reaking markets news, comment and analysis through the day from the Standard’s City team.
China emerges from Covid stronger
China today became the only major economy in the world to report that it grew in 2020, even as the global Covid pandemic that started in its Hunan province killed more than two million.
The country reported economic growth of 2.3% for the year after a rip-roaring final quarter which saw it going into 2021 stronger than before the coronavirus.
The country has rapidly bounced back from the pandemic it hastened by continuing international flights long after locking down domestic traffic in January.
Its rapid revival is being seen both as a testament to its draconian lockdown rules and its factories’ rapid skills in churning out PPE equipment for the world’s struggling hospitals and healthcare workers.
Industrial output was the mainstay of its recovery, boosting GDP througout the year. In December, China’s factories produced 7.1% more than a year ago.
The battle for Arcadia
High street stalwart Next is among a host of retail giants aiming to take control of Arcadia as the deadline approaches to snap up the troubled Topshop owner.
Sir Philip Green’s retail empire, which employs around 13,000 people and 444 UK stores, collapsed into administration at the start of December.
Administrators at Deloitte are expected to receive bids worth more than £200 million in the process, which could be completed by the end of the month.
Next has been touted as one of the most likely victors in the process, with the listed retailer bidding for the group in partnership with US hedge fund Davidson Kempner.
It is understood that the Next offer would work with existing management and seek to keep many Arcadia stores open if they are able to agree deals with landlords.
Next faces competition from high street rival JD Sports, which has held talks over a joint bid with US retail giant Authentic Brands.
Frasers Group and Boohoo have also been reported as having an interest.
BT leads fallers on Blue Morning for gloomy FTSE
Heavyweight stocks led the London market lower today amid more signs of investor unease over the scale of recent spectacular gains on Wall Street and elsewhere.
The Dow Jones Industrial Average is almost double its pandemic low-point in March, although Friday’s session exposed more jitters that share prices are looking toppy given debt issues and a sluggish response to the pandemic.
As Wall Street is closed for Martin Luther King Day, there’s an opportunity for reflection ahead of this week’s White House inauguration of Joe Biden. Already the initial euphoria over his stimulus plans for the US economy has been drowned out, with more voices claiming that $2 billion is either reckless or insufficient.
IG analyst Joshua Mahony warned: “Speculation over whether Biden will be able to garner enough support to pass his full stimulus package remain a key concern for markets.”
This uncertainty was reflected in the London market, which stuttered despite the positive impact of China’s latest GDP figures. The FTSE 100 index fell 10.98 points to 6,724.73, with BP 5.2p lower at 297.25p and Royal Dutch Shell down 15.6p at 1,404.6p.
BT was the biggest faller after it emerged that it is facing a £600 million class action lawsuit relating to the overcharging of landline customers over an eight-year period. The shares were 3.35p cheaper at 137.5p, having risen sharply in recent weeks.
The announcement of UK travel corridor closures on Friday added to pressure on transport-related stocks as both BA-owner International Airlines Group and Rolls-Royce fell 1.5%.
Animal genetics company Genus was among the best performing stocks after it upgraded profits guidance on the back of strong trading in China. Shares are now at a record high of 4,516p, having rallied by 5% or 200p on the back of today’s unscheduled update.
Spirent Communications was another FTSE 250 stock on the front foot, rising 4.5p to 267p after it forecast profits in line with City hopes as its testing and assurance work benefits from demand relating to new technologies, including 5G and autonomous vehicles.
Manchester-headquartered Begbies Traynor has splashed out nearly £21 million on a new insolvency company, adding its first offshore offices.
The corporate restructuring specialist said it would pay a consideration of up to £20.8 million for CVR Global, an insolvency practitioner focused in the south of England.
“The acquisition of CVR is our largest insolvency acquisition to date and is expected to be immediately earnings-enhancing,” said Ric Traynor, Begbies Traynor’s executive chairman
“The increase in scale and capabilities leaves the group well-positioned to increase its market share and continue to grow its business recovery and financial advisory revenues.”
The deal will add Begbies’ first ever overseas offices, as it gains access to CVR’s offshore sites in Gibraltar, Jersey, Cyprus and the British Virgin Islands.
