German factory output surpasses expectations

Liam Roche
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German factory output surpasses expectations

The high-importance car industry raised its output

German industrial output surpassed expectations in July after previous periods of downturns, data revealed on Tuesday.

It is a sign that factories are moving past supply bottlenecks which have been weighing on the recovery of the largest economy in Europe.

Industrial output, which includes construction and energy, increased by 1% on the month following a fall of 1% in June, according to the Federal Statistics Office.

A poll conducted by Reuters suggested an increase of 0.9%.

Output in manufacturing was up by 1.3%, while construction output rose by 1.1% and production in the energy sector was down by 3.2%.

“After the decline in industrial production in the second quarter, the third quarter got off to a friendly start,” Germany‘s economy ministry said.

The car industry raised its output by 1.9% and the machinery and engineering sector, also of high importance, increased production by 6.9%, according to the ministry.

“Even if the supply bottlenecks with semiconductors, which have slowed down production, are likely to persist for a while, the output figures suggest that industry could have overcome its low point,” the ministry added.

The Ifo institute said production expectations in the car industry and engineering sector dramatically improved in August.

“Apparently companies are hoping that the supply bottlenecks for preliminary products will slowly resolve in the coming months,” Ifo economist Klaus Wohlrabe said.

China’s export growth climbs in boost to economy

Liam Roche
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0
China’s export growth climbs in boost to economy

China shipments outperform analysts expectations for August

China‘s exports surpassed expectations in August by growing at a quicker rate thanks to global demand which took some pressure of the country’s economy.

Having been the first major economy to recover after the pandemic, China stalled as the Delta variant took a hold throughout the country.

Additionally high material costs, a slowdown in factory activity and other factors became concerning.

Shipments from China, the largest exporter in the world, rose by 25.6% in August year-on-year, rising from a 19.3% increase the month before, data revealed on Tuesday, suggesting some strength in the industrial sector of the second largest economy in the world.

Analysts forecasted growth of 17.1%, as per Reuters.

“The hot season for Christmas came earlier than previous years,” said Xing Zhaopeng, senior China strategist at Australia and New Zealand Banking Group Ltd. in Shanghai.

“It will remain strong before November,” he added.

Exports from countries close by also showed signs of improvement in August, as South Korean shipments grew on strong demand.

The breakdown of shipments showed increases across the board.

“In particular, the rebound in Chinese-made consumer goods such as electronics, furniture and recreational products possibly reflected retailers in advanced economies replenishing their inventories ahead of the Christmas shopping season,” said Sheana Yue, assistant economist at Capital Economics.

DS Smith benefitting from online shopping boom as costs rise

Liam Roche
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DS Smith benefitting from online shopping boom as costs rise

Construction of additional manufacturing sites going to plan

DS Smith, the packaging company, is benefitting from a boom in online sales across Europe, as its box volumes surged past levels seen before the pandemic.

In its most recent update the FTSE 100 company said that it had seen growth occur in both 2019 and 2020 during the months to 1 May on demand in the consumer and commerce sectors.

DS Smith has felt the impact of rising costs in energy and transportation, but maintained that it is in a good position to recover thanks to high levels of demand.

“The long-term structural growth drivers of e-commerce and sustainability have been accelerated by the effects of Covid,” CEO Miles Roberts said.

“Accordingly, while the macroeconomic environment remains uncertain, we remain confident about the prospects for the business in this financial year and beyond.”

Ongoing construction of additional manufacturing sites in Poland and Italy is going according to plan with operations expected to begin in Q4 of the current financial year.

Each plant has already received advanced commitments from customers for over 50% of their capacity.

The DS Smith share price is up by 2.13% during the morning session on Tuesday.

Belvoir continues to prosper

Andrew Hore
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Belvoir continues to prosper

Trading remains strong at franchised lettings and estate agency business Belvoir Group (LON: BLV) and, although it has been boosted by the stamp duty holiday on property purchases, the group should continue to prosper.
Interim figures show that revenues were 41% ahead at £13.8m, through a combination of acquisitive and organic growth. There was 33% organic growth.  
Pre-tax profit improved from £3.2m to £4.8m. This enabled the interim dividend to be raised from 3.4p a share to 4p a share.
During the first half, Belvoir paid £4.1m for Nicholas Humphreys, a letting agency focused on student...

PCI-Pal’s international growth plans

Andrew Hore
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PCI-Pal’s international growth plans

PCI-Pal (LON:PCIP) is widening its horizons by moving into new markets, but the benefits will not show through for another year. That does not mean that there will be any let up in the growth in revenues from the US market.
When it raised £5.2m, the cloud-based secure payments technology provider to call centre operators stated that it would be expanding into Australia, Europe and Canada. PCI-Pal already has clients in these regions. Australian and Canadian offices will be opened before the end of 2021. The country in Europe has yet to be decided but an office will be opened next year.
It will...

