Pound on a rollercoaster as markets recognise Parliament-shaped obstacle

Jamie Gordon
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Pound on a rollercoaster as markets recognise Parliament-shaped obstacle
If you can’t wait to hear the end of Brexit, then we’re in the same boat. Today’s deal proposal was as close as I think we’ve gotten to a largely amicable solution, and one where most parties have been able to agree to a compromise. That being said, it is widely expected that Parliament will have its way with the new deal offering on Saturday, with many pundits expecting an outright rejection by the Lib Dems, SNP, DUP and Corbyn loyalists. The concerns of the Labour faction, in particular, are commendable. Aside from potential stubbornness to let Brexit take place, there are legitimate concerns around working and living standards and opportunistic buy-ups of vital public services; which would affect the lives of most people, irrespective of whether they support Leave or Remain. That being said, there is a sense that Boris will lead the march one way or another, and from the perspective of many a Labour MP, this could and should be seen (at the very least) as the lesser of two evils. Despite this logic, it is expected that MPs will vote in force against the deal, and the rehashed uncertainty this inspires saw the pound double back on its bullish behaviour during the day. In his regularly anecdotal and enjoyable tone, Spreadex Financial Analyst Connor Campbell talked on the day’s market movements,

“Poor old pound. The currency has spent Thursday in a complete tizzy, its emotional state severely tested by the minute-by-minute Brexit updates.”

“After hours and hours (and hours (and hours)) of negotiations, compromises and concessions, Britain and the EU have a Brexit deal. Yet, as ever, things aren’t that simple. In doing so, Boris Johnson seems to have abandoned the DUP, apparently deciding he can do without their support on ‘super Saturday’ by offering up an agreement the party has refused to back. That makes the deal’s path through Parliament even more difficult, given that the Prime Minister currently has a majority of minus 45.”

“On top of all this, Jean-Claude Juncker has claimed ‘there will be no prolongation’, ruling out an extension if the deal can’t get passed by October 31st. And while there is a healthy dose of scepticism over the strength of this stance – it is more likely a persuasion tactic aimed at getting MPs on board – it nevertheless ratchets up the pressure heading into a historic Commons session this weekend.”

“It’s a lot to take in – and sterling has been there every step of the way. Staring the day in the red following the DUP’s initial rebuttal, the pound found itself tickling $1.30 for the first time since mid-May in the aftermath of the deal-announcement, only to drop back to $1.2836 as Arlene Foster and co. reaffirmed their unhappiness with what has been put forward. Now the pound is flat against the dollar and down half a percent against the euro.”

“With the rest of the markets broadly positive – the Dow crossed 27100 with a 90 point increase – and its banking sector cheering the Brexit developments, the FTSE managed to rise 0.6%. That once against puts the UK index above 7200, a level it has struggled to escape with any longevity since its October-opening nosedive.”

Elsewhere in political and macro economic news, there have been updates from; new Brexit deal agreed, UK economy looks likely to avoid recession, Hong Kong protester shooting and China’s strategy, the Supreme Court rules against Boris, the collapse of Thomas Cook (LON: TCP), the bid for the London Stock Exchange (LON: LSE), Lloyds Banking Group PLC (LON: LLOY), Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).

Malta Individual Investor Programme allows investors to buy their way into the EU

Dilara Kucuk
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Malta Individual Investor Programme allows investors to buy their way into the EU
Malta established an Individual Investor Programme in 2014 which grants citizenship by investment to successful applicants. Investors have the opportunity to buy their way into the European Union for a price of approximately $1.3 million by purchasing a Maltese citizenship. The government of Malta expects investors to make a financial contribution of $730,000. Furthermore, Malta requires that citizens by investment invest at least $167,000 in financial assets. Additionally, Malta requires citizens by investment to purchase property in Malta for a minimum price of $390,000.

