses were exacerbated by the overnight surge from sterling. The pound now sits at a $1.2938 against the dollar and a near-7 month high of €1.175 against the euro after YouGov’s MRP poll – the only survey to correctly predict 2017’s hung parliament – pointed to a Tory majority of 68 seats. This would, presumably, mean the UK is leaving the EU with Boris Johnson’s deal on January 31.”

Other recent updates from the UK market came from UK car production declining, Royal Bank of Scotland Group plc (LON: RBS) announcing the launch of a new digital bank and Brewin Dolphin Holdings plc (LON: BRW) posting their funds report.  

UK car production down for 16 out of last 17 months

Dina Caruso
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UK car production down for 16 out of last 17 months
British car production has declined for 16 out of the past 17 months, new data revealed on Thursday. The Society of Motor Manufacturers and Traders announced on Thursday that UK car manufacturing output dropped by 4% in October, when compared to the same month a year prior. Indeed, 5,622 fewer models were produced in comparison to last October. The Society of Motor Manufacturers and Traders added that August is the only outlier of the past 17 months, “due to ‘no deal’ Brexit contingency shutdowns earlier in the year artificially boosting output that month”. Meanwhile, production for the home market dropped by 10.7%, with consumer and business confidence continuing to diminish. Additionally, orders from overseas were down by 2.6%, because of “soft demand in some key markets”. “Yet another month of falling car production makes these extremely worrying times for the sector,” Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders, commented on the data. “Our global competitiveness is under threat, and to safeguard it we need to work closely with the next government to ensure frictionless trade, free of tariffs, with regulatory alignment and continued access to talent in the future,” the Chief Executive continued. Mike Hawes said:”This sector is export led, already shipping cars to more than 160 countries, and in a period of unprecedented change a close trading relationship with the EU and preferential trading with all these other markets will be essential to keep automotive in Britain.” The UK was granted yet another extension to its EU departure deadline at the end of October. Parties now prepare for a general election to be held later this year on the 12th December. A new poll recently revealed that the Conservatives are set to win 359 seats, giving the party a majority of 68 seats.

Union Jack Oil shares crash following share placing announcment

Ishen Patel
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Union Jack Oil shares crash following share placing announcment

Union Jack Oil PLC (LON: UJO) have seen their shares sink despite an announcement that the firm had raised £5 million through a share placing scheme.

Union Jack Oil plc is an onshore oil and gas exploration company with a focus on drilling, development and investment opportunities in the United Kingdom hydrocarbon sector.

Shares of Union Jack Oil sunk 4.41% to 0.16p on Wednesday afternoon. 27/11/19 15:28BST.

Competitors in the industry such as Shell (LON: RDSA) and SABIC (TADAWUL: 2010) have seen third quarter profits sink following volatile oil prices.

Whilst Egdon Resources (LON: EDR) and Premier Oil (LON: PMO) have seen their shares spike following impressive trading updates.

The UK-focused oil exploration company has raised the new money via placing of 2.93 billion new shares at 0.15 pence each and subscription of 404.3 million shares at the same price.

“The proceeds will be deployed into what Union Jack believes are highly accretive projects including the drilling and testing of two further appraisal wells and the acquisition and reprocessing of new seismic data at the company’s flagship asset at West Newton,” the Bath-based company said.

David Bramhill, executive chair of Union Jack, said: “The directors are extremely confident about the future prospects for Union Jack and look forward to updating the market on developments at West Newton and our wider portfolio.”

Joseph O’Farrell, an executive director, subscribed for 33.3 million shares in the fundraising. Following the purchase, O’Farrell owns a 1.8% stake in Union Jack.

Particularly in the oil and gas industry, there has been a recent increase in firms using share placing to raise funds for capital projects.

Shareholders seem to have reacted to this with a pessimistic tone, as reflected as the stock price movements across Wednesday.

There could be long term benefits for Union Jack Oil, if the firm can exploit the benefits in expanding its’ drilling projects.

