China report first trade deficit in three years
China posted its first monthly trade deficit in three years on Wednesday, fuelling concerns of a slowdown in the world’s second largest economy.
February’s imports up 38.1 percent on a year earlier, pushed higher by increasing commodity prices and domestic demand. However, exports unexpectedly fell 1.3 percent, leading to a surprise trade deficit of $9.2 billion for the month.
China last reported a trade deficit in February 2014, with the latest figures coming below the monthly trade surplus of $25.8 billion expected by most analysts.
However, spectators have said the figures are likely to be a ‘blip’ caused by a longer holiday season in both January and February, which saw many businesses decrease activity.
Julian Evans-Pritchard at Capital Economics, commented:”We suspect that this largely reflects the boost to import values from the recent jump in commodity price inflation, but it also suggests that domestic demand remains resilient”.
Jawbone customer service ‘offline’, sparking complaints
Fitness tracker Jawbone has sparked complaints from customers, after it appeared to have ‘abandoned’ its customer service as it deals with a “process of transition”.
Jawbone marketed itself as a rival to fitness giant Fitbit, selling wearable technology designed to measure users health and fitness. However, its customer care has been offline for several weeks, with both Twitter and Facebook staying notably silent.
Customer service lines are also offline, with a pre-recorded message saying that customer service was not currently available in the UK or EU.
However, a spokesman told the BBC customer care is “days from being back online”, adding that the firm was “in a process of transition”.
Jawbone’s problems have been obvious for a while, since the launch of its UP3 wearable was delayed by six months and had numerous build quality issues.
In February, the brand told TechCrunch that it intended to move from the fitness tracking market to healthcare technology. However, its wristbands are still being sold on Amazon.
Ibstock shares boosted by strong performance in the housing sector
Shares in brick manufacturer Ibstock (LON:IBST) rose Tuesday, after a strong performance from the housing sector boosted both revenue and profit.
Revenue gained 5 percent to hit £435 million, alongside a 8 percent rise in pre-tax profit to £110.9 million.
Adjusted earning before interest, tax, depreciation and amortisation also increased 4 percent to £112 million, with adjusted earnings per share was 18.1p.
The company saw £44 million of capital expenditure on major projects, while it continued strong cash conversion of 88 percent. Performance was boosted largely by the group’s clay business, which saw a stronger second half driven by good activity levels from the new build housing sector.
Wayne Sheppard, Ibstock’s Chief Executive Officer, called the performance “robust”, adding: “We have made an encouraging start to the new financial year, against softer comparatives from 2016 when our UK Clay business was affected by distributor destocking.”
Despite “uncertainty arising from events such as the EU referendum in the UK and the US Presidential election”, Sheppard said:
“With continued strength in the new home developer market, normalised demand from the merchant sector in the UK, and a positive economic backdrop in the US, our businesses have traded ahead of the prior year in the early weeks of 2017.”
Looking ahead, he said “While we remain mindful of the uncertainties surrounding Brexit we maintain our expectations for another year of progress.”
Ibstock declared a final dividend of 5.3p per share, up from 4.4p, making the full year dividend 7.7p.
Ibstock’s shares are currently trading up 2.88 percent at 208.96 (1112GMT).
“Crazy” discount rate changes to significantly hit young drivers
The government’s “crazy” change to the way insurance premiums are calculated may have a disproportionate effect on young drivers, making car insurance too expensive for those under 25.
Last week saw the government change the ‘discount’ rate on insurance premiums, lowering it from 2.5 percent to -0.75 percent. This figure is factored into compensation payments to account for the amount victims could earn if it were to be invested.
This decision is likely to dramatically increase the cost of insurance premiums across the board, but particularly for young drivers. Accountancy firm PwC warned that the average cost of a comprehensive policy is likely to rise by between £50 and £75 a year; but those under 25, for whom insurance is already significantly more expensive, may see premiums rise by up to £1000.
The Association of British Insurers (ABI) described last week’s change to the discount rate as a “crazy decision”. Matt Cullen from the ABI warned on Monday that the price increases are likely to have serious consequences:
“Lots of young drivers rely on their cars – whether to get to school or university or college or work – and it is very important that we have an environment which does not encourage practices that are unhelpful or in some cases illegal, such as fronting, where the parent buys the insurance and has the young person as the second driver when it is actually just the young driver driving. Or driving uninsured, in the worst cases”, Cullen said.
Harworth Group shares sink 5pc despite profit hike in 2016
Rotherham-based property specialist Harworth Group (LON:HWG) saw shares fall nearly 5 percent on Monday, despite reporting an increase in both profit and net asset value.
Harworth reported an operating profit of £45.8 million in the year to 31st December, compared to £37.9 million at the same time last year. These figures included value gain £43.7 million and profit from operations of £2.2 million, up from £1.5 million last year.
The regeneration and investment specialist also saw net asset value increase by 12.5 percent to £334.9 million, or 115p per share.
The group completed six acquisitions over the course of the year, totalling £31.6 million. It also made £58.9 million of disposals to capture value increases on mature residential and commercial sites and to increase focus on sites with higher value add potential.
Harworth’s Chief Executive, Owen Michaelson, said:
“These are a strong set of results, reflecting our continued focus on maximising the value of our strategic land bank whilst simultaneously growing our income base through new lettings and acquisitions. We are particularly pleased by the progress made and value uplift we have seen from our flagship North West site, Logistics North in Bolton, and are pleased to have improved the quality of our income base over the year.
“We have a proven strategy to create value and the market fundamentals in our regions remain strong, giving us confidence in the future.”