Malta Individual Investor Programme

The Malta Individual Investor Programme is the only citizenship by investment programme that is approved by the European Commission. Furthermore, it is the fourth cheapest citizenship by investment programme in the world. The benefits of the programme can far exceed its costs. Malta allows citizens by investment to apply for a Malta passport which allows visa-free travel to more than 160 countries. Moreover, citizens by investment are granted the right of establishment as well as the right of residence in all European Union countries. Purchasing Maltese citizenship creates further investment opportunities as it allows citizens by investment to start businesses in Malta. Overall, obtaining Maltese citizenship by investment can be extremely valuable in the long term. The citizenship by investment programme enables investors to pass their citizenship on to future generations. Candidates who meet the requirements of the Malta Individual Investor Programme can secure Maltese citizenship in as little as six months into the application process. The U.S dollar strengthened compared to the Euro in the past five years. As a result, the Malta Individual Investor Programme is more affordable for investors who hold wealth that is denominated in the U.S dollar. As a result, the Malta Individual Investor Programme is particularly valuable for those invested in assets that are denominated in U.S dollars. Citizenship or visa by investment programmes have been on the rise in the past five years.

Citizenship/ Visa by Investment Programmes

Investors are increasingly interested in purchasing their way into countries that have growth and welfare potential. The United Kingdom introduced its Investor Visa (Tier 1) Programme in 2008 to accommodate the increasing demand for visa by investment. The Investor Visa (Tier 1) Programme grants investors from outside the European Economic Area and Switzerland the right to reside and work in the United Kingdom for a maximum of 3 years and 4 months. Additionally, holders of the Investor Visa (Tier 1) have the right to apply for settlement after 5 years of residing in the United Kingdom if they invest £2 million in financial assets approved by the United Kingdom. The Malta Individual Investment Programme is particularly appealing to citizens of the United Kingdom who are unhappy about Brexit.

Why the new Brexit deal might give Jeremy Corbyn a difficult weekend

Jamie Gordon
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Why the new Brexit deal might give Jeremy Corbyn a difficult weekend
This Saturday, Jeremy Corbyn’s first concern won’t be about losing his weekend downtime. Rather, outside of the Ireland issue, his most convincing point of riposte to Boris Johnson’s Brexit plans has been somewhat undermined by the terms of the Brexit deal agreed this morning. Just for clarity, we aren’t overlooking the complex discussion of Northern Ireland because it isn’t important, just because it seems to be the only point most outlets have found worthy of discussion. Also worth mentioning, however, is the breakthrough on the EU’s ‘level playing field’ initiative. For those who don’t know, the level playing field is a directive which seeks to standardise and guarantee workers’ rights and market rules. Some may think that the enshrinement of these goals is hardly impressive, given that they were already included in Theresa May’s proposal and that basic rights and working conditions should be the bare minimum in a just and decent society. Well, you’d be on a different page to a cohort of Conservative MPs, looking forward to these principles being abandoned either in a minimal deal or No-Deal scenario. For the likes of Jacob Rees-Mogg, leaving the EU has already been a massive payday, having avoided legislation such as ATAD, which took a step towards forcing large companies and individuals with offshore accounts to pay taxes in their countries of operation. However, this didn’t go far enough – what these individuals continue to seek from Brexit is wanton deregulation. Quite rightly lamented as a possible ‘race-to-the-bottom’ in labour and living standards, some members of the Conservative party sought to undercut the Eurozone by cutting UK labour costs, which would have ultimately relied on making regular people bear the brunt of what would be called the national interest (surely they wouldn’t roll out the same hollow rhetoric twice in the same decade?). Alas, the guarantees laid out in this deal at least offer a short-term safeguard against what was becoming a widely-supported disaster, and I think this is a major loss for Jeremy Corbyn. While I’m not convinced the faux-populist plutocrats (wolves in sheep’s clothing) will be staved off for long, what this clause offers is a legitimate route for Brexiteers to hoist the anti-elite flag. Fears about rights and the NHS are justified, as the possibility of a trade deal with US remains on the table. However, what this new deal offers is a better option than No Deal, and with Boris Johnson gaining momentum, this might be the best source of protections and guarantees the UK public can hope for. This weekend, Jeremy Corbyn will risk alienating traditional Labour strongholds as he opposes the prime minister, who has managed to masquerade as the forgotten peoples’ champion and weaponise the word ‘democracy’ with extreme effectiveness. Elsewhere in political and macro economic news, there have been updates from; Michel Barnier saying a deal is still possible, UK economy looks likely to avoid recession, Hong Kong protester shooting and China’s strategy, the Supreme Court rules against Boris, the collapse of Thomas Cook (LON: TCP), the bid for the London Stock Exchange (LON: LSE), Lloyds Banking Group PLC (LON: LLOY), Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).