Shareholders should not be so grieved about the share placing, and although immediately shares have sunk, in the longer term rewards may be seen.

Earlier this year, the firm reported that the firm expanded its operating loss despite modest revenue growth and this has kept shareholders on edge.

Certainly, shareholders will have to be patient with the firm, however if benefits of the share placing aren’t exploited then Union Jack could see their shares hit red.

Fastjet shares plummet following considerations to sell Zimbabwe operations

Ishen Patel
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Fastjet shares plummet following considerations to sell Zimbabwe operations

Shares of Fastjet PLC (LON: FJET) have crashed on Wednesday afternoon after the firm speculated about selling its Zimbabwe unit.

Fastjet Plc is a British/South African-based holding company for a group of low-cost carriers that operate in Africa.

Shares crashed 34.55% to 0.36p. 27/11/19 14:48BST.

The firm said that it was considering selling its Zimbabwe operations in a restructuring deal. Fastjet added that profitability remained elusive amid Mozambique issues and tough market conditions.

It seemed that earlier this year fortunes had changed hands for Fastjet, after the firm reported a rise in revenues and narrowed losses back in July.

However, this optimism was short lived as the firm is now fighting to stay afloat in the market.

On October 21, Fastjet announced it suspended flight operations in Mozambique amid “ongoing supply and demand challenges”.

During the first six months of 2019, revenue from Mozambique had fallen to $2 million from $4 million the year prior.

While the group’s FedAir operation remains resilient and is expected to be profitable for the year, this has been off-set by the continued volatility and uncertainty in the Zimbabwean market,” Fastjet said in a statement.

“Fastjet Zimbabwe has increased its year on year revenue despite the difficult trading conditions following the introduction of a new currency which effectively devalued the existing currency by up to 15 times its previous value at official rates and has pushed inflation rates to above 200%,” Fastjet added.

In order to continue trading in its current form, however, Fastjet warned it expects to need further funding by the end of February.

Fastjet is currently in dicussions with shareholders about options to raise equity or plans to restructure the firm.

This restructure would involve Fastjet selling its Zimbabwe business for $8.0 million to a consortium which includes Solenta Aviation Holdings Ltd, currently a 60% shareholder in Fastjet.

The Zimbabwe sale would also relieve Fastjet of $5.4 million in debt and $3.2 million in future aircraft orders.

The proceeds from the sale would be used to fulfill debt obligations and fund future capital projects into 2021.

“The disposal, if agreed, approved and implemented, would be expected to de-risk the significant uncertainty and cash drain that shareholders have historically suffered and allow the group to continue operating under a more stablised and simpler business model,” Chief Executive Officer Mark Hurst said.

“This revised strategy allows the group the opportunity to create a single fastjet brand throughout key markets in Africa, leverage its key intellectual property of its brand and airline management solutions and invest in viable, already-established airlines where it can,” Hurst added.

In the airline industry there have been mixed experiences varied by each firm, and results have been sporadic.

Fastjet will have to be careful that they don’t end up with the same fate as Thomas Cook (LON:TCG), who recently collapse in September.

Amid tough market conditions, big players such as IAG (LON: IAG) and Ryanair (LON: RYA) have cut their medium term profit forecasts leading to skepticism from shareholders.

Additionally, IAG announced at the start of the month that they will purchase Europa Air which has alerted competitors such as Ryanair and easyJet (LON: EZJ)

Egdon Resources shares spike on two renewed gas licenses

Ishen Patel
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Egdon Resources shares spike on two renewed gas licenses

Shareholders of Egdon Resouces Plc (LON: EDR) have seen their shares spike on Wednesday afternoon after the firm secured a gas licence extension.

Egdon Resources plc is an independent onshore focused oil and gas exploration and production business. The firm is an established oil and gas exploration and production business with 44 licenses in proven oil and gas producing basins in the UK

Shares of Egdon resources spiked 8.31% to 3.2p. 27/11/19 14:31BST.

Big name competitors such as Shell (LON: RDSA) and SABIC (TADAWUL: 2010) have seen third quarter profits sink following volatile oil prices.

