4929 February 2020 THE WEEKStockmarketsgloballysuffereda
sustainedsell-off,fallingonconsecutive
daysasinvestorsworriedaboutthe
spreadingcoronavirus.Stocksrelatingto
travelandleisure,commoditiesandoil
andgasborethebrunt–easyJetshares
slumped18%–aspanickedinvestors
movedcashintosafehavens.Long-term
yieldsonUStreasuriesfelltohistoric
lows;thegoldpricehitaseven-yearhigh
of$1,690beforefallingbackslightly.IMF
headKristalinaGeorgievawarnedthat
theepidemiccoulddamageglobal
growth,butalsopointedoutthatasharp
andrapideconomicreboundcould
follow.Someanalystsagree,claiming
thatthespreadofthevirusislikelyto
peakinthefirstquarter.
The oil giantChevronasked 300 staff
in its London office to work from home
after astaff memberreported flu-like
symptoms. Many other UK firms have
taken precautions to protect staff.BP has
delayed all non-essential business travel
to China, Hong Kong, Japan, South
Korea and Singapore until further notice.
The Prime Minister, Boris Johnson, said
he was ready to sacrifice the interests of
British business and walk away from EU
trade talks if they compromised Britain’s
political independence.Arash of big
deals in the finance sector saw asset
managerFranklin Templetonbuy its
rival,Legg Mason,for £6.5bn. The US
investment bankMorgan Stanley
snapped up online brokerE-Tradefor
$13bn. The US hedge fundThird Point
beganacampaign to force thePrudential
to split its Asian and US businesses. Bob
Iger stepped down asWalt Disneychief
executive after 15 years in the role.CITYCompanies in the news...and how they were assessedRevolut: steamingahead
Londonleadsthewayinthe“hot”digital
bankingandpaymentsmarket–andoneofthe
“fastest-growingupstarts”,Revolut,gotashot
inthearmthisweek, saidSimonClarkinThe
WallStreetJournal.Afterraising$500minnew
funding,thefintechfavouritehasbeenvalued
at$5.5bn,justfiveyearsoutofthetraps.
Customernumbersdoubledtotenmillionin
2019 andtheoutfit,whichhasaspirationsof
becoming“aglobaldigitalbank”,issteaming
intotheUSandJapanthisyear.Revolut
reckonsitcanseducecustomersawayfrom
“traditionalbankaccounts”withaone-stop
appcontaininga“tonoffeatures”,saidRomainDilletonTechCrunch.“Youcaninsure
yourphone,getatravelmedicalinsurancepackage,buycryptocurrencies,buyshares...”
allinminutes.ThisfundingroundwasledbytheSiliconValleybackerTCV.It’seasyto
seetheattraction:unlikeotherprominenttechstart-ups,fintechsatleastseemtooffera
pathwaytowardsprofits.AsRevolutCEONikStoronsky(pictured)boastedonCNBC:
“Sofar,everysingleuserisprofitableforus.”Still,itmightnotallbeplainsailing.Some
investorsarereportedly suffering “challenger bank fatigue”, while competition fromthe
big boys isalso ramping up.Goldman Sachs andits online bankingbrandMarcusare
alreadyin Britain,saidKatherine Griffiths in The Times.Amooted moveby the US
powerhouse JP MorganChase may provea“tippingpoint”.
Barclays: Ispy
Whenit comes totheday job,Barclays hasbeenperformingprettycreditably:recent
results showedahealthy uptick.But what amonth Februaryhasbeenreputation-wise.
Hot onthe heelofnewsthat CEOJesStaleyisbeingprobedbyregulatorsoverhislinks
with sexoffender JeffreyEpstein(aformerclient)comesanembarrassing“BigBrother”
row.Barclays hasbeencastigatedfordeploying“spywareon staffcomputers”,said
AndySilvester inCityAM. Accordingtoonewhistleblower,“thestress” causedwas
“beyondbelief”.TheSapiencesystemminutelymonitoredworkers’productivityinreal-
time–admonishingthemif theyslippedoutof“thezone”andrecordingtoiletvisitsas
“unaccounted activity”.TheensuingrowsawBarclays swiftlyscrapthe software,but
privacycampaignershaveurged the datawatchdogtoinvestigatewhetherit “violated
workers’rights”.Employeeseverywheremightcheerthat; but,if foundtohavebroken
dataprotection laws,thebank couldbefined4%ofglobalturnover(about£865m).The
lastthingBarclays needsrightnowisan entanglementwithanother regulator,saidthe
FT. ItcanhardlybeacoincidencethatStaley“hasbeendiscussingaplan tostepdown”.
WithHSBCandINGalso onthelookout,thehuntfor areplacementcouldbetough.
“Starbankbosses,like effectivefootballmanagers,arenotoriouslydifficulttofind.”
Countrywide/LSL:movingin
“Timingcountsalotinhousepurchases,” saidAlistairOsborne in The Times.“Ditto
buyingestateagents.” Andwhatcouldbe moreopportunethanthetiltatCountrywide
–onceBritain’s biggestestate-agencygrou p–by rival LSLPropertyServices?The latter ’s
CEO, Ian Crabb,“can hardlyhavemissed the fact”thatCountrywide’s “roof is caving
in”: shareshave crashedfroma£180-pluspeak,six yearsago, to just 340p.Meanwhile,
LSL’sstock is at its highestsince October 2015, givingCrabampleroom tomount his
£460m“bea rhug”. Good luck to him, said NilsPratleyin TheGuardian. Countrywide’s
current boss,Peter Long, seems to have decided thetask of“reinvigorating” thegroup
(whose 60brands include Hamptons and Bairstow Eves)was “near-impossible”.A
mergerwouldallowfor hefty cost-cut ting,but t hereisa“basicproblem ”: thereare
too manyestate agents inBrit ain today,andmost have“to pass vast chunks of their
marketing budgets” toRigh tmoveandthe like, whic hhas transformedthebusiness. “If
Countrywideeta lwanted to mountafightback,the bestopportunity wasadecade ago.”
Chinese companies:crunchtime
China’s smallbusine sses arefacinga“coronavirus credit crunch”, said BBCBusiness.
Mountingdebts have leftmany “strugglingtopay workersandsuppliers”.Beijinghas
asked banksto offermorecredit –but accordingtot he C hina Associationof Smalland
MediumEnterprises, it could cometoo latefor mill ions of firms on the verge of collapse.
Thecrisisrageson–but at least somearemakin ghay, said Lexinthe FT.Gamin ggiants
Tencent and NetEase offer“some of the only diversions for more than780million
peopleat hom einChina unde rtravel restr ictions” ,and areattractingrecord numbers
of ga mers as aresult.Arare “silverliningfor investors in Chineseequities”.
Betting on Ladbrokes
Shares in Ladbrokes owner GVC have
risen 800% under the leadership of
Kenny Alexander, the poker-playing Scot
whose strategy of buying and merging
companies has turnedatiny Aim-listed
player intoaEuropean gaming giant.
But his empire is now under siege, said
Sabah Meddings in The Sunday Times.
Ken Griffin, the billionaire US tycoon
behind hedge fund Citadel, has taken
an £80m bet against GVC, joining a
burgeoning group of hedgies hoping to
benefit fromafall in shares. Some 3.6%
of the stock–worth £180.2m–isn ow
being “shorted”. GVC insists the level
of its short positions is “unremarkable”
compared with industry peers. Maybe.
But momentum seems to be growing.Sevendaysin the
Square Mile