British Pound weakens despite Brexit optimism
After events at the weekend, both Boris Johnson and Leo Varadkar looked hopeful for a deal to be struck before the Brexit deadline. Changed levels of optimism meant that the pound fell early Monday morning.
In a busy day for British Politics, where the next years legislative plans are being announced, the pound saw a slump this morning.
After a tough week of up and downs for the British Pound, this morning saw a fall of 0.5% to below $1.26 (GBPUSD=X)
Talks are set to continue today, and whilst the Queen announces legislative plans for Brexit at the time of writing, the national currency continues to weaken.
Michael Hewson, chief market analyst at CMC Markets commented “Talks look set to continue today. However, it is hard to see any other outcome than a delay to the October deadline, with the government forced to apply for an extension by the end of the week. What that means for the government of Boris Johnson by the end of this week, is anyone’s guess, given his passionate refusal to countenance an extension.”
On Friday, the pound had regained some ground after progress was made between PM Johnson and Leo Varadkar rising by 2%.
Dean Turner, economist at UBS Bank said on Friday that there would still be some reluctance from market traders “The news will have cheered sterling investors, but we recommend they remain nimble with much still uncertain as the sand in the Brexit hourglass continues to run down”
After both leaders concluded that there was a possibility of a deal, Forex traders quickly pounced on opportunity allowing a recovery.
However this morning, optimism has faded. Following the weekends developments, traders have sold sterling slumping unit price.
As the pound lowers, it has still not reached the 45 year lows once met in August showing some positive sentiment.
Naeem Aslam, an analyst at Think Markets said “The view from the EU lawmakers has been pessimistic over the weekend and this has taken the wind out of sterling’s rally.Their tone has set alarms that a deal by the end of this week isn’t likely. If nothing materialises, the British prime minister will be forced to apply for an extension. Traders will continue to breathe and trade every headline.”
It is clear that traders are not confident either way, and risks on the British Pound are not being taken.
In current affairs, there have been updates to Facebook (NASDAQ: FB), London Stock Exchange (LON: LSE) and NMCN Plc (LON: NMCN).
Serabi Gold boast strong production figures in Q3
Serabi Gold Plc (LON:SRB), reported its best production figures for gold in 2019.As a result, the stock price of Serabi Gold rose by 5.2% to be valued at 9,100p at 11.28 BST on 14.10.2019.
In the three months up to September, the gold producer confirmed 10,817 ounces of production. This showed an increase of 26% from 8,101 in the same period last year.
In the first quarter of 2019, production tallied at 10,164 ounces whilst the second quarter saw a fall to 9,527.
Despite the second quarter fall, Serabi Gold have impressive figures to back strong growth and revenue figures.
Mike Hodgson CEO commented “We are delighted to report our third quarter production of 10,187 ounces of gold, which is another excellent performance and as a result the Company is very well placed to exceed 40,000 ounces of gold production for 2019 and significantly improve on the 2018 gold production of 37,108 ounces”
In a press release this morning, the production figures showed an 11% increase from the same period last year.
Hodgson added “As a result, the plant has now processed 132,540 tonnes year to date, which represents an eight per cent improvement over the same nine month period in 2018. The processing circuit for treatment of stockpiled gold bearing flotation tailings continued to perform well, and for the last five months processing rates have averaged over 100 tonnes per day with a total of 20,554 tonnes of an average grade of 4.13 g/t of gold having been processed during the year to date. With a considerable stock of this tailings material remaining, we expect to continue processing these stockpiles to supplement run of mine gold production beyond the year end.
Serabi have publicly expressed their expectations from the final quarter, expecting figures of 40-41,000 ounces of gold reflecting a 10% rise.
The Brazilian based producers gave investors strong speculation, explaining developments to their ore sorters. “The quarter also saw the much anticipated delivery of our ore sorter. The accompanying infrastructure is close to completion and we hope to start commissioning before the year end and with the expected benefits starting to be seen in the early part of 2020. Its introduction will provide benefit by creating much needed space in the process plant in turn allowing for more flexibility to improve maintenance scheduling whilst also, through the liberation of process capacity, providing the opportunity to increase gold production in 2020”
Global developments have been provided by Serabi commenting on the Sao Chico Orebody “We are very excited about the prospectivity of these anomalies. They each exhibit geophysical signatures substantially better than anything else we have encountered around the Sao Chico deposit, and all have been the subject of significant artisanal mining activity, suggesting that the conductive body that we have identified has good potential to be gold bearing”
Seniors stated the most impressive facts to be taken on the quarter was the results of the Preliminary Economic Assessment (PEA).
