11th Jun 2018 11:17
LONDON (Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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HSBC Holdings Chief Executive Officer John Flint said that the Asia-focused bank was ready to get back into "growth mode" following its restructuring. "After a period of restructuring, it is now time for HSBC to get back into growth mode", Flint said. "The existing strategy is working and provides a strong platform for future profitable growth. Flint - who replaced long-standing CEO Stuart Gulliver in February - described HSBC as the "leading international bank" with "access to the world's largest and fastest growing markets". By 2020, HSBC is targeting a return on tangible equity of more than 11%. It also plan to invest between USD15 billion and USD17 billion dependent on "achieving positive adjusted jaws each financial year". HSBC also plans to "sustain" dividends at current levels and engage in share buybacks where "appropriate" as well as intending to retain CET1 solvency ratio above 14%. At the end of 2017, its CET1 ratio stood at 14.5%.
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SSE said it has appointed a chief financial officer designate for the new British energy supply and services company that it will form with innogy. Gordon Boyd will take up his new role July 4. He will "play a key role in the work being done to plan a prepare for the formation and listing of the new company". The listing "remains on course" to take place in the last quarter of 2018, or the first quarter of 2019. The combined retail company will be listed on the premium segment of the London Stock Exchange, SSE said. It noted the new company will not be controlled by either innogy or SSE. innogy will hold a minority stake of 34.4%, while SSE will demerge its stake of 65.6% to its shareholders upon completion of the transaction. Boyd has "significant experience" in the energy sector and "major" listed companies. He has more than 30 years experience having originally joined the energy sector in 1989.
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NMC Health said it has signed a joint venture agreement to establish a new national healthcare company in Saudi Arabia. The UAE focused private healthcare operator has signed a agreement to form a joint-venture healthcare platform with Hassana Investment Co, the investment arm of the Saudi Arabia's largest pension fund, General Organization for Social Insurance. The joint venture will be formed through contribution of existing assets by both NMC Health and GOSI's investee Tadawul-listed National Medical Care Co. NMC will retain a majority stake and operational control of the Saudi Arabian joint venture. The venture will serve as the main vehicle of future expansion for NMC in Saudi Arabia and will seek to acquire stakes in regional healthcare operators. The venture will also seek to manage private and government sector hospitals in the country.
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Rolls-Royce Holdings said it has identified durability issues on a number of Trent 1000 jet engines, dubbed Package B engines. Back in April, the aerospace and engineering firm had identified similar issues for the intermediate pressure compressor within another range of Trent 100 engines, known as Package C. Rolls-Royce said it has agreed with Boeing and the relevant regulatory authorities to conduct a one-off inspection of the group's Trent 1000 Package B fleet, which consists of 166 engines. The inspection requirements are expected to incur additional costs for 2018, however Rolls-Royce said it remains confident that its free cash flow guidance of around GBP450 million, plus or minus GBP100.0 million remains unchanged. Monday's announcement follows a report by the Sunday Times that Rolls-Royce is set to cut 4,000 jobs in a bid to slash costs and increase profit.
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Apax Partners said it is in early stages of considering an offer for used vehicle marketplace BCA Marketplace. The private equity firm said the offer would be made by a new entity controlled by funds advised by Apax. It said it has no firm intention to make an offer, and there is no certainty an offer will be made. In a separate statement on Monday, BCA Marketplace noted the possible offer. BCA said it had rejected a preliminary all-cash offer from Apax in May valuing each share in the company 200 pence in May and has not received offers since.
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Old Mutual on Monday announced the price range for its global offer of a stake in soon-to-float Quilter. Quilter was formerly Old Mutual Wealth, and the spun-off asset management business is set to list in both London and Johannesburg on June 25. Old Mutual is offering up to a 9.6% stake, or 165 million shares, in Quilter at a price between 125 pence and 155p. The final price will be determined, and the number of shares sold, at around the same time as it lists. Quilter itself Monday updated on the sale of its "single strategy" asset management business, Old Mutual Global Investors. This is going to plan, it said, and it is possible it may complete by June 25.
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MARKETS
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London shares were higher shrugging off a fractious G7 summit in Canada over the weekend. The pound was lower against the dollar following disappointing UK industrial and manufacturing data. Wall Street was pointed to a higher open as attention turns to the historic summit between US President Donald Trump and North Korean leader Kim Jong Un.
