The FTSE 100 was higher on Wednesday despite major escalations in the Middle East overnight as commodities provided a safe haven for investors.

Iran launched a barrage of missiles at Israel while Israel moved more troops into Lebanon overnight sparking concerns of all-out war in the region.

However, the dynamics of the FTSE 100 index and its leaning towards safe havens meant London’s leading found support as investors flocked to commodities companies.

“As Iran’s cruise missile attack on Israel and fresh strikes on Hezbollah in Lebanon have unnerved investors,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“The uncertainty has made safe-haven assets like gold more popular, with demand for the precious metal ticking up close to record levels, as violence spills further across the Middle East, briefly climbing above $2,670 an ounce. Already sought after, amid concerns that inflationary pressures would persist, fresh geopolitical fracture has increased demand for gold.  The dollar has steadied after gaining ground and US Treasuries proved more popular, indicated by falling yields, as investors have sought out trusted shelters amid the widening conflict.

Oil prices are climbing, with Brent Crude approaching $75 a barrel, as supply concerns swirl again, sparked by heightened aggression. These worries are being mitigated by expectations that Saudi Arabia will turn on the taps more fully, and lower demand from China, but upwards pressure is likely to continue while uncertainty reigns about just how far conflict will spread.”

Rising oil prices helped lift oil majors BP and Shell on Wednesday with gains of 2.1% and 2.5% respectively.

Prudential was the top riser as optimism around China was untouched by developments in the Middle East. China has ramped up its efforts to stimulate the economy, paying particular attention to the financial sector. Prudential shares were 3% higher at the time of writing.

JD Sports was the top faller amid ongoing worries about Nike. Despite JD reaffirming guidance for the year, investors were more concerned with Nike’s ongoing uncertainty given the fact around half of JD’s sales around from Nike products.

“JD Sports has a multi-brand strategy and is continuing to roll out new stores and make acquisitions globally, yet Nike’s warning that the festive period may be littered with discounts could well have had some contagion effect,” said Adam Vettese, market analyst at investment platform eToro.

“Investors who have been in JD Sports for a while will be haunted by last year’s disappointing Christmas figures which saw shares plummet in January and will be looking to avoid a repeat performance this year.”

GenIP started life as a London-listed company on Wednesday after the Generative AI analytics specialist raised £1.75m in an oversubscribed fundraise.

Although many retail brokers had not yet to listed GenIP of their platforms in the early hours of Wednesday trade, most trades placed in the stock on Wednesday were at a premium to the IPO price of 39p.

In a statement released on Wednesday, GenIP outlined a strategy to grow revenues through expanding its sales and marketing activities. Investors would have been encouraged to learn its new Generative AI services have already been a big hit with clients who have placed substantial orders for the company’s Generative AI analytics services.

“I’m looking forward to demonstrating GenIP’s revenue-generating capabilities as we assist our clients in commercialising leading technological innovations,” said Melissa Cruz, CEO of GenIP.

GenIP will allocate the proceeds of the IPO to ramp up sales and marketing efforts, which have already been proven to support the company’s long plans. The company works with some of the world’s leading research institutions to commercialise technological innovations. Each year, thousands of startups are launched based on university-generated technology. GenIP’s services will feed directly into this process and help bring exciting new discoveries to market.

The Generative AI company is led by a world-class board, including Lord David Willetts, President of the Resolution Foundation and Chair of the UK Space Agency, and Dr David Gann, Chair of UK Industrial Fusion Solutions and non-executive director of VenCap International plc.

“GenIP has laid the foundations for robust growth, and I’m delighted to have the opportunity to lead the board as we deliver Generative AI analytics services to some of the world’s leading research institutions,” said Lord David Willetts, GenIP’s Non-Executive Chairman.

Despite the share price action after last week’s Interim Results announcement, I have not lost my confidence in the progress of the £71m valued ASA International (LON:ASAI) microfinance group. 

On Monday 9^th September, they were trading at 87p, on the basis of being on 6 times current year current year earnings and just 4.5 times prospective. 

Within days of that date the group’s shares fell off the cliff, easing back to 56p just before the Interim Results were published. 

For the life of me I could see no justifiable reason for such a fall away, apart from ‘more sellers than buyers’ – but then the market, as we all know by now, can be a ‘wicked mistress’ not to be played. 

The Business 

The company is one of the world’s largest international microfinance institutions, with a strong commitment to financial inclusion and socio-economic progress.  

It provides small, socially responsible loans to low-income, financially underserved entrepreneurs, predominantly women, across South Asia, Southeast Asia, West and East Africa.   

ASA International provides small socially responsible loans, bank accounts, savings and other financial services to start or grow businesses.   