Ryanair share price above pre-pandemic levels on optimistic update from CEO

Liam Roche
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0
Ryanair share price above pre-pandemic levels on optimistic update from CEO

Ryanair Share Price

The Ryanair air share price (LON:RYA), while it has had peaks and troughs, has largely traded sideways in 2021. There has been optimism around the potential for flights to move towards pre-pandemic levels this year, however, there has equally been news to dampen spirits in the airline industry.

Year-to-date, the Ryanair share price is up by 5.43%, and at €16.20, it is back above pre-pandemic levels. The pandemic has been kinder to budget airlines such as Ryanair when compared to larger companies like IAG. Investors will now be focusing on whether the airline can continue growing for the remainder of the year and into 2022. Ryanair gave a recent optimistic update while it also divulged the conclusion of its talks with Boeing.

Passenger Levels

Ryanair’s expectations are that more passengers will fly in the autumn than in the summer. The airline increased its targets for the current quarter as it saw a “dramatic” recovery in traffic. Such is the increase in volumes of flyers that Ryanair now believes it could surpass pre-pandemic levels next year.

Ryanair confirmed that it will fly around 10.5m passengers each month up to November, an improvement its initial target by 5%.

Michael O’Leary believes that by October flight capacity will be close to normal levels and that they would be exceed by summer 2022.

It must be stated that these predictions depend on the outlook of the world economy in relation to the Delta variant. While Ryanair’s update gives reason for investors to be optimistic, recent events make it clear that no forecasts can be certain.

Talks with Boeing

Ryanair has ended discussions with Boeing on an order for Boeing 737 jets after to failing to reach an agreement on pricing. The airline is already the primary customer for 737 jets, having made 210 from orders of one if its models.

However, O’Leary has since said that any chance of a deal before the end of the year is unlikely.

“We are disappointed we couldn’t reach agreement,” O’Leary said in a statement.

“However, Boeing have a more optimistic outlook on aircraft pricing than we do, and we have a disciplined track record of not paying high prices for aircraft.”

Bitcoin surges as analyst predicts $100,000 before end of 2021

Liam Roche
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2
Bitcoin surges as analyst predicts $100,000 before end of 2021

The crypto market is valued at over $2.35trn

Bitcoin was soaring over the weekend, even climbing above $52,000 at one point on Monday.

Digital gold was joined by fellow cryptocurrencies, Ethereum (ether) and Cardano (ada), which are both nearing record-highs.

The overall market cap of Bitcoin stands at $965,601,415,664at the time of writing, just shy of Facebook which is valued at over $1trn.

Overall, the crypto market is valued at over $2.35trn, its highest point since May.

One online pseudonymous analyst, known as Plan B, gave a price prediction for Bitcoin of $100,000 by Christmas.

The move comes as El Salvador is set to become the first country in history to make Bitcoin legal tender.

Nayib Bukele, the president of El Salvador, said the policy would promote financial inclusion, investment, tourism and innovation.

El Salvadorians will have the option to use Bitcoin if they wish – pensions and salaries will still be paid in US dollars.

Is now the time to buy Chinese technology stocks?

Liam Roche
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0
Is now the time to buy Chinese technology stocks?

Analyst says now is not the time to buy Chinese tech stocks

Chinese consumer and technology stocks were the worst-performing in August, according to Saxo baskets, while crypto and cyber security were at the top of the pile.

An equity basket is a collection of stocks linked by a theme identified by Saxo analysts to isolate an area of the market, and act as inspiration for investors.

Equity Theme BasketAugust Return (%)
Crypto & Blockchain16.8%
Cyber Security6.1%
Logistics5.9%
NextGen Medicine5.3%
Financial Trading4.4%
Mega Caps3.2%
Green Transformation3.0%
India (GDRs)2.7%
Battery2.2%
MSCI World (USD)2.2%
Payments1.8%
Travel1.7%
Semiconductors0.8%
E-Commerce0.6%
MSCI EM (USD)-0.2%
3D Printing-1.6%
Commodity Sector-1.8%
Bubble Stocks-1.8%
Gaming-2.0%
Cannabis-3.6%
Chinese Consumer & Technology-4.7%
Source: Saxo Group and Bloomberg. The baskets are set up as portfolios in Bloomberg with equal weights rebalanced monthly

Sitting at the bottom of the pile is the Chinese consumer and technology basket, down by 4.7% in August.

Chinese stocks have had a difficult year on regulatory changes and restrictive government measures, causing a downturn in the sector.

