Russian economy shrinks 4.6%
Russia’s Gross Domestic Product has dropped by 4.6% according to figures released today, worse than the 4.4% expected by the Economy Ministry.
The Russian economy has shrank the most since 2009, and the country are currently in recession due to a currency crisis and the drop in oil prices; Russia’s first recession in six years.
Russia have been severely affected by the drop in commodities prices, as Russia relies on oil and gas for about half of its budget revenue. This, combined with sanctions imposed by the West, mean the economy is expected to sink by around 9% before it begins to recover.
However, the Economy Ministry say that the economy has reached its “lowest point”.
Ernesto Ramirez Rigo, International Monetary Fund Mission Chief for Russia, said: “External shocks, added to pre-existing structural weaknesses, are certainly weighing on Russia’s growth prospects.
“Maintaining a prudent fiscal policy and reviving slow-moving structural reforms could help unlock Russia’s growth potential.”
Start-up Stockflare make investing accessible for all
Start-up company Stockflare aims to make the stock market more attainable for everyone, and is offering an investment opportunity on Crowdcube. With most traditional stockbrokers looking for people with £500,000+ to invest, the company feel that the 1.6 billion people with anything less than that are just not catered for in the current financial market, and have set out to make investment opportunities available for everyone.
CEO Shane Leonard is a 20 year City veteran, previously working at Credit Suisse & Citigroup and passionately believes that investing is for everyone, not just for the ultra rich. With a clear, easy to use website he has created a platform in which anyone can easily search, understand and invest in stocks, turning complex financial data into easy to understand analysis.
Unlike other sites aimed at providing insight or a trading platform for investors, Stockflare is completely free to join and has no advertising or monthly subscription. The site provides easy to understand analysis of every stock in the world, a search tool designed to help the user find the right stocks for them and alerts if something happens to the stocks that they should be aware of.
Furthermore, they are about to launch an investment service in partnership with US broker platform, letting anyone in the world open an investment account with as little as $50 and buy US shares, at the cost of $3 a trade – a very low price compared to similar platforms. The money comes from helping people to find investment ideas via Stockflare, and integrating with the best low-cost brokerage partners in each market to help them purchase it; each of the future brokerage partners will then pay a percentage of the revenue to them.
So far, Stockflare have 10,000 users across the world; over 40% of users are based in the US, with the UK being the second most important market. These users have all been achieved through word of mouth or prominent blogger recommendation, and the company have engaged in next to no marketing to date. To that end, Stockflare are hoping to use the money raised on Crowdcube to begin properly marketing the company and have recently hired several advisors with a strong marketing and PR background, including Kate Simon, currently the head of Marketing at TransferWise, Martin Campbell, formerly head of PR & Communications at Virgin Direct and Richard Ireland, previously the Head of Digital Marketing at Zopa, one of the leading peer-to-peer FinTech businesses in the UK.
Stockflare are offering two types of shares; investments of £1,000 or more will be A-shares which have full voting rights, and those of less than £1,000 will be B-shares, which do not. The company aim to provide investors with a way to exit their investment within three years, preferably by floating on the stock market.
Stockflare are currently crowdfunding for £300,000. For more information on their crowdfunding campaign, visit Seedrs.com
Warren Buffet signs $37.2 billion deal – his biggest yet
American multibillionaire investor Warren Buffet has just signed his biggest deal ever, agreeing to buy Precision Castparts, the US maker of parts for the aviation industry, for $37.2 billion.
The agreement consolidates Buffet’s aim to move his business into the industrial sector. His company Berkshire Hathaway Inc will acquire all outstanding shares in Precision Castparts for $235 per share in cash. The deal towers over his biggest acquisition previously, the Northern Santa Fe railroad for $27 billion in 2009.
Buffett said Berkshire would use about $23 billion of its own cash and borrow the rest to finance the deal.
“We will have about $40 billion in cash once we get through this. I like to have a lot of cash at all times.”
“This takes us out of the market for an ‘elephant’ for 12 months or so … but we will be buying a few small things in the next six months,” Buffett told CNBC.
He attributes the possibility of deal to the recent fall in oil prices, saying that:
“When you get a chance to buy a wonderful company, there is usually some reason why you are getting that chance. perhaps a slump in oil and gas helps us in this case.”
The company’s shares were trading at $230.85 before the bell on Monday.
