Our head of investment rounds up the morning's big news.
After closing at a three-week high on Monday, the FTSE 100 is trading in the green again, with Glencore (LSE:GLEN) at the top of the basket. Later today, the chief economist at the Bank of England Huw Pill will be giving a public lecture entitled ‘Inflation, persistence & Monetary policy’ which could provide some clues into the central bank’s feeling towards the outlook for inflation and interest rates.
Overnight, Australia kept its cash rate unchanged at 3.6%, marking a pause to its rate hiking cycle which began in May 2022. This helped boost stocks in Asia with the ASX 200 closing slightly higher while the Aussie dollar fell.
Oil prices continue to climb after OPEC+’s surprise intervention to cut output, with WTI above $80/barrel and Brent above $85/barrel. Some analysts are now calling for Brent crude to push back above $100/barrel. At a time when inflation rates are finally starting to cool, OPEC+’s move could reinvigorate price pressures across many countries by adding to business costs and petrol prices. Meanwhile, the Russian rouble slumped to a one-year low against the US dollar driven by this week’s oil price spike.
Credit Suisse Group AG (SIX:CSGN) prepares for its final annual general meeting today ahead of its arranged marriage with UBS Group AG (SIX:UBSG). It will be the first time that the lender’s CEO and chairman will publicly speak to shareholders since the rushed acquisition. Shareholders who were unable to have their say during the takeover process will ask the board questions, request accountability and voice frustrations as the bank’s 167-year old history draws to a close. The value of their holdings has collapsed, with shares down almost 90% over the past year, while holders of AT1 bonds which had a combined value of $17 billion were entirely wiped out.
Meanwhile, this week Swiss Federal Prosecutors said they are investigating whether criminal offences had been committed in the speedy UBS rescue deal for Credit Suisse. The Swiss lender was valued at $3.15 billion in the agreement, less than half of its market value of around $8 billion just days before. As part of the tie-up, reportedly around 20-30% of the combined workforce is expected to be let go, adding employees to the chorus of infuriated voices.
Following the collapse of Silicon Valley Bank, Credit Suisse was seen as a weak link in the European banking sector following a series of scandals in recent years, heavy client outflows and a declining share price. Contagion fears from the SVB run and nervy comments from Credit Suisse’s biggest shareholder the Saudi National Bank sparked existential fears about the future of the lender, prompting the Swiss authorities to quickly broker a drastic acquisition deal from its cross-town rival. However, the repercussions from this rushed deal are starting to materialise, with angered shareholders, employees and taxpayers.
Saga (LSE:SAGA) reported full-year underlying pre-tax profit of £21.5 million versus a loss of £6.7 million a year ago. Its ocean cruise business has seen strong customer demand, with bookings for 2023/24 on track to meet its targets. In Travel, it said bookings are significantly higher year-on-year and it is aiming to return to profit this year. Travel and Cruise recovery post pandemic helped Saga enjoy revenue growth up 54% year-on-year.
However, its insurance business is still struggling with sales of motor and home insurance policies down 7% versus the prior year, weighing on shares today. It said the UK insurance market ‘remains very challenging.’ Saga has been increasing prices to offset claims inflation.
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During the pandemic, Saga was hit hard during lockdowns when travel and cruises ground to a halt. Offsetting this was a sharp drop in insurance claims when fewer cars were on the road. Post Covid, this dynamic has flipped with travel and cruises rebounding but insurance claims increasing.
Long-term investors have had a tough time with this stock which is down over 90% across a five-year period and down more than 40% over a one-year period. So far in 2023, shares are down over 5%, underperforming the FTSE 100 and the FTSE 250.
Argo Blockchain (LSE:ARB) has appointed Jim Maccallum as chief financial officer from Wednesday. He is currently CFO of East Side Games Group, a Canadian mobile gaming tech company. Chairman Matthew Shaw said ‘his broad experience across multiple industries and strategic mindset will help guide the Company through its next phase of growth.’
In February, its former CFO Alex Appleton and separately its founder and CEO Peter Wall stepped down, creating significant C-suite uncertainty for the crypto miner. Meanwhile, during the month of March, Argo mined 161 Bitcoin or Bitcoin Equivalents, down by 10% versus February because of the increase in network difficulty. Its March, mining revenue hit $4.05 million versus $3.76 million month-on-month.
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Like many crypto companies, Argo Blockchain had an incredibly tough year in 2022 as the crypto winter took hold, with crypto prices falling sharply from their 2021 highs. The company managed to avoid bankruptcy by selling its mining facility Helios and refinancing a new asset-backed loan.
However, so far this year, the crypto outlook is much brighter with bitcoin up over 60% and Argo’s shares up over 80%. Shares in Argo Blockchain hit an all-time high at 282p in February 2021 whereas now they are worth just a fraction of that at around 13p, suggesting there is still a long way to go to restore investor confidence.
OKYO Pharma Ltd (LSE:OKYO) has applied to delist from the London Stock Exchange. The move will not impact its American Depositary Shares (ADS) which trade on the Nasdaq. Last month, the biopharmaceutical company issued 3.5 million new ADSs, raising $5.3 million, with proceeds going to advance its Phase 2 clinical trial of OK-101, a treatment for dry eye disease.
This abandonment of its London listing adds to worries about corporate flight away from the London Stock Exchange post Brexit. Wandisco (LSE:WAND) said last month it is proactively exploring the United States to create a dual listening. Arm Holdings abandoned London as a potential location for its IPO, FTSE 100 building business CRH (LSE:CRH) also said it was planning to list in the US and Flutter has been considering a secondary listing in New York.
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