However investors remained unimpressed by the results, with shares in Harworth Group falling 4.80 percent by 1140GMT.
06/03/2017
Travis Perkins shares drop nearly 10 pc on 70 pc profit slump
Shares in materials supplier Travis Perkins slumped nearly 10 percent on Thursday, after a business overhaul caused profits to drop dramatically.
Pre-tax profit fell 67 percent to £73 million over the full year to December 31st, with profit after taxation down 91.7 percent.
Whilst revenue rose 4.6 percent to £6,217, basic earnings per share also sunk heavily, down 92.5 percent to 5.1p from 68.8p the year previously.
The results were affected by a weaker pound putting pressure on imports, as well as a “difficult year” for the company’s Plumbing and Heating division.
John Carter, the group’s CEO, said that looking forward, “the macro-economic outlook of the UK is mixed”.
“The sharp decline in the value of Sterling since June 2016 has created cost pressures on imported goods and materials, and the expectations for secondary housing market transactions and growth in the RMI market have weakened”, he added.
Travis Perkins is the UK’s biggest supplier of building materials, with customers across several sectors including housing, plumbing and government. Shares in the company are currently down 8.69 percent at 1,429.00 (1129GMT).
Challenger bank Monzo hits crowdfunding target in just four hours
Challenger bank Monzo has beaten its crowdfunding target in just four hours, after launching pre-registration for a campaign on Crowdcube.
Its £2.5 million crowdfunding campaign is the second to be run on Crowdcube, after its first one crashed the crowdfunding site and raised £1 million in just one minute and 36 seconds.
Monzo, a mobile-only bank previously operating under the name Mondo, will now randomly select pre-registered people in a ballot to complete the investment. Monzo was granted a restricted banking license by the FCA in August of last year, after 18 months of operation.
Last week, the bank agreed a £19.5 million investment round with Thrive Capital, Passion Capital and Orange Digital Ventures ahead of its £2.5 million crowdfunding campaign.
CEO and cofounder Tom Blomfield told Business Insider:
“The response to our crowdfunding campaign has been mind-blowing. Our aim at Monzo is to delight our customers so it’s amazing to see how much our community believes in what we’re building. It also shows the enormous appetite for change amongst consumers – the public want a new kind of bank.”
Australia moves into 25th year without recession, after 1.1 pc growth figure
Australia’s economy grew at a pace of 1.1 percent in the third quarter, pushing the country into its 25th year without recession.
The economy contracted slightly in the third quarter, with the 1.1 percent figure a welcome increase on the surprise negative result in the September quarter. The overall rate of growth for the year now stands at 2.4 percent.
Strong exports and higher than expected consumer spending drove the positive figure, alongside a pick up in mining and agriculture in the three months to December.
Australia’s treasurer, Scott Morrison, warned that “weak wages growth” was weighing on the economy, but added that the result was a success:
“[The result] confirms the successful change that is taking place in our economy as we move from the largest resources investment boom in our history to broader-based growth,” he said.
Australia’s resource-rich economy has now reached 25 years without sinking into recession, despite reduced demand from China dampening growth over the last couple of quarters.
Economic growth slows in India, but remains above expectations
Indian economic growth surpassed expectations for the fourth quarter of 2016, despite the confusion caused by the surprise withdrawal of high-denomination banknotes from circulation.
The economy in India grew at 7 percent in the December quarter, slower than the 7.4 percent rate achieved in the previous quarter but well above analysts’ expectations of 6.4 percent.
India’s Central Statistics Office (CSO) confirmed its projection that the economy will grow at a rate of 7.1 percent in 2016-17, slowing from 7.6 percent the previous financial year.
The figure came as a surprise, after analysts expected a larger fallout from the government’s withdrawal all old 500-rupee and 1,000-rupee banknotes last November. The noted made up 86 percent of the currency in circulation by value, and were withdrawn as part of Prime Minister Modi’s fight against illegal money.
Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance, told the BBC:
“I am totally surprised and stunned to see this number… I believe that, with a lag, we will see an impact on GDP numbers.”
“Perhaps this data is not capturing the impact of demonetisation,” he added.
FCA regulation has had little effect on the sector, say financial professionals
Financial regulation has done little or nothing to improve stability in the financial services market, one of the largest financial companies warned on Tuesday.
35 percent of financial services professionals polled believe that recent regulation has had little or no impact on financial stability, according to the latest Outlook report from Duff and Phelps.
17 percent believe that regulation has actually made the financial services world less stable. Nearly a decade on from the 2008 financial crisis, just 10 percent of senior executives surveyed say they believe changes to regulation have fully addressed the risk of a future crash.
Julian Korek, Global Head of Compliance and Regulatory Consulting at Duff & Phelps, commented on the findings:
“More needs to be done to build stability in financial services and ensure the system is resilient in future, for both banks and the alternative investment industry.
“The major regulatory bodies have been very clear about future areas of focus and concern, but the fact that so many still think there is potential for another crash is worrying – even without Trump or Brexit potentially taking the market down a quite different regulatory path.”
Looking towards Brexit, over half of those in the industry involved in the survey believed the UK’s break with European legislation will have an impact on their compliance procedures. 35 percent believe that Brexit will have a short term impact on compliance arrangements, whilst a quarter expect the impact to be felt in over 18 months.
However, Korek concluded:
“Regulators have gone some way to help rebuild trust in financial services. Firms therefore have an important role when it comes to maintaining investor confidence in the sector and ensuring transparency is evident in all their operations and governance going forwards.”