FTSE 100 over fell over 2% in early trade on Monday after Covid lockdown fears in China led to big sell-offs in Asia and stoking fears of further inflationary pressure and supply chain problems.

China has been battling the rise of the pandemic with severe lockdown measures resulting in a decline in oil and metal imports in the country as its industrial sector faces a slowdown. As China continues mass testing in its largest district, investors become wary of Asian markets resulting in large sell-offs ultimately impacting global markets including the FTSE 100.

“The prospect of further restrictions in China could lead to a poisonous mix of further inflationary pressure, as supply chains in the so-called ‘factory of the world’ get disrupted, and weaker economic growth,” says Russ Mould, Investment Director, AJ Bell.

“The result could be stagflation – a slowing economy accompanied by surging prices – a brew few investors would be able to stomach.”

Brent crude has dropped 4.8% to $101 a barrel as further lockdowns in China invoke demand fears amongst investors.

Major oil companies which ride on the back of oil prices such as BP and Shell saw their share prices fall 5.4% to 371p and 4.4% to 2,091p.

Susannah Streeter, Senior Investment and Markets Analyst, Hargreaves Lansdown said, “However the [oil] price is set to stay volatile given the brutal ongoing battles in Ukraine are adding to the spring tides of worry.”

Mining stocks on the FTSE 100 also took a hit on Monday with Anglo American shares tanking 7% to 3,227p after the company announced setbacks in its Los Broncos copper project due to recommended permit blocks by regulators in Chile.

“While the world might benefit from wider availability of the metal, which is critical for renewables and electric vehicle components and infrastructure, complaints domestically about the environmental impact within Chile demonstrate the difficult balancing act miners face as they look to show off their new ‘green’ credentials,” said Russ Mould.

Amongst miners stocks declining on the FTSE 100 on Monday are Glencore, Rio Tinto, Ferguson and Endeavour Mining.

Glencore shares were trading down 6.4% to 445p, followed by Rio Tinto shares dropping 4.5% to 5,405p. Ferguson shares were down 4% to 10,100p and Endeavour Mining shares lost 3.5% to 1,951p.

Later in the week, the US Fed is expected to announce aggressive monetary policies, leaving investors on the edge of their seats as it “could have an influence on the market’s mood as we head into May,” added Mould. The impact of the policies may backfire and result in a recession.

Amongst financial services companies, Standard Chartered and HSBC shares decreased 2.5% and 3.2% to 502p and 506p respectively as the banks have significant exposure in Asia and investors remain cautious about the rising US interest rates expected by the Fed.

Scottish Mortgage Investment Trust has large holdings in tech stocks and as investors swerve away from Asian markets, the trust’s shares lost 3.6% to 874p.

British Land shares lost 1.7% to 507p after the company announced the sale of its 75% stake in Paddington Central assets to GIC on Monday.

AstraZeneca shares dropped 1% to 10,177p despite the pharmaceutical company announcing that its candidate for unresectable liver cancer Tremelimumab has been accepted under priority review by the US FDA.

With such sharp decline in stocks today, a limited number of companies saw an increase in their shares today, as Reckitt Benckiser shares gained 1.6% to 6,236p, Unilever shares were trading up 1.1% to 3,580p and BT Group shares rose 0.6% to 187p.

Cost of living crisis

Earlier today, the Office for National Statistics released a report in which it claimed that 9 out of 10 UK adults experienced an increase in their cost of living over the last month in March as gas and electricity bills soared followed by higher prices in certain consumer goods.

We’ve published new analysis on the impact of rising costs of living on adults in Great Britain (for the period 16-27 Mar 2022).

Around 9 in 10 (87%) adults reported an increase in their cost of living over the past month – compared with 62% in Nov 2021 https://t.co/d8t4fYgfTi pic.twitter.com/JkxfJa7zsA

— Office for National Statistics (ONS) (@ONS) April 25, 2022

As a result, utility stocks were mixed – but still outperformed the benchmark on Monday as investors sought out safe havens – with National Grid shares falling 0.4% to 1,167p, Severn Trent shares down 1% to 3,019p and United Utilities shares declining 0.6% to 1,120p at the time of writing.

Anglo American is facing setbacks regarding its Los Bronces project permits in Chile announced the company on Monday.

Anglo American is conducting an environmental study for its Los Bronces Integrated Project.

Anglo American’s Los Bronces Integrated Project began in 2019 and is a mine life extension project that expands the current open pit at Los Bronces and substitutes future lower quality ore with higher-grade ore from a new underground section of the mine.

The proposal makes use of the mine’s existing processing facilities, improves water efficiency, and eliminates the need for new water or tailings storage.

Anglo American’s Los Bronces Integrated Project is an investment in the future of one of Chile’s largest copper mines, and it is an example of modern mining where a wide range of sustainability concerns have been consulted on and built in from the start.