Hodgson added, “In summary the results were very positive, indicating annual gold production, after an initial ramp-up period, averaging approximately 38,000 ounces per annum, a mine life of approximately nine years, average gold grades of 8.3 g/t, an AISC of approximately US$852 per ounces and an initial capex estimate of US$25 million. The costs and capital each include a 20 per cent contingency, so I feel confident that we can improve on these cost estimates”
Sebira look confident to increase both production and revenue.
Investors and Stakeholders will be impressed with these reports, if Sebira end 2019 with similar production figures, there is huge potential to expand revenue, growth and brand exposure.
In the commodities sector, updates to Kavango Resources PLC (LON: KAV), Glencore PLC (LON: GLEN) and Resolute Mining Limited (LON: RSG) have been provided.
WeSwap: unused foreign currency research
New research revealed on Monday that an average of £90 in excess currency is brought back to the UK from each trip abroad.
WeSwap conducted research from a sample of over 2000 adults in the UK, revealing the amount of excess currency returned back to Britain after trips abroad.
The research also shows that 27% save the spare currency for the next trip, 19% use it at duty free and 10% use the cash to purchase gifts or souvenirs. Only 9% currently change the currency back.
“Our research confirms that a huge amount of money goes to waste every year, but holidaymakers – especially those who are going away for the October half-term – should rest assured that there are ways to ensure their hard earned money stretches as far as possible,” CEO of WeSwap, Jared Jesner said in a statement.
“For example, buy back services allow customers to return excess currency and swap it back into pounds – this is particularly useful as the pound’s value has been so inconsistent recently. Swapping holiday currency back to Sterling may get you more money than you first thought,” the CEO continued.
“Also, it is worth bearing in mind that it is best to find free ATMs while abroad. You can also avoid further charges by withdrawing more money less often. And if an ATM or merchant asks if you want to be charged in the local currency, always say yes,” the CEO said.
With the October half-term approaching, many will want to take a break from Britain and seek out some final drops of sun elsewhere.
WeSwap provided a list of destinations to visit for under £90 this month:
- Dublin, Ireland from £20
- Toulouse, France from £24
- Bologna, Italy from £25
- Stockholm, Sweden from £36
- Berlin, Germany from £48
Sophos Group shares surge after Thoma Bravo finalize purchase
Earlier today, the share price of Sophos Group (LON: SOPH) rose after private US equity company Thoma Bravo bought Sophos for a reported £3.1 billion including net debt.
Sophos Shareholders are set to receive $7.40 in cash earnings per share. This was a premium of 37% to the companies closing price during Friday trading.
This morning, the stock price of Sophos Group (LON: SOPH) jumped by 36.69%.
The Oxfordshire based business was quick to rise specializing in security software to small and medium businesses. They have grown to boast 400,000 customers in over 150 countries.
However, in the last 18 months they have faced some turbulence. Shares fell in November 2018, and again in January 2019 after slow growth reports but have recovered since.
Peter Gyenes, Sophos Chairman said “Thoma Bravo has deep sector expertise in cyber security software as well as a long and successful record of partnering with and investing in its portfolio companies to support long-term growth and success,”
This follows Thoma Bravo’s aggressive attempts to bid into the securities market. The purchase of Sophos allows Thoma Bravo to enter this market and expose themselves to the UK market.
AJ Bell anaylst Russ Mould stated ““Another day, another takeover of a UK company by a foreign business as a US private equity firm makes a bid for FTSE 250 software firm Sophos. “The downside of Sophos receiving a takeover bid is that the London market loses yet another tech stock. “There are now slim pickings for UK investors wanting to invest in mid to large technology companies, meaning they have to look further afield for opportunities and be comfortable owning overseas-listed shares or, as an alternative, leave it to a fund manager to find suitable stocks.”
Thoma Bravo manages private equity valued at over $35 billion, and has completed over 200 acquisitions accounting for over $50 billion in enterprise.
The move is one that will expand Thomas Bravo. As Seth Boro a managing partner described “The global cyber security market is evolving rapidly, driven by significant technological innovation, as cyber threats to business increase in scope and complexity”
US based technology firms look to exploit the insecurities of the British markets as Brexit looms.
Dragging out the Brexit process will have dangerous implications for investment into the UK. However, shareholders of Sophos Group will be more than happy on their returns following the confirmed buyout.
In technology and finance, there has been news on, Facebook (NASDAQ: FB), Nissan (TYO: 7201), Castleton PLC (LON: CTP).
Superdry founder made CEO until 2021
Superdry said on Monday that founder Julian Dunkerton will continue as the fashion retailer’s Chief Executive Officer.
Shares in Superdry (LON:SDRY) were up during trading on Monday morning.
Indeed, founder of Superdry Julian Dunkerton’s contract as Chief Executive Officer has been extended until April 2021, the company said in a statement.
