September economic growth and consumer confidence up post-Brexit

Miranda Wadham
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September economic growth and consumer confidence up post-Brexit
Further positive data on both economic growth and consumer confidence was released on Friday, added to the plethora of figures showing Brexit has had a weaker than expected impact on the economy. The UK economy grew 0.7 percent in the second quarter, according to the Office for National Statistics, an upwards revision from its previous estimate of 0.6 percent. ONS statistician Darren Morgan commented: “Together this fresh data tends to support the view that there has been no sign of an immediate shock to the economy, although the full picture will continue to emerge.”

Consumer confidence up

British consumer confidence also rose in September, after a plummet in July on the back of the European Referendum result. Market research firm GfK’s gauge of consumer confidence saw its sharpest drop in over 26 years in July, falling to -7. However, data from September shows it has now risen to -1, a steep climb in just two months. These figures are the latest in a wealth of data suggesting that, so far, the UK has escaped a negative impact from Brexit. In July the service sector grew by 0.4 percent, which was stronger than economists had been expecting and in August unemployment sank unexpectedly. 
30/09/2016

Capita issue profit warning

Nicole Jeary
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1
Capita issue profit warning
Outsourcing company Capita Group issued a profit warning this morning, causing stocks to fall 27 percent. Capita told investors that full-year pre-tax profit would range between £535 million to £555 million for 2016, down from the £614 million previously forecast. The FTSE 100 company supply government agencies with contract staff, including both the NHS and The Army. Capita also operate the London Congestion charge system. Capita are currently in the midst of an on-going dispute with The Co-op Bank group, after agreeing to take-over The Co-op’s mortgage staff. This is part of a 10-year negotiated deal with The Co-Op’s mortgage administration business, Western Mortgage Services. The move was instigated in an effort to help The Co-Op to comply with Section 166 of the Financial Services and Markets Act. The Act allows financial regulators to monitor company activities, as well as IT and infrastructure. Capita’s Chief Executive, Andy Parker, said: “We’ve seen a significant downturn in our expectations that we’re calling out today,”. He notably highlighted the “high degree of risk” of litigation with Co-op Bank following contract delays over its role in assisting to administer mortgages. “This is a specific issue around this client…We were the answer to Section 166 but at the moment we’re not able to proceed because they don’t want us to.” Disappointing profit numbers have also been attributed to the group’s failure to deliver a new IT system, in accordance within an allocated deadline, for Transport for London (TFL). Failure to promptly deliver the service resulted in the racking up of around £20-25 million in penalties. Capita secured the £145 million five-year deal in 2014. The deal puts the firm in charge of London congestion charge centres, as well as various customer services offices. Nevertheless, Capita has negotiated a total of £949m of contracts this year, which have yet to come into economic fruition. This includes a recent deal for the group to provide customer support to mobile network Three.

OPEC deal causes markets to surge

Nicole Jeary
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0
OPEC deal causes markets to surge
The first OPEC cut in oil production since 2008 sent markets surging on Thursday, lifting the price of oil between 6 and 7 percent. The landmark agreement is the first of its kind in eight years, with the Organisation of the Petroleum Exporting Countries saying they would reduce output to a range of 32.5 million-33.0 million per day, a decrease of around 0.7-2.2%. Brent crude was up at $2.72 (5.9%), at $48.69 a barrel, which marks a more than two-week high of $48.96. Additionally, US West Texas Intermediate (WTI) crude jumped to 5.3%, to settle at $47.05, after a peak $47.45, its highest since 8th September. OPEC is a 14-nation cartel that supplies most of the world’s crude oil supplies. This is the first time that the group have signalled a move in support of oil since the downturn in crude oil prices. Similarly, the deal has also stimulated a bounce for certain world currencies. The dollar surged 1% against the yen amidst the news, its strongest rise since September 21st. The Australian dollar was also at a three year high of $0.7711. The deal also led to a lift for various US energy company stocks. Shares in Exxon mobil reached 4.4pc and Chevron rose to around 32.pc. The OPEC deal marks a significant development in relations between Iran and Saudi Arabia. Up until recently Iran has been subject to sanctions preventing the sale of their oil; since re-entering the market they have been heavily against agreeing to an output curb. However, Iran’s oil minister praised the output agreement last night as an “exceptional decision”. He remarked that “after two-and-a-half years, OPEC reached consensus to manage the market.” The exact specifics of the deal remain to be seen, leading to speculation over how much each country will be required to cut. The next formal OPEC meeting is scheduled for November, where the details will be finalised. Decisions will then be made over whether the deal will be extended to non-OPEC nations, such as Russia. 29/09/2016

