BHP to leave FTSE 100 for Sydney

Liam Roche
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BHP to leave FTSE 100 for Sydney

BHP’s move raises question marks over the attractiveness of London

BHP, the mining giant, has dealt a blow to the FTSE 100 by revealing plans to move its primary listing to Sydney.

The company said that it will lose its dual corporate structure and separate listings in Sydney and London. As a result, and pending approval from shareholders, BHP will separate from the FTSE 100.

This means that index funds will be required to sell their positions in the company which mines resources including iron ore, copper, nickel and metallurgical coal.

“Now is the right time to unify BHP’s corporate structure,” said chairman Ken MacKenzie. “BHP will be simpler and more efficient, with greater flexibility to shape our portfolio for the future.”

“Our plans announced today will better enable BHP to pursue opportunities in new and existing markets and create value and returns over generations.”

Fund managers, who have long benefited from BHP’s substantial dividend and the increase in the value of its share price, have been left frustrated by the news.

In addition, it has raised a question mark over the attractiveness of London as a destination for listing companies.

“Today’s announcement is very significant — with the likely outcome that BHP leaves UK indices,” Nick Stansbury, head of climate solutions at Legal & General Investment Management, a top-ten shareholder, told The Times. “If this is indeed the case for UK index investors, it is our view that losing a company of the calibre of BHP is disappointing.”

“However, BHP’s proposal is supported by a robust and clearly articulated value case with the potential for investors in the UK company to benefit from the possible narrowing of discount to the Australian company.”

“It is important that UK index investors are able to realise that benefit and we will continue to review the proposal with this in mind.”

Over the past five years the BHP share price has added 115.48%.

AJ Bell rings changes at board level to push investment platform forward

Liam Roche
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AJ Bell rings changes at board level to push investment platform forward

AJ Bell appoints third woman to the board

AJ Bell has made changes to its management in order to reflect its plans for new growth opportunities.

The investment platform has added two new leadership roles and the third woman to a board that has previously faced criticism for a lack of representation.

AJ Bell on Wednesday announced that current CFO Michael Summersgill will take up his new position as deputy chief executive on October 1.

The firm has began an external search to find a new CFO, after Summersgill held the role for a decade.

Roger Stott, the current group finance director, will take on the role of chief operating officer, while Margaret Hassell is set to join AJ Bell as a non-executive director.

Les Platts, outgoing chair of AJ Bell, said: “These changes will further strengthen the board, both at executive and non-executive level, as the business embarks on the next phase of its long-term growth.

“The changes, together with the planned recruitment of a new chief financial officer, will bring greater experience and diversity to the board. This will benefit all of our stakeholders and enable the board to continue to maintain effective oversight as the business continues to grow.”

CEO Bell added: “Our business is growing quickly and there are exciting opportunities to take advantage of in the investment platform market.

“It is important that we have the resources and expertise within the business to support this growth and that includes the board.

“I am as enthusiastic as I have ever been about the prospects for the business and I am looking forward to working with Michael, Roger, Margaret and the rest of the team as we embark on our next phase of growth.”

AJ Bell has £70.4bn in assets under management, the company confirmed at the end of Q2.

The AJ Bell share price (LON:AJB) is up by 0.26% during the morning session on Wednesday.

Persimmon sales surge past 2019 levels

Liam Roche
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Persimmon sales surge past 2019 levels

Housing market set to return to more regular levels after pandemic-caused swings in activity

Following an upturn in activity during the pandemic, Persimmon is expecting the market to get back to a more normal level.

In its half-year earnings report released on Wednesday, Persimmon revealed that its sales rate for new homes was 20% quicker than the same period of 2019, before the pandemic. The FTSE 100 house builder also said that its forward sales were 9% higher than the same six-month period in 2019.

Persimmon made a profit before tax of £480m from £1.84bn in revenue, compared to £292m and £1.19bn for the first six months of 2020, a period that was affected by the pandemic.

While the UK market will be healthy moving forward, Persimmon says, it is expecting more normal levels of trading to resume following the easing of restrictions.