Diversity low in FTSE 100, according to Green Park
Diversity in business has been a contentious topic, with company boardrooms traditionally ruled by one demographic: white men. Several government initiatives have been launched to improve the diversity of Britain’s top companies, with ex-business secretary Vince Cable setting a voluntary target for company boards to make sure 25% of their positions were held by women, after a report by Lord Mervyn Davies suggested that the numbers were severely imbalanced. Furthermore, in 2014 the 2020 campaign was launched to ensure that, by 2020, every FTSE 100 board had at least one ethnic minority member.
This year’s Green Park Leadership report shows that, whilst figures are improving, the numbers are not yet encouraging. This is the second of these reports by the company, who are committed to greater transparency in business and hope to provide robust benchmarks for companies. They provide intelligence and insight, strategic advice and recruitment support to leading companies, and are acting to try and change the lack of diversity in UK businesses.
Green Park’s survey was conducted on the FTSE 100 companies and published in April 2015. At the very top, the results are alarming; out of all the companies in the FTSE 100, only 3 chair were non white. 96 of the Chief Executive positions were white, as well as 95 Chief Financial Officers. According to the figures, there has actually been a decline in executive positions held by ethnic minorities, suggesting that opportunities for advancement are unfortunately declining rather than increasing.
By sector, transport and utilities are the worst for diversity; out of 6 companies, there with no non-white members in top leadership positions. The construction and property sectors are almost as bad, with just 2.2% of top positions held by those from ethnic minorities. However, health and natural resources came out on top, with 15.9% and 11.7% respectively.
The natural resources sector is also one of the highest for women’s representation too, with 14.1% of their top positions held by females. The best for women is the utilities industry, at 29.7%.
If fact, news for women is far brighter across the board than for ethnic minorities. Following the Davies report, the percentage of women on boards has doubled and has now hit the 25% target, with 26.1%. The report showed that out of the ethnic minority leaders who did hold top positions, they were more likely to be women.
Whilst Green Park’s report has shown some progress for diversity, the low figures for ethnic minorities clearly highlights the need for diversity campaigns. Britain is, after all, applauded for its diversity, tolerance and accessibility for people of all backgrounds – so why doesn’t this show on the boards of the country’s top companies?
Miranda Wadham on 10/08/2015
The Markets and Carney disagree over when rates will rise
In last week’s Bank of England press conference, Mark Carney said he saw rates raising in early 2016, a dovish adjustment to comments made in May that suggested lift off could be as early as this year.
The change in stance from the governor caused an initial knee jerk reaction in sterling that fell against the dollar.
However, markets that reflect the timing of the rate hike are still pricing in a chance of a rate hike by December.
Short Sterling futures for expiry in December are fractionally off pricing in a 0.25% increase in UK Interest rates by the end of the year.
Using the same method, interest rates are expected to be 1% by the middle of 2016.
The futures market highlights the conflict in opinion of the first rate hike but share consensus by the middle of next year rates will have increased, possibly by as 0.5% to 1%.
The uncertainty over when rates will initially rise is very much a product of comments by Mark Carney who said the timing of a rate hike is data dependent and his apparent willingness to change guidance at the drop of a hat.
Greek bailout to be finalised on August 11
A final bailout agreement for Greece is on the brink of being finalised, after significant concessions were made by Alexis Tsipras.
According to sources, the country hopes to negotiate final agreement with creditors by August 11th.
Finance ministers and creditors have been in talks over the weekend, which stretched into early Monday morning. A source has told Reuters that they are confident an 86 billion euro deal will be reached by the early hours of tomorrow.
“Efforts are being made to conclude the negotiations, the horizon is by Monday night or early Tuesday,” said a Greek official who declined to be named.
“When the new bailout comes to parliament for a vote it will be one bill with two articles – one article will be the loan agreement and the MoU (memorandum of understanding) and the second article will be the prior actions,” the official said, referring to measures Greece needs to take for the bailout accord to take effect.
The new bailout agreement comes just a week before their first 3 billion euro repayment, due on Aug 20.
Chinese merger speculation causes market rise
Chinese stocks rose more than 4.5% on Monday, their biggest gain in a month, after rumours of company restructuring in the shipping industry.
The CSI300 index .CSI300 rose 4.5 percent to 4,084.36 points, with the Shanghai Composite Index .SSEC climbing 4.9 percent to 3,928.82.
