By Powerscourt on 17/05/2020
Powerscourt Coronavirus Briefing – 17 May 2020
Saudi Arabia’s $300 billion sovereign wealth fund, the Public Investment Fund, spent $8 billion buying stakes in big name listed companies after the market crash. It disclosed yesterday that it had taken stakes in Bank of America, Boeing, Citi, Disney, Facebook, Marriot, Starbucks, Shell and BP. It previously bought into Carnival Cruises. Bloomberg reports that the fund is looking for a $10 billion loan to keep investing.
China may be reporting almost no cases but it is getting ready for a possible second wave. Reuters reports that the Chinese Ministry of Commerce has contacted food companies in recent days to urge them to build stockpiles of soya beans and corn because of concerns of food supply chain collapse in the event of a second wave.
In the UK, the coronavirus pandemic has wiped £54 billion from the wealth of Britain’s super-rich in just two months according to the Sunday Times, which publishes its annual Rich list today. The cumulative wealth of Britain’s richest 1000 people stands at £749bn, down £29bn year on year.
The Hinduja family and Sir Jim Ratcliffe are among the biggest fallers while Sir James Dyson is the biggest winner with a 29% rise in his wealth to £16.2bn, making his Britain’s wealthiest individual. Dyson reveals in an interview with the newspaper that he lost £500m on his failed electric car project.
The Treasury is said to be considering plans to establish a bank to hold stakes in bailed-out businesses amid fears that nationally significant firms could fail in the coronavirus crisis.
WHAT ARE COMPANIES SAYING?
Consumer and Retail
The luxury fashion brand and retailer is set to join the ranks of big companies cutting dividends in the fallout from Covid-19 according to The Sunday Times. Burberry is also locked in talks with shareholders over controversial changes to its executive pay scheme. Burberry’s store sales dropped by 30% in the first three months of the year, when lockdowns were being imposed across Europe.
Adam Cunard, Managing Director of the cinema Group that owns seven cinemas in the UK spoke to The Sunday Times over his concerns that studios will hold back the summer’s two biggest films Tenet and Mulan, which were supposed to be released in July. Or even worse, show them online. The Group is one of the many chains fighting for survival. Whilst social distancing would be a nightmare for cinemas, the bigger threat is the way studios have taken to releasing films straight to streaming during lockdown.
Industrials & Transport
The Telegraph reported that hedge fund Elliott is reviewing Virgin Atlantic’s financial forecasts as the airline lines up suitors hoping to secure £750 million in investment. Elliott joins US investment rival Apollo as a leading contender in the race to save the carrier after passenger operations were brought to a standstill by the coronavirus pandemic. Sources said that last week Virgin Atlantic’s management, led by chief executive Shai Weiss, presented investment options to about a dozen interested parties.
The German tour giant Tui has received coronavirus support cash from local authorities in the UK according to The Telegraph. Tui had already secured €1.8bn (£1.6bn) in state aid from the German government. The world’s largest tour operator has been awarded cash from the Government’s Retail, Hospitality and Leisure Grant Fund (RHLGF) which was set up on March 17 for businesses “operating from smaller premises” in those sectors, which have been severely hit by the coronavirus crisis.
Financial Services & Real Estate
Public Investment Fund
Saudi Arabia’s sovereign wealth fund said in April that it was looking into “any opportunity” arising from the economic wreckage of the coronavirus crisis. Bloomberg reported that a regulatory filing Friday shows how the fund has spent billions of dollars this year on stocks.
New Commercial Arts
The Sunday Times reported that New Commercial Arts, Britain’s newest advertising agency is launching tomorrow despite the circumstances. Having sold Adam & Eve to media giant Omnicom for £110m, James Murphy and business partner David Golding are starting up again, and doing so in the most hostile environment in decades. Despite the challenges, Murphy is optimistic. “Recessions are good launchpads for start-ups,” he said. “Clients want maximum bang for reduced buck. When you’re coming in as a new entrant, it is all growth from a very low base. This will pass.”
IN THE NEWS
Coronavirus loans default: Treasury eyes plan for ‘bad bank’ – The Sunday Times
Sunday Times Rich List 2020: the economic impact of the coronavirus on the UK– The Sunday Times
Billionaires make use of UK furlough scheme — Rich List 2020 – The Sunday Times
Britain heading for Eighties-style unemployment crisis – The Telegraph
One-fifth of FTSE 100 companies tap government wage scheme – Financial Times
Revolt over easing of lockdown spreads as poll slump hits PM – The Guardian