UBS to move operations to Frankfurt post-Brexit
Swiss bank UBS will move operations to Frankfurt post-Brexit.
The lender’s chief executive told Bloomberg TV that the lender had been forced to prepare for a no-deal Brexit.
Sergio Ermotti said it had chosen Frankfurt as the group’s “main hub, it will carry out what is described as a multi-location strategy, doing business from offices in Paris, Milan, and Madrid.”
“The financial system is already operating on the assumption that there is no agreement,” he said, referring to the deal on which Britain will leave the EU.
“Whatever is going to happen from now onwards, it’s not going to make the exercise less expensive.”
Ermotti went onto describe how Brexit had impacted many companies across Europe.
“It’s a complication that undermines the willingness to make investments. In the UK and in general in Europe this has been something that has prevented people taking action and investing for the future.”
There has not been an indication of the number of staff that UBS plans to move from the UK, although senior bankers have said that the number of employees moved from London post-Brexit will be smaller than initially expected.
The UBS chief executive said that despite concerns, he did not think Brexit would lead to another financial crisis.
“I think the system is well prepared. I don’t think the next crisis is going to be a banking crisis. The banking system is very resilient,” he said, before adding that Brexit would trigger the economy to slow down.
“That is clear,” he said.
The International Monetary Fund (IMF) chief, Christine Lagarde, warned on Monday that no conceivable Brexit deal would be as beneficial as staying in the EU.
“Whatever the deal is will not be as good as it is at the moment,” she said.
“Let me be clear, compared with today’s smooth single market, all the likely Brexit scenarios will have costs for the economy and to a lesser extent as well for the EU.”
“The larger the impediments to trade in the new relationship, the costlier it will be. This should be fairly obvious, but it seems that sometimes it is not,” she added.
Shares in the group (SWX: UBSG) are trading at 15,14 (0943GMT).
Aldi reports 12pc growth in sales
Aldi has reported a strong quarter, as the discount supermarket’s sales grew faster than its UK competitors.
Sales in the retailer jumped 12.5 percent, higher than Lidl’s 9.1 percent sales growth, which put the group in second place.
According to Nielsen data, sales in Co-op and Iceland also grew by 7.1 percent and 6.1 percent respectively.
The big four supermarkets also saw a growth in sales but at a lower level. Asda and Morrisons saw sales grow by 3.9 percent and 2.8 percent respectively, whilst Tesco (LON: TSCO) saw sales increase by 2.5 percent.
“While there is still pressure on the consumer wallet, we continued to see shoppers spend freely on indulgences, celebrations and events up until the end of August. The hot summer has been a windfall for most food retailers,” said Nielsen’s UK head of retailer insight, Mike Watkins.
“However, with summer turning to autumn in the last couple of weeks, sales growths have mellowed. Even so, shoppers are maintaining their grocery spend and opting instead to make savings on overall household expenditure, including clothing and homewares.”
“The exceptional summer has given the industry some much-needed momentum and with a recent small uptick in inflation, the improved growth we’ve seen in the first half of the year are likely to continue for the second half, even if the last few weeks have seen a pause for breath,” he added.
Supermarket sales grew at their fastest rate this year, boosted by the World cup and warmer weather over summer.
Market research firm Kantar Worldpanel said that food and drink sales in the 12 weeks to 15 July increased by 3.6 percent compared to the same period a year earlier.
“Football-frenzied customers visited supermarkets an extra 13 million times as they hurried to stock up on World Cup-viewing essentials, with alcohol in particular the stand-out winner,” said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.
Marsh & McLennan buys JLT in $5.6bn deal, shares soar
The insurance firm Jardine Lloyd Thompson has announced plans to take over the US financial services giant Marsh & McLennan.
JLT will buy the group for $5.6 billion (£4.3 billion) in cash as it looks to expand its speciality risk broking and global reinsurance business.
Dan Glaser, Marsh & McLennan’s chief executive, said that the acquisition will “create a compelling value proposition for our clients, our colleagues and our shareholders”.
