Emerging markets asset manger Ashmore Group said assets under management fell $8bn to $56bn as of the end September 2022.

Declines in fixed income assets accounted for the majority of the AuM reduction after severe volatility and interest rate risks rocked the asset class. Ashmore has a substantial Fixed income business which makes up the majority of their assets under management.

Of the $8bn fall in AuM, $5bn were net outflows and $3bn was adverse investment performance.

“Global fixed income and equity markets fell over the quarter reflecting continued uncertainty around geopolitical risks, higher inflation and increasingly hawkish central banks,” said Mark Coombs, Chief Executive Officer, Ashmore Group.

“This has increased the risk of recession in many countries and pushed bond yields higher and equity valuations lower in both Developed and Emerging Markets. Investor risk appetite therefore remains limited in the near term and Ashmore’s AuM movement this quarter reflects the impact of lower market levels and investors continuing to reduce risk.”

Mondi had a successful third quarter judging by the 55% jump in EBITDA continuing operation as volumes and sales price rose.

The paper and packaging maker enjoyed EBITDA of €450m in Q3 2022 compared to €290m Q3 2021 as they more than compensated for rising input cost.

The Corrugated Packaging unit enjoyed higher selling prices but saw volumes dip while Flexible Packaging saw both resilient demand and rising prices.

In the paper business, Uncoated Fine Paper was the stand out performer with higher prices and volumes.

Input cost

Mondi had to navigate rising fuel and wood costs in the quarter but were able to mitigate rising energy cost as most of their European plants produce the required power internally through biomass power generations.

Mondi are continuing with their €1 billion expansion plans, noting a €400 million Czech Republic paper mill set to come online in 2025.

Russia asset are being classified as held for sale as they pursue the sale of Mondi Syktyvkar for around €1.5bn.

“We continue to partner with our customers, helping to lead the way towards a circular economy with our unique portfolio of innovative and sustainable packaging and paper solutions. We also remain focused on operational efficiency and cost control,” said Andrew King, Chief Executive Officer.

“Our ambitious expansionary capital investment programme is progressing well, as we continue to invest in our cost advantaged asset base to capture opportunities in our structurally growing packaging markets, enhance our competitiveness and deliver sustainably into the future.”

The FTSE 100 experienced a whipsawing session on Thursday as a rally sparked by hopes the UK government would U-turn on some of their radical tax cuts was stopped in its tracks by higher than expected US inflation data.

The FTSE 100 sank more than 120 points in minutes after US CPI inflation came in at 8.2% versus expectations of 8.1%. However, the month-on-month 0.6% jump in prices was the major concern for markets.

London’s leading index had staged a strong rally earlier in the session after reports the UK government could be set to U-turn on radical tax cuts that sent a shock waves through markets in September.

U-turn reports – although not officially confirmed and lacking details – are likely the result of mounting pressure on the Prime Minister and Chancellor. There have been calls for them to resign from their own party’s MPs and her administration is persistently lambasted in the media.

Liz Truss had been further humiliated yesterday by a recording of her meeting with the King. King Charles appeared to respond ‘oh dear’ to her arrival at their weekly meeting.

A scene straight from the Office.

Truss: “Your Majesty… Lovely to see you again.”

King: “Back again. Dear oh dear. Anyway…”

Political awkwardness and unintentional comedy at its finest.

pic.twitter.com/o5G7Tsz3IA

— Dr. Jennifer Cassidy (@OxfordDiplomat) October 12, 2022

The King aptly summed up the markets, and many UK voters, perception of Liz Truss’s tenure as Prime Minister and a U-turn could be a political move to save her job.

A U-turn on some elements of the mini-budget could trigger a sustained rally in UK assets including the pound and UK equities.

Nonetheless, the reports of a potential U-turn could not contend with US inflation data news and the FTSE 100 was firmly in the red at the time of writing, down 1.3% at 6,734.

US inflation at 8.2% means the Federal Reserve will likely push on with rate hikes in the order 75-100 bps in November and are a long way off pivoting to an easing on policy.

UK banks

A look at the intraday chart of UK banks highlights the volatile nature of the session. Lloyds and Barclays had been up over 6% before the inflation data but sank with the wider market. A roll back of tax cuts by the UK government would boost market confidence in UK assets and help the mortgage market.

However, it was the FTSE 100’s overseas earners that drove sharp declines in the FTSE 100 as the dollar soared.

The cyclical sectors such as miners were the most heavily hit on concerns ongoing adjustments to interest rate hikes would hurt the global economy.