The business, which has over 2,016 branches, across 13 countries, handling its 2.3m clients, operates in Pakistan, India, Sri Lanka, The Philippines, Myanmar, Ghana, Nigeria, Sierra Leone, Tanzania, Kenya, Uganda, Rwanda and Zambia.  

The Interim Results  

Last Friday morning, 27^th September, the company declared its Interim Results for the six months to end-June, showing a sustained improvement in its business and financial performance. 

Its half-way pre-tax profits were up 267% at $28.3m ($13.8m), on the back of a 7% increase in the number of clients to 2.4m (2.2m). 

The business delivered strong operational performance in H1 2024 as its loan book grew following increased demand from clients. 

In the period its assets surpassed the $500m mark, the highest level since 2022. 

The boosted profitability was achieved despite the negative impact of $3.5m from hyperinflation accounting for Ghana and Sierra Leone.  

Pakistan, the Philippines, Ghana, Tanzania, and Kenya made a key contribution to the group’s financial performance due to increased loan demand and high loan portfolio quality in all these markets. 

CEO Karin Kersten stated that: 

“H1 2024 saw both operational growth as well as importantly increased profitability. The overall operating environment across most of our markets improved during the first half of the year.  

Encouragingly, demand remains high for our products from clients as economic conditions, while still challenging, have eased when compared to the same period in 2023.  

Clients and staff continue to demonstrate their resilience in these economic circumstances.  

In particular, we have demonstrated improved performance in our major operating countries – Pakistan, the Philippines, Ghana, Tanzania and Kenya – almost all of which recorded excellent portfolio quality, client and OLP growth, and profitability.  

The improved performance in our major operating markets was slightly offset by FX movements in certain markets.  

Currencies in most of our markets have been relatively stable against the USD in H1 2024. 

Away from the clear operational impacts, the effects of inflation, including hyperinflation accounting, other currency movements, are expected to continue to dampen financial performance in USD terms in 2024.  

However, given the improved operating developments we have already seen in 2024, we are confident of being able to continue our strong performance for the remainder of 2024.” 

Analyst View 

Stephen Barrett at Cavendish Capital Markets has upped his Price Objective to 148p from 136p previously, reflecting his higher forecasts. 

His current year estimate to end-December, is for revenues of $168.2m ($148.2m) and $53.4m ($38.0m) in adjusted pre-tax profits, generating 23.2c (15.0c) per share with the UK equivalent of 17.9p (12.1p), and paying a 4.6p dividend per share (nil). 

For 2025 Barrett goes for $183.4m revenues, $56.6m profits, 27.5c earnings (UK 21.2p) and paying a 5.7p per share dividend. 

Even better figures are being shown in his estimates for 2026, where he is setting his cap at $201.3m revenues, $64.2m profits and 34.4c per share in earnings (UK – 26.6p), with a 7.7p dividend. 

In My View 

On the basis of the Cavendish Capital Markets estimates, the current 71p share price offers massive upside. 

In the last year it has been up to 110p and as low as 23p, clearly showing that it is a tight market and subject to big swings in share price. 

However, I believe that as the message starts to get out into the marketplace, the company’s value will be appreciated, with its shares reflecting such recognition. 

JD Sports shares dropped on Wednesday despite releasing upbeat interim results as investors chose to fixate on the ongoing issues with Nike whose products make up a large proportion of JD’s sales.

JD Sports reported robust H1 2024 results, with revenue up 5.2% to £5.0bn and profit before tax and adjusting items rising 2.0% to £405.6m.

Investors will be pleased to see the sportswear giant maintains its full-year profit guidance of £955-1,035m, despite currency headwinds.

Looking to the future, JD’s expansion strategy remains aggressive, with 83 new JD stores opened in H1 and plans for around 200 new stores by year-end.

The company also completed the acquisition of Hibbett, significantly boosting its presence in North America, which now represents about 40% of pro-forma annualised group revenue.

“Following on from Nike’s disappointing numbers yesterday, JD Sports shares are also down this morning despite posting a profit ahead of estimates and reiterated guidance,” said Adam Vettese, market analyst at investment platform eToro.

“JD Sports has a multi-brand strategy and is continuing to roll out new stores and make acquisitions globally, yet Nike’s warning that the festive period may be littered with discounts could well have had some contagion effect this morning. Investors who have been in JD Sports for a while will be haunted by last year’s disappointing Christmas figures which saw shares plummet in January and will be looking to avoid a repeat performance this year.

“That said, conditions for the retailer should be better than 12 months ago with inflation easing up and potentially another rate cut in between now and the end of the year. Shares have steadily climbed this ear paring those January losses but are still some 20% from the 12 month high.”

