Tuesday 28/06/22

1. In MACRO & ENERGY NEWS, the G7 talks Russia sanctions, Moscow defaults, Japan asks citizens to save power, National Grid moves to avoid blackouts and the UK turns to coal
2. In M&A NEWS, Robinhood creates a stir, VW cooks up a deal and Prosus aims to offload Tencent shares
3. In CONSUMER NEWS, prime London rents return to pre-Covid levels while toiletry prices rise
4. In INDIVIDUAL COMPANY NEWS, Biffa delays its results, Wise’s chief faces a UK ban and Eat Just has issues
5. AND FINALLY, it’s Pomplamoose mash-up time again!

So the G7 talks sanctions, Russia defaults on debt, Japan appeals for power saving, National Grid moves to avoid blackouts and UK relents for coal…

📢 I’m going to be doing a roundup of the month of June TOMORROW at 5pm with Jake Schogger of the Commercial Law Academy. I will whip through the major events of the month in the business and financial markets news and show you how they’ve developed and Jake will give you legal insight into many of those events. You need to REGISTER to attend this even (which is FREE), and you can do that HERE. See you TOMORROW!

G7 countries to hit Russia with new sanctions (Financial Times, Sam Fleming, Guy Chazan and Henry Foy) shows that the G7 leaders are cooking up more sanctions to impose on Russia to scupper the financing of its war ambitions but Russia/sanctions: G7 seeks more damage to the war machine, less to its own economies (Financial Times, Lex) points out that although Europe has cut its reliance on Russian gas in half – so it now accounts for 20% of total supplies – the “easy” options to plug the gaps are running out. Sanctions will bite, but for both sides. Talking of which, Moscow defaults on foreign debts for first time since Bolshevik era (Daily Telegraph, Louis Ashworth) highlights Russia’s first default on foreign debts since 1918’s Bolshevik revolution as it continues to be frozen out of the Western financial system. Russia is arguing that it can pay, but as it is only willing to do so in Roubles (which are not being accepted) they say that the whole situation is a “farce”. Russian debt default deals a heavy blow to Putin’s plans (Daily Telegraph, Ben Marlow) is an interesting article which goes

on to say that although common opinion at the moment suggests that the sanctions are losing their bite and that the default is largely symbolic, the longer term effects could be considerable as the country may not be able to access international financing for years.

Meanwhile, in energy news, Japan tells business and public to save power to avert Tokyo blackout (Financial Times, Kana Inagaki and Leo Lewis) highlights the latest appeals by the Japanese government to businesses and the public to cut their electricity use in its second blackout alert this year. * SO WHAT? * The previous one was in March and this latest alert will stir up debate about restarting Japan’s nuclear plants. Most of its nuclear reactors have been shut down since Fukushima in 2011 for obvious reasons and lingering resistance to turning them back on will mean that this could be one less option available to the government to address the current energy shortage.

Back in the UK, National Grid will pay households to shift electricity use to avoid blackouts (The Guardian, Alex Lawson) shows that the electricity network operator is planning to cut blackout risk this winter by paying customers with smart meters to use less electricity at peak times while Net zero regulations to be watered down as Britain returns to coal (Daily Telegraph, Rachel Millard and Tom Rees) shows that fossil fuel plants will be given a free pass on emissions as efforts intensify to ensure continuous power. Desperate times require desperate measures…

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Robinhood gets approached, VW closes in on making a disposal and Prosus aims to sell Tencent shares…

In Robinhood shares soar on takeover hopes (Wall Street Journal, Vicky Ge Huang and Hannah Miao) we see that the company’s shares shot up by 21% initially – and then calmed down to “only” 14% up on the day – on news that it was subject to a takeover bid by crypto exchange FTX. A Bloomberg News report said that FTX was thinking of ways to buy the trading platform but a formal bid has not been made officially. * SO WHAT? * This sounds quite interesting and has clearly become an option as its share price has fallen by 49% so far this year. It was trading at $80 in August last year, but even with the bump it got yesterday, it’s still only at $9.12. It sounds to me like one 💩 company buying another 💩 company, but no doubt this will have woken up other potential bidders.

