Friday 23/08/19

  1. In POLITICAL NEWS, South Korea-Japan relations get even worse
  2. In INDIVIDUAL COMPANY NEWS, Hasbro buys Peppa for $4bn, e-cigarette companies get called in and NMC Health stuns short-sellers
  3. In RETAIL NEWS, UK high street sales drop like a stone, Laura Ashley disappoints, Links goes up for sale, Morrisons closes stores and Ocado has another warehouse fire
  4. In OTHER NEWS, I bring you the world’s most instagrammable cafe…



So South Korea-Japan relations continue to worsen…

South Korea scraps intelligence-sharing pact with Japan (Financial Times, Song Jung-a and Kana Inagaki) charts the latest development in the worsening relations between the Asian neighbours as South Korea retaliates against Japan following the latter implementing trade restrictions on the former. Everyone had expected the General Security of Military Information Agreement to remain in place despite the increasingly frosty relations between the two countries, so this latest move has come as a surprise to many. Kim You-geun, deputy director of South Korea’s presidential National Security Council, stated that “We have determined that it would not serve our national interest to maintain an agreement we signed with the aim of exchanging military information which is sensitive to

security”. * SO WHAT? * Some may dismiss this as a storm in a teacup – just a bit of a flare-up of tensions that have always been bubbling under the surface. However,  this seems to be more serious than usual. The Americans will be getting nervous about regional stability in that such moves imply that South Korea is favouring China as its superpower backer and Russia will no doubt be quite keen to poke the hornet’s nest by using this situation to needle Japan with its constant territorial battles in the Kuril Islands. Trump has been keen to take troops out of the region and let them just get on with it, so an escalation of rhetoric between South Korea and Japan is not in US interests because they might have to beef up presence there once more. The thing is that neither side appears to want to climb down and the longer this goes on, the worse things are going to get as nationalism on both sides continues to escalate to potentially damaging proportions. Let’s hope tensions ease for the sake of regional stability.



Hasbro buys the company behind Peppa Pig, e-cigarette makers face more scrutiny and NMC Health confounds the short-sellers…

Hasbro picks up Peppa Pig in $4bn deal (Wall Street Journal, Micah Maidenberg) highlights Hasbro’s purchase of Entertainment One, the entertainment company famous for Peppa Pig, PJ Masks and Ricky Zoom. Hasbro’s chief exec, Brian Goldner said that “These brands have many of the characteristics and profitability of our franchise brands”. Entertainment One is based in Toronto and also produces TV and film for adults in addition to operating a music business. Hasbro said that it expected to squeeze out $130m in annual cost savings by 2022 as it will bring part of Entertainment One’s toy business in-house and raise profitability of its licencing and merchandising activities. * SO WHAT? * Toymakers have been having a nightmare in the last few years as kids increasingly turn to mobile device-based gaming and away from “traditional” toys – which has ultimately led to the demise of companies such as Toys R Us. Having said that, although Hasbro shares fell by 5% in after-market trading, they have actually gone up by over 40% so far this year. Toymakers have been trying to broaden the appeal of their assets in order to attract more customers – so, for example, Hasbro has developed a Fortnite version of Monopoly and Mattel has launched a film studio to make movies based on Barbie and other toys. I think that the Entertainment One purchase will give Hasbro access to more popular content – but it’s what it does with it that counts!

Then in E-cigarette makers quizzed over health risks to smokers (The Times, Alex Ralph) we see that the US House of Representatives energy and commerce committee has asked e-cigarette makers to give them details about the health impact of their products. Fontem

Ventures (a subsidiary of Imperial Brands and owner of the Blu brand), Reynolds American (the US business of British American Tobacco), Japan Tobacco International (which owns the Logic brand) and Juul (the vaping supremo which is 35% held by Altria, the company famous for the Marlboro brand) have all had to submit details of their marketing practices, any research they have on the health impact of their products on adolescents and adults along with a list of the influencers who are paid to peddle their products. * SO WHAT? * I’m all for cigarette alternatives to wean people off smoking, but I think that concerns over young people getting IN to smoking via vaping are worth looking at more closely (especially if their long-term health suffers as a result). Given that no-one really knows what the health impacts are of e-cigarettes, it’s good to see that there are moves afoot to monitor it properly. The letters were sent out after the Centers for Disease Control and Prevention voiced concerns over a “cluster of pulmonary illnesses possibly related to to e-cigarette product use…primarily among adolescents and young adults”. You can find more out about this in Vaping is suspected in sever lung illnesses (Wall Street Journal, Betsy McKay). The debate rumbles on…

Bid talk is shot in the arm for health firm (The Times, Alex Ralph) is a popular story in today’s broadsheets as it highlights the reasons behind the 42% share price rise of FTSE100 private healthcare provider NMC Health yesterday – basically, there were rumours of a bidding war between two investor groups for a 40% chunk of the company. NMC remained tight-lipped on the development that coincided with the company’s better-than-expected first half results statement. * SO WHAT? * The shares have been a favourite of short-sellers due to scepticism over the company’s accounting policies, sending the price down by 53% since August last year, so this news will be painful for them. More detail is needed before getting too excited about this, however. Still, what a move! If bid rumours prove to be false, these things will fall through the floor…



UK high street sales hit new lows, Laura Ashley disappoints, Links is up for sale, Morrisons sheds stores and Ocado has another warehouse fire…

Today’s retail stories don’t make for an uplifting read as UK high street sales fall at fastest rate since 2008 (The Guardian, Phillip Inman) cites the latest report from the CBI which showed that sales volumes and orders fell at the fastest rate for a decade due to rising costs and increasing Brexit uncertainty, Laura Ashley is off the pace – could it soon be off the stock market too? (Daily Telegraph, Laura Onita) highlights Laura Ashley’s disappointing results

dashing hopes of an iminent turnaround and Owner tries to find buyer for Links (The Times, Robert Miller) shows another British retailer potentially biting the dust if a buyer isn’t found. The jewellery chain’s current owner, Folli Follie, bought Links back in 2006 and is asking for offers next week.

The bad news continues in Morrisons shuts four supermarkets, putting 400 jobs at risk (The Guardian, Zoe Wood) following a performance review. Recent Kantar data showed that Morrisons was the worst-performing supermarket incumbent. Then Ocado orders hit by second warehouse fire (The Times, Ashley Armstrong) heralds Ocado’s second fire in six months, this time in Erith, east London. Customer orders will be disrupted as a result but it doesn’t sound quite as serious as the one they had in Andover, which took four days to put out. The retail sector really could do with a boost at the moment, but I don’t see one coming any time soon.



And finally, in other news…

I thought I’d bring you something pretty spectacular today in the form of This Is Officially the Most Instagrammable Café in the World (BestLife, Diana Bruk If the food in there tastes as good as it looks, then it’s clearly a winner! I’m not normally into this kind of thing, but it really is very impressive…

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Some of today’s market, commodity & currency moves (as at hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq**DAX *CAC-40 *Nikkei **Shanghai **
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)