China’s systemic tipping point: Hong Kong protester shooting and CPC’s 70th anniversary
Today the world winced as Hong Kong authorities shot the first pro-democracy protester. Contemporaneously, China marked the 70th anniversary of the Communist Party’s rule with a jingoist tour de force and a cliche comic-book-villain-esque speech from Xi Jinping, who lauded the ‘unstoppable rise of China’. The resulting ominous aura following today’s developments was likely caused by the impression that China has no intention of maintaining either the regional or international status quo.
After succeeding in blocking the extradition bill, Hong Kong’s pro-democracy lobby has since upped the ante against looming Chinese influence, with escalating violence in clashes with authorities. Today, though, the stalwart opposition to authoritarianism may have had a taste of things to come, with a teenage protestor being shot in the chest from point-blank range by a police officer.
Speaking on the incident, the Hong Kong police chief commented,
“At about 4pm, a large group of rioters attacked police officers near Tai Ho Road, and they continued with their attack after officers warned them to stop. As an officer felt his life was under serious threat, he fired a round at the assailant to save his own life and his colleagues’ lives.”
“The round hit an 18-year-old, and the area near his left shoulder was injured, and he was conscious when taken to Princess Margaret Hospital.”
“The police force really did not want to see anyone being injured, so we feel very sad about this. We warn rioters to stop breaking the law immediately, as we will strictly enforce the law.”
Responding to the shooting and what appears to be a sentiment of limited remorse from Hong Kong authorities, Amnesty International issued the following statement,
“The shooting of a protester in Hong Kong marks an alarming development in the police’s response to protests.”
“We call on the Hong Kong authorities to launch a prompt and effective investigation into the sequence of events that left a teenager fighting for his life in hospital.”
“We are urging the Hong Kong authorities to urgently review their approach in policing the protests in order to de-escalate the situation and prevent more lives being put at risk.”
Unfortunately, things will likely worsen before they improve. On the one hand, you have a highly educated and prosperous populace, who will not soon relinquish the democratic rights that have been afforded to them, and will actively resist pernicious (and perhaps soon more overt) influence being exerted by China. On the other hand, you have a growing, hungry dragon, already being poked by Donald Trump. Already at loggerheads with their rival for global hegemony, China won’t take kindly to resistance on its own doorstep, let alone in an area that gives it a strategic foothold in the world of financial services. Beyond that, though, China’s willingness to heavily intervene in its own economy and put on a military parade belonging in a bygone era, shows us that its intentions go well beyond money.
When Xi Jinping talks about the unstoppable rise of China, he is referring to dominance in all spheres. After decades of oppressing its own people (including a case being brought before the European Court of Human Rights this week, with China being accused of harvesting organs from falsely imprisoned Islamic minorities) and making strides toward extending its influence on a global scale (most audaciously with its role in the Hinkley power station and the Hong Kong Exchange’s bid for the London Stock Exchange a few weeks ago), the race to build a ruthless, unified and nigh-on dystopian superpower is well under-way, and the fact that Hong Kong protestors haven’t been quelled with extreme prejudice is – in my opinion – nothing short of remarkable.
No doubt hoping his compatriots will continue fighting the good fight, pro-democracy activist Lee Cheuk-yan told Sky News,
“Today we are out to tell the Communist Party that Hong Kong people have nothing to celebrate.
“We are mourning that in 70 years of Communist Party rule, the democratic rights of people in Hong Kong and China are being denied. We will continue to fight.”
What happens in the coming weeks could potentially set a precedent for future political conflict. If China extinguishes the voices Hong Kong – a small chrysalis of modern free market liberalism – it could potentially throw down a gauntlet that lets the West know that it will go well beyond tariffs, if necessary.
Elsewhere in political and macro economic news, there have been updates from; the Supreme Court’s ruling, the collapse of Thomas Cook (LON: TCP), ECB stimulus, the bid for the London Stock Exchange (LON: LSE), Lloyds Banking Group PLC (LON: LLOY), Jo Johnson quitting, Hilary Benn’s Brexit delay bill, Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).
Severfield reinforces its foundations with Harry Peers acquisition
Structural steel producer Severfield plc (LON: SFR) announced it had entered into an agreement to wholly acquire structural steel work business Harry Peers and Co Limited.
