The Times - UK (2020-10-20)

46 2GM Tuesday October 20 2020 | the times

BusinessMarkets

news in brief

Cards cost shops £1.1bn

Retailers paid out £1.1 billion for

accepting card payments,

according to a report that reveals

the declining use of cash. Credit

and debit card use rose between

2016 and 2019 from 54 per cent of

transactions to 61 per cent, and

account for roughly four in every

five pounds spent in retail, the

British Retail Consortium (BRC)

survey found. Transaction

charges also rose 15 per cent since

2016 for credit cards and 6 per

cent for debit cards. The BRC

and other retailer associations

are calling on the government

to reduce excessive card costs.

Oil chief stays upbeat

The American shale industry will

continue to shrink, but energy

companies will emerge stronger

from the pandemic, Jeff Miller,

chief executive of Halliburton,

the oilfield services provider, said.

The company beat estimates but

still posted its fourth straight

quarterly loss, at $17 million, in

the three months to September,

compared with a $295 million

profit a year ago. Total revenue

fell 46.4 per cent to $3 billion.

The shares fell by 0.7 per cent

to $12.17 in New York last night.

Fund suspensions lifted

Aberdeen Standard Investments

is to lift dealing suspensions on

two UK property funds next

month. Dealing in the £1.6 billion

Standard Life Investments UK

Real Estate and the £976 million

Aberdeen UK Property funds will

resume on November 16. The

move comes after the Royal

Institution of Chartered

Surveyors’ removal last month of

an “uncertainty” clause imposed

on UK property funds in March

as the coronavirus pandemic sent

stock markets sharply lower.

Cloud lifts IBM revenue

International Business Machines

reported better quarterly revenue

than expected last night, aided by

higher demand for its cloud

computing services as companies

shifted quicker to digital because

of the pandemic. IBM recently

surprised investors by saying that

it was splitting into two public

companies. Revenue fell 2.6 per

cent to $17.6 billion in the three

months. Profits rose to $1.7 billion

from $1.67 billion previously. In

late trading IBM’s shares were

down 2.7 per cent at $122.25.

company that traces its origins to

1834, when John Marston established

his brewery in Burton upon Trent,

will deploy the exit mechanisms

enshrined in the terms of the deal to

exit brewing altogether.

Mind you, as Ralph Findlay, 59, the

chief executive, has made clear, the

deal already represents a move away

from Marston’s being in control of its

beer business, adding: “Operationally,

it will be a pub operator.”

With the strategic issues neatly

filed in Mr Findlay’s out tray, he can

now focus all his efforts on keeping

the group’s 1,379 managed, franchised

and leased pubs ticking along in

survival mode.

He has already announced up to

dividend policy. The second is the

market’s failure to properly value its

brewing business. By injecting its

brewing unit into a joint venture

with Carlsberg, Marston’s is killing

two birds with one stone.

In addition to having a 40 per cent

stake in the venture, it will collect

£273 million — £230 million of that

on completion in the next couple of

weeks — which will reduce its debt

and means it will not have to raise

further debt or equity to ensure it

has sufficient liquidity to get it

through the pandemic.

The joint venture, which this

month got the green light from the

Competition and Markets Authority,

also means that, at some point, the

I

t probably sounds odd to be

tipping a pub stock in one of the

worst years in living memory for

the industry, but Marston’s has been

pursuing an altogether different path

to its quoted rivals, making it worthy

of consideration as an investment

(Dominic Walsh writes).

There are two issues in recent

years that have called its strategy

into question. The first is its debt

burden, which stands at £1.3 billion,

although the flip side up until the

Covid pandemic was its generous

Tempus

Buy, sell or hold: today’s best share tips

Riding the tech share rollercoaster

I

t is one of the biggest

investment trusts in the sector,

and no small bet on technology

shares. With a market

capitalisation of £3 billion-plus,

the Polar Capital Technology Trust

has a portfolio stuffed with high-

octane stocks from Apple and

Microsoft to Facebook and Amazon

(Miles Costello writes).