Additionally, both Nostrum Oil and Gas (LON: NOG) and Chariot Oil and Gas (LON: CHAR) saw their shares crash following modest updates.

Earlier in November, Egdon saw their shares sink following fracking bans from the government, but it seems that Egdon have bounced back from the setback.

The firm updated shareholders saying that it had received a six month extension for two UK offshore gas licenses.

The UK Oil & Gas Authority extended the period for the P1929 and P2304 licences until the end of May 2020.

With the new extension, the firm will be able to execute a farm-in deal for the licenses to provide funding for the projects by the end of January.

P1929 has estimated contingent gas resources of 231 billion cubic feet of gas and P2304 another 18 billion cubic feet.

“We are pleased to have secured extensions from the OGA for both P1929 and P2304 which contain the Resolution and Endeavour gas discoveries, key conventional projects for Egdon,” Managing Director Mark Abbott said. “This follows on from our recent announcement of securing an exclusivity agreement with a large internationally recognised exploration and production company as our preferred partner for Resolution and Endeavour.”

“Today’s news represents further positive progress for these projects and results from the proactive and constructive engagement between Egdon, the Counterparty and the OGA,” Abbott added. “Having secured the licence extensions, our focus now turns to finalising a farmout agreement and we look forward to updating shareholders on progress in this regard in the New Year.”

AXA set to exit coal investments to address environmental policy issues

Ishen Patel
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AXA set to exit coal investments to address environmental policy issues

French Insurance firm AXA (EPA: CS) have made a concerned effort to strengthen their environmental policies as they gave the market an update on Wednesday.

Shares of AXA are trading at EUR24 (+0.14%) 27/11/19 14:06BST.

The insurance and finance industry has seen mixed results, as shares have been up and down. Competitors including Aviva (LON: AV) and Lloyd’s (LON: LLOY) have seen their shares crash following poor respective trading updates.

AXA announced that it would commit to exit coal more quickly across a greater number of countries, as policymakers look to transition into a low carbon economy.

At a time where environmental policies have never been so important, the move to exit coal investments by 2030 is a positive one for AXA and will certainty favor their media image.

AXA said that as an investor it would exit completely from the coal industry across countries in the Organisation for Economic Cooperation and Development (OECD) and the European Union by 2030, and the rest of the world by 2040.

This will put pressure onto other financial institutions and industrial companies to make a concerned effort to step up their fight against climate change.

In other steps announced on Wednesday, the French insurer said it will put 12 billion euros (£10 billion) in “green investments” between 2020-2023.

AXA added that as an insurer, it would restrict coal undewriting policy and stop selling insurance contracts, apart from employee benefits offers, to clients developing new coal projects that exceed 300 MW in capacity.

“AXA is leading the way by driving its portfolio of coal down to zero by 2030,” said Regine Richter, Energy Campaigner at Germany-based campaign group Urgewald.

This comes as a move after firms such as UniCredit (BIT: UCG) and Coca Cola (LON: CCH) have announced new environmentally friendly policies.

Certainly, when fighting climate change competition has to be put to one side as it is a communal effort. The steps made by AXA are ones in the right direction and should set an example to the industry and other multinationals looking to address the issue.

RBS set to launch digital bank Bó

Ishen Patel
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RBS set to launch digital bank Bó

Royal Bank of Scotland Group plc (LON: RBS) have announced to the market that they are set to release their standalone digital Bank Bó.

Shares of RBS currently trade at 231p (+0.17%). 27/11/19 13:44BST.

Over a fortnight ago, it was announced that both HSBC (LON: HSBA) and RBS were set to roll out their respective new digital banking platforms.

As HSBC prepares to roll out HSBC Kinetic, RBS is putting the finishing touches onto Bó.

The Bó app is designed to encourage customers to budget and save better, alerting them if they overspend.

This has come as a response where banks such as RBS, HSBC and Lloyd’s (LON: LLOY) have seen a slump in their third quarter profits.