Growthpoint look to formalize deal for Capital and Regional

Ishen Patel
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Growthpoint look to formalize deal for Capital and Regional
South African based Growthpoint Properties (JSE: GRT) are looking to acquire Capital and Regional (LON: CAL) in a reported £150 million deal. Capital and Regional own eight shopping centers, in locations such as Walthamstow, Woodford Green. Talks first commenced last month about the potential move. The first part of the investment is for Growthpoint to acquire 219.8 million existing shares in Capital & Regional Today, Growthpoint have offered Capital and Regional Investors 33p per share, at a stake of 30.3%. If accepted, this would be a 100% premium to the company’s share price before the deal was announced. Growthpoint have also pledged for new shares to raise £77.9 million, giving it a 51.2% stakehold in Capital and Regional. Capital and Regional look to formalize this deal in an attempt to cut their mass debt, currently at £400 million. Plans were announced to invest into their shopping centers to give less exposure to fashion stores, and introduce more ‘need’ stores such as chemists, grocers and opticians. Growthpoint Chair Francois Marais said “Growthpoint views its investment in Capital & Regional as an exciting next step in the execution of its internationalisation strategy. Growthpoint’s strategic intent is to support the growth of Capital & Regional in the same way it has done following its investments in GOZ and GW. The result of Growthpoint’s investment in GOZ and GW was a significant improvement in profitability, growth in their property portfolios, both in size and quality, and a value uplift for shareholders,” Currently shares of Capital and Regional plc are trading at 26.18p per share, a notable 23.22% increase. 17/11/2019 15:22BST. As the pound continues to fluctuate and falling real estate values overseas investors are finding UK firms attractive hence the move. If this proposed takeover were to happen, this would give the South African firm a foothold in the UK market. However, uncertainty with Brexit negotiations may play a factor in Growthpoints ultimate decision.

Warnings of lower revenues drive Tissue Regenix stocks down

Ishen Patel
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Warnings of lower revenues drive Tissue Regenix stocks down
On Thursday, Tissue Regenix (LON: TRX) warned shareholders that full year revenues would be 15-20% lower than projected after delays in developing manufacturing capabilities. Tissue Regenix are a major medical device company, specializing in regenerative medicine. They have patented technology which removes DNA and other cellular material, allowing repair to diseased or worn out body parts. In June, the Leeds based health firm said that annual revenue would be heavily weighted on the second half of the year. Shareholders were warned that revenues would be reliant on the ability to bring increased manufacturing capacity during the last six months. Despite the delays, seniority at Tissue Regenix claimed that there was still strong demand and does not expect long term issues past the time period specified. Executive Chairman John Samuel said “We have strong global demand for our products, which allowed us to deliver continued revenue growth, demonstrated by DermaPure, which increased sales by 33% in the first half. We remain focused on short and medium term initiatives to increase capacity and alleviate supply constraints.” Due to these manufacturing capability issues, shares in Tissue Regenix have fallen across Thursday trading. They currently value at 2.78p after experiencing a decline of 13.13%. 17/11/2019 14:40BST. On a positive, Tissue Regenix announced receipt of a $300,000 grant to begin building a new 21,000 square foot facility in San Antonio, Texas. The funds allocated would help upgrade utilities and infrastructure at the site, whilst technical staff needed to operate a second shift. Even with the limitations, TRX have said that they plan to release additional products towards the end of 2019, giving shareholders optimism to hold onto shares. Additionally, the company added that it was working with outsourcers to increase the yield of DermaPure, its soft tissue repair product. Firms have been flexible in Pharmaceuticals and health, seen with to Ra Pharmaceuticals Inc (NASDAQ: RARX), Yourgene Health PLC (LON: YGEN), Salarius Pharmaceuticals Inc (NASDAQ: SLRX). The falls in the share price might only be short term, as TRX look to release more products and work to increase manufacturing then investors can take positives from the slower revenues in the third quarter.