Apple to relocate to Battersea Power Station

Nicole Jeary
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0
Apple to relocate to Battersea Power Station
The Californian born tech giant Apple is to move its London HQ to Battersea Power Station by 2021. Apple plans to move 1,400 staff into the power station, occupying 500,000 sq ft. The move signals a renewed commitment to operations in London and expanding its UK presence. Currently Apple have seven other offices across London, the largest of which is in Hanover Street, Mayfair.
A river view of Battersea Power Station, South-West London
Apple’s HQ’s new location at Battersea Power Station, South-West London.
In a statement to The Evening Standard Apple said of the move, “This is a great opportunity to have our entire team working and collaborating in one location while supporting the renovation of a neighbourhood rich with history.” Battersea Power Station stopped producing energy in 1985 and had been since left abandoned. Previous re-generation proposals include transforming the space into a theme-park or, alternatively, a new stadium for Chelsea FC. Renovations of the Grade II Listed Building are currently underway. Aside from Apple, the space is also to include various other office and retail spaces, as well as a Northern line extension and a new power station terminal, which is expected to be completed by 2020. The chief executive of Battersea Power Station Development Company, Rob Tincknell, said: “It is a testament to not only the fantastic building but the wider regeneration of the 42-acre site, which offers a carefully curated mix of homes, businesses and leisure amid extraordinary open spaces and new transport links.” The announcement has been received warmly by UK politicians who have welcomed the development. London’s mayor Sadiq Khan said Apple’s decision was “a further sign that London is open to the biggest brands in the world”. Chancellor Phillip Hammond reiterated Sadiq Khan’s sentiment, labelling the move “another vote of confidence in the UK economy”. Apple continues to dominate the global technology market, having opened a total of 453 retail stores in 16 countries. The recent launch of the iPhone 7 has proved a resounding success, with sale numbers already surpassing initial market expectations.

RBS face a further £846 million fine

Nicole Jeary
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0
RBS face a further £846 million fine
RBS bank has been delivered a £846m ($1.1bn) fine, after investigations into its involvement in causing the 2008 financial crash. The fine is to be one of three scheduled, after extensive investigations conducted by the National Credit Union Administration (NCUA) board. This most recent fine is however, included within the stipulated £3.8bn that the bank had already allocated to address impending litigation. More penalties are nonetheless to be expected, as negotiations with the NCUA are set to continue into the new year. Speaking about the settlement with the NCUA, RBS emphasised that it may be necessary to undertake extra provisions. The Bank stated that, in response to “investigations by the civil and criminal divisions of the US Department of Justice and various other members of the RMBS working group of the financial fraud enforcement task force… RMBS litigation and investigations may require additional provisions in future periods that in aggregate could be materially in excess of the (current) provisions,”. RBS has been thus penalised for its involvement in mis-selling mortgage-backed securities in the lead up to 2008. RBS sold the securities to two credit unions, which collapsed following the US housing market crash. However, the fine does not include an admission of fault for these activities. This is after an initial worrisome plunge in Deutsche Bank shares, following market anxieties about the scale of the fine to be issued by the Department of Justice. The DOJ ultimately issued a $14bn penalty to Deutsche Bank, for its similar activity involving mortgage-backed securities. However, today, Deutsche bank stock rebounded by just over 3%. Nevertheless, RBS have felt the effects of Deutsche Bank’s plunge, closing at around 175p. This is significantly below the average price paid by taxpayers of 502p. Taxpayers continue to own a 73% stake in the Scottish Bank, following extensive bailout measures undertaken by the Government following the crash.  

APS Financial launch bond offering with 7% interest rate

Miranda Wadham
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APS Financial launch bond offering with 7% interest rate

Financial service provider APS launched a £5 million bond offering today, enabling investors to earn 7 percent fixed interest on a four-year investment.

The APS bond is suitable for investments of between £1,000 and £250,000, with interest paid twice yearly. The bonds will mature after four years, and will support the launch of new products and services for SMEs, and enhance APS financial’s digital assets and underlying technology to continue its aspiration to provide a best in class customer experience for banking services.

APS is a data-driven digital banking services pioneer, developing a full suite of digital banking products over the past ten years. The group’s aim is to provide better banking services and credit to small businesses and individuals, and became the first non-bank to leverage the over the counter Banking Services from the UK Post Office.

APS’s bank accounts take around eight minutes to open, allowing access to banking for SMEs far quicker than traditional high street banks. APS boasts 70,000 SMEs who choose to use its services, with 900,000 personal customers.

Rich Wagner, CEO, said that offering a bond was a “deliberate decision”, allowing them to “fund the next stages of our growth in a way that allowed our loyal customers and the general public to participate in our success.”

“The funds will enable us to enhance our suite of services loved by the thousands of small businesses and individuals in search of faster and smarter solutions. Our growth, track record and high levels of customer satisfaction have proven that you don’t need to be a bank to provide a trusted banking service”, he continued.

