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LONDON BRIEFING: Kape Technologies gets offer; MJ Hudson auditor quits

13th Feb 2023 07:54

(Alliance News) - Stocks in London were set to open slightly higher on Monday, though held back from bigger gains by hawkish comments from central bankers about interest rates.

"That realisation along with last week's drip, drip narrative of hawkish Fed speakers which now finally appears to be cutting through," said Michael Hewson, chief market analyst at CMC Markets.

Deutsche Bank Chief Executive Christian Sewing believes further interest rate hikes are "absolutely" necessary in the fight against the eurozone's high inflation.

"The inflationary risks remain high. The cost of energy can easily rise again, and the reopening of China can also give prices a temporary boost," Sewing told the Welt am Sonntag newspaper.

In Asia, reports in Japanese media, including the Nikkei business daily and public broadcaster NHK, said the government plans to nominate economics professor Kazuo Ueda as Bank of Japan governor.

Current chief Haruhiko Kuroda, the central bank's longest-serving governor, is expected to step down when his second term ends on April 8.

The decision on his replacement will be presented to Parliament on Tuesday, the media reports said, without citing sources. The ruling coalition's majority means it is almost guaranteed to pass.

In early UK company news, Kape Technologies has received a takeover offer from existing shareholder Unikmind that values the entire company at USD1.51 billion.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: called up 9.65 points, or 0.1%, at 7,892.10

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Hang Seng: up 0.1% at 21,202.36

Nikkei 225: closed down 0.9% at 27,427.32

S&P/ASX 200: closed down 0.2% at 7,417.80

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DJIA: closed up 169.39 points, 0.5%, at 33,869.27.

S&P 500: closed up 0.2% at 4,090.46

Nasdaq Composite: closed down 0.6% at 11,718.12

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EUR: up at USD1.0684 (USD1.0677)

GBP: down at USD1.2062 (USD1.2072)

USD: up at JPY132.14 (JPY131.44)

Gold: up at USD1,865.22 per ounce (USD1,858.39)

(Brent): up at USD85.60 a barrel (USD86.41)

(changes since previous London equities close)

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ECONOMICS

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Monday's key economic events still to come:

EU Eurogroup meeting of eurozone finance ministers

08:00 EST US Federal Reserve Board Governor Michelle Bowman speaks

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The number of UK pub and bar companies calling last orders has risen by more than 200 in a year. Insolvencies rose from 280 in 2021 to 512 last year, accountancy group UHY Hacker Young said. Pubs and bars have faced rising energy and other costs and concerns over falling sales, it added. The cost-of-living crisis and interest rate rises have affected spending on drinks and meals in pubs, while rail strikes have stopped punters from travelling into city centres. Following the pandemic period, which included lockdowns, many pub and bar companies have very little savings or the capacity to borrow more and the current economic downturn has been the final push into insolvency for some, the accountancy firm said.

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Tens of thousands of homes in New Zealand were without power on Monday and hundreds of flights have been cancelled as a tropical storm lashes the north of the country. A state of emergency has been declared in five separate regions in the North Island, covering almost one-third of New Zealand's entire population of 5.1 million. Although the storm was downgraded as it approached on Sunday, it has already toppled trees, damaged roads and downed power lines. New Zealand's Wellington-based prime minister Chris Hipkins was among thousands stuck in the northern city of Auckland after the wild weather grounded flights. "Things will get worse before they get better," Hipkins told New Zealanders in a press conference Monday, calling for them to "be prepared, stay inside if you can".

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BROKER RATING CHANGES

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RBC cuts Severn Trent to 'sector perform' ('outperform') - price target 3,000 (2,900) pence

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RBC reinitiates United Utilities with 'outperform' - price target 1,250 pence

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Barclays cuts Network International to 'equal-weight' ('overweight') - price target 300 (405) pence

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COMPANIES - FTSE 250

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Internet infrastructure investor Digital 9 Infrastructure announced that Lisa Harrington will succeed Keith Mansfield as senior independent director with immediate effect. Mansfield will remain as a non-executive director and chair of the audit committee. Harrington was formerly chief customer officer at telecommunications provider BT Group.

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Real estate investment trust Supermarket Income REIT noted that Fitch Ratings reaffirmed its existing investment grade, long-term issuer default rating of BBB+ with a stable outlook.

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BH Macro completed its initial equity placing, intermediaries offer, and offer for subscription, raising around GBP315 million gross. The company said it will invest the fresh cash in Brevan Howard Master Fund Ltd.

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OTHER COMPANIES

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Kape Technologies received a takeover offer from Unikmind Holdings, a company wholly-owned by Teddy Sapi, who holds around 55% of Kape. The offer for USD3.44 per Kape share, or 285 pence per share, values the firm at around USD1.51 billion or GBP1.25 billion. The offer price represents a 9.7% premium to Kape's closing price of 260 pence on Friday. Kape said that, regardless of the outcome of the offer, Unikmind intends to call a general meeting to try to pass a resolution to delist Kape from trading on AIM "as soon as reasonably practicable following the offer." Kape urged shareholders to take no action.

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Adriatic Metals announced it has drawn down on the second USD30 million tranche of its senior secured debt and the USD22.5 million copper stream from its Orion Mine finance. The funds are being used in the construction of Adriactic's flagship Vares silver project in Bosnia & Herzegovina. Chief Executive Paul Cronin said first concentrates from Vares are expected in the third quarter of 2023.

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Asset manager MJ Hudson said Ernest & Young has quit as its auditor with immediate effect, less than 18 months after being appointed. MJ Hudson said the resignation letter from EY said that it is resigning as auditor as it has "trust and confidence in the company's management and those charged with governance, and in their ability, along with your finance team, to provide us with accurate and reliable information for audit". Consequently, MJ Hudson said it believes the finalising of its financial 2022 reports will "take some time" as it commences a search for a new auditor. MJ Hudson added it has completed the initial process of seeking interest from parties to acquire some or all of its business units. The resignation was first reported by Sky News.

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Former Wirecard boss Markus Braun is due to take the stand in one of Germany's biggest fraud trials in decades, allegedly concerning billion-dollar fraud at the group which collapsed in 2020. Wirecard was a payment service provider at the interface between credit card companies on the one hand and retailers and other sellers on the other. Braun is planning to make a statement lasting two to three hours in the Munich Regional Court, before being questioned by the judges. He and two co-defendants face charges of forming a criminal gang, falsifying the group's balance sheets and cheating lenders out of EUR3.1 billion.

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By Heather Rydings, Alliance News senior economics reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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