However, the housebuilder believes that demand for new homes will remain above pre-pandemic levels.

Completions increased to 7,406 from 4,900 with prices on average rising by 4.9% at £236,000.

“Expectations were high for Persimmon and certainly well ahead of other similar operators in the housebuilding sector. However, it has delivered half year results in-line with these expectations. The business is clearly well on its way to recreating 2019’s figures, reporting sales volumes of 7,400 (-2% vs 2019) and an operating margin of 27.6% (vs 31.0% in H1’19). Overall profit before tax was only -5% down on the equivalent 2019 figure,” said Oli Creasey, property research analyst at Quilter Cheviot.

“It could be argued that in some ways the company is actually ahead of its position in 2019 and has recovered from the pandemic. The cash balance is now over £1.3bn, and provides considerable support to the 8% dividend payout for 2021 & 2022, and likely beyond as well. Similarly, the company is monitoring its Home Builders Federation satisfaction score, which at 92% is trending well ahead of the 5-star threshold. It was inevitable that the renewed focus on customers’ experience would have come to impact on both volumes and margins, and so to achieve this score while operating so close to 2019 financial metrics is remarkable, particularly within the further context of a global pandemic.”

Dean Finch, chief executive, said: “We have a strong platform for future growth with high-quality landholdings, a diverse UK wide network and a business operating from approximately 300 outlets on average throughout the current year.

“We are expecting an increase of c.10% in new home legal completions this year (FY 2020: 13,575 legal completions).

“With c.85 new outlets opening by the end of this year and a similar number of new outlets targeted to open in the first half of 2022 , subject to the timely granting of planning permission, we have a good pipeline of new outlets coming through the business.”

The Persimmon share price is down by 0.77% during the morning session on Wednesday.

New AIM admission: Likewise plans to repeat Headlam success

Andrew Hore
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New AIM admission: Likewise plans to repeat Headlam success

Floorcoverings distributor Likewise is switching from The International Stock Exchange to AIM as part of its plans to consolidate the sector. The management team of Likewise have predominantly come from fully listed floorcoverings distributor Headlam (LON: HEAD) which had a similar strategy in its earlier days and is the major player in the sector.
Likewise chief executive Tony Brewer joined Headlam in 1991 and became chief executive in 2000. He left the company in 2016.
The cash raised will provide working capital for growth and cash for acquisitions. There will also be investment in further ...

Sunrise Resources share price: outlook brightens on update from America and US infrastructure bill

Liam Roche
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Sunrise Resources share price: outlook brightens on update from America and US infrastructure bill

Sunrise Resources Share Price

The Sunrise Resources share price (LON:SRES) is up by 10% on Tuesday following a positive update from Nevada, USA. The move comes on the back of what has been a disappointing year so far for the AIM-listed mining company.

Year-to-date the Sunrise Resources share price has lost 21.94% in value after a series of ‘frustrating’ mining delays. The company is expecting its outlook to brighten on today’s update, along with Joe Biden’s stimulus package.

CS Project in US

Sunrise Resources confirmed positive test results from recent commercial concrete pours using natural pozzolan from CS pozzolan-perlite deposit in Nevada, USA.

Two commercial concrete pours carried out by large cement & ready-mix company as due diligence towards commercial agreement.

Preliminary results show early strength gain in excess of target strengths, while seven-day concrete strengths exceed the 24-day target strengths after just 7 days curing.

Commenting today, Executive Chairman Patrick Cheetham said: “We are delighted to be announcing these exciting results which come after a number of frustrating delays. The preliminary results from the concrete pours using CS natural pozzolan are first-rate and, we anticipate, will provide the basis for a more structured arrangement with the CRMC carrying out this work.”

“Interest in using the CS natural pozzolan in concrete continues to grow and a number of additional companies have requested samples in recent weeks, no doubt driven by the bleak long-term outlook for coal fly ash supplies in the USA.”