CleanTech Lithium shares surged on Thursday as the lithium explorer announced the commencement of lithium brine testing with SunResin.

CleanTech Lithium are developing the Chilean Laguna Verde and Francisco Basin lithium brine assets and are planning production in 2024.

Crucial to achieving production is the finalisation of their Direct Lithium Extraction (DLE) activities and today’s announcement signals an expansion of their efforts to evaluate their processes.

Bulk samples of brine from the sub-surface aquifers of Laguna Verde and Francisco Basin have been sent to SunResin’s facilities in China for testing.

The DLE testing with SunResin will from input data for CleanTech’s feasibility studies. Assuming early tests are successful, SunResin has proposed a pilot project to produce 1 tonne per month of battery grade lithium commencing H1 2023. The plant would be located in Maricunga, 50km away from Laguna Verde.

In addition to the SunResin testing in Chile, a small demo unit is being sent to Chile which has a feed rate of 20l/second. The purpose of this is to produce a small amount of lithium to provide to potential customers.

CleanTech had previously produced 1kg of battery grade lithium in early testing at a Beyond Lithium facility.

“We are delighted to move forward our process test-work with SunResin on multiple fronts including trials on brine from the sub-surface aquifers of our Laguna Verde and Francisco Basin projects, ordering of a DLE demo unit which will arrive in Chile this month and receiving a proposal for the DLE unit for a pilot plant that will produce battery grade lithium carbonate and lithium hydroxide for customer testing and verification,“ said Aldo Boitano, Chief Executive Officer, of Cleantech Lithium PLC.

CleanTech Lithium shares jumped 4% to 55.9p on the news and are now up 34% over the past week.

easyjet’s woes were well-documented this summer as supply chain and staffing issues led to a large number of cancellations. This disruption was evident in easyjet’s 2022 full year trading update in which the budget airliner said they would record a headline loss before tax of between £170 million and £190 million.

easyjet attributed £75 million of costs to the disruptions throughout the summer.

The disruptions came as easyjet and other airlines ramped up capacity as holiday makers returned after the pandemic amid supply chain issues causing cancellations.

easyjet’s Q4 2022 capacity was 88% of pre-pandemic 2019 numbers.

“Profits are still delayed at easyJet, with full year pre-tax losses expected to be as high as £190m. A large chunk of extra costs stemmed from the industry-wide disruption experienced in the third quarter, with well-publicised flight cancellations and short staffing leading to a real drag on resources at the time easyJet needed it least,” said Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown.

Looking forward, easyJet are still way of pre-pandemic numbers and capacity actually fell in Q1 2023.

easyjet’s Q1 2023 capacity is up 30% year-on-year to around 20m seats. This, however, is only 83% of the capacity recorded in 2019, before the pandemic.

Analysts also pointed to the cost of living crisis as a head wind for easyJet.

“The combination of a higher cost of living and ongoing labor shortages are creating a more cautious environment around capacity and longer-term demand for the European low cost carrier segment,” said Peter McNally, Global Sector Lead for Industrials, Metals & Energy at Third Bridge.

easyjet addressed operational problems with management action but both investors and passengers want to see this in action in the busy summer period before confidence is restored.

“Operations have significantly improved as a result of management actions to mitigate the disruption that the whole airline ecosystem experienced through Q3,” said Johan Lundgren, CEO of easyJet.

Tekcapital’s portfolio company MicroSalt announced a partnership with ready meal provider Presty on Thursday and marked another another step in the roll-out of their low-sodium salt products.

The partnership will yield a significant product offering in the low-sodium ready meal market and see MicroSalt’s products reach more end customers.

Presty produces their healthy and diverse range of ready meals from a facility in France specifically for the US market’s taste.

The partnership is eyeing a global ready meals which was valued at US$138 billion in 2021, and is expected to reach $408 billion by 2031.

“We are proud to work with Presty! Foods in their efforts to offer low-sodium solutions to their customer base. We view Presty as a thought leader in offering lower sodium as an active option in its ingredient listing. Excess sodium consumption is a leading contributor to hypertension and cardiovascular disease, and partnerships like this are the best way to make a difference in our efforts to address the sodium crisis,” said Rick Guiney, CEO of MicroSalt®.

Founded in 2018, MicroSalt is 97% owned by Tekcapital. Having floated already their portfolio companies Belluscura and Lucyd, Tekcapital CEO Dr Clifford Gross alluded to a potential MicroSalt IPO in early 2023 in a recent Podcast with Kemeny Capital.

Tekcapital shares rose following the release on Thursday.