APS as a group have seen significant growth over the last four years, with a 29 percent increase in revenue and 69 percent hike in EBITDA CAGR. In the 12 months to March 31st 2016, APS generated revenues of £25.3 million and EBITDA of £4.1 million.

27/09/2016

Clinton debate win sparks peso surge

Miranda Wadham
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1
Clinton debate win sparks peso surge
Asian shares broadly closed up on Tuesday, as polls showed Hillary Clinton performed best in the first US presidential debate. Democrat Hillary Clinton represents continuity for the markets, with investors largely reacting positively to her performance on TV last night. The presidential race has been neck and neck so fair, with the latest Reuters/Ipsos polling showing Clinton pulling into the lead by 4 percentage points. Sean Callow, a senior currency analyst at Westpac in Sydney, commented: “Markets started to call the debate for Hillary within the first 15 minutes or so, with the Mexican peso surging in what is probably its busiest Asian session in years.” The Mexican peso rallied strongly on the debate, up 1.7 percent against the dollar after plunging to record lows at the prospect of a Trump presidency. Trump’s anti-Mexican rhetoric has raised concerns that his presidency would threaten Mexico’s exports to the United States, its single biggest market. The Shanghai Composite is up 0.60 percent, with the Nikkei 225 up 0.84 percent. Hong Kong’s Hang Seng index rose 1.09 percent. The FTSE 100 also got off to a good start on Tuesday, rising 0.15 percent in early trade. 
27/09/2016

Thomas Cook shares spike as profits remain steady

Miranda Wadham
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0
Thomas Cook shares spike as profits remain steady
Shares in British travel operator Thomas Cook spiked on Tuesday, after reiterating its profit guidance for 2016. An attack on tourists in Istanbul in January and a failed coup in July led to a significant drop in demand for summer holidays to Turkey, with Thomas Cook warning in July of a quarterly loss and a lower profit guidance. However, for the twelve months to September 30th Thomas Cook reiterated its operating profit of £300 million, helped by an 8 percent increase in bookings outside of Turkey. Thomas Cook (LON:TCG) shares rose 4 percent on the news at market open, before dropping back down. They are currently trading up 0.14 percent at 70.10 (0918GMT). Peter Fankhauser, Thomas Cook’s chief executive, commented: “The summer season has progressed largely as expected. Customers’ desire to go abroad on holiday has remained strong with the exception of Turkey where demand continues to be volatile. To date, sales for the winter season are in line with last year while sales so far for summer 2017 suggest customers are booking early in an effort to secure their first-choice destination and hotel.” Travel operators have had a tricky time of late, with terrorist attacks in Tunisia, Istanbul and across Europe impacting strongly on consumer demand. Thomas Cook’s largest competitor, TUI, have felt less of an impact from a drop in Turkish holiday demand after limiting their exposure to the region. 
27/09/2016

German business assessment of current climate climbs to 2 year high

Katy Fleiner
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German business assessment of current climate climbs to 2 year high
The IFO index on businesses assessment of the current business climate in Germany has risen to its highest level since June 2014, according to a report published by CESifoGroup on Monday.
IFO Business indices rise
The IFO current climate index came in at 109.5 for September, rising 3.2 points from the previous month. This measure beats estimates by 3.1 points. The index last recorded a figure this high more than two years ago, reaching 109.7 in June 2014. The IFO current assessment and future expectations indices also beat estimates, rising to 114.7 and 104.5 respectively.
Recent data suggested adverse Brexit effect on Euro-Zone economies
Recently, data has been suggesting, that the Euro-Zone and Germany in particular have felt some adverse economic pressure since the UK’s decision to leave the European Union. After the latest ECB monetary policy decision, President Mario Draghi stated, that the Euro-Zone recovery seems to be on track, thanks to effective monetary policy. However, he admitted, that the recent Brexit vote has had some negative effects on European economies. Inflation has not been approaching the sought after two percent target, with business as well as investor sentiment has been falling slightly. Yesterday, data published by Markit economics indicated a reduction in growth in the services sector. The Markit PMI Services fell from 51.7, the previous month, to 50.6 in September. Last Tuesday, the ZEW Survey indicator for economic sentiment in Germany came in at 0.5. This measure missed expectations by two points and represented no improvement to August’s figure.
Economists and entrepreneurs remain faithful
However, Mario Draghi and the ECB have been confident that the adverse impact of economic uncertainty following the UK’s Leave vote can be tackled. The latest data on German business sentiment seems to show that German entrepreneurs agree with this notion and are hopeful for the future. 
Katharina Fleiner 26/09/2016

Phoenix Place Luxury Student Development Investment – 9% Rental Yield

UK Investor Magazine
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0
Phoenix Place Luxury Student Development Investment – 9% Rental Yield
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Source – This Is Money

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