Tuesday 26/11/19

  1. In POLITICAL & DEAL-MAKING NEWS, Hong Kong gets behind pro-democracy, Saudi Arabians arrest more dissidents, the LibDems face difficulties and the M&A boom is back with a…boom
  2. In RETAILING/HIGH STREET NEWS, US trad retailers continue to face challenges but the UK high street gets a boost while Wagamama’s owner stumbles, Sports Direct announces a rebrand and TSB announces branch cuts
  3. In INDIVIDUAL COMPANY NEWS, Uber loses its London licence and battery maker Northvolt scales up
  4. In OTHER NEWS, I bring you an idea for what we could do with our phone boxes…



So Hong Kong gets behind the protesters, Saudi Arabia is up to its old tricks, the LibDems face challenges and the M&A boom is back…

Hong Kong voters propel pro-democracy candidates to landslide win (Financial Times, Sue-Lin Wong and Nicolle Liu) heralds a massive victory for pro-democracy parties who won a majority in 17 out of the 18 district councils – a feat that is particularly impressive given that it didn’t win control of any council seat at the last local election four years ago. The voter turnout was also pretty high with over 70% of registered voters standing up to be counted. Out of 452 seats, pro-democracy won 385, pro-Beijing candidates won 59 and independents won 8. Carrie Lam, Hong Kong’s chief exec said the result would be respected and there appeared to be little reaction from Beijing in the immediate aftermath. * SO WHAT? * You do wonder what Carrie Lam would have done differently with the benefit of hindsight when she tried to pass a bill (which has since been withdrawn) that would have sent criminal suspects to mainland China. This sparked the massive protests we have seen over the past five months, with some of the most violent clashes occurring in the last fortnight. Having said all that, these local elections won’t actually change things that much because although the pro-democracy candidates will now have a greater say on the committee that elects the chief exec, that committee is still stuffed with pro-Beijing members. This is definitely a step in the right direction for the pro-democracy cause, but it will need to continue momentum if it is to actually achieve anything more substantial when it comes to elections for the Legislative Council, which is basically the city’s parliament.

Judging from Saudi Arabia arrests writers in fresh crackdown, says rights group (Financial Times, Andrew England) its seems that the regime is up to its old tricks again as human rights group ALQST alleges that at least eight dissident writers, bloggers and journalists have been arrested. * SO WHAT? * They weren’t apparently that high level, but Saudi Arabia’s treatment of critics was highlighted most recently when Jamal Khashoggi was murdered last year in Saudi Arabia’s consulate in Istambul. Investors who decided to avoid Saudi Aramco’s ongoing IPO may well be feeling even more justified in their decision not to get involved when you have a regime that is as unpredictable as this.

Lib Dems fear promise to reverse Brexit has backfired (Financial Times, Laura Hughes) suggests that the Lib Dems’ clear line that they will just stop Brexit dead if elected (and not hold another referendum) is not going down that well with voters according to polls and it also seems that voters just don’t seem to be getting behind Jo Swinson at the moment. * SO WHAT? * This is just one example of the noise you are going to be hearing up until the election itself! Now that all the manifestos are out for the main parties, I’m going through all of them individually and will be publishing a guide that will give you an idea of where each party stands on the main issues plus a quick word on what their impact may be so you can more easily compare and contrast. I’m hoping to have this out by the end of the week for you – so watch this space! I’ve decided to concentrate on the manifestos because these are the documents that have been debated over at length by the parties and represent more clearly, to my mind, what they are aiming to do. I tend not to take too much notice of TV debates etc. because all that shows IMHO is how good the participants are at debating! Being good on camera doesn’t necessarily mean you can do the job any better…

Boomtime back as dealmaking hits $70bn in a day (Financial Times, Eric Platt and Arash Massoudi) highlights the latest rush of global takeovers yesterday as over $70bn-worth of deals were announced. They included Charles Schwab’s acquisition of TD Ameritrade for $26bn, LVMH’s purchase of Tiffany for $16.6bn, Novartis buying biotech company The Medicinces Company for $9.7bn, a Mitsubishi-led consortium takeover of Dutch Utility company Eneco for €4.1bn and eBay selling its online ticketing business StubHub for $4.1bn to Viagogo. * SO WHAT? * Schwab/Ameritrade: imperilling Merrill says that the deal will still have to get past the regulators, but if it goes ahead should help it take on the likes of Morgan Stanley and Bank of America Merrill Lynch; LVMH/Tiffany: diamond geezer (Financial Times, Lex) suggests that Tiffany should flourish under LVMH’s umbrella; and New fear of rip-off prices after Viagogo buys StubHub from eBay in $4bn deal (The Guardian, Dominic Rushe and Rob Davies) shows that there’s resistance to the potential power of a mega-ticket tout. OK, so there are still hoops to jump through for some of these deals to complete, but the fact that these things just happened at all shows that there is an underlying thirst for them which shows confidence. Many will take heart at this given how we keep hearing about a global economic slowdown, US-China trade tensions and difficulties in Europe. It would imply to me that there is still belief under the surface of tension and that solutions to any of these economic logjams will result in a massive frenzy of activity.



