Wednesday 14/04/21

1. In VACCINE, MACRO & CRYPTO NEWS, Johnson & Johnson delays European rollout, India does a deal with Russia and fake vaccine certificates emerge while the UK economy grows and Bitcoin hits new highs
2. In IPO NEWS, Coinbase’s flotation approaches and Grab announces a SPAC merger
3. In RETAIL/RETAIL-RELATED NEWS, Sainsbury’s garners investor interest and JD Sports predicts a good year but landlord Landsec continues to take less rent
4. In MISCELLANEOUS NEWS, China tech companies get a month to sort themselves out, Just Eat takes market share and JLR has a shocker
5. AND FINALLY, I thought I’d leave you with ideas for a Yes Day and how to “make” people say yes!

So J&J hits the brakes, India does a deal with Russia and fake certificates emerge while the UK economy grows and Bitcoin hits new highs..

Johnson & Johnson delays vaccine rollout in Europe after US health agencies call for pause (Financial Times, Nikou Asgari, Hannah Kuchler and Kiran Stacey) shows that it’s not only the Oxford/AstraZeneca vaccine that is causing concern regarding blood clots The US CDC and FDA said they were reviewing six cases of “rare and severe” blood clots in people who had received the J&J vaccine. They were all women, aged between 18 and 48 and developed symptoms between 6 and 13 days after getting the jab. * SO WHAT? * Clearly, the authorities are being cautious, but this is yet another blow to vaccine rollout efforts – especially in the EU, which was hoping that the J&J jab would help speed things up (the fact that it was a one-shot jab would have really helped them get back on track). Interestingly, both the J&J and AstraZeneca vaccines use messenger RNA technology and are adenovirus-based. Norway estimated that its vaccine rollout plans would be delayed by between 8 and 12 weeks if they couldn’t use either. Good news for Pfizer who is hiking its prices…

Meanwhile, India seeks vaccine boost with Russian jab deal as Covid cases soar (Financial Times, Amy Kazmin, Jyotsna Singh, Stephanie Findlay and Henry Foy) shows that things are getting pretty bad in India as hospitals in Mumbai, New Delhi and other major cities are getting overwhelmed with Covid patients and that the government are doing what they can to source more vaccines for domestic use. India already stopped vaccine exports because of rising Covid cases, but on Monday this week Indian drug regulators gave emergency approval for Russia’s Sputnik V vaccine that would potentially lead to

local production and imports. In addition to this, the authorities said they would give emergency approval for any vaccines approved for use in the US, UK, Europe or Japan (previously they had to go through an additional stage of “bridging trials”). Tough times.

Then in Fake Covid-19 certificates hit airlines, which now have to police them (Wall Street Journal, Benjamin Katz) we see what may be a sign of things to come as the International Air Transport Association (IATA) said that it has seen rising instances of people travelling with fake certificates that are required by many countries. * SO WHAT? * This is going to put more pressure on governments/authorities/companies to come up with something much more viable and, presumably, digital in order to minimise this problem. Given the way it works, I wonder whether blockchain could be used to support such an initiative and make it harder to hoodwink by embedding more checks and balances. Anyway, I think there is going to be more of this as cautious economies open up.

There’s some positive news in Growth returns to UK as firms adapt to Covid and Brexit (The Guardian, Richard Partington) as the latest figures from the Office for National Statistics show that GDP rose by 0.4% in February versus the previous month as retailers saw rising sales and manufacturing activity got a boost from rising car production. It’s a bit early to crack open the Bolly as the economy is still 7.8% smaller than it was in February 2000, but at least it seems to be going in the right direction. Hopefully, pent-up demand will kick-in as restrictions lift and momentum will build.

Cryptocurrency fans will be rejoicing as Bitcoin’s value rises 5% to hit record high of $63,000 (The Guardian, Joanna Partridge) shows that Bitcoin is at it again after a bit of a recent pause for breath. This record was hit just a day before the flotation of the US’s largest cryptocurrency exchange, Coinbase, which I’ll get onto in a minute.

Coinbase floats today and Grab makes a big announcement…

I did mention this yesterday in passing but Coinbase listing set to capitalise on crypto bull run (Financial Times, Miles Kruppa) highlights today’s NASDAQ listing of the nine-year old cryptocurrency exchange start-up. The thing is no-one really knows how to value the company which relies on transaction revenues in a volatile and lightly-regulated market. Investors will probably be buying into the fact that it is the biggest US cryptocurrency exchange, that it held funds for 56m retail customers at the end of the first quarter as it was the go-to storage solution for Bitcoin from the early days and that it is now in the midst of a strong run in values of cryptocurrencies (Bitcoin has more than doubled so far this year, for instance). * SO WHAT? * This will be interesting to watch, not just because it is the first company of its type to list, but also because it is another company that has decided to go for a direct listing rather than the traditional IPO route. In this case, I think that hype will rule and given that they are the biggest fish in the pond regarding what they do in cryptocurrency they can probably go OK without the safety net that a traditional IPO can provide. Given valuations of anything between $74bn and $100bn being touted at the moment, early investors (especially the founders!) will be feeling pretty smug

given that private investors put an $8bn valuation on the company in 2018! The fact that the company is a trusted intermediary due to its adherence to regulators and secure service (unlike some other competitors) will be key to its future growth and I would have thought that as long as it doesn’t do anything outrageous it will continue to tick over nicely as cryptocurrencies edge further toward the mainstream. It may have to trim its margins in future due to competition, but for now it seems it can kick back and watch the transaction fees roll in…

Then in ‘Super app’ Grab to go public in record $40bn Spac merger (The Guardian, Mark Sweney) we see that the south-east Asian “super app” Grab – which people use for ride-hailing, food delivery and online banking, among other things – has decided to float in the US via a merger with US-based SPAC Altimeter Growth Corp. * SO WHAT? * It is the biggest ever SPAC deal in history – not bad for something that started as a ride-hailing app in 2012 that then rolled out across south-east Asia. It is now a one-stop-shop of apps with services in hotel booking, food delivery, banking and mobile payments (so it’s like an Uber, DoorDash and Ant Financial combined)! It has been a lockdown winner and Grab: superapp secures superior price (Financial Times, Lex) points out that although the valuation is steep, it has an interesting growth story and the money that this raises will give it extra firepower to combat its main rival in the region, Gojek.

