By Powerscourt on 19/06/2020
Powerscourt Coronavirus Briefing – 19 June 2020
We like to say that the pandemic has concertinaed 20 years of change into 20 weeks. And it isn’t just about the Darwinian crushing of businesses that haven’t adapted to digital. European Union leaders are currently in a virtual meeting (from 0800 GMT) to discuss recovery and agree a proposed €750 billion recovery fund as part of the next joint budget, for disbursal among the worst hit nations including Italy and Spain. Such a programme would be funded by debt issuance, unimaginable six months ago. There are North/South and East/West fault lines in opinion, and it will be a race against time to unite all 27 national heads on a plan before the summer break. Agreement would represent a significant step towards economic and therefore political integration.
Yesterday, after a long period of poor communication and expectations management, the UK government announced that it was giving up on its contact tracing app after three months of work and investment. It was designed to work in a centralised way, sending information to the NHS to hold, going against the joint efforts of Apple and Google, which preferred decentralised data storage to address privacy concerns. Resulting restrictions on Apple phones in particular led to very poor performance for the UK app, which recognised only 4% of iPhones during testing on the Isle of Wight.
Things are getting worse in the US with a 3.6% rise in cases in Texas (the worst ever) and a surge in Florida. New York’s governor Andrew Cuomo has said he is considering quarantine for visitors from the Sunshine State. The ongoing problems in the US didn’t impact US stock markets which were flat yesterday while Asian markets were positive today.
Tokyo has lifted all remaining business restrictions in the final phase of a three-stage process. Even live music venues, nightclubs and other places which feature the ‘three Cs’ – closed spaces, crowded places and close contact – are now open. Singapore has also lifted restrictions on socialising, shopping and dining out.
Beijing has declared its latest outbreak under control and shared related genome data with the WHO. This comes after US Secretary of State Mike Pompeo suggested neutral observers assess the extent of the outbreak the day before and President Donald Trump insisted on Twitter that breaking trade ties with China remained an option.
The Financial Times looks again at who is prospering in the pandemic, this time identifying the top 100 companies by equity value added. The global list is dominated by pharma, tech and e-commerce and will be followed in a ‘corporate resilience’ series by a piece on a further way of measuring success as well as deeper dives into themes of pharma, cloud computing, ecommerce and gaming.
WHAT ARE COMPANIES SAYING?
Industrials & Transport
Carnival shares dropped after the cruise ship operator reported a $4.4 billion loss in its second quarter and warned that it still doesn’t know for sure when its ships will sail again. Revenues decreased to $700 million between March and May, compared with $4.8 billion in the same period and while that continues, it expects to burn through $650 million a month. Carnival, which will officially be leaving the FTSE100 next week, fell 14p, or 1.1%, to £12.61.
The British technology-based construction and engineering company released a trading update this morning, ahead of their AGM. Whilst the ongoing implications of the pandemic remain uncertain, Costain Group are now back to working on site across all of their operations. Activity levels have now stabilised and COVID-19 safety measures implemented. In addition to this, Costain recently completed a £100 million capital rise in order to substantially improve their financial position and provide the platform needed to capitalise on opportunities in the positive infrastructure outlook.
John Wood Group
The multinational energy services company released a trading update this morning for the six months ended 30 June 2020, announcing that they are continuing to successfully win and execute work despite the impact of the pandemic. The group recently secured $1.3bn of new orders and are committing to reduce their scope 1 and 2 greenhouse gas emissions by 40% by 2030.
Trifast plc this morning confirmed their intention to conduct a non-pre-emptive placing of new ordinary shares in order to raise up to £15 million as a result of the financial and operational impact the COVID-19 pandemic has had on the business. Whilst the Board believes that existing resources should be sufficient to manage the uncertain period, additional funding is likely to be necessary to defer important investments in the business that could impact future growth.
The UK-listed biotech company working closely with the government and big pharma to mass-produce diagnostic coronavirus tests has launched three new products to boost the process. Novacyt said they would support laboratories by accelerating the production of tests and by addressing the shortage of a key component. The update triggered a rally in Novacyt’s shares which have surged this year after it moved to the forefront of global efforts to develop polymerase chain reaction (PCR) tests for the disease.
Financials & Real Estate
Bank of England
The Bank of England voted to pump an additional £100bn into the UK economy on Thursday but, with financial markets more stable than in March, it felt able to cut the pace at which it would inject the money. The decision to increase quantitative easing reflected continued concern about the likely strength of the economic recovery, despite the central bank now thinking the plunge in output in April would turn out to be milder than it previously feared.
The specialist currency manager today announced full year results, stating that revenue grew 2.4% to £25.6m in the year ended 31 March 2020. Despite the negative impact on markets from COVID-19, strong net inflows of $4.6 billion for the year helped drive the 2.3$ increase in Record’s final AUME of $58.6 billion.
IN THE NEWS
Global stocks slip on rising coronavirus cases – Financial Times
UK public debt exceeds GDP for first time since aftermath of WWII – Financial Times
Boris Johnson to announce £1bn ‘catch-up’ plan for pupils who have fallen behind during lockdown – The Daily Telegraph