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LONDON BRIEFING: Plus500 launches buyback; takeover offer for Glantus

14th Aug 2023 07:40

(Alliance News) - Weak trading further afield is likely to translate into a lower open for London's equities on Monday.

Sentiment in Asia was hit by fears for the health of China's property sector.

Chinese property firm Country Garden missed bond payments and warned of multibillion-dollar losses, deepening concerns over the nation's heavily indebted real estate sector.

Country Garden is a real estate firm named in Forbes' list of the 500 largest companies in the world. Its boss, Yang Huiyan, was until recently one of the richest women in Asia.

The firm has long been deemed financially solid but was unable last Monday to make two bond payments, and after a 30-day grace period, the company risks defaulting in September if it still cannot pay. Country Garden announced over the weekend it would suspend trading of onshore bonds from Monday, a decision likely to cause concern in the markets as the company said its debt was estimated at some CNY1.15 trillion, or USD159 billion, at the end of 2022.

"The two major contributors to China's growth, exports and property, are experiencing major setbacks and negatively impacting the local and broader ASEAN risk markets," said SPI Asset Management's Stephen Innes.

In local UK company news, Plus500 reported a weaker first half but launched a USD60.0 million share buyback. Glantus Holdings said it has agreed on the terms of an all-cash takeover offer with Basware.

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

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MARKETS

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FTSE 100: called down 12.3 points, 0.2%, at 7,511.86

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Hang Seng: down 2.2% at 18,666.94

Nikkei 225: closed down 1.3% at 32,059.91

S&P/ASX 200: closed down 0.9% at 7,277.00

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DJIA: closed up 105.45 points, 0.3%, at 35,281.40

S&P 500: closed down 0.1% at 4,464.05

Nasdaq Composite: closed down 0.7% at 13,644.85

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EUR: down at USD1.0938 (USD1.0961)

GBP: down at USD1.2681 (USD1.2703)

USD: up at JPY144.90 (JPY144.80)

Gold: down at USD1,913.39 per ounce (USD1,916.88)

Oil (Brent): down at USD85.94 a barrel (USD86.97)

(changes since previous London equities close)

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ECONOMICS

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Monday's key economic events still to come:

11:00 EDT US consumer inflation expectations survey

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German wholesale prices fell 0.2% month-on-month in July, according to Destatis. The reading matched the pace of decline seen in June. From a year before, wholesale prices were 2.8% lower in July, compared to 2.9% lower in June. "At -21%, the steep drop in prices in the wholesale of mineral oil products had the biggest impact on the overall development of wholesale prices in July 2023 compared with July 2022. Prices in this branch of economic activity rose 1.3%, however, compared with June 2023," the statistics office said.

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BROKER RATING CHANGES

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JPMorgan raises Quilter to 'neutral' (underweight) - price target 90 (73) pence

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JPMorgan cuts Prudential price target to 1,700 (1,850) pence - 'overweight'

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COMPANIES - FTSE 250

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Plus500 reported a drop in first-half revenue and profit. The London-based financial technology company providing online trading services said total revenue fell to USD368.5 million from USD511.4 million, while pretax profit dropped to USD174.9 million from USD312.6 million. Despite "quieter" market conditions, the firm said it is confident about its performance for the year as a whole. It expects revenue and Ebitda to be in line with current market expectations. It declared an interim dividend of USD0.41 as well as a special dividend of USD0.32. In addition, it announced a new share buyback programme of USD60.0 million, which will begin once the current programme is completed.

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OTHER COMPANIES

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ITM Power announced a non-binding head of terms for the sale of its hydrogen refuelling stations business Motive Fuels Ltd. This follows a review of strategic options for the unit that ITM announced back in January. ITM said one of its three priorities in its 12-month plan is increased cost and capital discipline, and the exit will free up GBP28 million to put towards its core business of making electrolysers. "The sale of Motive will allow us to devote our time, attention and capital resources on our core competencies, to ready the business for scaling up to capture the significant growth opportunities that lie ahead of us," said Chief Financial Officer Andy Allen.

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UK holidaymakers are flocking to Turkey and Egypt to take advantage of favourable currency exchange rates, according to On The Beach Group on Sunday. On The Beach said the number of bookings it has received for summer trips to those destinations is more than double the level from 2019, before the coronavirus pandemic. It partly attributed this to the fall in the value of the Turkish lira and Egyptian pound against sterling over that period. The number of lira that can be bought for a UK pound has quadrupled from around TRY8 in 2019 to TRY34 currently. Holidaymakers visiting Egypt are receiving approximately twice as much local currency for sterling than they were before the virus crisis. On The Beach said a sharp rise in flight capacity has also driven the rise in demand for holidays in Turkey.

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Glantus said it has agreed on a recommended all-cash offer by Genesis Bidco, a company wholly-owned by Basware Oy. The AIM-listed Dublin-based provider of accounts payable automation and analytics services said the offer is for 33.42 pence per share, which is a hefty premium to the 11.2p closing price on July 4 before takeover discussions were first announced. It is also a 67% premium to Glantus's closing price on Friday. It gives the company a valuation of GBP17.8 million on a fully diluted basis, and implies an enterprise value of GBP29.5 million. "Despite recent challenges, the business has significant scope to further expand its footprint, which we believe will be best achieved in the private arena where Glantus can benefit from the experience and capital of Basware as its partner, whilst maintaining the management and wider team which have driven the business forward to date," said CEO Maurice Healy. The board unanimously recommends the offer, Glantus said.

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By Elizabeth Winter, Alliance News senior markets reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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