46 Wednesday April 13 2022 | the times
BusinessMarkets
news in brief
Union staff back strike
Unionised staff at the Financial
Conduct Authority have voted in
favour of taking industrial action
in a dispute over changes to pay.
The watchdog has about 4,000
employees and 640 are members
of the Unite union. Unite said
that more than 75 per cent had
backed industrial action in a
ballot, on a turnout of 62 per
cent, and 89.8 per cent had
supported action short of a strike.
An FCA spokesman said: “Our
new employment package is
highly competitive, providing fair,
competitive pay at all levels and
rewards strong performance.”Firms’ optimism fades
Optimism among financial
services firms fell at its quickest
pace since September 2019 amid
concerns about the cost-of-living
crisis, according to a survey from
the CBI and PWC. Companies
reported worries last month
about low demand for services
and poor returns on investment.
Staff shortages were also a worry,
but not as much as last year. Rain
Newton-Smith, from the CBI,
said inflationary pressures and
the Ukraine war had also “started
to take a toll on confidence”.Liontrust assets on rise
Liontrust Asset Management
reported an 8.5 per cent increase
in assets under management and
advice over the financial year to
£33.5 billion at the end of March,
despite outflows of £400 million
in the first quarter of this year
after the loss of an investment
mandate. John Ions, chief
executive, said: “The largest
negative impact in the last
quarter was the loss of the
£329 million investment
management mandate for the
Verbatim Funds.”Electronic benefits
Electrocomponents, the London-
based distributor of industrial and
electronics products, said its like-
for-like revenue will rise 26 per
cent in the financial year to the
end of March, after 23 per cent
growth in the fourth quarter. Its
growth in the final quarter
advanced from the third quarter’s
21 per cent growth but was
unable to match its performance
in either the second or first
quarter. Electrocomponents
shares rose by 16p, or 1.6 per cent,
to close at £10.24.Commodities
ICIS pricing (London 6.00pm)Crude Oils ($/barrel FOB)
Brent Physical 104.67 +6.95
BFOE(Apr) 104.88 +6.59
BFOE(May) 104.26 +6.23
WTI(Apr) 100.07 +6.42
WTI(May) 99.32 +6.12Products ($/MT)Spot CIF NW Europe (prompt delivery)
Premium Unld 1013.00 1014.00 +44.00
Gasoil EEC 1019.25 1021.25 -9.75
3.5 Fuel Oil 570.00 570.00 +18.00
Naphtha 918.00 919.00 +49.00ICE Futures
Gas Oil
May 1031.50-1030.75 Aug 952.00-942.00
Jun 997.00-996.50 Sep 935.00-933.00
Jul 969.50-969.00 Volume: 592839Brent (6.00pm)
Jun 105.31-105.29 Sep 103.03-102.99
July 104.74-104.71 Oct 102.03-101.91
Aug 103.97-103.85 Volume: 1758490LIFFECocoa
May 1763-1759 Jul 1815-1779
Jul 1793-1792 Sep 1825-1705
Sep 1813-1787 Dec 1810-1750
Dec 1825-1803
Mar 1803-1772
May 1829-1721 Volume: 79360RobustaCoffee
May 2100-2094 Jan 2280-2101
Jul 2113-2107 Mar 2091-1995
Sep 2119-2107
Nov 2120-2101 Volume: 23954White Sugar (FOB)
Reuters Dec 537.60-528.50
Mar 534.10-533.00
May 564.20-563.40 May 529.30-524.20
Aug 549.30-549.00 Aug 523.30-514.20
Oct 541.50-541.00 Volume: 67669PRICES
Major indices
New York
Dow Jones 34542.03 (+233.95)
Nasdaq Composite 13575.10 (+163.14)
S&P 500 4450.61 (+38.08)
Tokyo
Nikkei 225 26334.98 (-486.54)
Hong Kong
Hang Seng 21319.13 (+110.83)
Amsterdam
AEX Index 716.38 (+1.64)
Sydney
AO 7735.50 (-37.70)
Frankfurt
DAX 14124.95 (-67.83)
Singapore
Straits 3330.25 (-33.31)
Brussels
BEL20 4185.03 (-2.97)
Paris
CAC-40 6537.41 (-18.40)
Zurich
SMI Index 12378.87 (-149.74)
DJ Euro Stoxx 50 3831.47 (-8.15)London