“The complementary fit between our companies creates a platform to deliver exceptional service to clients and opportunities for our colleagues.”
“On a personal level, I have come to know, and respect, Dominic Burke and his management team from my time both at MMC and as an underwriter. I am confident that with the addition of the talented colleagues of JLT, Marsh & McLennan will be an even stronger and more dynamic company,” he added.
Shares in the UK insurance and reinsurance broker soared by 32 percent after the deal was announced in Tuesday’s early trading.
The deal values JLT at $6.4 billion, allowing shareholders to receive £19.14 per share, which is a premium of almost 34 percent to Monday’s closing price.
Dominic Burke, JLT’s chief executive, said: “I am enormously proud of what JLT has achieved, founded on our people, our culture and our unwavering commitment to our clients. MMC is, and always has been, one of our most respected competitors and I believe that, combined, we will create a group that will truly stand as a beacon for our industry.”
Shares in JLT (LON: JLT) are currently trading up 31.15 percent at 1,878.00 (0850GMT), whilst shares in Marsh & McLennan (NYSE: MMC) closed on Monday at 86.63.
Trump announces $200bn import tariffs on China
Donald Trump has imposed a further $200 billion worth of import tariffs of Chinese goods arriving in the US.
The US President’s new round of tariffs will not only affect businesses but hit thousands of consumer goods and increase costs.
“For months, we have urged China to change these unfair practices, and give fair and reciprocal treatment to American companies,” said Trump in a statement.
“We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But, so far, China has been unwilling to change its practices.”
The tariffs will increase the costs of many consumer items including electronics, food, houseware items and luggage.
The latest round, which Trump has blamed on “unfair policies and practices”, will affect half of all Chinese goods coming into the US.
Investors were expecting Trump’s latest move and therefore the blow to the market was not as big as it could have been.
Chang Wei Liang of Mizuho Bank said: “Given that markets have been bracing for this tariff announcement, we expect a muted rather than dramatic sell-off in Asian equities and currencies today.”
Earlier on Tuesday, Trump tweeted a warning to foreign countries of higher tariffs if they failed to agree on “fair” trade agreements.
“Tariffs have put the US in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be ‘Tariffed!’” he tweeted.
The US President also took to Twitter to describe the benefits the latest round of tariffs would have on the US economy.
“Our Steel Industry is the talk of the World. It has been given new life, and is thriving. Billions of Dollars is being spent on new plants all around the country!” he wrote.
Coca-Cola eyes up the cannabis market
Coca-Cola Co (NYSE:KO) is closely watching the cannabis-infused drink market. This was announced after a media report said that Coca-Cola and Canada’s Aurora Cannabis Inc were corresponding.
Canadian financial channel BNN Bloomberg, reported the possible product collaboration. This may drive new interest in Coca-Cola as it faces a slump in demand because of its not so healthy beverage.
The partnership between the two companies could be one of the first of its kind. It would make Coca-Cola the first of the major non-alcoholic beverage manufactures to delve into the cannabis market.
Coca-Cola is in “serious talks” with Aurora Cannabis to develop a cannabis-infused beverage.