While that means the trust has

been a rampant performer during

the recent tech market rally in the

US, it does mean that it is highly

exposed when investor sentiment

turns sour, as it can do rapidly.

The trust, launched in 1996, aims

to give shareholders access to high-

growth companies that have

technology at the heart of their

business model. Its portfolio is

managed by Polar Capital, an active

fund manager founded in 2011 that

manages more than £16.4 billion of

assets in total.

The trust pays no dividend and

prioritises capital growth for its

investors, benchmarked against an

adjusted version of the Dow Jones

World Technology Index, which it

beat during its most recent financial

year, but not by much.

Given the nature of this vehicle, it

should come as little surprise that

the biggest investment is in Apple,

the US-based maker of computers

and the iPhone, which vies with

Microsoft, its second-largest holding,

to rank among the most valuable

stocks in the world. Alphabet, the

owner of Google, also features in

Polar Capital Technology Trust’s top

ten holdings, together with Facebook

and Amazon.

Although Polar buys companies in

a range of sectors, including leisure

and entertainment, just over two

thirds of the portfolio is skewed

towards software and hardware,

semiconductors, interactive media

and internet businesses.

There are plenty of arguments for

staying away from the tech sector,

which is in the sights of regulators,

amid intensifying debate about

privacy and the use of consumer

data. It is also vulnerable to political

intervention from those worried

about the undue influence of social

media and the power of China.

Alibaba and Tencent, the Chinese

tech multinationals, are also among

the trust’s top ten positions and

could feel the effects of anti-China

Pole position

Polar Capital Technology Trust

share price

Source: Refinitiv

2,500

2,000

1,500

1,000

500

0

16 17 18 19 2020

p

Top ten holdings

Percentage of portfolio

Apple

Microsoft

Alphabet

Facebook

Alibaba

Tencent

Samsung Electronics

Amazon

TSMC

Adobe Systems

8.7%

5.1%

4.9%

3.7%

3.3%

2.9%

2.6%

2.6%

2.3%

9.5%

sentiment from the White House.

Donald Trump has already acted

against the China-owned telecoms

group Huawei and the app

phenomenon TikTok.

The long-term growth in the value

of tech businesses is there to see.

When Google listed in 2004 for $85

a share it sparked immediate cries of

foul, yet shares in Alphabet closed

last Friday at $1,567.70.

In its favour, with the exception of

a near £300 million position in

Apple, Polar Capital Technology

Trust’s portfolio is not heavily

concentrated in any single holding.

Enthusiasts might even argue that, at

only 2.6 per cent of the portfolio, its

exposure to a company such as

Amazon could be higher.

At the end of September, the net

asset value per share had beaten the

benchmark over one, three and five

years but, again, not by much. Over

five years to the end of last month its

NAV per share rose by 290.6 per

cent, for example, against a 255.4 per

cent gain in the reference index.

The shares, down 25p or 1.1 per

cent to £21.90 yesterday, have traded

during this year at both a premium

and a discount to the prevailing NAV,

suggesting that those investors keen

to buy should pick their moment

carefully. Yesterday the discount was

just over 4 per cent.

For those who are unafraid of the

regular rollercoaster ride that tech

shares bring, this trust offers a

diverse exposure to all the big

corporate attractions, but is probably

best held as a long-term value play.

ADVICE Hold

WHY Offers diverse exposure

to high-growth technology

markets, but the area is

volatile and vulnerable to

regulatory intervention

2,150 pub-based job cuts, possibly

with some head office casualties as

well, while the 10 per cent decline in

like-for-like sales since reopening on

July 4 represented outperformance

of 7 per cent relative to the wider pub

sector.

The path to recovery will not be

smooth, however, as local lockdowns

compound the impact of measures

such as the rule of six, table service

and the 10pm curfew.