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FTSE 100: up 0.7% at 7,738.58
FTSE 250: up 0.6% at 21,289.28
AIM ALL-SHARE: up 1.1% at 1,097.65
GBP: soft at USD1.3361 (USD1.3394)
EUR: firm at USD1.1783 (USD1.1761)
GOLD: down at USD1,294.98 per ounce (USD1,297.90)
OIL (Brent): soft at USD76.00 a barrel (USD76.47)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK industrial production decreased unexpectedly at the start of the second quarter, figures from the Office for National Statistics showed. Industrial production fell 0.8% month-over-month in April, reversing a 0.1% rise in March. It was the first decline in four months. Meanwhile, economists had expected a stable 0.1% increase for the month. On a yearly basis, industrial production growth eased to 1.8% in April from 2.9% a month ago. The expected growth rate was 2.7%. Manufacturing production dropped 1.4% monthly in April, following a 0.1% contraction in March. In contrast, output was expected to recover by 0.3%. Moreover, this was the largest fall since October 2012, when it slid by 1.8%. Annually, growth in manufacturing production slowed to 1.4% from 2.9% in March.
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The UK's visible trade deficit in April was the biggest in over one-and-a-half years, data from the Office for National Statistics showed. The trade in goods deficit widened to GBP14.04 billion from GBP9.25 billion a year ago and GBP12.00 billion in March. The latest figure was the biggest since September 2016, when the deficit was GBP14.25 billion. Economists had forecast a shortfall of GBP11.40 billion. Good exports decreased 5.9% from the previous month, while imports grew 0.8%. Total trade deficit widened to GBP5.28 billion from GBP883 million in the same month last year. In March, overall trade deficit was GBP3.22 billion.
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US President Donald Trump met Singapore's Prime Minister Lee Hsien Loong on Monday, on the eve of a historic summit between Trump and North Korean leader Kim Jong Un. The two emerged briefly from a private meeting at the Istana, the Singaporean president's official residence, shaking hands while posing and smiling for cameras, before proceeding inside for a working lunch with officials from the US and Singapore. Neither gave any comment to journalists, but as they took their seats Trump could be heard saying to Lee: "We've got a very interesting meeting in particular tomorrow, and I just think it's going to work out very nicely". Meanwhile, officials from Trump's delegation wrapped up a meeting that lasted more than two hours with North Korean representatives.
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Trump took more swipes at Canada and its prime minister over trade issues as he settled in for a multi-day summit with North Korea in Singapore, contending that "fair trade is now to be called fool trade if it is not reciprocal". Trump roiled the G7 meeting in Canada by first agreeing to a group statement on trade, only to withdraw from it while complaining that he had been blindsided by Canadian Prime Minister Justin Trudeau's criticism of his tariff threats at a summit-ending news conference. As he flew from Canada to Singapore on Saturday night, Trump displayed his ire via Twitter, which he also employed to insult Trudeau as "dishonest" and "weak". The attack on a long-time ally and its leader drew sharp criticism. German Chancellor Angela Merkel, who also attended the summit, told German public television that she found Trump's tweet disavowing the G7 statement "sobering" and "a little depressing".
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UK Prime Minister Theresa May will appeal for a show of unity from her warring MPs as she seeks to avoid a series of damaging Commons defeats on the government's centrepiece Brexit legislation. The EU (Withdrawal) Bill returns to the Commons on Tuesday with ministers seeking to overturn a raft of amendments by the House of Lords intended to keep Britain close to the EU after Brexit. However, they face a revolt by pro-EU Tory MPs determined to retain as many of the changes as possible in the legislation. In what is likely to be a highly-charged appearance before the backbench 1922 Committee on Monday, the prime minister will remind her MPs they have a duty to deliver on the referendum vote to leave the EU.
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Ireland's construction activity expanded at the fastest pace for a year in May, survey data from IHS Markit showed. The Ulster Bank construction Purchasing Managers' Index rose to 61.8 in May from 60.7 in April. Any reading above 50 indicates expansion in the sector.
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Italy will not be leaving the euro, Italian Finance Minister Giovanni Tria said in an interview with the Corriere della Sera newspaper, published on Sunday. "The government's position is clear and unanimous," the 69-year-old economics professor said. "Leaving the euro is out of the question." He continued: "The government is committed at all costs to preventing market conditions that would lead to an exit."
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Voters decided Sunday that Switzerland should not become the world's first country to wrest control from its banks in a sweeping monetary reform. In a referendum, 75.7% of the ballots cast rejected the proposal to change the way banks lend money. Proponents of the so-called Sovereign Money Initiative wanted to reform the country's monetary system to protect the economy from a future financial crisis. According to the concept, developed by economists in Germany and Switzerland, banks would have no longer been able to lend excessively, as the central bank would have become the only institution that could create money. Banks could only issue loans if they had acquired an equivalent sum from the central bank, other lenders or client deposits. In a separate referendum on Sunday, 72.9% of the voters backed a new gambling law that will prevent foreign online casinos from offering their services in Switzerland.
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The FIFA congress will decide the 2026 World Cup host between Morocco and US-Mexico-Canada on Wednesday after the council of the ruling football governing body formally allowed both bids to proceed. The council met Sunday in Moscow, three days before the final decision will be taken by all FIFA members - the first time a tournament has been allocated in such a manner. The 2018 World Cup begins in Russia on Thursday with the 2022 edition in Qatar.
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