Earlier this year, Superdry asked its shareholders to reject Julian Dunkerton’s pledge for a seat on the company’s board after he stepped back from the company a year ago.
However, Julian Dunkerton made a return to the company, causing most of its board members to quit and with top executives among the board members who left their positions.
“Julian has a clear vision and his creativity, ambition and leadership will be crucial for the turnaround of the business,” Peter Williams, Chairman of the Board of Superdry, said in a company statement.
“I am looking forward to working alongside Julian during this period as we seek to identify his long-term successor,” Peter Williams continued.
“I’m pleased that the Board has asked me to continue in the CEO role for this important phase of the turnaround,” Julian Dunkerton, Chief Executive Officer, commented on the announcement.
“Since I have returned to the business full-time, I have been working with the team to put in place the plan that will turn around Superdry, with a focus on its design-led roots and strengthening the retail basics,” Julian Dunkerton continued.
“We are already seeing early signs of progress and while this will take time, we are excited to realise the brand’s full potential. As CEO I am fully committed to working with the Board and everyone in the business to deliver this change over the months ahead,” Julian Dunkerton said.
In June, the company delayed the release of its annual results.
Shares in Superdry plc (LON:SDRY) were trading at +1.52% as of 10:24 BST Monday.
Facebook tax loophole continues
Facebook (NASDAQ: FB) have released their latest UK accounts, showing revenues of £1.65 billion on the back of strong marketing and advertising growth.
The social media firm showed huge profit growth in excess of 54% with recognized sales of £797 million. Whilst pretax profit rose more than 50% from £63 million to £97 million.
Facebook UK in a statement said that net revenue from advertisers rose 50% meaning that 12% of sales were converted into profit.
This follows the latest US Multinational Corporation to avoid paying taxes using legal loopholes.
Amazon (NASDAQ: AMZN), Starbucks (NASDAQ: SBUX) and Vodafone (LON: VOD) have all been found guilty.
The social media titan, founded my Mark Zuckerberg has had a history of using legalities to avoid paying taxes they owe.
The fragile tax system involving payment by Multinational Corporations meant that the Treasury only received £28 million in corporation tax
Steve Hatch, the Facebook Vice President for Northern Europe said “Businesses across the country use our platforms to grow and revenue from customers supported by our UK teams is now recorded here so that any taxable profit is subject to UK corporation tax”
He added ““The UK is now one of Facebook’s most important hubs for global innovation. We continue to grow and invest heavily in the UK and by the end of the year we’ll employ 3,000 people here. These high-skilled jobs are not only working on products like WhatsApp and Workplace but also help develop technology to proactively detect and remove malicious content from our platforms.”
Facebook have backed up their bold revenue figures, with investment into Europe and somewhat into the UK.
The UK division of Facebook spent £356m on research, development and engineering in the UK last year.
With Hatch saying “Businesses across the country use our platforms to grow and revenue from customers supported by our UK teams is now recorded here so that any taxable profit is subject to UK corporation tax.”
Since the rise of Multinational Tax Avoidance, the Organization for Economic Development (OECD) have looked to impose tighter regulations so firms pay their legal duties.
Standard need to be met where both UK and overseas firms have consistent tax laws.
Giles Derrington, TechUK’s policy chief said “UK-based tech firms could actually end up paying more tax than their international competitors’ with Just Eat, Rightmove, MoneySuperMarket and Match.com named as possible victims if their sales continue to grow.”
However, it seems that once again Facebook have tricked the system. The UK Tax system will need tighter controls to ensure that companies such as Starbucks, Amazon and Facebook do not get away with this.
US China negotiations gain momentum
The trade war and tense political conditions between the US and China have taken another turn. As negotiations unfolded in Washington, talks seem to have taken a positive spin.
A Chinese newspaper reported that a potential trade and currency deal would benefit both parties.
Trump described the state of negotiations “I think it’s going really well. I will say, I think it’s going really well. So we had a very, very good negotiation with China. They’ll be speaking a little bit later, but they’re basically wrapping it up”
Chinese advisors took the chance to advise Washington to accept the proposes suggested by Liu He so that both parties could agree a mutually beneficial pact.
The everlasting trade war has led to a battle of economic and political sanctions, derived from both parties lasting more than 15 months
Liu described the approach “The Chinese side came with great sincerity, willing to cooperate with the US on the trade balance, market access and investor protection,”
China evidently are keen to end this never ending saga, as any further sanctions would derail China’s near term growth prospects.
The negotiations have come timely for China, as the United States was set to increase tariffs on Chinese Imports by $250 million at a rate of 30%, an increase by 5% from October 2015.
The tariff war has had adverse effects on the global market as well as foreign exchange rates. Investor confidence has died, as well as heavy downward pressure on growth has become a product of this feud.