Looking forward, Cheetham considered the positive impact of the $1.2 trillion infrastructure spending stimulus recently passed by the US Senate and embraced by President Joe Biden.

“Together with Biden’s climate plan will give further impetus to pozzolan demand and so we are looking at possibilities to grow our business by acquiring additional pozzolan deposits favourably located for other regional centres of concrete demand in the western United States.”

“Whilst development of the perlite for uses other than for natural pozzolan is the smaller of the two business opportunities at the CS Project, we are pleased to have received great feedback from the most recent customer trials of our horticultural grade raw perlite and look forward to advancing this and other production options in tandem with the production of natural pozzolan.”

Indian equity market round-up: COVID drives recovery

UK Investor Magazine
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Indian equity market round-up: COVID drives recovery

·      Reserve Bank of India commences improvement procedure in the FI-Index of the stock market. The index includes the financial aspects of the insurance, investments etc., sectors to find the suitability of services.

·      The market sentiment on 17thAugust 2021 has remained neutral in India. A profit booking session has been seen in the Banking Stocks. Bank Nifty Index has been observed to be traded in red for the day.

·      Indian stock markets hit their all-time highs on 13thAugust 2021. Nifty hit 16,500 and BSE Sensex hit above 55,000 level. Currently, the market is trading on a similar level.

·      Indian markets are at their all-time highs while few stocks are recovering from the fatal effects of the Covid-19 2ndwave.

·      According to the Retailers Association of India, the retail sales in July 2021 has been 72% up. This data has been compared to the sales percentage before the pandemic.

·      Indian rupee opens 3 paise weaker than US dollar in the currency market.

· Trading session in the market today has been observed as flat trading with an average sell-off in banking stocks.

Big Boomers: 17thAugust

IT industry lifted the market to reach a new level in Nifty -16600. The stock-specific action in the IT industry has been shown below:

Infosys

Infosys is a multinational service provider for business consultation, outsourcing and IT Services. The current stock price of Infosys is 1,734 listed in NSE/BSE as the symbol INFY. INFY is a quality stock in the IT industry which is values at an expensive valuation from the market end. In the news, Infosys is in continuous talks to invest in Tidal Scale Inc at $0.45 million. The current market capitalization of Infosys stands at 741,783 (Rs. Cr.). With the previous close of 1,704 in the stock price on 16thAugust, the stock gained around 40 plus points in the trading session. The price is closed at 1,741.65 on 17thAugust.

Wipro

Wipro Limited is a technology company providing its services for global clients in consulting and business processes. It has been noted that it is ranked as the 29thlargest company by its revenue (Fortune India 500). With the 3.40% gain from the previous close of 614.05 the current stock of Wipro is priced at 634.90 per share. The current market capitalization of Wipro is 347,878 (Rs. Cr.). The company is one of the top gainers on 17thAugust trading session.

HLC Tech

HCL Tech is a technology service provider which helps the global enterprise in technology transformation and development. HCL tech’s stock price is traded at 1142 in the recent market. The market capitalization of the company is 309697. Price and volume growth in the company is depicting positive returns to the past investors. HCL tech is one of the competitors with the IT giant-Infosys.

Top Movers

The stocks listed below are the quality stocks of the Indian market which have attractive and strong shareholding patterns:

Titan Company

Titan Company Ltd. is an Indian company that is known for manufacturing and selling luxury products. The share of the company is listed both on NSE and BSE. In the latest session of trading, the stock has managed its levels at 1874.45 with an increase of 37.35 points. There is a strong shareholding and an increased chart pattern in the stock.

Dabur India

Dabur Limited is a leading brand in India that brings to its customers’ wide range of Herbal products. The share of the company is listed on both exchanges with an increased share price of 596.60 in the current trading session. The company has strong market visibility and chart pattern.

Bajaj Finance

Bajaj Finances Limited is one of the Bajaj groups companies which have diversification in the Indian market for lending business. BFL is considered a profitable company with an increased share price of 6,410 in the current session.

What does soaring wage growth mean for the pension triple-lock?

