42 1GM Thursday October 15 2020 | the times
BusinessMarkets
news in brief
Expats banks plea
The City watchdog has called on
banks to provide British
expatriates living in the European
Union with “timely” warnings if
they are to drop services after
Brexit. MPs raised concerns after
customers on the Continent were
said to have been told that their
accounts would close after the
end of the transition period on
December 31. The Financial
Conduct Authority has urged
lendersto ensure that their users
have time to “take necessary
steps”, adding: “It would be a poor
outcome for the customer for you
to suddenly stop servicing them.”Tesco goes it alone
Tesco Bank has bought out its
partner Ageas’s 50.1 per cent stake
in its underwriting business in a
£104 million deal, paving the way
for the supermarket to offer a
wider range of insurance
products. Tesco Underwriting
was formed ten years ago as a
joint venture with Ageas. Last
weekKen Murphy, the new boss
of Tesco, ruled out selling the
bank, despite its £155 million
operating losses, and said that the
benefits of owning it would be
clearer after the pandemic.Ashmore assets boost
Ashmore Group said that assets
under management had risen by
2.3 per cent higher to $85.5 billion.
The emerging markets-focused
asset manager said that the
performance reflected diversified
gross sales and declining
redemptions. “While there are
some near-term macro risks that
may temper investors’ risk
appetite, such as Covid-19 and the
US election, these environments
have historically provided good
investment opportunities,” Mark
Coombs, chief executive, said.KPMG delays results
Hundreds of partners at KPMG
UK are braced for reduced
payouts after the firm became the
second of the Big Four auditors to
delay the publication of its
annual results. The accountancy
firm said that the figures, which
were due in December, would not
be published until the new year,
according to Sky News. The delay
is intended to give executives a
clearer idea of the level of cash
that the firm needs to retain in
2021 that will affect the level of
partner payouts.Lionello Stock, a Croatian who
founded an Italian drinks
distribution business in 1884, was
listed on the London Stock
Exchange, but its claim at the time to
be a “mini-Diageo” has always
sounded hollow, even after it signed
a distribution deal with Diageo and
another with Beam Suntory.
One issue that has dogged Stock
ever since it floated has been tax, the
cause of more than one profit
warning over the years. Yesterday’s
update noted the proposed
introduction in Poland of a tax on
small-format pack sizes of alcohol.
The other ever-present theme is
that of acquisitions. Last year it
completed two deals: Distilleriecontinued to show growth despite
hits from excise tax increases and the
coronavirus pandemic. Although
Czech bars and restaurants were hit
by a lockdown, this had the knock-
on effect of boosting retail sales,
while the shutdown was relaxed
earlier than expected.
Volumes in Poland were up 2 per
cent, with the Czech Republic up
5 per cent. Stock’s performance was
helped by strong demand for
flavoured vodka in Poland. Pricing, a
thorny issue over the years, has been
given a lift by the pandemic, with
consumers accepting higher prices
and retailers limiting promotions.
It is seven years since Stock Spirits
Group, which takes its name fromI
ts drinks may be
unpronounceable, but Stock
Spirits Group is having no
problem shifting brands such as
Zoladkowa Gorzka and
Dolnozemska in its core Polish and
Czech markets (Dominic Walsh
writes).
In a trading update for the year to
September 30, the company said that
its performance was ahead of its
expectations. The Polish and Czech
markets, together accounting for
three quarters of its revenue,Tempus
Buy, sell or hold: today’s best share tips
Italian sale delivers terminal velocity
W
hen London Stock
Exchange Group
shelled out
€1.6 billion for Borsa
Italiana in 2007,
analysts applauded the deal for
giving it access to one of the most
active share-dealing markets in
Europe (Miles Costello writes). How
times have changed. Last week’s
move in the opposite direction, to
offload Borsa Italiana to its pan-
European rival Euronext, was seen as
a similarly positive step, in this case
making it easier for European
regulators to wave through
LSE Group’s acquisition of Refinitiv,
the financial information provider.