Myron Brilliant, head of international affairs at the US Chamber of Commerce said “Both sides have been losing, and so has the global economy. We all know we can’t afford a further escalation of the trade war”
Reports direct from Washington suggested that a mini deal could be on the table but the US President insisted that “he would not be satisfied with a partial deal to resolve his two-year effort to change China’s trade, intellectual property and industrial policy practices, which he argues cost millions of U.S. jobs.”
Ken Bernan founder of Gorilla Trades said ““Even a partial deal could be a huge boost for stocks, especially following this week’s scary headlines”
Since negotiations commenced on Thursday in Washington, equity markets have been boosted by renewed optimism for the two superpowers to strike a deal.
The Dow Jones Industrial Average (INDEXDJX: .DJI) has climbed 0.681% since Thursday along with S&P500 Index (INDEXSP: .INX) rose by 19.58 points to reach 2,938.13.
After the indicator that China was open to a limited tariff resolution with the US combined with a report that China offered to increase purchases of US Agricultural Products by 50%, this formed factors driving the stock market.
Kim Forrest, founder and chief investment officer at Bokeh Capital Management said “talks have been contentious but both sides absolutely know something needs to be done. Semiconductor stocks were up sharply Wednesday, she pointed out, on investor optimism not just about a trade truce, but also better conditions for businesses”
In the final minutes of the trading day, stocks received a late boost following a report saying that Beijing had lowered expectations for significant progress.
Notably after this statement, the iShares PHLX (NASDAQ: SOXX) and the S&P500 futures (INDEXSP: .INX) rose after trader optimism.
Stock futures received positive boosts along with this. Big tech firms such as Facebook (NASDAQ: FB) and Apple (NASDAQ: AAPL) received 1% increases in the premarket. Notably, bank stocks also gained value as JP Morgan (NYSEARCA: AMJ) and Bank of America (NYSE: BAC) also rose by 1%.
It would seem globally beneficial if both superpowers can strike up an agreement to end the war of tariffs and quotas.
However, looking at the recent rhetoric of Donald Trump it would not be a surprise if talks fell through and the US titan allowed this economic war to continue.
Hurricane Energy exceeds expectations after 6 month reports
Today, Barclays (LON: BARC) have upgraded their investment rating on Hurricane Energy Plc (LON: HUR) after outperformance and growth. Additionally Barclays cut their target price for Hurricane from 75p to 55p.
Despite a challenging period for for European Energy firms, Barclays seem optimistic after 6 month trading figures were released by upgrading Hurricane to ‘overweight’.
Hurricane Energy Plc focus on on hydrocarbon resources in naturally occurring basement reservoirs boasting a market cap of £802.46 million.
Dr Robert Trice, Chief Executive of Hurricane commented “I am delighted to announce our half year results for 2019, Hurricane’s first financials to include revenue. The Lancaster Early Production System is the first phase of development of our significant Rona Ridge assets. Achieving first oil on schedule and on budget is a remarkable achievement and a huge credit to our operating team, our partners and contractors. Since first oil, Hurricane has sold over 1.6 million barrels of oil across four cargoes and Lancaster has been producing at an average of 14,100 barrels of oil per day. The operating cash flow that the EPS is delivering provides Hurricane with greater control of our future as we seek to deliver growth in reserves and production across all of our Rona Ridge assets. Whilst the financial security gained from production is crucial, the ultimate goal of the Lancaster Early Production System is to improve our understanding of the reservoir to aid planning of future phases of development of Hurricane’s significant Rona Ridge resource. Throughout the start-up phase and following first oil, the reservoir has performed at the higher end of expectations. However, we remain cognisant that it will take at least six months of steady state production before we are able to evaluate the validity of our reservoir model.
Barclays have also changed their outlook on this sector, as they changed the status from ‘neutral’ to ‘positive’ despite Brexit clouding the UK economic vision
Barclays predictions estimate that crude prices will continue to increase to around $60 per barrel.
As quoted in the 2019 Half year results published on Hurricane Energy Plc “The Group recognized revenue for the first time relating to a single cargo of crude oil that was sold in the period. This resulted in the Group recording an operating profit of $1.2 million (H1 2018: operating loss of $4.7 million)’
Hurricane’s shares dipped at the end of May due to disappointing results at the Warwick Well, however both traders and shareholders must be pleased with the first recognized revenue as outlined.
During trading on Friday, share prices increase by 2.6% which shows positive results, positive media image and potential for traders to leap on this change.
One additional benefit of Hurricane Energy Plc is that they do not rely on rising oil prices to support investment chances or increase its share price.
This presents a positive outlook for both Hurricane Energy Plc and shareholders as profits are set to rise.
In the energy sector there have also been updates to IGAS Energy PLC (LON: IGAS) and Cabot Energy PLC (LON: CAB).