Liam Roche
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What does soaring wage growth mean for the pension triple-lock?

The state pension triple-lock increases pensions by the highest out of earnings, inflation and 2.5%

Average earnings are up by 7.4% excluding bonuses, while this figure rises to 8.8% with bonuses included, according to data released by the ONS on Tuesday.

The soaring wage growth is bringing eyes on to pensions and what the ramifications are for the state pension triple lock.

There has been calls to scrap the state pension triple-lock, which increases pensions by the highest out of earnings, inflation and 2.5%.

This would mean that pensioners would be set to receive a substantial uplift in their income.

“This poses a problem because the Conservative Party committed to maintaining the triple-lock in their manifesto. An 8% rise will put huge pressure on the public finances at a time when the Treasury is already staring down a fiscal black hole,” said Tom Selby, head of retirement policy at AJ Bell.

However, pension legislation allows the government to estimate the growth in earnings in whichever was it deems appropriate.

“Historically it’s the May to July earnings growth figure that’s been used for the triple-lock calculation, and expectations are this could be around 8% when published next month. However, pensions legislation allows the Government to estimate the rise in earnings as they see fit, and doesn’t tie them to the headline rate published by the ONS,” Selby added.

This would allow the Conservatives to keep their manifesto promise to maintain the triple-lock, while curbing the cost of the state pension.

“Coincidentally, the ONS has now started publishing a figure which tracks the growth in underlying earnings in the economy, stripping out the distortive effects of the pandemic. The latest data released shows that headline earnings grew at 7.4% year on year (not including bonuses), but underlying earnings grew at somewhere between 3.5% to 4.9%, a considerably lower rate.”

“By choosing the lower of these figures, the Government could legitimately cut the state pension bill by around £3.5 billion compared to using the headline rate (the OBR estimates a 1 percentage point rise in the rate creates £0.9 billion more of pensions spending),” says Selby.

This approach could allow the government to get the best of both worlds when it comes to the triple-lock. It allows them to keep their manifesto without putting additional strain on public finances.

Selby believes that while the Conservatives have committed to maintaining the triple-lock, its longer-term survival remains in doubt.

What is the impact of events in Afghanistan on global markets?

Liam Roche
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What is the impact of events in Afghanistan on global markets?

The events unfolding in Afghanistan in front of the world’s eyes will now be added to the lost of issues to look out for for investors as markets take on board the fact that the Taliban has regained power.

This is what Nigel Green, chief executive and founder of deVere Group, as the Taliban seized Kabul, the capital of Afghanistan, from where thousands desperately tried to flee.

It comes as President Joe Biden made the decision to remove troops from Afghanistan following Donald Trump’s decision to withdraw US forces as part of an agreement between America and the Taliban.

Green does not however feel that the news coming out of Afghanistan will send an immediate shockwave through global stock markets.

“Investors are currently more focused on other key factors that could impact returns,” he said, adding that “these include the fallout from the delta variant of Covid, concerns about peak earnings, disappointing Chinese economic data, slowing growth, and this week’s publication of the minutes of the Federal Reserve’s latest meeting which could hint at a shift in policy.”

Green does however believe that the Taliban’s power grab will be on the radar of investors among a growing list of global issues.

“There will be questions regarding stability in the Middle East, the global influence of the U.S. and the mounting pressure on Biden, the prospect of increasing international terror threats, and the growing dominance of China’s renminbi,” said Green.

Early in trading in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4%. European markets are set to open lower on Tuesday as investors monitor the Afghanistan crisis. On Wall Street, U.S. stock index futures were slightly lower after the Dow and S&P 500 on Monday closed at record highs.

The deVere CEO concludes: “Investors will be monitoring the Afghanistan situation carefully as it could very likely have implications down the road.

“As ever, investors’ best tool to avoid risk and seize opportunities is to remain invested and ensure proper diversification across asset class, sectors, currencies and regions.”