London Stock Exchange Group
was founded as a market for trading
stocks in 1571. It has long played an
active part in the consolidation of
international securities markets and
as well as Borsa Italiana, it owns a
majority stake in MTS, a European
fixed-income market, and
Turquoise, the pan-European share-
trading system. In addition, as well
as facilitating securities trades and
new company listings, it also
provides data, custody and risk
management services and publishes
stock market indices. It may be
better known for its capital markets
activities, but it makes more money
from the information it provides,
along with humdrum back-officework such as clearing share
purchases and sales. It is a member
of the FTSE 100 index with a market
value of more than £31 billion and in
its most recent financial year it made
a profit before tax of £651 million on
revenues of just over £2 billion.
The disposal of Borsa Italiana,which also includes a 62.53 per cent
stake in MTS, CC&G, the Italian
clearer, and Monte Titoli, the
custody and settlement business,
looks very tidy for several reasons,
not least the price tag of
€4.325 billion, which seems
attractive, equating to 16.7 times
Borsa Italiana’s adjusted earnings last
year and 21.6 times its pre-tax profit
of €200 million.
LSE Group also has made the sale
conditional on European regulators
granting approval for its purchase of
Refinitiv, the owner of the Eikon
terminals used on trading floors, so it
is able to back out if the decision
doesn’t go its way. The proceeds of
the sale will be used to cut some ofTrading places
Share price
Source: RefinitivRevenues
* Figures cover the six months to June 30Information services
Post trade
Capital markets
Technology
£437m
£416m
£372m
£342m
£217m
£226m
£30m
£30m
Share price £100
90
80
70
60
50
40
30
Jan Apr Jul Oct Jan Apr Jul Oct2019 2020
2020
2019the debts it will take on as a result of
the $27 billion acquisition, which had
been a worry for some analysts.
While the sale adds to Euronext’s
heft as a giant in securities trading,
the stock exchange would argue that
Refinitiv, the ownership of which
would help to create a worthy rival
to the Bloomberg financial news and
data group, is a bigger prize as
information and analytics become an
ever stronger force in dealing.
Owning Refinitiv should help to
make LSE Group’s earnings even less
susceptible to the fluctuations in
listings and trading and, because the
terminals are subscription-based,
increase its recurring revenues.
Because Euronext is working with
two Italian lenders on the Borsa
Italiana transaction, it also assuages
any potential unease about
ownership among governments and
regulators. In short, if the sale goes
through, everyone’s happy.
Shares in London Stock Exchange
Group, down 104p, or 1.2 per cent, at
£87.74 yesterday, are not cheap. They
trade at about 43.5 times HSBC’s
forecast earnings for next year,
falling to a more manageable 30.2
times the bank’s estimates for 2022.
At only 1 per cent, the dividend yield
is extremely modest.
Nevertheless, those investors who
followed this column’s “buy”
recommendation in August last year
will have seen their holding grow in
value by 29 per cent. With the
Refinitiv acquisition looking
increasingly likely to go ahead, there
is every reason to hold on.ADVICE Hold
WHY Good terms for the
sale of Borsa Italiana, which
improves the chances of a
beneficial acquisition of
Refinitiv going ahead
Franciacorta, an Italian producer of
grappa and sparkling wine, and
Bartida, an upmarket Czech spirits
business. Stock said that it was now
focusing on “more meaningful
acquisition opportunities to deliver
further shareholder value”.