The deal announced today was valued at a total consideration of £30.4 million. The Company said an initial cash consideration of £18.0 million would be financed through cash reserves and a term. The remaining £12.4 million will comprise of cash and cash equivalents. Severield then said a conditional £7 million performance-based deferred consideration is in place, which would be paid by late 2020 should ‘certain financial and operational targets’ be met.
The Group added that Harry Peers commands a respected position within a niche area of the nuclear and defence sectors. Over the next few years, the Company is expected to continue its focus on blue chip customers and is expected to grow on the back of the UK Government’s decommissioning investment programme.
Severfield comments
Alan Dunsmore, Chief Executive Officer, added his insight on the acquisition,
“This acquisition will help Severfield continue to deliver on its strategic objectives. Harry Peers’s experience in specialist, highly regulated, non-cyclical markets will enhance our future growth plans through expanding the Group’s capabilities and sector reach.”
“We believe Severfield is best placed to help Harry Peers continue its profitable growth trajectory, through increased scale and investment and together with Harry Peers’s strong management team we have a real opportunity to develop a broader position within the UK structural steel services market.”
The Company’s statement added,“The Board of Severfield believes that the long-term investment profile of Harry Peers’s key market positions in the highly regulated markets of nuclear, process industries and power generation, enhances its areas of expertise and broadens its market exposure.”
“With the scale and capabilities of the Group, there are substantial opportunities to grow Harry Peers through a number of combined operational initiatives such as new business development functions for Harry Peers, European contract opportunities, and investment in technology-driven enhancements.”
Investor notes
The Company’s share price rallied modestly by 0.084% or 0.060p to 71.16p per share 01/10/19 12:06 BST. Peel Hunt analysts have reiterated their ‘Buy’ stance on Severfield stock, their p/e ratio is 10.69 and their dividend yield stands at 3.94%. Elsewhere in construction and development news, there have been updates from; Billington Holdings PLC (LON: BILN), Epwin Group PLC (LON: EPWIN), Ashtead Group plc (LON: AHT), SIG plc (LON: SHI), Alumasc Group plc (LON: ALU), Somero Enterprises Inc (LON: SOM) and Barratt Developments Plc (LON: BDEV).ScS sitting pretty despite difficult summer
UK-based home furnishing retailer ScS Group PLC (LON: SCS) booked consistent full-year progress across its sales indices, despite a challenging market climate.
The Company’s gross sales improved by £5.8 million year-on-year, to £333.3 million. This drove revenue growth of £4.6 million to £317.4 million, which in turn saw its underlying EBITDA rise by £0.6 million to £19.7 million, and its underlying operating profit bounce 4.6% to £14.3 million.
ScS shareholders enjoyed similar progress, with underlying EPS jumping 13.1% to 30.3p and a full-year dividend of 16.70p per share, up 3.1%.
The Group added that it had opened a new store in Kirkcaldy in September, alongside the roll-out of its in-store sales app in July and further investment in its e-commerce offerings, which saw online sales hike 21.7% to £16.8 million during FY19.
ScS comments
David Knight, Chief Executive Officer, responded to the positive results,
“I am delighted to report another year of good progress and growth for ScS in our continued effort to ensure we remain Britain’s best value sofa and carpet retailer.”
“Since the start of the current financial year, trading conditions have been more challenging, with like-for-like order intake falling 7.6% for the period from 28 July 2019 to 29 September 2019. This period was impacted by the record temperatures experienced by the UK across the August bank holiday weekend and the increasing political and economic uncertainty we are currently facing in the UK.”
“We remain conscious of the impending Brexit deadline, and the impact this may have on the market, consumer confidence and the wider economy. However, the Group’s financial health has never been as strong and with our resilient, debt-free balance sheet, we are in a good position to manage the ongoing uncertainty, and furthermore seek opportunities which will add value in the longer term.”
“Our strong and clear value offering has proven successful, and we are confident it will continue to appeal to our customers who want to buy great products at the lowest possible price.”
Investor notes
The Company’s shares have dipped 6.33% or 15.00p to 222.00p per share 01/10/19 13:07 BST. Peel Hunt analysts reiterated their ‘Buy’ stance on ScS stock, the Group’s p/e ratio is 8.84 and their dividend yield is generous at 7.30%. Elsewhere in retail and on the highstreet, there have been updates from; McColl’s Retail Group PLC (LON: MCLS), Boohoo Group PLC (LON: BOO), Burberry Group plc (LON: BRBY), Associated British Foods plc (LON: ABF), H&M (STO: HM-B) and Sports Direct International Plc (LON: SPD).WPP appoints Sainsbury’s John Rogers
WPP (LON:WPP) said on Tuesday that it will appoint Sainsbury’s (LON:SBRY) John Rogers as Chief Financial Officer.