The non-alcoholic beverage would be infused with cannabidiol, or CBD, the non-psychoactive chemical found in marijuana plants. Additionally, the beverage is likely to be more health-focused, reducing inflammation, pain and cramping. The Hemp Business Journal predicts significant growth in the cannabidiol market. In fact, in 2015, th market was valued at US$202 million. By 2020 market value is set to grow to a staggering $2.1 billion. Interestingly, a spokesman from Coca-Cola declined to comment about the Aurora partnership. That said, in an emailed statement to BNN Bloomberg, he said: “along with many others in the beverage industry, we are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world. The space is evolving quickly. No decisions have been made at this time.” Earlier this year, the UK government legalised medicinal cannabis. After being advised by the Advisory Council on the Misuse of Drugs, doctors will be permitted to prescribe medicinal cannabis for its therapeutic benefits within months. However, doctors will only prescribe products provided they meet safety standards. Recent studies have shown that cannabis can be useful for the treatment of chronic pain, spasticity, nausea and vomiting in chemotherapy and drug-resistant epilepsy, just to name a few conditions. Moreover, we reported that UK’s first medicinal cannabis investment vehicle, Sativa, has appointed a new Director and CFO. With the UK’s legalisation of medicinal cannabis, opportunities in the market are opening. Could Coca-Cola be the first to capitalise on this if the non-alcoholic cannabis-infused beverage is marketed for its health benefits?Sirius Minerals agrees potash supply deal with Cibra
Sirius Minerals Plc (LON:SXX) has today penned a take-or-pay potash supply agreement with Brazil’s Cibrafertil Companhia Brasileira de Fertilizantes, or Cibra, for supply and resale of POLY4 in Brazil and certain South American countries.
The deal sees the firm’s contracted peak take-or-pay sales volume to 8.2mln tonnes, with an additional exchange being done for a 30% stake in Cibra, in exchange for 95 million Sirius shares. At the same time as agreeing these deals, the London-listed company are also building a potash project in Yorkshire.
“We are delighted to have signed these supply and investment agreements with a leading player in the South American fertilizer market with a proven track record and ambitious growth plans,” said Chris Fraser, Sirius Minerals chief executive.
Cibra chief executive Santiago Franco, meanwhile, added, “We are excited to be entering into this long-term partnership with Sirius to deliver POLY4 into Brazil and other key markets of South America.”
“POLY4 will change the shape of the fertilizer market in South America and Cibra will be at the heart of driving the growth and adoption of this innovative sustainable product across the region.”
Sirius Minerals shares are currently trading up 1.84p or 6.68% at 29.38p. Analysts from Liberum Capital have reiterated their ‘Buy’ stance on the company’s stock.
New iPhones could soon be out of reach for some
Apple Inc (NASDAQ:AAPL) have announced three new iPhone models this week, the XS, the XS Max and the XR, but have since faced criticism for becoming an increasingly luxury brand.
The new phones are priced at £1000, $1100 and $750 respectively, and while the latter seems like a relatively affordable option in comparison to its counterparts and last year’s $1000 iPhone X, it represents a hop from its $700 lower-priced equivalent, the iPhone 8.
This comes as part of a drive from the company to set itself apart from its competitors. It bears an attitude of borderline arrogance, ‘we are better, we do not compete on the same level as the rest’. While Apple products have never been cheap, this represents a seismic shift from the days of Steve Jobs and the iPod Nano, designed to cater to all tiers of tech consumer. This new approach certainly changes Apple’s centre of gravity in the smartphone market.
While the price of the new phones alone may not be enough to convince a reader – and may come of little surprise – the company’s move to discontinue its SE model should be enough to demonstrate a statement of intent. The SE was Apple’s lowest-price iPhone model, retailing at £250 or $350 in the US. With the removal of this product, Apple’s cheapest phone is now the iPhone 7 at $450, which leaves question marks hanging over how long we’ll have to wait before it won’t be possible to buy an iPhone for under $500.
Some may see little difference in the price increases and old model discontinuation, but Apple’s sales figures do. While the company’s profit per unit has jumped from $600 to $724, its sales figures have plateaued over the last four years.
More revenue than ever is pouring into the company and it has just hit a trillion dollars in value. Surely though, one can’t help but think that one of Apple’s major strengths is tying customers up in its iOS/Cloud/iTunes user-face, but getting new customers involved and tied into your tech only works if you can entice them in the first place.
Critics have noted Apple’s prices have risen faster than market forces such as comparative wages or GDP per capita, and thus they risk excluding lower economic tiers who represent a large proportion of their customer base. Similarly, such concerns echo as bad omens in emerging markets such as China and India, especially with the rise of Chinese smartphone giant Huawei.