Volkswagen nears deal to sell stake in Electrify America to Siemens (Wall Street Journal, Ben Dummett and William Boston) shows that VW is close to selling the minority stake it owns in Electrify America, its US EV charging business, to Siemens AG, that gives the business an implied valuation of over $2bn. It is

expected to announce a deal today and would complement Siemens’ existing operations in the EV charging sector. * SO WHAT? * It’s interesting to see that VW is pulling out when you would have thought that it should be piling in. Interestingly, it formed Electrify America back in 2016 after the dieselgate scandal broke in an effort to show commitment to clean vehicles so VW perhaps feels that it’s done its time. Maybe it just wants to concentrate on cars or MAYBE it thinks that installing chargers in the US will be more trouble than it’s worth…

Then in Bell rings for a vast Tencent stake sale (The Times, Katie Prescott) we see that the South African media and internet group, Naspers, is planning to sell down its massive stake in the Chinese tech giant Tencent to finance a share buy back. It bought 41% of Tencent for $36m in 2001 and although it’s sold down some of it in the intervening years it still owns 33%, which is now valued at over $130bn 😱. Not a bad investment, eh?!? Prosus/Tencent: reducing stake further would close valuation gap (Financial Times, Lex) points out that Tencent’s share price has halved since its peak and that Prosus could have sold at much higher levels, but then again it probably didn’t foresee the massive hit it took from the Chinese government as it cracked down on the tech sector as a whole.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Prime London rents bounce back and soap prices rise…

In consumer news, Prime rents leap to pre-Covid level (The Times, Tom Howard) cites Knight Frank’s latest report which says that luxury home rents in central London have shot up by 26.4% thanks to the return of businesspeople and overseas students. The only big city that has seen rents rise more over the last year is New York, where they have risen by an eye-watering 38.5%. Everyone will be needing wage increases to cover this, although rent is a smaller proportion of disposable income for wealthier people.

Meanwhile, Shoppers squeezed as soap prices rise (Daily Telegraph, Hannah Boland) shows that consumers continue to face higher prices as PZ Cussons, the maker of Carex and Imperial Leather, has decided to increase its prices. Stats from price comparison sites show that some of PZ Cussons’ soaps are now 17% dearer than they were in 2020. * SO WHAT? * This is just the latest evidence of companies passing on higher raw materials costs to customers as Unilever and others have all been at it. Maybe the solution is for us to take fewer showers to save on water and soap, although this might be made worse by cutting electricity usage for ACs and fans, which will make us all sweatier and more in need of showers…

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Biffa delays, Wise’s co-founder gets into hot water and lab-grown meat success isn’t a given…

In a quick scoot around other interesting stories today, Results on back burner as Biffa waits for auditor (The Times, Tom Howard) shows that the British bin collection and recycling company has had to delay the publication of its annual results to give its auditor more time to review the numbers as it is currently under scrutiny by HMRC for potentially underpaying landfill tax in recent years. * SO WHAT? * Delaying results is not a good look for a company and it may spook investors who interpret it as being due to something untoward going on in the background. However, the shares only fell by 2.1% on the news so they don’t appear to be that worried at this stage. No additional date for the results announcement has been forthcoming as yet.

Wise chief faces UK ban over tax payments (The Times, Katherine Prescott) shows that the billionaire co-founder and chief exec of Wise (formerly known as TransferWise) could be banned from working in financial services as he is being investigated by the Financial Conduct Authority for being a “deliberate tax defaulter”. Kristo Kaarmann will remain in place while the investigation is ongoing. It will be interesting to see how this goes as he is very

much associated with the company he co-founded and any disruption here could cause worries about its ongoing success.

Then in Lab-grown meat maker Eat Just unable to capitalise on Malaysia chicken ban (Financial Times, Oliver Telling and Emiko Terazono) we see that US start-up Eat Just, which became famous 18 months ago for making the world’s first lab-grown meat to be sold commercially (a chicken nugget, no less!), has been unable to benefit from a chicken export ban from Malaysia as its products have yet to hit shop shelves. As things stand currently, they don’t have enough scale although many see it as the future of meat. Other rivals around the world, like America’s Upside Foods and Israel’s Future Meat, are seeking regulatory approval before scaling up production. Funnily enough, meat-alternative companies like Impossible Foods dismiss lab-grown meat as being too expensive to be commercial but Eat Just reckons it is just a matter of time. As things stand currently, its chicken product is being reviewed by the FDA and it is also developing lab-grown minced beef. * SO WHAT? * I think that the longer it takes for plant-based meat-alternatives to really taste like meat the more chance lab-grown meat has of being successful. Still, I think consumers will need some convincing – especially if this lab-grown meat is more expensive.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

…in other news…

Yes, it’s that time again where I can’t find anything appropriate from my usual sources for this section, so it’s time for a Pomplamoose mash-up! This time it’s Every Breath and 500 Miles – enjoy! These mash-ups are so clever 👍