FTSE 100 unfazed by rumours of lockdown extension

Liam Roche
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FTSE 100 unfazed by rumours of lockdown extension

Widespread speculation that England will delay lockdown easing hasn’t troubled markets, with the FTSE 100 up 0.39% to 7,167.

“That puts the UK index at its highest level since February 2020, but there is still some way to go to hit the 7,400 levels seen before Covid triggered a global market crash,” says Russ Mould, investment director at AJ Bell.

“Many other major stock markets in the world have already recovered all of their Covid crash losses and since rallied to considerably greater heights, including the S&P in the US and the Nikkei 225 in Japan.”

Driving the UK market on Monday were oil stocks, consumer goods firms, overseas-focused banks and pharmaceutical companies, with Unilever the largest driver for the index in points terms.

“These movements would suggest that investors are focusing on companies that do business beyond the UK, taking a positive view on the global economy,” said Mould.

“Gold fell back 1.1% to $1,858 as some investors lost interest in safe-haven assets, pulling down shares in precious metal miners Polymetal and Fresnillo.”

Leisure companies could be worst affected by any delay to lockdown easing in England as it will require a continuation of the social distancing rules, meaning pubs and restaurants can’t operate at full capacity.

“However, investors don’t seem too bothered by the risk, perhaps because speculation points to a mere four-week delay, albeit during a seasonally busy time. Pubs group Marston’s slipped 0.5% while Restaurant Group was unmoved,” Mould said.

“Airlines fared worse as any cautious tone by the Government doesn’t bode well for relaxing guidance on foreign travel. The travel sector is waiting with bated breath to start taking more passengers overseas, but hopes are fading for widespread flying this summer. International Consolidated Airlines fell 2.3% while EasyJet dropped 1.8%.”

FTSE 100 Top Movers

BT (2.55%), Halma (2.12%) and Just Eat (2.06%) are leading the way early on Monday.

While at the bottom end of the FTSE 100 is Rolls-Royce (-3.18%), IAG (-2.62%) and Polymetal International (-1.62%).

VietNam Holding records impressive growth on digitisation of Vietnam

Liam Roche
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0
VietNam Holding records impressive growth on digitisation of Vietnam

Vietnam Holding saw its share price soar by 60% this year

Vietnam Holding (LON:VNH) released a statement on Monday that said Vietnam was the best performing stock market in the world during May, while the investment firm’s performance surpassed the national benchmark.

The trust’s largest holding, FPT, saw its share price soar by 60% during this year, according to a report issued this month by Dynam Capital, the manager of the trust.

Dynam said that its recent success in Vietnam can be put down to the spread of the internet, which reached 69% of the population in 2020, which rose to 73% in 2021.

“For FPT, fast internet means customers can stream content over their rapidly growing Pay TV business …[and] contribute greatly to economic growth,” Dynam said.

“Considering Vietnam’s software engineers on average cost one third of the level of those in India and China, the opportunity for a Vietnamese company, such as FPT, to be internationally competitive is also immense. FPT already serves many Japanese and US companies, which are trying to move their activities to the cloud and upgrade their technologies to adapt to new customer usage patterns.”

The digitisation of the country has benefitted other industries too, as banks propped up the country’s economy as they have been more able to connect with customers online.

Dynam said that banks in its portfolio have risen in value following strategic decisions by the management team.

“Other drivers in the digitalisation momentum currently taking place in Vietnam include education and government regulations… The government is also pushing hard for digital technologies as a way to scale Vietnam’s development as a modernising industrial nation and is planning to promote e-payment and e-government.”

“Soft infrastructure is as important as hard infrastructure, and both can have a multiplier effect on economic growth, in our view.”

“Digitalisation is helping Vietnam stay on course to reach its 30-year track record of 6.5% growth.”

Vietnam Holding presented at the UK Investor Magazine Virtual Conference on 23 March.

Average age of US vehicles reached record 12.1 years in 2020

Liam Roche
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0
Average age of US vehicles reached record 12.1 years in 2020

According to IHS Markit, vehicle miles in the US fell by over 13% during 2020

The average age of cars in America jumped to a record 12.1 years during 2020 according to IHS Markit.

It happened as Americans drove less and scrapped more cars throughout the pandemic.

However, as lockdown restrictions are easing, IHS Markit said the data may not last long sales of both new and used cars are starting to pick up again.