Kristina Hooper, Invesco’s chief global market strategist, sees a Federal Reserve policy mistake and the Covid-19 delta variant as bigger threats to the US economy and stocks.

“This [Afghanistan] is certainly a human tragedy. It’s a disaster,” she told CNBC on Monday. “Yet, what we have learned time and time again is no matter how big the disaster [and] no matter how significant the geopolitical risk seems, it rarely has much of an impact on markets.”

UK job vacancies surge as wages rise

Liam Roche
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UK job vacancies surge as wages rise

Over the last quarter the number of vacancies reached 953,000

Job vacancies are at a record high as the labour market continues its robust recovery, official figures have revealed.

For the three months to July, the number of vacancies reached 953,000, the Office for National Statistics (ONS) said.

During the same period the unemployment rate fell to 4.7%, as the yearly growth in average pay was 7.4%.

Rishi Sunak, chancellor, said: “Today’s figures show that our Plan for Jobs is working – saving people’s jobs and getting people back into work.”

“I know there could still be bumps in the road but the data is promising – there are now more employees on payrolls than at any point since March 2020 and the number of people on furlough is the lowest since the scheme launched.”

The number of people in employment rose again, by 182,000 to 28.9m in July, but remained 201,000 below pre-pandemic levels. As the economy recovered, job vacancies rose to a record high of 953,000 in May to July – 168,000 more than before the pandemic.

Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “The world of work continues to rebound robustly from the effects of the pandemic. 

“The number of people on payroll was up again strongly and has now grown over half a million in the past three months, regaining about four-fifths of the fall seen at the start of the pandemic.”

However, experts were cautious to say that the figures proved that there would number be a flurry of layoffs as the furlough scheme comes to an end.

Martin Beck, senior economic adviser to the EY Item Club, said: “Looking ahead, the jobless rate could feasibly creep up in the short-term: an easing of restrictions has made searching for a job easier, and this could result in people moving from inactivity to seeking a job and therefore being picked up in the numbers again.”

“But the risk of a serious increase in joblessness when the furlough scheme closes in September looks low.”

BHP reveals oil and gas merger with Woodside Petroleum

Liam Roche
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BHP reveals oil and gas merger with Woodside Petroleum

The BHP share price surged on the announcement

Just a day after it confirmed it was in talks over an exit from the oil and gas industry, mining giant BHP (LON:BHP) is in the news again as it confirms its plans to merge its oil assets with Woodside Petroleum.

The new group would be among the largest independent energy companies in the world and in the top 10 for liquified natural gas (LNG) production.

The entity’s yearly revenue and underlying earnings (EBITDA) will come in at $8bn and $4.7bn respectively.

The BHP share price is up by 6.16% on Tuesday following the announcement.

“The market is clearly excited about the move and while investors are set to get shares in the combined venture rather than an immediate cash payout, this will give them the option of selling the shares should they choose and realising value that way,” says AJ Bell investment director Russ Mould.

After expected completion of the merger in Q2 of 2022, Woodside will issue shares to BHP shareholders.

52% will be held by Woodside shareholders, while 48% will be held by BHP shareholders.

“The news comes alongside results which encompass a big capital return to shareholders and a plan to tidy up the company’s corporate structure with its main listing widely expected to be in Australia and the green light on a new potash project.”

BHP has a clear strategy now of focusing on future-proofed commodities which are part of the transition away from fossil fuels.

BHP’s decision to analyse its operations comes as major miners are coming under pressure to eliminate, or at least reduce, their exposure to fossil fuels.

However, “Mr Henry and the board have a tricky balancing act if they are to strike the right balance between shareholder satisfaction and shareholder value,” says AJ Bell Investment Director Russ Mould.

Management may also be taking the view that now is a good time to sell, after a rebound in the oil price from 2020’s lows, as the global economy and travel begin to regain some sort of traction.

“The board will also want to avoid the risk that they are left with ‘stranded’ assets, should long-term demand for oil and gas tail off more quickly than anticipated, and take further hits to the valuation of those assets on its balance sheet,” said Mould.

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