The FTSE 100 produced respectable gains on Tuesday as investors geared up for Friday’s Non-Farm Payrolls and the next major instalment of economic news with the power to move the dial for equities.

London’s leading index was 0.4% higher at the time of writing.

“The FTSE 100 ticked higher on Tuesday morning with oil prices remaining steady despite Israel launching a ground offensive against Hezbollah in Lebanon,” said AJ Bell investment director Russ Mould.

“Gold prices ticked higher, within sight of record highs amid the Middle East turmoil, helping to lift precious metals miners on the UK stock market.

“The top riser was advertising group WPP on news it has secured a favourable outcome from major client Unilever’s latest media review, keeping some duties and adding new ones. Losing Unilever as a client would have been a major blow, so it was no surprise to see investors expressing some relief.”

Unilever is one of the world’s biggest advertising spenders and news WPP would keep the contract sent shares 3% higher.

European stocks were also helped higher by further good news from the US and the S&P 500 hitting another record high. A strong session for US stocks can still have a positive impact on sentiment in Europe despite a breakdown in correlations after US indices left European counterparts in the dust during the AI rally over the past two years.

Investor focus will remain on the US later this week as markets receive the September Non-Farm Payrolls report. The report has sent waves through markets in recent months, and any big deviations from the consensus number promises choppiness in stocks as traders position for the next round of interest rate decisions.

We are also heading into the final weeks of the US election.

GenIP is set to list on London’s AIM on 2nd October, providing UK investors with an opportunity to gain exposure to the rapidly growing Generative AI phenomenon.

We outline five reasons why investors interested in technology and Generative AI should monitor the company closely as trade gets underway on the first day of dealings.

1. GenIP’s encouraging order flow and market traction

GenIP has already won new orders from research institutions keen to secure the company’s services. The launch of GenIP’s new Generative AI services in September has already generated over 40 orders for AI analytical assessments and three executive search assignments. GenIP is far from a concept and has hit the ground running.

As we explore below, GenIP operates in a sector rich with research organisations striving to commercialise the products of their innovation centres. It appears that, at least in these early stages, many institutions see GenIP’s services as a viable tool for assisting them in this process.

2. Strong management team

GenIP is helmed by a world-class leadership team. The board includes Lord David Willetts, President of the Resolution Foundation and Chair of the UK Space Agency, and Dr David Gann, Chair of UK Industrial Fusion Solutions and non-executive director of VenCap International plc.

CEO Melissa Cruz has extensive experience providing solutions to exactly the global research institutions GenIP are targeting their AI-enhanced analytics services at.

Technology specialist Selwyn Lloyd supports the board and CEO and has been instrumental in developing the Generative AI LLM at the heart of GenIP’s offering.

I’m short; GenIP looks to have the ideal mix of experienced oversight, technological capabilities and industry connections to secure success.

3. Substantial market opportunity 

GenIP is focusing on the opportunity in the Generative AI analytics market, which is set to grow exponentially in the coming years. A study has projected Generative AI in analytics will grow at a CAGR of 27.41% between 2024 and 2032 taking the market to a potential size of over $10bn.

One broader Generative AI market forecast predicts the industry could balloon to $1.3 trillion by 2032.

4. First-class client base 

GenIP has plans to forge relationships in sectors rich in innovation. Universities and research institutions are hotbeds for technological discoveries. GenIP’s opportunity resides in helping to fill the gap between generating innovations and generating revenue from them. Research institutions’ desire to commercialise innovations presents a market of potentially thousands of clients for GenIP’s analytical services. 

From looking at the websites of GenIP’s respective websites and the details released to the market so far, GenIP is already working with several institutions, including Brazil’s National Nuclear Energy Commission CNEN, Chile’s Fundación Copec UC, and the University of Huddersfield.

Non-Exec Director David Gann OBE’s existing positions on the board of a leading fund managers will support building a footprint in that sector.

5. GenIP’s attractive IPO structure 

GenIP is the latest IPO from the Tekcapital technology incubator, and it has a track record of successful IPOs. The most recent, MircoSalt, saw shares triple within six months before easing back. Although GenIP and MicroSalt operate in entirely different industries, the structure of the IPOs is very similar.

Tekcapital will retain a large proportion of outstanding shares after IPO and is ’locked in’. Other major shareholders are also locked in for a 12-month period. This prevents them from selling any shares for 12 months, creating a favourable environment for GenIP, avoiding the selling pressure some other companies face at IPO from existing shareholders. This dynamic helped SALT shares higher and is likely to support GenIP as trading begins in London.