FTSE 100 7576.66 (-41.65)
FTSE 250 21009.61 (-105.47)
FTSE 350 4241.35 (-22.99)
FTSE Eurotop 100 3454.58 (-16.05)
FTSE All-Shares 4210.28 (-22.25)
FTSE Non Financials 5164.30 n/a
techMARK 100 6084.89 (+16.29)
Bargains n/a
US$ 1.3034 (+0.0013)
Euro 1.2007 (+0.0037)
£:SDR 0.98 (+0.00)
Exchange Index 81.54 (+0.17)
Bank of England official close (4pm)
CPI 115.83 Feb (2015 = 100)
RPI 320.20 Feb (Jan 1987 = 100)
RPIX 290.10 Jun (Jan 1987 = 100)
Morningstar Long Commodity 677.16 (+5.72)
Morningstar Long/Short Commod4703.45 (+27.75)London Financial Futures
Period Open High Low Sett Vol Open Int
Long Gilt Jun 22 118.82 119.70 118.42 119.49 242641 687663
Sep 22 124.10 124.10 124.10 118.67 2 2
3-Mth Sterling Jun 22 99.025 99.045 99.015 99.026 10377 232459
Sep 22 98.885 98.890 98.860 98.866 3885 301735
Dec 22 98.820 98.825 98.790 98.806 7310 347378
Mar 23 98.785 98.795 98.755 98.771 8310 229855
Jun 23
3-Mth Euribor Jun 22 100.29 100.32 100.28 100.31 72986 497091
Sep 22 99.980 100.03 99.965 100.01 66820 484843
Dec 22 99.565 99.650 99.545 99.610 103161 535051
Mar 23 99.065 99.180 99.045 99.135 75790 479514
Jun 23 98.625 98.750 98.595 98.705 94681 402758
3-Mth Euroswiss Jun 22 100.71 100.72 100.70 100.71 925 29152
Sep 22 100.68 100.68 100.67 100.68 710 31355
Dec 22 100.61 100.62 100.59 100.62 488 22748
Mar 23
FTSE100 Jun 22 7565.5 7565.5 7503.0 7547.0 91053 590468
Sep 22 7569.5 7569.5 7569.5 7532.0 1 565
FTSEurofirst 80 Jun 22 5287.5
Sep 22 5275.5© 2021 Tradeweb Markets LLC. All rights reserved.
The Tradeweb FTSE Gilt Closing Prices information contained
herein is proprietary to Tradeweb; may not be copied or
re-distributed; is not warranted to be accurate, complete or timely; and does not constitute
investment advice. Tradeweb is not responsible for any loss or damage that might result
from the use of this information.of the banking, property and retail
sectors, which the trust is heavily
exposed to. The consumer price
index in Vietnam is up 1.2 per cent
but inflation is expected to climb: the
fund manager Dragon Capital has
increased its forecast for this year
from 3.5 per cent to 4.2 per cent.
But note that the rate of inflation
is still far below that ravaging the UK
and the US. Note also that Vietnam
is a net importer of goods, which
gives it a better line of defence
against commodity inflation than in
developing markets such as Turkey, a
large importer of food and fuel.
Elevation from frontier into the
MSCI emerging markets index has
not materialised as some investorsof China and into Asian markets and
have risen 19 per cent over the past
year, beating the heavy declines from
China-focused trusts such as Baillie
Gifford China Growth Trust and JP
Morgan China Growth and Income.
The FTSE 250 trust takes heavy
positions in companies and can go
up to five times overweight or
underweight compared with the
Vietnam Index. At the end of
February, the steelmaker Hoa Phat
Group accounted for 11.7 per cent of
assets, with Vietnam Prosperity Bank
and the retailer Mobile World
accounting for a further 21 per cent.
Inflation is a risk, particularly if it
engenders a broader economic
slowdown that damages the fortunesE
merging market trusts are out
of fashion, pushed aside due to
concerns about the Chinese
economy and the prospect of weaker
growth for developing countries on
the back of the war in Ukraine.
The impact on Vietnam Enterprise
Investments has been mixed. On the
one hand, the trust trades at a 20.8
per cent discount to net asset value,
above a five-year average ballpark
range of between 10 and 15 per cent.