What these critics have perhaps failed to realise is the idea of monopolising a section of the market. Apple has plenty of competition in the smartphone market, so perhaps this move is a long-term strategy to monopolise the luxury bracket of the market, while its competition fight for control beneath them.
Paperchase insurer abandons retailer’s suppliers
Paperchase is under renewed pressure after one of its main credit insurers withdrew its cover.
Following a a slump in profits, Euler Hermes has refused to cover new contracts with the retailer’s suppliers.
“We’re in discussion with [Euler Hermes] around why we believe this decision should be reversed. Paperchase has excellent long-term relationships with suppliers and very supportive lenders and owners. Trading so far this year is in line with expectations,” said Paperchase.
The group has been owned by the private equity firm Primary Capital for the past eight years and sells greetings cards, mugs and stationary.
The company was founded in 1968 by Judith Cash and Eddie Pond and currently employs an estimated 2,000 people.
Latest accounts have shown pre-tax profits to have fallen 88 percent to £613,000 in the year to the end of January 2017. Revenues were up by four percent to just over £119 million.
The high street faces a difficult time as retailers struggle amid weak consumer spending which has resulted in business failures, mass store closures and tens of thousands of job losses.
Retailers including Mothercare (LON: MTC), Carpetright (LON: CPR), Byron and Prezzo, have resorted to company voluntary arrangements (CVAs) whilst groups including Toys R Us and Maplin have fallen into administration.
In August, House of Fraser collapsed into administration and was purchased by Sports Direct’s (LON: SPD) Mike Ashley in a £90 million deal.
Chancellor, Philip Hammond, said: “We want to ensure that the high street remains resilient, and we also make sure that taxation is fair between business doing business the traditional way, and those doing business online.”
“We may have to look at temporary tax measures to rebalance the playing field until we can get international agreements sorted out.”
Karhoo is on the road to recovery
Karhoo is back after it collapsed into administration two years ago, the Times reports. Originally, the British business was an “Uber wannabe”, rivalling London’s most popular app-based taxi service.
In late 2016, Karhoo faced administration. The first version was launched in May 2016 and expanded into nine other British cities along with New York, Paris and Singapore. However, flaws in its promotional campaign and a faulty payment system damaged the business. Not to mention the extravagant spending of its founder.
But, two French bankers have reshaped Karhoo. Boris Pilichowski and Nicolas Andine gained control after the business was appointed administrators.
Today, the only traces of the original Karhoo that remains is its name. RCI Banque and Renault now back the business. Additionally, it operates from WeWork offices in Paddington.
Moreover, Karhoo now targets train operators, airlines and hotels. It allows businesses to provide customers with taxis and private hire vehicles via Karhoo technology.
Karhoo now operated in 125 countries with 1.5 million vehicles and 100 staff.
Amazon under fire amid allegations of staff selling customer data
Online commerce giant Amazon (NASDAQ:AMZN) is under the cosh following claims that employees accepted bribes in exchange for confidential customer information.
According to findings from a report published by the WSJ, independent merchants who sell through the website were paying brokers for Amazon employees up to £1500 for data such as internal sales metrics, reviewers’ email addresses, and the ability to delete negative reviews, as well as the ability to restore banned accounts.
The alleged phenomena has been particularly “pronounced in China”, with the bulk of sales being proliferated in Shenzen.
The company have said they are carrying out a “thorough investigation”, which began in May when the practice was first brought to light.
In a statement, Amazon commented on their position toward relevant third parties, “We have zero tolerance for abuse of our systems and if we find bad actors who have engaged in this behaviour, we will take swift action against them, including terminating their selling accounts, deleting reviews, withholding funds, and taking legal action”.
Regarding its staff, the company have said, “We hold our employees to a high ethical standard and anyone in violation of our Code faces discipline, including termination and potential legal and criminal penalties”
The company hope to stamp out internal malpractice as friction persists with the UK government over tax avoidance. Amazon shares are currently trading at $1.970,19, down $19,68 or 0.99% since trading began.