Shares in WPP were up during trading on Tuesday.
John Rogers is currently the Chief Executive Officer of Sainsbury’s Argos. In this position, he has supervised the digital transformation of the business.
In his role at Sainsbury’s Argos, John Rogers was a contender to take over from Mike Coupe, the CEO of Sainsbury’s.
Moreover, John Rogers was Chief Financial Officer of Sainsbury’s from 2010 to 2016.
Last week Sainsbury’s announced that it had experienced an improved sales momentum across all business areas, whilst also revealing that it will be opening and closing many supermarket, Argos and convenience stores.
WPP said that John Rogers will join its multinational advertising and public relations business in early 2020 and will receive an annual salary of £740,000.
“John is not only an accomplished CFO, but also a leader with extensive experience of business transformation,” Mark Read, CEO of WPP, said in a statement.
“His priority will be to lead a finance function that best fosters investment in creativity, technology and talent in support of WPP’s new strategy for growth,” the CEO continued.
“I am really excited to be joining WPP as it embarks on the next stage of its evolution. As a technology-driven business with creativity at its heart, joining WPP was an opportunity impossible to resist and I look forward to playing my part in helping the business deliver its new strategy,” John Rogers commented on his appointment.
Shares in WPP plc (LON:WPP) were trading at +1.08% as of 13:44 BST Tuesday.
Shares in J Sainsbury plc (LON:SBRY) were also up trading at +1.00% as of 13:45 BST Tuesday.
JD Sports’ Footasylum deal under additional investigation
JD Sports (LON:JD) said on Tuesday that its £90 million deal to acquire Footasylum (LON:FOOT) will undergo an additional investigation.
The leading trainer and sports fashion retailer in Britain agreed to purchase Footasylum earlier this year in a £90 million deal as its smaller rival struggled for survival amid a gloomy trading environment.
The Competition and Markets Authority claimed earlier this month in a Phase 1 decision that the acquisition of Footasylum would “give rise to a realistic prospect of a substantial lessening of competition”.
JD Sports said that it believes there is “clear evidence” that the deal would not lead to a substantial lessening of competition in the sports clothing and footwear retail market.
However, the Competition and Markets Authority confirmed on Tuesday that the deal will now be referred to a Phase 2 investigation.
In response, JD Sports has agreed to co-operate fully with the Competition and Markets Authority in its review to ensure that both retailers will continue to trade in a competitive environment following the deal.
JD Sports highlighted the challenging trading conditions to hit the UK retail market. It emphasised that its rationale behind the deal was “to retain Footasylum’s position as a multichannel retailer, both on the UK high street and online”.
“The CMA has referred their review of this acquisition to Phase 2 on the basis that it could be bad for competition and may have an impact on price,” Peter Cowgill, Executive Chairman of JD Sports Fashion Plc, said in a company statement.
“I strongly disagree with this. This transaction will not result in any price increases or a reduction in product ranges or service quality,” the Executive Chairman continued.
“The focus of all of our Group businesses is to ensure we deliver a best in class, multichannel experience to our consumers by offering a compelling product proposition.”
Shares in JD Sports Fashion plc (LON:JD) were trading at -0.98% as of 12:05 BST Tuesday.
Greggs on a roll in Q3
Greggs said in a Tuesday trading update that it has continued to trade “very strongly” during the third quarter.
For the 13 weeks to 28 September, total sales were up 12.4% and company-managed shop like-for-like sales increased by 7.4%.
The British bakery chain added that its autumn menu is now available in stores. It features new additions to its hot sandwich range, such as Chipotle Chilli Steak and Hot Peri Peri Chicken Baguettes.
Its autumn menu also welcomes the return of its popular Spicy Chicken and Pepperoni Bake, in addition to its Pumpkin Spice Latte.
Greggs added that it is preparing for the potential impact of the UK’s exit from the European Union by stockpiling ingredients and equipment.
Meanwhile, its expectations for the full year remain unchanged.