ADVICE Buy

WHY Brewing exit cuts debt

and bolsters its finances

polar capital technology

Market value

£3bn NAV per

share £23.06¼

Dividend yield 0

marston’s

Sales in 2020

£821m (-30%)

Pub sales £515m

(-34%)

Commodities

ICIS pricing (London 7.30pm)

Crude Oils ($/barrel FOB)

Brent Physical 41.90 +0.19

BFOE(Jan) 43.08 -0.29

BFOE(Dec) 42.70 -0.23

WTI(Jan) 41.34 -41.42

WTI(Dec) 41.06 -0.06

Products ($/MT)

Spot CIF NW Europe (prompt delivery)

Premium Unld 346.00 347.00 -5.00

Gasoil EEC 339.00 341.00 -3.75

3.5 Fuel Oil 242.75 244.00 +0.75

Naphtha 384.00 385.00 -2.00

ICE Futures

Gas Oil

Nov 336.25-336.00 Feb unq

Dec 339.25-339.00 Mar unq

Jan 343.75-343.50 Volume: 588389

Brent (9.00pm)

Dec 42.42-42.41 Mar unq

Jan 42.80-42.79 Apr unq

Feb unq Volume: 1536164

LIFFE

Cocoa

Dec 1669-1660 Mar unq

Mar unq May unq

May unq Jul unq

Jul unq

Sep unq

Dec unq Volume: 65581

RobustaCoffee

Nov 1283-1278 Jul unq

Jan 1308-1305 Sep unq

Mar unq

May unq Volume: 13381

White Sugar (FOB)

Reuters Aug unq

Oct unq

Dec 403.60-403.50 Dec unq

Mar unq Mar unq

May unq Volume: 45437

PRICES

Major indices

New York
Dow Jones 28195.42 (-410.89)

Nasdaq Composite 11478.88 (-192.67)
S&P 500 3426.92 (-56.89)

Tokyo
Nikkei 225 23671.13 (+260.50)

Hong Kong
Hang Seng 24542.26 (+155.47)

Amsterdam

AEX Index 565.25 (-2.93)

Sydney
AO 6435.60 (+50.60)

Frankfurt
DAX 12854.66 (-54.33)

Singapore

Straits 2543.57 (+10.55)

Brussels

BEL20 3262.30 (-2.30)

Paris
CAC-40 4929.27 (-6.58)

Zurich

SMI Index 10184.36 (-22.77)

DJ Euro Stoxx 50 3235.52 (-9.95)

London

FTSE 100 5884.65 (-34.93)

FTSE 250 17866.08 (+43.17)

FTSE 350 3342.06 (-14.83)

FTSE Eurotop 100 2644.44 (-9.01)

FTSE All-Shares 3311.77 (-13.90)

FTSE Non Financials 4030.45 (-26.14)

techMARK 100 5789.51 (-16.65)

Bargains n/a

US$ 1.2962 (+0.0036)

Euro 1.1003 (-0.0028)

£:SDR 0.98 (+0.00)

Exchange Index 77.31 (+0.02)

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 499.69 (-1.17)

Morningstar Long/Short Commod 3719.97 (-3.76)

London Financial Futures

Period Open High Low Sett Vol Open Int

Long Gilt Dec 20 136.43 136.75 136.28 136.67 164402 534212

Mar 21

3-Mth Sterling Dec 20 99.945 99.950 99.940 99.945 33440 555478

Mar 21

Jun 21

Sep 21

Dec 21

3-Mth Euribor Dec 20 100.52 100.52 100.52 100.52 24455 537796

Mar 21

Jun 21

Sep 21

Dec 21

3-Mth Euroswiss Dec 20 100.79 100.80 100.78 100.79 3047 49837

Mar 21

Jun 21

Sep 21

FTSE100 Dec 20 5905.5 5936.0 5844.5 5863.5 63979 757774

Mar 21

FTSEurofirst 80 Dec 20 4440.0

Mar 21

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