Merger speculation has propped up the markets, with major shipping companies halting trading due to pending announcements. China is planning to merge China Ocean Shipping Co and China Shipping Co, the two major state owned shipping companies, according to Bloomberg.
Du Changchun, an analyst at Northeast Securities in Shanghai, told Reuters:
“China’s economic indicators are not very good which means monetary policy will continue to be accommodative.
“Investors are also betting that SOE (state-owned enterprise) reforms will inject life into the market. Trading volumes in the stock market today picked up why.”
The Chinese government have implemented measures to stimulate the markets and fight off a crash. Analysts at Goldman Sachs estimate that the “national team” has potentially spent 860-900 billion yuan to support the stock market in over the last two months.
Hackers attack Dixons Carphone
Dixons Carphone (DC.L) have been subject to a cyber attack that may affect 2.4 million of its customers, the retailer announced on Saturday.
The electrical and mobile phone company said that it had learned of the data breach on Aug. 5 and had taken immediate action.
The affected part of the company includes the OneStopPhoneShop.com, e2save.com and Mobiles.co.uk websites, as well as around 400,000 TalkTalk customers.
Up to 90,000 customers may also have had their encrypted credit card details accessed, it said in a statement.
Sebastian James, chief executive of Dixons Carphone, said: “We are, of course, informing anyone that may have been affected, and have put in place additional security measures.
“We take the security of customer data extremely seriously, and we are very sorry that people have been affected by this attack on our systems.”
Saxo Payments leads the way for global transfers
Fintech industry body Innovate Finance announced its 2020 Manifesto last week, with the aim of advancing the UK’s standing as a leader in financial technology innovation.
Their vision for 2020 is for the UK to be the most investment-friendly environment for FinTech globally, attracting $4 billion of venture investment and $4 billion of institutional investment. Currently, UK fintech investment stands at $623 million, up from $264 million the year before.
Anders la Cour worked as a technology and financial M&A lawyer at a tier one law firm in Copenhagen, before co-founding the Saxo Payments Banking Marketplace. He fully agrees with the manifesto’s potential for UK fintech industry:
“There is no question that the FinTech sector represents a significant opportunity for the UK economy. There seems to be a growing appetite amongst a broad range of organisations to get involved in FinTech – from the creation of the UK Government’s FinTech special envoy, to investment in the sector by a number of traditional banks. And it’s vital that everyone understands the broader benefits that can be delivered to the economy by allowing this sector to grow.”
Saxo Payments are a fintech company who send and receive money internationally, sidestepping traditional banks and reducing fees in the process. Transfers occur instantly within the Saxo Payments community, even across borders. According to them, businesses are afraid to stand up and demand instant global transfers, cheaper international payments and better, more customer-centric service.
The payments company has just secured its fourth contract win in the space of a month. The latest partnership, with Valitor, a leading online and e-commerce payment solutions company, shows the hunger of start-up companies for a cheaper alternative to global bank transfers. Vidar Thorkelsson, Chief Executive Officer at Valitor believes its merchant clients will benefit from the deal.
“The Saxo Payments Banking Marketplace tackles the big challenge for our merchant clients of processing cross border payments quickly and cost-effectively, enabling us to significantly enhance our customer proposition.
“By joining the Saxo Payments Banking Marketplace we can also reduce the amount of extra time and money which is inevitably spent when working with multiple service providers. Now we can manage all the cross border payments for our merchant clients from one unique solution. We are looking forward to working closely with Saxo Payments to enhance the Valitor service offering, allowing us to build on an already extensive customer portfolio across various international markets.”
Miranda Wadham on 07/07/2015
US economy adds 215,000 jobs, unemployment remains flat
The US economy added fewer jobs than expected in July, according to US non farm payroll figures released this afternoon.
215,000 jobs were added over the last month, as opposed to the 223,000 expected by analysts.
June’s figure was revised higher to 231,000 from 223,000 while May was also revised up to 260,000 from 254,000. So far this year, job gains have averaged at 208,000 per month.
US unemployment remained at 5.3%, and average wages increased by 0.2%, after showing no change in June.
The figures released today by the Department of Labor suggest that Janet Yellen will raise rates sooner rather than later – possibly as early as September. Yellen told congress last month:
“If we wait longer it certainly could mean that when we begin to raise rates we might have to do so more rapidly. An advantage to beginning a little bit earlier is that we might have a more gradual path of rate increases.”