Anglo American has taken note of the Environmental Assessment Service of Chile’s (SEA) recommendation to reject the Los Bronces Integrated Project’s permit application.

The SEA has determined that Los Bronces Integrated Project complies with all applicable environmental regulations but it has issued an unfavourable recommendation based on an alleged lack of information provided throughout the evaluation process to entirely dispel any questions regarding a potential public health risk according to Anglo American.

The SEA’s recommendation has taken into consideration the substantial support for the project from 23 of the 25 technical services agencies and government ministries involved in the assessment process.

The organisation is likely to decide on the LBIP permission application within the next week said Anglo American.

The SEA’s declaration that the Los Bronces Integrated Project meets all of the required environmental regulatory criteria is welcomed by Anglo American.

Anglo American further believes that all relevant information was provided throughout the evaluation process and that this information was properly disseminated at every given chance within the regulated permitting process, including formal meetings and written submissions.

Anglo American’s Los Bronces Integrated Project was created using 10 years of scientific research and a robust and transparent engagement process with locals and government officials.

Mitigation techniques will offset 120% of the emissions generated by the project and Los Bronces’ current operations during development and operation, resulting in improved local air quality.

As a result, a project has been designed to safeguard the local ecosystem while causing no harm to biodiversity or neighbouring protected areas or glaciers by the group.

In the case that the SEA issues a negative decision, the permitting process provides for a second look at the project’s broad range of merits as well as technical permitting factors.

Anglo American is dedicated to following the existing process and is working with Chilean authorities to show that all potential impacts have been adequately mitigated and that the project has received approval.

The current copper production forecast for 2022 and 2023 remains unchanged whilst water availability and the continued effects of Covid-19 are still factors in production planning for Anglo American’s Los Bronces Integrated Project.

Anglo American shares fell 6.5% to 3,233p after the disappointing news from SEA on the Los Bronces Integrated Project.

EQTEC shares were up 9% to 0.8p in early morning trading on Monday, after the company released glowing final results for 2021 with a 410% revenue increase to €9.2 million from €2.2 million in 2020.

The net-zero technology innovation firm reduced its EBITDA loss to €4.7 million compared to €5.8 million in 2020, and reported an increase in net assets to €43.4 million against €25.3 million in the previous year.

EQTEC highlighted an oversubscribed, investor-led placing in May, which raised €19 million before expenses, alongside a cash balance of €6.4 million.

The company noted its new €1.39 million loan facility with shareholder Altair Group Investment Limited, with a maturity date of 31 December 2021.

The group said that the loan, which had been fully drawn down to repay an overdue debt with another lender, had a lower interest rate compared to a previously held debt facility and was repaid in full ahead of schedule on June 2021.

The company celebrated its project pipeline advancement, with 17 projects under development or construction against a pipeline of over 100 announced in its 2021 interim results in September, compared to its 10 projects in development with a pipeline of 75 in 2020.

EQTEC also confirmed that it would focus on four key areas moving forward to position itself as a viable replacement for fossil fuel developers, with investments in subsidiaries in the USA, UK, France and Italy, alongside joint-ventures to Croatia, Greece and Ireland.

“We set ambitious targets for 2021 and delivered more than 4x revenue over 2020, building the momentum we intended,” said EQTEC CEO David Palumbo. 

“We converted more opportunities than ever into focused, planned projects and amongst these was closure of both of our targeted Market Development Centres in Italy and Croatia.”

“We formalised majority-owned joint ventures in Croatia and the Aegean and invested in our go-to-market presence across USA, UK, France, Italy and Ireland, with a view to increasing pace and impact in those markets.”

The company is also set to invest in a full research and development programme to advance its innovation in technology development in a three-year strategy with university partners, tier-1 engineering company Wood, and other top-tier businesses yet to be confirmed.

The group said it would enrich its global network to integrate multinational development, delivery and technology partners, alongside local, market-specific partners to enhance its company reach.

EQTEC added that its fourth key area included investing in talent across the group’s technical and corporate sectors, alongside its market partners, in a move to advance the firm’s expertise in project development, corporate venturing and technology innovation.

The firm also said that it had ramped up its discussions with policymakers across the UK, EU and USA to promote the company’s potential in a net-zero progressive future.

“Our business platform grows increasingly resilient as we add partners and new talent to our global network,” said Palumbo.

“From post-Covid challenges to COP26 to more recent geopolitical events, we experience more demand than ever and are taking our place as a leading technology innovator for fossil fuel replacements and clean, baseload energy and biofuels, as well as an innovator of new business models for energy independence and security.”

ZOO Digital raised its performance expectations for 2022 in its pre-close trading update for the financial year ending 31 March 2022, where it expected revenue to be $70m compared to the previously announced $65m on Monday.

ZOO Digital announced in March that revenue was expected to be at least $65m and EBITDA at least $6.5m. The group has raised its estimates for the year ending March 31, 2022.