The expansion of brands such as Monzo and Starling Bank has put pressure on the heavyweight banking firms to conjure up a response to the use of new fintech.

Bó will target the 16.8 million Britons with savings less than £100.

Bó Chief Executive Mark Bailie told reporters on Wednesday the venture could offer its parent cheaper funding by amassing customer deposits on its lower cost banking platform, although he did not say how much the bank had spent on the project.

RBS are still majority publicly owned after the financial crash in 2008 led to a public bailout, and its biggest brand Natwest serves over 16 million customers.

Bailie said Bó aimed to attract what he described as a “material” number of customers relative to NatWest within five years. “A few hundred thousand customers doesn’t make any difference to the bank,” he said, without giving a precise target.

From recent market data, start-ups such as Monzo and Starling have picked up thousands of new customers this year from rivals, leading to the creation of these mobile banking platforms.

“We’re blocking them at the front door,” Bailie said, adding such attacks were expected for new online ventures.

Bailie said Bó, which offers similar functions to other digital banks, would differentiate itself with its focus on helping customers budget better.

“We’ve got a big data set, and the data set says that customers have a broken relationship with money,” Bailie said.

In a time where rivals such as Standard Chartered (LON: STAN) and Bank of Ireland (LON: BIRG) have posted bullish updates, the move to release Bó will come to stimulate customers in an attempt to turn performance around.

Cairn Energy exit Norwegian operations

Ishen Patel
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Cairn Energy exit Norwegian operations

Cairn Energy PLC (LON: CNE) have announced the sale of their Norwegian operations to Solveig Gas in an update to shareholders on Wednesday.

Cairn Energy PLC is one of Europe’s leading independent oil and gas exploration and development companies.

Shares of Cairn Energy are trading at 180p (-0.17%). 27/11/19 13:27BST.

Cairn received a double blow at the end of October when they were hit with legal battles with the Indian government, which caused shares to dip.

The sale was announced for a fee of $100 million, which will also mean that Cairn Energy will exit operations and business in Norway.

The sale will allow Cairn to reduce its committees exploration and development spending by around $100 million.

The proceeds of the sale will be reinvested into existing operations, Cairn added.

Chief Executive Simon Thomson said: “This is a further attractive transaction for Cairn shareholders in line with our consistent strategy to realise value and redeploy capital within our portfolio.

“We continue to have a material business in the UK North Sea where the production performance of the Kraken and Catcher assets remains strong. We wish all of the team in Stavanger every success in the future.”

FTSE250 (INDEXFTSE: MCX) listed Cairn has assets in the Americas, Africa, and the UK, including the producing Catcher and Kraken fields in the North Sea.

The deal is expected to be completed by early 2020 and remain subject to written consent by the Norwegian Ministry of Petroleum and Energy, partner and third-party approvals.

This is an interesting move by Cairn, and the exiting of these Norwegian operations doesn’t seem to have worried shareholders as much as expected.

The energy market is becoming increasingly tough to trade in as reputable names such as Shell (LON: RDSA) have seen a slip in their third quarter profits amid volatile oil prices.

Additionally, smaller names such as i3 Energy (LON: I3E) and AFC Energy (LON: AFC) have seen their shares crash in the last week.

Brewin Dolphin shares jump on rising funds report

Ishen Patel
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Brewin Dolphin shares jump on rising funds report

Brewin Dolphin Holdings plc (LON: BRW) have seen their shares jump after the firm reported a rise in funds across its financial year.

Brewin Dolphin plc is one of the largest British investment management and financial planning firms with 39 offices throughout the UK and Channel Islands.

Shares of Brewin Dolphin jumped 1.55% to 347p. 27/11/19 12:54BST.

At September 30, the asset manager’s total funds under management stood at £45 billion, up 5.1% from £42.8 billion at the same point a year ago.

Brewin Dolphin’s Direct Discretionary funds grew 4.8% to £26.3 billion, seeing a 6.6% rise in total Discretionary funds to £40.1 billion.