CVR also has significant insolvency practice, and a strong forensic accounting side, Babies said in a statement to the London Stock Exchange on Monday.
The company’s 90 partners and employees will join Begbies’ offices and teams in the south of England and will operate under the Begbies Traynor and BTG Advisory brands.
In its most recent financial year, CVR made revenue of £9.5 million and normalised pre-tax profit hit £1.2 million. The acquisition is expected to bring operating synergies of at least £750,000 every year
The lipstick effect
Cosmetics company Warpaint is on track to record better than expected full-year sales, it said today.
The AIM-listed firm, which owns the W7 brand which is stocked by retailers including Wilko, expects 2020 sales to not be less than £40 million. It had previously guided at least £37 million.
It had better than anticipated trading in the second half.
Warpaint added that following successful initial sales of a range of 15 W7 cosmetics products in 209 Tesco Express stores from November, these products will now be stocked in a further 469 Tesco Express stores starting at the end of February 2021.
Dr Marten kicks off IPO
Dr Martens could be listed on the Stock Exchange in London by the start of next month and hopes to be included in a FTSE index, the business said on Monday.
The footwear firm confirmed its intention to launch an initial public offering (IPO), a process companies go through when their shares first start trading.
Dr Martens’ current private equity owner will be selling off some of its shares in the IPO.
Around a quarter of the company’s shares are expected to be traded publicly after the float, and Dr Martens “expects that it would be eligible for inclusion in the FTSE UK indices”.
It said: “The final offer price in respect of the offer will be determined following a book-building process, with admission currently expected to occur in early February 2021.”
Goldman Sachs, Morgan Stanley, Barclays, HSBC, BofA Securities, RBC Capital Markets and Lazard have all been hired to help with the floatation.
Keywords appoints new chief operating officer
AIM-listed video gaming services company Keywords Studios has appointed Sonia Lashand Sedler to the board as chief operating officer.
She will work alongside the boss and finance chief and take responsibility for the day to day operational running of the business. The appointment comes at a busy time for the firm: it has recently made two acquisitions.
Keywords said Lashand Sedler has 20 years of experience in scaling up businesses internationally through senior roles, most recently as global head of managed services and banking strategy at Diebold Nixdorf, a retail and banking technology group.
Keywords provides a range of services, such as testing and marketing.
Rutherford Health launches funding round
Rutherford Health, the cancer treatment business which was the biggest investment in Neil Woodford’s ill-fated Patient Capital fund said it would need to raise more funding in the current quarter.
Formerly known as Proton Partners, Rutherford raised £100 million from Woodford after being floated on the NEX exchange in 2019.
Its shares are illiquid and remain mainly held by the Patient Capital Trust, now known as the Schroder UK Public Trust since Woodford was stripped of the management contract and Schroders took it over.
It said today that Covid 19 had made for growing waiting lists for cancer biopsies, diagnostics and surgery.
“The Company expects a significant increase in revenue and patient numbers over the coming months following the contracts awarded by the NHS and a strong pipeline for recruitment of oncologists trained in proton beam therapy.”
But it needs new sources of funding “to support the company’s rapid growth”, it admitted, “and expects that it will need to do so in Q1”.
“These include but are not limited to debt refinancing, sale and leaseback agreements and an equity fundraise potentially in conjunction with an admission to AIM. The Company will update shareholders in due course as appropriate.”
Andrew Sykes Group boss takes leave
HEAT hire firm the Andrews Sykes Group today said managing director Paul Wood is taking a leave of absence due to ill health.
Carl Webb has been appointed to assume Wood’s day-to-day responsibilities.
Jean-Jacques Murray, Vice- Chairman of Andrews Sykes, said:
“The Board and all his colleagues wish Paul a speedy and full recovery and look forward to welcoming him back to the business. The group is strong and the Board has every confidence in the strength of the senior management team under the direction of Carl Webb.”
Andrews Sykes has been around since 1857, headquartered in Wolverhampton.
It supplies heat and cooling equipment hire and was involved in the construction of the Millennium Dome in 1999.