National Express on road to success with new contract win

Jamie Gordon
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National Express on road to success with new contract win
British multinational transport company National Express Group PLC (LON: NEX) posted bumper fundamentals for the three month period ended 30 September 2019, which it said owed to significant contract wins. The Company booked impressive profit growth of 14.3%, which was led by a 14.5% bounce in revenues. It added that its operating margin was ‘up’ during the period. Operationally, the Company announced the renewal and expansion of its second largest North American transit contract. The deal will see revenue double to $420 million across the 7.5 years of the contract. Further, the Group’s new National Express Accessible Transport offering commenced ‘successfully’ during the period, with a 400 vehicle fleet expected to target the ‘growing market’ int the West Midlands. By far the biggest revelation, though, was the Company’s €1 billion contract win in Casablanca. The contract covers 700 buses in the Morocco region, which will last 15 years and almost doubles the scale of their existing offerings in Morocco.

National Express comments

Dean Finch, Group Chief Executive, said,

“We had another good trading performance in our key summer period. ALSA performed particularly well and our UK coach business grew despite lapping a very strong comparative period last year. North America posted strong growth, boosted by both our WeDriveU acquisition and a good back-to-school performance including improved wage control.”

“With these results, the further delay to Spanish concession renewal and our recent successes in winning, retaining and mobilising significant contracts, our outlook remains positive. We will continue to focus on operational excellence as the foundation of our strategy to drive growing shareholder returns and maintain profit growth in the coming years.”

Investor notes

Despite the positive update, the Company’s shares dipped 0.044% or 0.20p to 451.60p 17/10/19 14:34 BST. Analysts from RBC Capital Markets reiterated their ‘Top Pick’ stance on National Express stock. The Group’s p/e ratio is 13.73, their dividend yield is 3.29%. Elsewhere in travel and aviation, there have been updates from; International Consolidated Airlines Group (LON: IAG), TUI AG (LON: TUI), Thomas Cook (LON: TCP), Fastjet PLC (LON: FJET), John Menzies plc (LON: MNZS), Wizz Air (LON: WIZZ) and Ryanair Holdings Plc (LON:RYA).