Brewin Dolphin reported impressive growth in July, despite tough market conditions as the firm alluded to tense political and economic barriers to trading.

It seems that this run of good results is expected to be translated across the full trading year.

However, the success has been matched by competitors such as Intermediate Capital Group (LON: ICP) and AJ Bell PLC (LON: AJB) who gave shareholders impressive updates.

However, the success has not been so widespread as Hansard Global Plc (LON: HSD) posted a modest growth report.

“This year has seen economic uncertainty resulting in subdued client activity; however, the performance of the business has held up very well. We have delivered organic net discretionary funds growth of 3.7%, and we remain on track to meet our target to grow new discretionary funds organically by a third by the end of financial 2020,” the asset manager said.

The FTSE250 (INDEXFTSE: MCX) listed firm saw £1.3 billion in net inflows with investment performance adding a further £600 million.

The “strong” inflows, the asset manager said, is proof the company has “continued to broaden”.

Brewin Dolphin saw their income rise by 3.1% in the year ending September 30, to £339.1 million from £329 million, but pretax profit slipped 8.6% to £62.6 million from £68.5 million.

“I am very pleased with our financial performance, particularly over the second half of the year. The group has continued to deliver strong and resilient organic growth, against the continued uncertain economic and political backdrop. This is demonstrated by the strength of our discretionary funds flows. Our strategy of focusing on our advice-led wealth management service continues to deliver results,” said Chief Executive David Nicol.

He added: “We continue to invest in our business to support future long-term growth. We have completed and integrated a number of strategic acquisitions and the replacement of our core custody and settlement system is on track. These initiatives are laying the foundations for long-term growth and will ensure that we are well placed to capture future market opportunities.”

Brewin Dolphin is proposing a final dividend of 12.0 pence per share, giving a full year dividend of 16.4p – both flat on the year before.

“The progress we have made over the past year means we can look ahead with considerable optimism,” Nicol concluded.

Sosandar shares slip on widened loss report

Ishen Patel
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Sosandar shares slip on widened loss report

Shareholders of Sosandar PLC (LON: SOS) have seen their shares slip on Wednesday, after the firm reported a widened loss caused by heavy investment.

Sosandar PLC is a women’s clothing retailer, and have been trading since 2005, with headquarters in the UK.

Shares of Sosandar slipped 0.92% to 24p. 27/11/19 12:40BST.

At the end of October, Sosandar saw its shares surge as the firm expected to post growth in their interim update. However this was not to be case.

The firm reported that its interim loss widened as it invested heavily, however the firm did report that revenue grew strongly.

For the six months ended September 30, pretax loss deepened to £2.8 million from £2.0 million the year prior. This was despite revenue jumping 56% to £2.8 million from £1.8 million the year before.

Profit took a blow caused by administrative costs, which surged from £3 million a year ago to £4.3 million as reported on Wednesday.

“We are delighted to be reporting on a period of significant progress for Sosandar,” Chief Executive Officers Ali Hall and Julie Lavington said.

“The investments that were made in the latter part of the second quarter have resulted in exceptional autumn trading,” Hall and Lavington added. “Post period end, October was particularly notable, as we hit a special milestone – the first month where net revenues exceeded GBP1 million, a performance which November is on course to exceed.”

“Our vision is to be a global one-stop online destination for our customers, and with a widened product range, strong balance sheet, and a broadened, aggressive, and increasingly effective marketing strategy, we are confident that financial 2020 will be an important next step in that journey,” Hall and Lavington concluded.

The clothing sector has seen mixed results by firm.Marks and Spencers (LON: MKS) and Superdry (LON: SDRY) saw their profits sink due to a slump in clothing sales, which led to mass store closures.

Additionally, Koovs (LON: KOOV) and Laura Ashley (LON: ALY) have seen their shares sink following trading announcements.

Shareholders of Sosandar are likely to be concerned, as the firm has still not made a recovery from its initial losses. However, shares have not plummeted as significantly as the market may have expected and this might show investor optimism in the brand itself to deliver long term goals.
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