ZOO Digital says that revenue for 2022 is now estimated to be about $70m compared to $39.5m in 2021, representing a 78% increase in organic growth over the previous year.

The group’s EBITDA adjusted for share-based compensation is likely to be considerably ahead of previously updated projections, coming in at over $8m in 2022, up 78% from the preceding year when it amounted to $4.5m.

Despite major investment in South Korea, India, Turkey and Denmark, to increase capability and underpin future revenue growth, net cash on March 31, 2022, was $5.4m compared to $2.9m in 2021, indicating excellent cash creation despite significant expenditure to expand capabilities and sustain future income according to ZOO Digital.

ZOO Digital supports big names such as Disney, Netflix, Amazon, NBC Universal, HBO, ViacomCBS, and Paramount with its major Hollywood studios and streaming services to globalise their content and reach audiences everywhere.

“It has been an outstanding year for ZOO with growth materially above expectations, with our last quarter being a record period. We continue to benefit from streaming launches in new territories around the world, while also increasing market share through new service offerings and seeing strong demand from customers across all of ZOO’s operating segments,” said Stuart Green, CEO of ZOO Digital.

“The board has invested heavily in capacity to support further growth and the group has expanded its international footprint in regions that are strategically aligned with our major customers. With a strong pipeline of projects in place, we are confident of delivering further sustainable growth in the year ahead.” 

ZOO Digital shares gained 5.75% to 119.5p on Monday after the company raised its performance expectations for the year.

British Land said it sold 75% of its stake in the Paddington Central assets to GIC for £694m on Monday.

British Land completed the sale of 75% interest in the majority of its Paddington Central assets to GIC.

This transaction creates a new joint venture in which GIC and British Land share 75:25 ownership where the completion is unconditional and will take three months.

The entire consideration of £694m is 1% less than the book value in September 2021 and represents a 4.5% NIY for the sale of Paddington Central assets by British Land/

This acquisition satisfies one of British Land’s core strategic aims, which is to aggressively recycle money from mature businesses where it has produced significant value.

The transaction’s proceeds will be used to invest in value-adding development possibilities across the group’s portfolio, as well as growth sectors such as development-led urban logistics in London and innovation campuses.

British Land’s recent collaboration is another example of how the group uses its operating platform to find new ways to add value.

The group will continue to serve as asset manager for the campus as well as development manager for prospects, such as 5 Kingdom Street, for which it will be compensated.

Paddington Central was purchased for £470m in 2013 and consisted of three buildings, a retail and leisure cluster, and two development sites at the time.

British Land completed the acquisition of 1 Sheldon Square for £210m in 2015, and the development of 4 Kingdom Street in 2017, which generated rentals 40% higher than the top rents on campus at the time of acquisition.

Since its acquisition, the campus has generated an average total property return of 9% each year.

The assets of the joint venture between British Land and GIC will be 2 and 4 Kingdom Street, 1 and 3 Sheldon Square including the retail and leisure component, the Gateway development site, and neighbouring moorings at first.

Currently, the Novotel at 3 Kingdom Street and the development site at 5 Kingdom Street are not part of the Joint Venture.

GIC will be granted an unconditional option via a separate joint venture machine established for this purpose to purchase 50% of 5 Kingdom Street, a 438,000 sq ft development opportunity for £68.5m plus a share of CAPEX, which includes some contingent consideration, for six months after completion.

GIC will also be given an unconditional option to purchase 3 Kingdom Street at current market value through the joint venture that will expire five years after completion.

On a 100% basis, the gross asset value of the properties acquired by the joint venture between British Land and GIC was £936m as of September 2021 and the net rental revenue attributable to those assets was £39m in FY 2021.

Before reinvestment, the group expects the deal to cut EPS per share by 1.6p on an annualised basis.

The acquisition will lower leverage by 500bps and reduce NTA per share post fees and taxes immediately upon completion, with revenues to be reinvested in development and growth opportunities by strategy.

As of September 2021, the gross asset values for 3 and 5 Kingdom Street were £62m and £122m, respectively. The net rental income from 3 and 5 Kingdom Street was insignificant.

Simon Carter, CEO of British Land said, “We are delighted to be partnering with GIC again and this second joint venture with them demonstrates the success of our relationship at Broadgate as well as the quality of the assets and the opportunity at Paddington Central. Paddington has been an excellent investment for British Land and this transaction is a great illustration of our strategy in action.”

“We are pleased to invest in Paddington Central, a high-quality office-led mixed-use campus with retail and leisure uses. It is very well-located with connectivity to national rail services and key transport links to Heathrow, West London and Oxford. Our earlier investment in Broadgate has demonstrated the high value of acquiring central London campuses and we are confident that this asset will generate resilient long-term returns,” added Lee Kok Sun, Chief Investment Officer of Real Estate, GIC.

British Land shares fell 1.3% to 509p after the sale of 75% interest in its Paddington Central assets to GIC on Monday.