Honeywell cut full year revenue target after slow quarterly revenue

Ishen Patel
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Honeywell cut full year revenue target after slow quarterly revenue
Manufacturer Honeywell International Inc (NYSE: HON) fell short of estimates by analysts in its latest update, as a result cutting their annual targets. Customers have remained cautious about capital spending following tough economic and political conditions. Honeywell own a variety of different business, and operate within many different sectors. The prolonged trade war between the United States and China tied with Britains stance in the EU have contributed to a slump in the third quarter. This has also put downward pressure on business confidence and slow capital spending. As a result, Honeywell cut the top end of its annual sales forecast to $36.9 billion. The company also forecast fourth quarter earnings per share between $2 and $2.05, which was marginally below the $2.06 target. Gordon Haskett analyst John “While the slightly lower fourth-quarter guide versus consensus is likely to be viewed as mildly disappointing – but likely also relatively resilient against the backdrop of the tough economy,”Inch said “Overall, we believe the quarter was generally in-line with expectations (better margin performance and weaker core growth)” On a more positive note, sales in the aerospace sector surged by 10%. This was a boost for Honeywell, where they provide repair and overhaul services. Honeywell also make brakes for Boeing Co (NYSE: BA) and Airbus SE (EPA: AIR), henceforth Honeywell can take this forward. Honeywell International Inc (NYSE: HON) shares are trading at $163.63 seeing a 0.098% fall. 17/11/2019 14:12BST CEO Darius Adamczyk said “Overall, we had a strong third quarter, which was a continuation of very strong performance year-to-date. We are well positioned in attractive end markets with multiple levers for value creation heading into 2020. We remain committed to delivering outstanding returns for our customers, shareowners, and employees over the long-term.” Following the news that Honeywell cut their annual targets, the stock price did not fall as drastically. This may come from renewed hope from traders that the US and China will reach a mutually beneficial trade deal.

Shanta Gold digs away at its debt during productive Q3

Jamie Gordon
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Shanta Gold digs away at its debt during productive Q3
East Africa-focused gold producer, developer and explorer Shanta Gold Limited began “rapidly paying down its debt” during a productive third quarter, which saw the Group’s production volumes and sales expand. The Company booked an impressive reduction in net debt, dropping 23% during the quarter to US $20.7 million. Further, the Group’s net debt narrowed 15% during the same period, to $25.7 million.

This progress was led by improved production volumes, with 22,726 oz produced during Q3, up from 19,856 oz the previous quarter. Shanta Gold added that the average head grade of this output was also superior, at 4.5 g/t compared to 3.9 g/t for the previous period.

Further, while the Group reported that forward sales had dipped by 2,000 oz to 43,000 oz, their operating costs narrowed by $90 per oz to $474 per oz and adjusted EBITDA spiked from $10.5 million to $16.5 million.

The Company said they remained on track to meet their target of 80,000-84,000 oz.

Regarding the Company’s social responsibility ventures, they said enrolment of sesame farmers onto their alternative livelihood programme had increased by 168% during the year-to-date, they built two deep water boreholes for nearby villages and distributed 500kg of sports equipment donated by Eton College, among other activities.

Shanta Gold comments

Eric Zurrin, Chief Executive Officer, stated,

“As we rapidly pay down our debt and improve our financial position, New Luika Gold Mine continues to perform operationally. This quarter has seen us produce over 22,000 oz of gold and positions the Company on track to again meet our guidance for the year. Net debt at US$20.7 m is now the lowest it has been in over six years and has decreased by over 50% since the same period two years ago.”

“Our recent exploration results are encouraging as we look to add more ounces to the New Luika mine plan. Key to our current exploration targets is the close proximity to both the existing sources of high-grade ore and the processing plant. We plan to announce a new resource update shortly which will highlight how we can add low cost gold ounces to our future production and extend the mine life of New Luika.”

Investor notes

After a slight dip, the Company’s shares are up 4.88% or 0.39p to 8.39p per share 17/10/19 13:58 BST. The Group’s p/e ratio is 9.96, their dividend yield is unavailable. Elsewhere in the mining and minerals sector, recent updates have come from; Capital Mining Ltd (LON: CAPD), Griffin Mining Ltd (LON: GFM), Alien Metals Ltd (LON: UFO), Highland Gold Mining Ltd (LON: HGM), Kavango Resources PLC (LON: KAV), URU Metals Ltd (LON: URU) and Resolute Mining Limited (LON: RSG).  

