Watson’s Weekly 10-05-2019

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily. You will need a FULL SUBSCRIPTION to be able to click through all the links which take you to the relevant articles.

• This week was all about US/China trade talk as everyone was expecting an agreement on Friday 10th, but Trump did his usual Trump thing and threw a cat among the pigeons by threatening to increase tariffs on Chinese goods (Tuesday), which caused panic (Wednesday) but then he actually followed through on the threats just hours after the latest round of trade talks
• In commodities, there was an oil price hike (Tuesday) because the US sent an aircraft carrier and strike force to the Middle East as a warning to Iran, and prices for metals used in rechargeable car batteries continued to strengthen (Wednesday) 
• In currencies, there was a Bitcoin security breach (Thursday) at Binance, one of the world’s biggest cryptocurrency exchanges, as hackers stole over £30m in 7,000 bitcoin. The company said that it would use backup funds to ensure users didn’t lose any money. This is probably a blip, but if there are any more breaches investors will get very nervous

• Funnily enough, there was a lot of news about Uber given its much-anticipated listing on Friday this week. Uber listed at the bottom end of its price range (Friday) as it went for a more conservative approach, attracting a valuation of $82bn as opposed to the $90-100bn that had been mooted before, because it didn’t want to rub investors up the wrong way given Lyft’s poor performance since its flotation at the end of March
• As it happens, Lyft’s first ever results as a public company weren’t a complete disaster (Wednesday) but they weren’t exactly amazing either
• Meanwhile, Gett raised $200m in debt and equity from current investors including VW (Wednesday), valuing the company at $1.5bn. It is thought to be seeking a listing itself in 2020 and – unlike its larger peers – is aiming to reach profitability by the end of this year
• There was also news that Singapore-based Grab is thinking about hiving off its payments and services businesses (Thursday) to increase growth prospects, much in the same way Alibaba did with Ant Financial and Alipay. Grab is south-east Asia’s biggest start-up and currently valued at around $13bn

• There were rumours that Sports Direct’s Mike Ashley is thinking of splitting House of Fraser into two brands (Thursday) – “Frasers”, which would comprise of a handful of stores with an upmarket/designer label focus and “House of Fraser”, which would be more mass-market. An official announcement on this is expected in the next few weeks
• Debenhams managed to get its CVA overwhelmingly approved by creditors (Friday) despite strenuous objections from Sports Direct, whose 29% stake was wiped out as a result of the company’s actions
• Superdry announced its third profit warning in eight months (Friday) in its first set of results post the return of its co-founder and ousting of its previous management team. Julian Dunkerton plans on increasing the number of products available online, putting more stock on the shop floor, cutting back on promotions and introducing 500 new products within the next six months
• Morrisons decided to reduce its ties with Ocado (Friday) as it aims to deepen its existing relationship with Amazon and open the possibility of working with companies like Deliveroo and Uber Eats
• Ikea opened a store in central Paris (Tuesday), in line with its strategy of changing its existing out-of-town format and making its products more accessible. No doubt this will be rolled out elsewhere if it’s successful

• HSBC and Standard Chartered face some tough new competition in Hong Kong (Friday) as Tencent (the world’s biggest gaming company and digital giant), Alibaba (e-tailing behemoth), Xiaomi (the world’s #4 smartphone maker) and Ping An (the world’s largest insurer) have just won approval from the Hong Kong Monetary Authority to launch digital banks. Customer satisfaction for incumbent banks very low, so the sector seems to be ripe for change!
• Revolut faces investigation by the Lithuanian authorities over alleged Russia connections (Thursday) which will obviously put a cloud over the company until a conclusion is reached. Lithuania granted it a European banking licence as recently as December, so if it is revoked it could make geographical and product expansion much more difficult
• JP Morgan Asset Management is in the running to take control of China International Fund Management (Thursday), which would make it the first foreigner to take control of a Chinese fund manager since China relaxed rules to let foreign asset managers own up to 51% of mutual fund joint ventures back in 2017

My favourite story this week was Dog plays the piano and howls along (Inside edition, https://tinyurl.com/y5692gya). He’s even got his own backing dancer!

Have a great weekend!