According to IHS Markit, vehicle miles in the US fell by over 13% during 2020, while more than 15m vehicles were scrapped. That amounts to 5.6% of the Toal vehicle population.

High scrap rates generally accompany a decline in the average age of a vehicle, IHS Markit said.

However, a fall in car sales during the pandemic as people travelled fewer miles, saw the average age increase by 2 months from 11.9 years in 2019.

Another cause of a fall in vehicle production, according to IHS Markit, was an ongoing shortage of semiconductors, which led to inflated prices and a subsequent increase in used vehicle prices.

Lockdown easing set to be delayed as working from home will continue

Liam Roche
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0
Lockdown easing set to be delayed as working from home will continue

The prime minister is expected to confirm the decision during a press conference later on Monday

The UK government is set to end the lockdown restrictions in England later than June 21, the originally planned date, meaning workers’ returns to their offices will be delayed.

The BBC has reported that a number of senior ministers have agreed on a decision to maintain current rules for an additional four weeks.

As a result of the delay, people will still be encouraged to work from home if possible, while nightclubs will stay closed.

The prime minister is expected to confirm the decision during a press conference later on Monday.

The extension will be put to a vote in the House of Commons later in June, and could face a rebellion from a number of Conservative MPs.

Stage four of the roadmap out of lockdowns will see limits on social contact gone, although mask wearing and social distancing could however remain.

Scientists have suggested the next step should be delayed as the Delta variant is more transmissible.

This, it is suggested, would allow the rate of vaccinations to increase, and minimise a potential rise in vaccinations.

On the other hand, some politicians and business owners are becoming frustrated at the news, as they consider the vaccine roll-out to have been a success.

Over 70m vaccine doses have been given out across the UK, as 55% of people receiving two jabs.

The hospitality industry is one in particular which has warned against the potential harm caused by the continuation of social distancing measures. Nightclubs and theatres also remain unable to operate.

Nightclubs and bars could sue the government to prevent a delay to coronavirus restrictions being lifted on 21 June in England.

Ted Baker records £107.7m pre-tax loss as sales slashed

Liam Roche
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0
Ted Baker records £107.7m pre-tax loss as sales slashed

Ted Baker (LON:TED) saw its revenue fall by 44% to £352m during 2020 as the retail industry was left reeling from the multiple lockdowns across the UK.

The UK fashion brand also confirmed it made a pre-tax loss of £107.7m, rising from £77.6m the year before.

In better news for the company, Ted Baker secured two long-term territory licenses in March to broaden its reach into Indonesia, the Middle East and North Africa.

While its retail sales fell by 42.2%, Ted Baker‘s eCommerce sales rose by 22% £144.9m. This in part a result of the fashion brand’s increased investment.

James Andrews, Personal Finance Expert at money.co.uk, said:

“If you set out to design a shop to do badly under coronavirus restrictions, you’d end up with something a lot like Ted Baker,” said Andrews.

“It’s reliance on physical stores – not infrequently in airports – while shops were shut and holidays outlawed. Concessions in department stores that are now in insolvency or closing branches. A focus on workwear as people set up home offices and special occasion outfits while weddings and other parties were banned.”

“The good news for investors is that as offices reopen, weddings start again and travel tentatively returns later on in the year, things will get better – especially as the firm continues its pre-pandemic push into online sales.”

In response to demand for climate aware clothing, Rachel Osborne, chief executive of Ted Baker, said the company had improved its sustainability strategy.

“We are making good progress against our strategic transformation plan and Ted Baker is increasingly well placed to take advantage of the significant growth opportunities ahead of us. The Ted Baker brand has strengthened further, with the number of active customers growing to 1.2m by the end of the year,” Osborne said.

“While the impact of COVID-19 is clear in our results and has amplified some of the legacy issues impacting the business, Ted Baker has responded proactively and is in a much stronger place than it was a year ago. During the period, we delivered robust cashflow generation, fixed our balance sheet, refreshed our senior leadership team and today we are upgrading our financial targets for the second time since outlining our new strategy last summer.”