Amid tension with the US, Turkey bans short selling in top banks

Dilara Kucuk
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Amid tension with the US, Turkey bans short selling in top banks
Earlier this week, Turkey launched a cross-border offensive in Syria in order to establish a safe zone in the region. Following the cross-border offensive, Donald Trump sent a letter to President Erdogan urging him to make a deal with Kurdish fighters in Syria. In his controversial letter to President Erdogan, Donald Trump threatened to destroy the Turkish economy if Turkey didn’t reach an agreement with the Kurdish fighters in Syria. Donald Trump’s threat to destroy Turkey’s economy was not unfounded. The United States took strict economic measures against Turkey including a 50% increase in tariffs on Turkish steel. President Erdogan threw Donald Trump’s letter in the bin as he ordered to continue operations in Syria. As a result, economic tension between the United States and Turkey followed. Subsequently, the Turkish government took measures to prevent market fallout by banning short selling, and squeezing liquidity in offshore money markets. The immediate implication of the ban was a limit on Turkish lira liquidity sources for international investors. The Istanbul Stock Exchange ruled that shareholders would not be able to sell unless shares were visible in the broker’s custody account. The decision to ban short selling in seven of Turkey’s biggest banks was a part of a greater attempt to make Turkish banks T+O settlement. International shareholders were concerned as making Turkish banks T+O settlement would make it difficult for them to sell their shares. Additionally, the United States’ decision to file criminal charges against one of Turkey’s biggest banks for violating United States sanctions on Iran raised concerns about the possibility of further sanctions. Both the Republican and the Democratic Party pushed for strict economic measures against Turkey. Consequently, the Turkish Lira weakened more than 4% against the USD in October. The tension between Turkey and the United States increased the risk of investing in Turkish capital.

Nestle savours the flavour of the first three quarters

Jamie Gordon
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Nestle savours the flavour of the first three quarters
Food and confectionery conglomerate Nestle SA (LON: NESN) posted steady but positive sales fundamentals as it reflected upon the first nine months of full-year 2019. The Company reported that its total sales during the period had risen 2.9% on a year-on-year comparison, up to CHF 68.4 billion. It also stated its organic growth of 3.7% – 3.0% from real internal growth and 0.7% from pricing – had been bolstered by strong performance in the US market and progress from its Purina PetCare brand. The Group added that net acquisitions made a positive impact of 0.7% while foreign exchange weighed sales down by 1.5% Operationally, Nestle restated the sale of its Nestle Skin Health offering on October 1, for CHF 10.2 billion, and said its strategic review of Herta charcuterie business will conclude before the year’s end.

Looking forwards, the Company said it planned to distribute around CHF 20 billion to its shareholders between 2020 and 2022, which would be largely comprised of share buybacks. For the FY19, the Group forecast organic sales growth of 3.5%, alongside an operating profit margin of at least 17.5% and an ‘increase’ in underlying EPS.

Nestle comments

Mark Schneider, CEO, commented,

“We are pleased with our nine-month results and have made further progress towards our 2020 financial goals. We continue to see good momentum in our largest market, the United States and very strong growth for Purina PetCare globally. Nestlé’s growth was supported by investment behind our brands, rapid innovation and disciplined execution. During the third quarter, the roll-out of Starbucks products continued, now reaching 34 countries. Our portfolio transformation is fully on track, as shown by the timely completion of the Nestlé Skin Health disposal. With prudent investments and a disciplined approach to acquisitions our value creation model is generating profitable growth and attractive cash returns for our shareholders.”

Investor notes

The Company’s shares dipped 1.00% or 1.06p to 105.00p per share 17/10/19 14:02 CEST. Nestle SA’s market cap is 315.63 billion CHF, their dividend yield is 2.31%. Elsewhere in food and beverage news, there have been updates from; The City Pub Group PLC (LON: CPC), Bakkavor Group Plc (LON: BAKK), Avangardco Investments Public Limited (LON: AVGR), Loungers PLC (LON: LGRS), The Coca-Cola Co (NYSE: KO), Devro plc (LON: DVO), Greencore Group plc, (LON: GNC) and NWF Group plc (LON: NWF).
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