The big question is whether the
shares can secure a re-rating. Last
night they closed up 12p, or 5.3 per
cent, at 237p — 2p above the 235p
that they were floated at in 2013.ADVICE Buy
WHY Shares trade at 60 per
cent discount to listed peers
london stock exchange
Market value
£31.5 billionPE ratio 43.5X
Div yield 1%stock spirits
2020 annual
revenue €340mAnnual volumes
125m litresCommodities
ICIS pricing (London 7.30pm)Crude Oils ($/barrel FOB)Brent Physical 42.14 +0.98
BFOE(Jan) 43.80 +0.80
BFOE(Dec) 43.40 +0.87
WTI(Jan) 41.66 +0.81
WTI(Dec) 41.34 +0.85Products ($/MT)Spot CIF NW Europe (prompt delivery)Premium Unld 354.00 355.00 +1.00
Gasoil EEC 341.00 343.00 +3.75
3.5 Fuel Oil 237.25 238.00 +8.25
Naphtha 389.50 391.00 +3.50ICE FuturesGas OilNov 347.00-346.75 Feb unq
Dec 350.25-350.00 Mar unq
Jan 354.75-354.25 Volume: 593485Brent (9.00pm)Dec 43.32-43.31 Mar unq
Jan 43.69-43.67 Apr unq
Feb unq Volume: 1628314LIFFECocoaDec 1642-1640 Mar unq
Mar unq May unq
May unq Jul unq
Jul unq
Sep unq
Dec unq Volume: 66418RobustaCoffeeNov 1254-1252 Jul unq
Jan 1280-1278 Sep unq
Mar unq
May unq Volume: 21911White Sugar (FOB)Reuters Aug unq
Oct unq
Dec 387.50-387.30 Dec unq
Mar unq Mar unq
May unq Volume: 44317PRICES
Major indices
New York
Dow Jones 28514.00 (-165.81)
Nasdaq Composite 11768.73 (-95.17)
S&P 500 3488.67 (-23.26)
Tokyo
Nikkei 225 23626.73 (+24.95)
Hong Kong
Hang Seng 24667.09 (+17.41)
Amsterdam
AEX Index 571.98 (-0.49)
Sydney
AO 6387.40 (-12.80)
Frankfurt
DAX 13028.06 (+9.07)
Singapore
Straits 2555.59 (-12.06)
Brussels
BEL20 3316.16 (-4.31)
Paris
CAC-40 4941.66 (-5.94)
Zurich
SMI Index 10292.66 (-43.70)
DJ EURO Stoxx 50 3273.28 (-5.91)London
FTSE 100 5935.06 (-34.65)
FTSE 250 17950.41 (+59.40)
FTSE 350 3368.39 (-14.14)
FTSE Eurotop 100 2677.79 (-8.81)
FTSE All-Shares 3337.64 (-13.28)
FTSE Non Financials 4075.56 (-13.94)
techMARK 100 5802.50 (-14.70)
Bargains n/a
US$ 1.3026 (+0.0095)
Euro 1.1086 (+0.0072)
£:SDR 0.98 (+0.00)
Exchange Index 77.58 (-0.20)
Bank of England official close (4pm)
CPI 108.61 Aug (2015 = 100)
RPI 293.30 Aug (Jan 1987 = 100)
RPIX 290.10 Jun (Jan 1987 = 100)
Morningstar Long Commodity 494.06 (-0.03)
Morningstar Long/Short Commod3724.79 (-11.51)London Financial Futures
Period Open High Low Sett Vol Open Int
Long Gilt Dec 20 136.00 136.26 136.00 136.07 243999 525903
MAR 21
3-Mth Sterling Dec 20 99.945 99.950 99.940 99.945 77069 589992
Mar 21
Jun 21
Sep 21
Dec 21
3-Mth Euribor Dec 20 100.52 100.52 100.52 100.52 34939 540329
Mar 21
Jun 21
Sep 21
DEC 21
3-Mth Euroswiss Dec 20 100.78 100.78 100.77 100.78 2823 49085
Mar 21
Jun 21
Sep 21
FTSE100 Dec 20 5955.5 5983.0 5879.0 5911.5 74164 760796
MAR 21
FTSEurofirst 80 Dec 20 4476.5
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