9th Dec 2019 07:43
(Alliance News) - Stock prices in London are seen opening lower on Monday ahead of big events this week, both central bank decisions and the UK general election.
In early company news UK supermarket chain Tesco confirmed it is considering selling its Asian operations. Tullow Oil suspended its dividend as its chief executive departed. The founder of guarantor lender Amigo Holdings returned to the company amid sweeping board and executive changes.
IG futures indicate the FTSE 100 index is to open down 22.16 points 7,217.50. The blue chip index closed up 101.81 points, or 1.4% at 7,239.66 on Friday.
Tesco confirmed that it has started a review of strategic options for its businesses in Thailand and Malaysia, which includes an evaluation of a possible sale of these businesses.
The UK's largest supermarket chain said the strategic options are at an early stage and no decisions concerning the future of Tesco Thailand or Malaysia have been taken.
Tesco was confirming an article in the Times newspaper, which said the Asian operations could be worth up to USD9 billion.
Tullow Oil said Chief Executive Officer Paul McDade and Exploration Director Angus McCoss have resigned with immediate effect by mutual agreement.
The oil and gas firm said Dorothy Thompson will move from non-executive chair to executive chair on a temporary basis, and it has started the search for a new CEO.
Following underperformance from its main oil producing assets - the TEN and Jubilee fields in Ghana - Tullow said it needs to reset its forward-looking guidance. For 2020, group production is forecast to average between 70,000 and 80,000 barrels of oil per day and group production for the following three years is expected to average around 70,000 bopd.
"A number of factors have been identified that have caused this reduction in production guidance. On the Jubilee field, these factors include significantly reduced offtake of gas by the Ghana National Gas Co, which Tullow makes available at no cost, increased water cut on some wells, and lower facility uptime. At Enyenra (one of the TEN fields) mechanical issues on two new wells have limited the well stock available and there is faster than anticipated decline on this field," the company said.
Further, in 2020, the company expects to generate underlying free cash flow of at least USD150 million at USD60 a barrel after a capital investment of USD350 million. Considering the level of expected free cash flow, Tullow has decided to suspend its dividend.
Amigo Holdings said Richmond Group exercised its right to appoint non-executive directors to the board and named James Benamor and Kelly Black as its choices. Benamor is the founder and former CEO of Amigo and holds a 61% stake in the firm via Richmond.
The company floated in June 2018 with a market capitalisation of GBP1.31 billion making Benamor one of the wealthiest businessmen in the UK. Since then however, the stock has plummeted, reducing the company's value to GBP288 million.
In light of Benamor's return, Chair Stephan Wilcke said he does not intend to seek re-election at the company's next annual general meeting in 2020. In addition, Non-Executive Director Clare Salmon is to resign at a "suitable opportunity", Amigo said.
Further, Amigo said Hamish Paton has resigned as CEO, subject to a 12 month notice period in order to ensure an orderly transition to a successor. Amigo said the sweeping board changes do not constitute a takeover offer.
Subprime lender Provident Financial has hired Secure Trust Bank Chief Financial Officer Neeraj Kapur as its new CFO. Kapur will replace Simon Thomas on April 1. Secure Trust Bank said it is starting to look for a new CFO.
The pound was quoted at USD1.3176 early Monday, up from USD1.3105 at the London equities close Friday, ahead of the UK general election on Thursday.
The general election campaign enters its frenetic final stages on Monday, with Prime Minister Boris Johnson and Labour leader Jeremy Corbyn desperately seeking votes ahead of the crucial poll.
Johnson is hoping to regain the Conservative majority lost by his predecessor Theresa May in the last election, just two years ago, while Corbyn is aiming to upset the odds and usher in the first Labour government for nine years.
Hanging over the election is the issue of Britain's departure from the EU, which will be thrown into doubt altogether should Johnson fail to achieve a majority.
A Conservative majority would almost certainly confirm the UK's departure from the EU, but any other result could lead to a second referendum and the 2016 result being overturned. The Labour leader is proposing to negotiate a softer form of Brexit if he becomes prime minister to put up against remaining in the bloc in the vote.
The euro was quoted at USD1.1061, up from USD1.1045 at the European equities close Friday. Against the yen, the dollar was trading at JPY108.57, down from JPY108.71 late Friday.
Brent oil was quoted USD64.20 early Monday, firm against USD64.15 a barrel at the London equities close Friday.
Gold was quoted at USD1,461.30 an ounce early Monday, up from USD1,459.85 at the London equities close Friday.
The Japanese Nikkei 225 index closed up 0.3% on Monday. In China, the Shanghai Composite closed flat, while the Hang Seng index in Hong Kong is up 0.1%.
China's foreign trade continued to decline in November compared to the same period last year, according to official data, as the trade war with the US weighs on the giant Asian economy.
Exports dropped 1.1% from November last year, according to customs data released in Beijing on Sunday. It was the fourth month in a row of weakening exports. Experts had actually expected an increase. Imports were up by 0.3% year-on-year, the first rise since April.
The US and China are facing off in a protracted trade war which has slowed exports from China.
Also ahead in the economic calendar this week, the US Federal Reserve will announce its last monetary policy decision of 2019 on Wednesday. The central bank is widely expected to leave interest rates unchanged.
On Thursday, the European Central Bank will announce its own interest rate decision, which will be the first under its new president, Christine Lagarde.
By Arvind Bhunjun; [email protected]
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