US retailers face tough competition, the UK high street gets a boost, Wagamama’s owner sees a slowdown, Sports Direct wants to rebrand and TSB announces closures…

Why traditional US retailers don’t expect happy holidays (Financial Times, Richard Henderson) highlights a potentially tough period for shops in the US as they continue to face pressure from online-based rivals. IHS Markit forecasts suggest that online shopping sales for the holiday season will rise by 18.4% versus, say, US department stores which are expected to see a 6% fall. Interestingly, a group of 48 traditional retail stocks have underperformed an equivalent group of online retailers by 20% so far this year alone! * SO WHAT? * I think it’d be fair to say this isn’t particularly surprising, but there are some interesting charts in this article to illustrate the point. More evidence of what we have all come to suspect anyway!

Christmas boost comes early for retailers (The Times, Gurpreet Narwan) cites the latest figures from the CBI which show that retail sales remained unchanged in November – a significant development given months of continuous gloom. * SO WHAT? *  Some will see this as an early sign that Christmas on the high street might actually turn out to be OK, although the CBI’s deputy chief economist Anna Leach sounded a note of caution as well when she said “Actual sales have also stabilised and have nudged above average for the time of year. Employment has stopped falling after three years of decline. But Brexit uncertainty continues to weigh on investment plans for the year ahead, which remain weak”. It’s too early to tell yet, but at least this gives high street retailers some hope.

Slowdown in sales growth hits Wagamama’s parent company (Daily Telegraph, Simon Foy) highlights a slowdown in momentum at Wagamama’s, the company that The Restaurant Group (TRG) bought last November to add to existing brands Frankie & Benny’s and Chiquito. * SO WHAT? * The halving of Wagamama’s sales growth will be a particularly sensitive subject for the company given that it paid a whopping £559m for it at the end of last year amid shareholder outcry over the price. TRG sought to justify the cost by emphasising Wagamama’s growth momentum, especially in the US. Plans for its American business are currently under review and are expected to be unveiled at TRG’s full-year results in late February or early March.

Ashley changes name of Sports Direct (Daily Telegraph, LaToya Harding) shows that Sports Direct’s founder Mike Ashley is intending to rebrand his company as Frasers Group in an attempt to ditch its discount image and go up-market. If shareholders approve of the name change, the rebranding will take place on December 16th. * SO WHAT? * Although Ashley’s critics will say that putting lipstick on a pig won’t make it a supermodel, I think that this is a much-needed evolution for the company. When you consider that Nike and Adidas have decided that they don’t want to sell their latest stuff there because Sports Direct doesn’t fit well with their respective images, you can see why this move is needed. Whether or not it works, of course, will depend on whether it’s a proper format change or whether it’ll just be a case of swapping the sign over the door.

Meanwhile, TSB to close 86 branches with loss of up to 400 jobs (The Guardian, Jasper Jolly) piles on the gloom with plans by the high street bank to cut costs over the next year as its new chief exec, Debbie Crosbie, puts her mark on the company. She didn’t rule out further closures or job cuts either…



Uber lost its London licence and Northvolt scales up…

Uber loses licence to operate in London (Financial Times, Tim Bradshaw) heralds tough times for the ride-hailer as it has lost its licence for the second time as London’s transport regulator, Transport for London, found that it was not a “fit and proper” company to operate in the capital. This conclusion was reached due to a number of findings of questionable drivers using loopholes in the system that continued to allow them to work. Uber now has 21 days to lodge an appeal, but will be able to continue to operate in the meantime. * SO WHAT? * Competitors will be loving this, but this will just add to Uber’s headache. We’ll just

have to see how quickly it can act! Its food delivery business, Uber Eats, and its electric bike rentals service Jump will be unaffected by this decision.

In Battery maker Northvolt scales up ambitions with factory push (Financial Times, Richard Milne) we see that Europe’s leading battery start-up has announced big ambitions to almost triple the number of large factories it currently has in the pipeline. The Swedish group makes batteries for electric cars, storage and other uses and has thus far attracted €1bn of investment from the likes of BMW, Goldman Sachs and Ikea. * SO WHAT? * Its new ambitions will launch it into the same orbit of companies like Panasonic and Tesla and it said that it is open to working with other leading European industry players. I suspect that this will get a lot of support on the continent as many will want a European champion to rally behind.



And finally, in other news…

I have a confession to make. I love karaoke. There – I said it. So when I saw HacoKara Karaoke Box: The best way to de-stress at the cinema in Japan (SoraNews24, Oona McGee https://tinyurl.com/wlj7k9a) I thought this is something we need over here – and we could perhaps use our old telephone boxes! How great would this be?? A Dragon’s Den idea perhaps?!? I’m not sure whether everyone would share my enthusiasm, though…

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Some of today’s market, commodity & currency moves (as at 0856hrs 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 **
7,396 (+0.93%)28,048 *+0.78%)3,134 (+0.84%)8,63213,249 (+0.68%)5,928 (+0.67%)23,373 (+0.35%)2,907 (+0.03%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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