Earlier in May, the British bakery chain Greggs raised its profit forecasts for the third time this year, driven by the popularity of its vegan sausage roll.
“With over 2,000 Greggs outlets now under its belt, the bakery-turned-food on the go chain, is still on a roll and very much on track for a strong year,” Emma-Lou Montgomery, associate director from Fidelity Personal Investing’s share dealing service, commented on Greggs’ third quarter trading update.
“On its new autumn menu are some seasonal favourites among Greggs customers, like Pumpkin Spice Latte, alongside new offerings such as hot sandwiches and a post-4pm meal deal, as part of the chain’s expansion into all-day dining,” Emma-Lou Montgomery continued.
“Brexit also pops up as an item. But Greggs says it continues to build stores of key ingredients and equipment to ensure its operations aren’t disrupted. This is a company that has its costs under control and its plans in the pipeline, ready to serve up another year of growth.”
The British bakery chain said, however, that it sees food prices going up and sales growth slowed compared to the first half, largely down to the vegan sausage roll being introduced in January. Shares have currently fallen over 5%.
Shares in Greggs plc (LON:GRG) were trading at -6.75% as of 11:18 BST Tuesday.
Shares in Greggs (LON:GRG) are up heavily over the last year.
The British bakery chain said, however, that it sees food prices going up and sales growth slowed compared to the first half, largely down to the vegan sausage roll being introduced in January. Shares have currently fallen over 5%.
Shares in Greggs plc (LON:GRG) were trading at -6.75% as of 11:18 BST Tuesday. Nationwide: September house price growth remains subdued
Nationwide said on Tuesday that house price growth remained subdued in September.
Indeed, Nationwide’s House Price Index revealed that UK annual house prices grew by 0.2% in September. This marks the tenth consecutive month in which annual price growth has been below 1%.
As for the month of September itself, house prices saw a monthly change of -0.2%, after considering “seasonal factors,” Nationwide said.
“Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty,” Robert Gardner, Nationwide’s Chief Economist, commented on the data.
Indeed, as the nation has now entered the month of the extended Halloween Brexit deadline, the only certainty that remains now is additional uncertainty.
Just last week the Supreme Court ruled that Boris Johnson’s prorogation of Parliament was not only unlawful but also ineffective and non-existent.
“However, the slowdown has centred on business investment – household spending has been more resilient, supported by steady gains in employment and real earnings,” Nationwide’s Chief Economist continued.
“The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years. Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook.”
According to the data, London was the weakest performing region in the third quarter, followed closely by the surrounding Outer Metropolitan region, with annual price declines of of 1.7% and 1.5% respectively.
This marks the ninth quarter in a row where prices have dropped in the capital city.
Meanwhile, Northern Ireland remained the strongest performing home nation in the third quarter, but Nationwide’s Chief Economist did note that annual price growth moderated to 3.4%.
Homebuyer demand drops in Q3, study finds
New data revealed on Monday that buyer demand dropped in Q3, though Glasgow remains the most highly demanded homebuyer location in the UK.
Springbok Properties released its latest Property Hotspots Index for Q3, looking at buyer demand levels across 100 spots in the UK and how this differs from Q2.
The data shows that UK homebuyer demand is at 39.5%, dropping by 2.8% since the last quarter, with the uncertainty surrounding the UK’s departure from the European Union continuing to “cloud the market”.
Indeed, the nation is just a day away from entering the month of the Brexit deadline and the only certainty that remains is additional uncertainty.
Meanwhile, Springbok Properties said that Glasgow remains the hottest spot in the UK for property demand in the quarter at 59.5%
Though there has been a wider slowdown across the nation, demand in London has risen slightly from 29.2% to 29.5% in the quarter, the data shows.
“In the current political climate, it would seem that the further you move away from Westminster the more appetite there is amongst UK homebuyers and while demand continues to decline, on the whole, the aspiration for homeownership is alive and well in many areas of the UK,” Founder and CEO of Springbok Properties, Shepherd Ncube, commented on the data.
“Those areas that will feel a direct consequence as a result of our European departure, such as the City of London, prime central London, and Northern Ireland, are certainly the areas feeling the brunt of market uncertainty at present,” the Founder and CEO continued.
“The likelihood is that come the fourth quarter of this year, we will see a further decline in demand levels as a mix of seasonality and a brace for impact cause many to wait until the dust has settled next year before looking to buy.”