“Our Chinese Consumer & Technology basket is the worst performing basket this year due to the ongoing technology crackdown in China,” said Peter Garnry, head of equity strategy at Saxo Group.

Investors will be wondering whether now is the time to buy Chinese technology stocks.

“The short answer is no,” said Garnry. “Chinese technology stocks are currently trading at a discount to US technology stocks for good reasons and as long as this discount persists we think investors should focus on Chinese consumer stocks and get exposure to technology in the US.”

“The crackdown of the technology sector in China that started over a year ago has intensified this year with an onslaught against the for-profit education industry and the world’s toughest data privacy law. Gaming regulation and tighter control of content dissemination are on the way, and the word ‘Common Prosperity’ is being used more and more in government speeches indicating higher taxes and more redistribution; Alibaba recently announced that it expects to lose various preferential tax rates related to its various businesses.”

The regulatory shift in China has impacted Saxo’s China Consumer & Technology basket so that it is now the worst performing theme basket year-to-date, down 12.4%.

“Tencent is by far the most powerful private company in China together with Alibaba. Given Tencent’s share price is down 39% from the peak it is a natural question whether this is not a remarkable buying opportunity,” said Garnry.

“Though with foreign investors pulling out of China for now we cannot leave out the possibility that Tencent could suddenly trade at a discount to Facebook.”

Digital 9 Infrastructure acquires Nordic data centre platform for £231m

Liam Roche
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0
Digital 9 Infrastructure acquires Nordic data centre platform for £231m

Digital 9 Infrastructure (D9) confirmed on Monday that it has acquired Verne Holdings, a data centre platform in Iceland, operating on a former NATO site near Keflavik, for £231m.

Verne Holdings, which trades as Verne Global, is the leading Icelandic data centre platform, delivering sustainable data centre solutions in a geographically optimal environment, with 100% of power delivered from local renewable sources (hydroelectric and geothermal) and delivering exceptional energy efficiency by making use of year-round ambient low temperatures for cooling.

Iceland‘s 100% renewable power is generated from local stable and predictable geothermal and hydroelectric sources, allowing its customers to significantly reduce their carbon footprint.

The country’s natural stable ambient low temperatures, enable year-round free-air cooling capabilities, making Verne Global one of the most efficient data centres in the world.

Free-air cooling removes the need for chillers, along with reduced infrastructure requirements and operational costs for customers, making Verne Global one of the most efficient data centres in Europe and globally.

This, combined with access to low cost, virtually unlimited power, enables Verne Global to provide high performance compute (“HPC”) services at a market leading price.

This acquisition, which is one of the pipeline investments identified at IPO, is D9’s first data centre acquisition.

The Verne Global Icelandic facilities’ environmental credentials reaffirms D9’s data centre strategy and together with the subsea network platform steps forward our ambition to decarbonise digital infrastructure (in line with UN Sustainable Development Goal 9) by enabling better access to data centres in areas of surplus renewable generation.

Commenting on the Verne Global transaction, Dominic Ward, CEO of Verne Global, said: “We are experiencing rapid growth and demand for sustainable high intensity compute solutions. Our customers are growing fast and have a stronger focus than ever on sustainability.”

“Acquisition by D9 enables us to accelerate our growth and respond to our customers’ needs now and in the future. What Verne Global has achieved over the last decade is a fantastic accomplishment and this acquisition is a great acknowledgement of the exceptional team that we have. We are hugely excited to be working with D9 and believe that we have the perfect partner to help power our future.”

Markets in more positive mood on the back of last week’s US jobs numbers

Liam Roche
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0
Markets in more positive mood on the back of last week’s US jobs numbers

Markets are in a more positive mood on Monday after US jobs numbers left a sour taste last week.

The FTSE 100 has added 0.56% to reach 7,179 points while Asian stock markets are also up.

Going back to the US, the Fed has “consistently reiterated that its decision making will be heavily led by the unemployment situation and therefore a weakening in the labour market could see it hold off on tapering its support for the economy for a bit longer,” according to Russ Mould.

The jobs figures served as a reminder of the precariousness of the ongoing recovery, while the Delta variant continues to thrive.

“Apart from those issues, you can practically feel the tumbleweed brushing past you this morning with US markets closed for Labor Day, relatively few big economic announcements and hardly any corporate news of note,” said Mould.

FTSE 100 Top Movers

ITV (2.54%), Burberry (1.85%) and JD Sports (1.77%) are leading way atop the FTSE 100 on Monday.

At the other end of the UK index, British Land (-0.48%), Rio Tinto (-0.33%) and Smith and Nephew (-0.32%), have given away the most gains.

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