Our head of investment rounds up the morning's big news.
European markets have opened higher with the FTSE 100 above 7,500 having closed in the green on Tuesday. Tesco (LSE:TSCO) is trading at the top of the index after Morgan Stanley raised the stock to 'overweight' from 'equal weight', increasing its price target to 296p from 263p. Meanwhile, Next (LSE:NXT) is trading at the bottom of the FTSE 100 following its full-year update.
Germany’s GFK consumer sentiment index rose to -29.5, missing expectations for -29 but improving month-on-month from -30.6. It rose for a sixth consecutive month to hit the highest level since July, helped by the fall in energy prices.
Oil prices are trading higher, with Brent crude extending gains up over 4% in the past five trading sessions. With concerns around a potential full-blown banking crisis easing off and supply disruptions in Iraq, price action has turned more positive. However, Brent crude is still down by 3.5% year-to-date and down 12% over a one-year period following last year’s geopolitical driven commodity surge.
Sergio Ermotti is returning as UBS’ CEO from 5 April to lead the bank following its takeover of Credit Suisse Group AG (SIX:CSGN). Ermotti previously served as chief executive of UBS from 2011 until 2020 and is currently the chairman of Swiss Re AG (SIX:SREN). Ralph Hamers, who has been in the top job since November 2020, is stepping down ‘in light of the new challenges and priorities facing UBS’. Ermotti said ‘the task at hand is an urgent and challenging one’.
Having steered UBS through the aftermath of the 2008 global financial crisis and a rogue-trading scandal, Ermotti is a dab hand at crisis management. He also helped UBS navigate through the onset of the pandemic and the corresponding market volatility during most of 2020.
The new CEO will have the immediate challenges of cutting staff, reducing Credit Suisse’s investment bank, finding other synergies between the two lenders and convincing shareholders about the prospects for the arranged marriage.
Chinese e-commerce giant Alibaba Group Holding Ltd ADR (NYSE:BABA) is planning to split itself up into six business groups in a major corporate overhaul to ‘unlock shareholder value’. Each business will have a separate CEO and board of directors. Shares in Alibaba jumped over 12.5% in Hong Kong as investors cheered the announcement. However, the stock is still down 16% over a one-year period.
Earlier this week, Alibaba’s colourful founder Jack Ma reportedly visited China after years abroad. In 2020, Ma criticised China’s financial regulators and banks. His mega IPO of fintech company Ant Financial was suspended in November 2020, marking the start of a regulatory crackdown on the Chinese tech sector. Ma has dropped out of the public eye ever since.
The reorganisation at Alibaba has prompted hopes that tensions between Chinese tech giants and the regulators are easing. Following a major regulatory clampdown in recent years, investors have grown cautious of further unpredictable interventions by the regulators. Perhaps looking ahead, other tech giants will follow suit with similar break up plans, paving the way for a more peaceful co-existence between the authorities in Beijing and China’s tech sector.
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