But on the other, the shares have
benefited from the flow of capital outEmma Powell Tempus
Buy, sell or hold: today’s best share tipsFast-fashion outfit short of friends
T
he fast-fashion giant Asos is
looking increasingly
defenceless against the
many challenges it faces —
and not just because it is
still without a boss. The former stock
market darling is battling against
snarled-up supply chains, higher
labour and freight costs and more
competition for consumer pounds
that are becoming shorter in supply.
Asos investors are grateful for any
crumbs these days. An 87 per cent
decline in adjusted pre-tax profits —
a statutory loss — for the six months
to the end of February was in line
with low expectations, but was
enough to push the shares almost
5 per cent higher.
That is scant relief for longer-term
shareholders, who would have
stomached a decline of almost 70 per
cent in the value of their holding over
the past 12 months. The group is
nearing its cheapest level ever,
equating to an enterprise value of
6.9 times forecast earnings before tax
and other charges or a forward sales
multiple of only 0.4.
Yet some investors expect the
shares to fall further. Short interest in
Asos has risen in the past 18 months
to 3.74 per cent of outstanding share
capital, according to data from the
Financial Conduct Authority.
Forward multiples that low
indicate dwindling faith in the onlineretailer’s sales and profit prospects. A
warning that uncertain consumer
demand would mean “a greater
degree of risk” than normal for
performance hardly inspires
confidence. Analysts have forecast
adjusted pre-tax profits of £98 million
this year, which would represent a
decline of almost half on the last year.
Meeting those expectations meansmanagement finding more ways to
cut costs with gross margins expected
to fall by 1 to 1.5 percentage points for
the full year. The margin has been hit
on the cost and sales front. Higher
freight costs and wage inflation
increased expenses; delays getting
stock into warehouses meant more
discounting and lower sales growth.
The gross margin fell to 43.1 per cent
over the first half, from 45 per cent
for the same time in the prior year.
Asos has got a better grip on
managing delays, reckons its finance
chief Mat Dunn, who is holding the
fort, but that has meant spending
more on building stock, tipping the
group into a net debt position of
£62.6 million. Building inventoryDownward trend
Share priceSource: Refinitiv
*At constant currency ratesSales growth* Gross margin
£6050403020100
Jul Oct Jan2021 2022
AprH1 2022FY 2021H1 2021FY 2020H1 2020FY 2019 12%
48.8%21%
47%19%
47.4%25%
45%22%
45.4%4%
43.1%brings more risk, particularly if Asos
is forced to discount more to shift
stock, thinks the brokerage Liberum,
prompting analysts to cut their
adjusted pre-tax profit forecast for
this year by a third to £91 million. A
target price of £17, cut from £23, is
only 88p above where the shares
closed yesterday.
Why might Asos struggle to
offload its garb? Higher living costs
could cause consumers to cut back
spending on non-essentials, hardly
good for fast-fashion retailers that
thrive on high-volume, low-priced
sales. Revenue growth has been
slowing, at only 4 per cent over the
first half, as online retailers like Asos
compete with high-street retailers
and other outlets for shoppers’ post-
lockdown cash.
Asos is undertaking a balancing
act, managing higher costs with the
need to maintain its allure to its core
Gen Z and millennial customer base.
The benefit of low to mid-single digit
price increases put through at the
start of this calendar year could
easily be swallowed up by
inflationary pressures.
The group’s greatest hope for sales
growth lies in expanding in the US
— aided by the acquisition of the
Topshop brands, which had a
stronger US presence, and the tie-up
with Nordstrom, the US department
store chain — and Europe.
Investors might want to hang on in
the hope of a bidder being teased out
by Asos’s cut-price market value, but
without that materialising there
seem few catalysts to lift the shares.ADVICE Avoid
WHY Cost inflation and the
prospect of further slowdown
in sales growth could cause
the shares to deratemight have hoped. Inclusion in the
high-profile index, a benchmark for
both active and passive funds, would
naturally attract more flows to
Vietnamese companies. For what it’s
worth, it has beaten the index
provider’s emerging markets index
over the past five, three and one-year
periods. So, too, has it outperformed
the benchmark Vietnam Index over
those timeframes on both a share
price and NAV return basis.ADVICE Buy
WHY Shares are attractively
priced for longer-term growthasos
Market cap
£1.61bnPre-tax loss
(half year) £15.8mvietnam enterprise investments
Discount versus
NAV 20.8%One-year NAV
return 34.1%