Powerscourt

By Powerscourt on 02/06/2020

Powerscourt Coronavirus Briefing – 02 June 2020

ANALYSIS

Markets on Tuesday shrugged off the increasingly ominous situation in the US as President Trump promised to bring the military in to quell the continued unrest over the killing by police of George Floyd. Anger has intensified after two separate reports described Floyd’s killing, on May 25th at the hands of Minneapolis police, as a homicide.

For now, signs of economic recovery in Asia are keeping markets bubbling despite anxiety over the US unrest, now into its seventh night and spilling out into the largest US metropolises. The Nikkei hit a three-month high amid positive signs on Japan’s economy.

The World Health Organization and other scientists have refuted the claims of Professor Alberto Zangrillo, head of intensive care at Italy’s San Raffaele Hospital in Lombardy, who claimed that coronavirus is losing its potency – a claim highlighted in yesterday’s Powerscourt Wrap. The WHO says there is no evidence for this.

With the US in turmoil and the epicentre of the virus shifting to Latin America, Europe continues the delicate tug of war between those pushing for greater relaxation of economies and those urging caution.

A report in the Daily Telegraph suggests that the UK government is considering backtracking on plans to quarantine people coming into the UK for two weeks, replacing the quarantine with a so-called “air bridge” system – a quarantine waiver between destinations where virus rates are low.

UK Prime Minister Boris Johnson’s goal of getting all primary school children back to school by the end of the month has been dealt a blow, meanwhile, as Britain’s largest headteachers union said this would be impossible due to the challenges of maintaining social distancing. Some primary school children returned on Monday, despite unease from parents and teachers over the cumbersome systems implemented to ensure social distancing.

Despite these challenges, Europe continues to inch toward normality. Germany has now allowed most shops to reopen. Italy, which has had one of the world’s strictest lockdowns, is preparing to allow its citizens to travel freely in between regions and in and out of the country.

 

WHAT ARE COMPANIES SAYING?

Consumer & Retail

Carrefour
The French retailer has said it had agreed to buy Wellcome Taiwan from Dairy Farm, as it further expands its footprint in Taiwan and in the fast-growing convenience stores format. The transaction, with an enteprise value of 97 million euros (86.42 million pounds), covers the purchase of 224 proximity stores in quality locations as well as a warehouse, the statement said. Wellcome Taiwan posted net sales around 390 million euros in 2019.

Card Factory
The British greeting card retailer has said it is unable to give an outlook for the 2021 financial year and signaled it would reopen slowly, starting with 10% of its stores around June 15. The company, which has more than 1,000 stores in the UK and Ireland, said it had seen online sales for its main brand surge threefold since the start of lockdown but did not expect to pay any dividends for 2021.

Tesco 
Britain’s biggest retailer has announced its chief financial officer Alan Stewart has decided to retire on April 30 next year. Stewart joined Tesco in 2014 shortly after an accounting scandal had been exposed and played a key part in its successful turnaround. Tesco, whose CEO Dave Lewis is due to leave in October and be replaced by Ken Murphy, said it will now conduct a thorough search both internally and externally to identify a successor.


Industrials & Transport 

Electrocomponents
The FTSE 250 distributor announced that headline profits were a fraction higher than the City had forecast at £215 million, up from £214.5 million last year, in the 12 months to the end of March. Meanwhile, revenue over the period rose to £1.95 billion, up from £1.84 billion last year. However, the focus will be on current trading, with Electrocomponents reporting that like-for-like revenue declined 14% during the first eight weeks of the new financial year. The company stated that: “Given the relative resilience of our business, we have taken the decision not to take UK government furlough support for employees at the current time”.

Volkswagen 
The German automaker has closed its $2.6 billion investment in Argo AI, the Pittsburgh-based self-driving startup. Argo, founded in 2016 by Bryan Salesky and Peter Rander, is now jointly controlled by VW and Ford Motor Co , which made an initial investment in Argo shortly after it was founded. Details of the VW investment, which does not include an agreement to purchase $500 million worth of Argo stock from Ford, was announced last July. VW’s agreement includes the transfer to Argo of its Munich-based Autonomous Intelligent Driving unit, which boosts Argo’s employment to more than 1,000, according to Salesky.

 

Financials & Real Estate 

Mediclinic International
The owner of a chain of private hospitals in southern Africa, the Middle East and Switzerland, today reported a net loss for the full year that ended on March 31. The company reported a net loss of 315 million pounds for fiscal year 2019/2020 as compared with 151 million pounds reported 2018/19. Ronnie van der Merwe, Group Chief Executive Officer of Mediclinic said in a statement: “A high degree of uncertainty remains regarding the progression of the pandemic and its full impact, which may well continue for at least the next 12 months”.

McCarthy & Stone
The UK’s leading developer and manager of retirement communities, in a trading update this morning, highlighted how it took several decisive actions from mid-March onwards to help ensure the safety and well-being of its homeowners and staff. As a result, the Group has seen fewer cases of coronavirus within its 441 retirement communities, than has been seen within the general over 65s UK population.  The unique nature of its communities, which provide independent living in private apartments with a tailored level of care and support, means the Group’s homeowners have been safer and more supported than if they had been living alone during this period.  

 

IN THE NEWS

Coronavirus: Safe return of all primary school pupils ‘will be impossible’ – The Times

Investor plans £15bn support for UK companies toiling with crisis loans – Financial Times

‘Unworkable’ quarantine plan for UK arrivals could be ditched as MPs revolt – The Telegraph 




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