Sainsbury’s attracts attention and JD Sports sounds optimistic but Landsec is still suffering…

‘Czech sphinx’ billionaire swoops on Sainsbury’s (Daily Telegraph, Oliver Gill) is a very racy-sounding headline and refers to billionaire activist investor Daniel Kretinsky building up a near-10% stake in the UK’s second biggest supermarket via his firm Vesa Equity Investments. * SO WHAT? * This sounds kind of exciting in the sense that speculation will increase about him trying to take the business private, but I don’t see why anyone would really want to take it private TBH. Usually, I would say that you tend to take something private if it is a bit of a basket case and is crying out for emergency surgery to get it back on track. You throw some money at it to take it private, do some dramatic pruning in the background away from the prying eyes of annoying investors and then take it back to market with a fat valuation. Sainsbury’s is clearly rather fuddy-duddy and is still smarting from its failed bid for Asda but it’s done well from lockdown, has built up a decent distribution network and is chugging along OK. Could it do with a bit of a refresh and new direction? Probably. But does it really need to go private to do so? Not necessarily. It’ll be interesting to see how this pans out.

Then in JD Sports chief predicts bumper year with high street ‘back to normal’ by summer (Daily Telegraph, Hannah Boland) we see that the FTSE100 retailer is very bullish about its profits and future prospects and so its share price hit a record high on its results announcement yesterday. Great timing of its results to come out the day after “Freedom” started in England and Wales 😁! The exec chairman Peter Cowgill said that he expects shoppers to return to stores by the end of June. JD Sports has been one of the best performing high street stores so far (but obviously, it’s early days!).

Things are not so rosy in Landsec takes less rent as retail and hospitality battle (Daily Telegraph, Ben Gartside) as ongoing difficulties for retailer tenants has meant that Landsec only managed to collect less than 50% of rents due in the first quarter from them versus collecting 87% of rents due from office tenants. * SO WHAT? * This isn’t surprising given lockdown and rival Derwent London experienced something similar. I would have thought that the situation will improve as lockdown is lifted but tenants will no doubt be keen to keep downward pressure on rents so I wouldn’t expect any uplift in retail activity to transfer to better rent collection for a few months yet at least.

Chinese regulators lay down the law, Just Eat gloats and JLR faces even more challenges…

After the recent crackdown on Ant Group and Alibaba, China tech groups given a month to fix antitrust policies (Financial Times, Ryan McMorrow) shows that Chinese regulators are continuing in their mission to crack down on their big tech companies by giving the country’s 34  leading tech companies one month to get their anti-competitive practices together otherwise they will get the Alibaba treatment (i.e. massive fine). * SO WHAT? * This is probably the biggest attempt yet by the country’s regulators to combat the monopolistic behaviours of the country’s massive internet groups. Given that Alibaba has been made an example of, I would expect companies to swiftly fall into line. This is long overdue, but then again I guess they couldn’t have done it last year now could they! The companies will need to show a concrete roadmap as to how they will reform their current behaviours in areas such as the “unfair” acquisition of customers (i.e. chucking money at them to grab market share), data and algo usage to set discriminative prices and tax evasion.

Elsewhere, Just Eat claims to have taken a big bite out of Uber Eats and Deliveroo’s market share (Daily Telegraph, Matthew Field) shows that the food delivery company is claiming to have taken market share from its rivals under the latest lockdown after a major marketing drive involving Snoop Dogg. * SO WHAT? * It is clearly enjoying the travails of its rivals (especially the disastrous Deliveroo IPO) but I fail to see how they are inherently better. Yes, they are ahead in terms of not having the contractor/employee problem, but I don’t think their fundamental business is that different. They will surely still face the same drop-off in takeaways etc. as their rivals as people head to restaurants rather than having takeouts. I’d say enjoy your moment while you can, Just Eat, because you are not that much better than the others! I wonder whether there will be a summer takeout delivery price war in the offing??

Covid slams brakes on JLR sales in blow to recovery plan (Daily Telegraph, Alan Tovey) shows that it never rains but it pours for JLR as it announced a drop in sales for the third consecutive year, although they did at least rise in the final quarter. * SO WHAT? * I think that the whole “Reimagine” turnaround thing announced by chief exec Thierry Bolloré in February is just a distraction and, essentially, a list of pipe dreams. Fundamentally, the company has to do a major line-up revamp so maybe it is just as well it is aiming to be 100% electric by 2025 – something that is discussed in the latest edition of Watson’s Monthly. I am far from confident that Jaguar will be able to do this alone.

…in other news…

I thought I’d leave you today with an idea for living dangerously with kids in Couple say yes to everything their kids ask for – and people are praising them (The Mirror, Paige Holland) and, as we are on the subject of answering things in the affirmative, an apparently sure-fire way of bending people to your will in Man shares ‘FBI tip’ for getting someone to say yes to any question you ask (The Mirror, Courtney Pochin).