“Additionally, we have made good progress with our sustainability strategy, Fashioning a Better Future, including the mapping of all of our factory partners within our supply chain and significantly increasing our usage of cotton from sustainable sources to 69%.”

boohoo sales comparatives get tougher

Andrew Hore
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0
boohoo sales comparatives get tougher

Online fashion retailer boohoo (LON: BOO) is releasing a first quarter trading statement on Tuesday 15 June. boohoo adapted to the changing conditions last year more quickly than many of its peers, so the comparative performance will be interesting, however the second half is likely to be most significant this year.
There is already guidance in the market of 25% growth in revenues for the year, with 20% organic growth and the rest coming from the additional brands that have been acquired in the past year. The EBITDA margin is expected to be 9.5%-10%.
Comparatives
Comparative figures will get t...

Revolting shareholders: Morrisons directors’ not thought to be good value

Andrew Hore
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0
Revolting shareholders: Morrisons directors’ not thought to be good value

Supermarket operator Wm Morrison (LON: MRW) has upset shareholders with selective decisions on executive pay. There were 70.1% of the votes at the AGM cast against the directors’ remuneration report.
Last year, like-for-like sales, excluding fuel, increased by 8.6% and total revenues were 0.4% ahead at £17.6bn. Underlying pre-tax profit was 6% higher at £431m, before returning government assistance, although earnings per share before exceptionals halved to 5.95p. That pre-tax profit should improve this year.  
There were adjustments for direct Covid-19 costs included in the calculation of...

AB Traction adds to Driver stake

Andrew Hore
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0
AB Traction adds to Driver stake

AB Traction has increased its stake in construction dispute and property services provider Driver Group (LON:DRV) from 17.32% to 18.27%. This is something worth taking note of.
That is the first change in the stake since last November. NASDAQ OMX Nordic Stockholm Mid Cap-listed AB Traction has a record of buying stakes in professional services companies when they are depressed and then selling to a bidder.
AB Traction previously built stakes in Waterman and WYG and then sold them when a takeover was launched. AB Traction built up a 17.2% stake in property consulting company Waterman before sel...

New Aquis admission: Clarify Pharma

Andrew Hore
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0
New Aquis admission: Clarify Pharma

Yet another Aquis flotation of an investment company from Michael Edwards following on from NFT Investments, Dispersion Holdings and Pioneer Media Inc. Three other Clarify directors are also directors of NFT Investments and one is also on the Dispersion Holdings board. In this case, Jonathan Bixby is executive chairman, although he does not own any shares in Clarify Pharma – he does hold 10 million warrants he can exercise at 1p each if he wants to.
Clarify Pharma will focus on investing in psychedelic medicine businesses and products in the UK and Canada.
There seem to have been some lessons ...

Scottish Mortgage Investment Trust share price is a long-term investment

Liam Roche
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0
Scottish Mortgage Investment Trust share price is a long-term investment

Scottish Mortgage Investment Trust Share Price

The Scottish Mortgage Investment Trust share price (LON:SMT) performed outstandingly well during 2020. However, the company faced some bumps in the road early this year, during the tech sell-off and when James Anderson, one of the fund managers, announced he would be stepping down. At the time of writing, the Scottish Mortgage Investment Trust share price is at 1,229p, nearly 200p down from its all-time-high in February. The fund seems to have responded well following its mid-February dip, and now could represent an opportune time for investors while the share price is low.

Volatility

Following a tumultuous year, the Scottish Mortgage Investment Trust share price, with both peaks and troughs along the way, is up by 0.98%. In addition to this, the short-term volatility that has occurred may serve to put investors off.

The FTSE 100 company has a high exposure to tech firms which makes it vulnerable to mass sell-offs. In addition, it seeks out companies in the early period of their growth with massive potential. For example, it bought Tesla shares as early as 2013.

More recently it confirmed it has invested £72m in Blockchain.com, the UK’s largest cryptocurrency company, which could be a sign of things to come. It is important for investors to consider the longer-term with the Scottish Mortgage Investment Trust share price for this reason.

“The managers are true long-term investors since they believe it’s the best way to capture the potential growth of their companies. Currently the trust invests in around 95 companies, eight of which have been held for over ten years, including technology firms Amazon and Tencent, and French luxury goods company Kering,” said Hargreaves and Lansdown investment analyst Henry Ince.

Over the past 12 months the Scottish Mortgage Investment Trust share price is up by 70%, while going back as far as five years, it has gained 387%.

James Anderson stepping down does remain a long-term risk as he led he trust to make some excellent decisions over the past decade. Although he will not depart until April 2022 and will be replaced by Lawrence Burns who joined Baillie Gifford in 2009 straight from the University of Cambridge where he studied geography.

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