Powerscourt

By Powerscourt on 05/01/2021

Powerscourt Coronavirus Briefing – 05 January 2021

ANALYSIS

It is squeaky bum time for Boris Johnson. The Prime Minister is betting the house on getting almost 14 million jabs into British arms between now and mid-February.

Johnson announced the reintroduction of a strict lockdown across England on television last night (having trailed it for 24 hours). Blanket restrictions may be less unpopular than the confusing and divisive local tiers that have been in force since early December. We are all in it together now but the Prime Minister said that restrictions will ease when the most vulnerable 13.9 million have been immunised.

The main change under the new restrictions is that schools across the UK will be forced to close to all but a minority of children from this morning.

While some businesses can continue, like garden centres and estate agents, the level of restrictions is similar to those England was subject to following the initial emergence of Covid-19 last spring.

Johnson’s practice of rehearsing his arguments in public in advance meant that others beat him to the punch. Scottish first minister Nicola Sturgeon announced the reintroduction of a lockdown north of the border earlier in the day while former secretary of state for health Jeremy Hunt had also called for an immediate national lockdown.

The UK recorded 58,784 new coronavirus cases yesterday – the highest daily total since the start of the pandemic.

Internationally, the story in the coming week will be dominated by the World Health Organisation’s pending visit to China to investigate the origins of the virus. China’s foreign minister has claimed on state media that the scourge originated elsewhere. However, latest data from Wuhan, where the virus was first noted, shows that almost 5% of the city’s 11million have been exposed. If it didn’t start there, it certainly hit there.

Reuters has a good analysis and quotes Yanzhong Huang, senior fellow with the Council on Foreign Relations, a U.S. think tank: “Even before this investigation, top officials from both sides have been very polarised in their opinions on the origins of the outbreak.

“They (the WHO) will have to be politically savvy and draw conclusions that are acceptable to all the major parties,” he added.

The announcement of harsh new restrictions occurred on the same day though that the UK administered the first doses of the Oxford University/AstraZeneca’s Covid-19 vaccination.

Fuelled by optimism about the vaccine programme, the FTSE 100 rose 1.7% on the first day of trading in 2021, while the pound rallied to a two and a half year high against the dollar of $1.37.

And there was good news on the manufacturing front with the publication of the IHS Markit/CIPS manufacturing Purchasing Managers’ Index (PMI) for December. This measure, where any score of 50 or above indicates growth, rose to 57.5 from November’s 55.6, the highest level it has reached since November 2017.

IHS Markit’s euro zone manufacturing PMI increased to 55.2 in December, the highest reading it has recorded since May 2018, according to Reuters.

However, Germany’s federal and state governments are expected tomorrow to extend the current strict lockdown of Europe’s biggest economy until the end of this month, Bild newspaper reported.

Both Germany and Denmark could also follow the UK by delaying a second dose of Covid-19 vaccine to people who have already received a first jab, the Guardian has reported.

The coronavirus crisis even touched the playing fields of Sri Lanka yesterday as spin bowler Moeen Ali self-isolated after testing positive for the virus following his arrival in the country for England’s cricket tour.

 

WHAT ARE COMPANIES SAYING?

Industrials

Ryanair Holdings plc 
The Irish low-cost airline today released its December traffic statistics, reporting an 83% drop in passengers since last December, as several European nations impose severe restrictions on travel due to Covid-19. The airline carried 1.9 million people compared with 11.2 million in the same month last year

Wizz Air Holdings plc
The fastest-growing European airline today announces passenger and CO2 emission statistics for December 2020. The airline reported an 80% drop in passengers compared to the same month last year due to Covid-19 restrictions: 665,722 down from 3.32 million the previous December.

Consumer & Retail

Morrison(Wm.)Supermarkets plc 
The fourth largest chain of supermarkets in the United Kingdom today released a trading update, reporting a rise in underlying sales in its latest trading period encompassing Christmas, benefiting from out of home eating and drinking being restricted by strict COVID-19 regulations. The group said on Tuesday that group like-for-like sales, excluding fuel, rose 8.1% in the 22 weeks to Jan. 3 – a period that spans Morrisons third quarter to Nov. 1 and the nine week Christmas trading period. The outcome compared to analysts’ average forecast of a rise of 8.3% and a second quarter increase of 12.3%. David Potts, Chief Executive, said: “The pandemic has had a severe effect on people and communities around Britain for nine months now but it has been especially hard at Christmas time. I’m very pleased with the way the Morrisons team has helped our customers across the nation enjoy their Christmas in the best way they could – with safe shopping, great service and outstanding stores even in the most difficult circumstances.”

Next PLC 
The British multinational clothing, footwear and home products retailer today released a trading statement. It stated that its sales in the nine weeks to 26 December were much better than it had expected, although an additional property provision of 40 million pounds resulted in it nudging down its pretax profit forecast. The company said full-price sales in the Christmas trading period were down -1.1% on last year, beating its central guidance of -8% given in October, despite the impact of COVID-19 restrictions on trading in stores. It forecast full-year pretax profit of 342 million pounds ($464.8 million). The Company stated that “The continued uncertainty caused by the COVID pandemic, and its potential economic impact, mean that it is harder than ever to predict sales and profits for the year ahead. So the guidance ranges we are giving for the coming year are wider than usual, but at least give shareholders an understanding of how the profits of the business would respond to different levels of sales growth.” 

Entain plc
The British sports betting and gambling company said on Monday that an $11 billion takeover approach from U.S. casino operator MGM Resorts significantly undervalued its business, as companies move to capitalise on an expected boom in U.S. sports betting. The United States is widely viewed as the next big growth market following a 2018 Supreme Court ruling that lifted a ban on sports betting. U.S. companies have sought partnerships to tap European expertise, including Caesars Entertainment’s 2.9 billion pound deal for Britain’s William Hill in September. Online betting has also enjoyed a further boost as COVID-19 restrictions encouraged locked-down customers to play more from home when casinos and betting shops were off limits.

 

Financials & Real Estate

Foresight Group Holdings Limited
The award-winning infrastructure and private equity investment manager has today confirmed it plans to list on the London Stock Exchange. Foresight Group stated that revenue in 2020 has remained resilient, despite the COVID-19 backdrop: for the six months ended 30 September 2020, Foresight Group generated revenue of £32.4 million (six months ended 30 September 2019: £28.2 million) with Core EBITDA[1] of £10.7 million (six months ended 30 September 2019: £7.9 million).  The listing is expected to put a value of £500 million on the group, which manages about £6.7 billion of assets, including the FTSE 250 Foresight Solar Fund. Bernard Fairman, Executive Chairman and Co-Founder of Foresight Group, said: “Foresight’s significant recent growth and consistently strong performance over many years, together with the many highly attractive opportunities that are opening up across our markets, make listing the Company on the London Stock Exchange the logical next step.”

 

TMT

Softcat plc 
The leading UK provider of IT infrastructure technology and services today updates on trading ahead of its interim results for the six months to 31 January 2021. It states that trading has continued to be positive since its Q1 statement on 16 November 2020 and that demand from its public sector customers has remained strong. It notes that the corporate picture has continued to improve but is also somewhat mixed, with some customers pursuing large projects and others taking a more cautious approach.  The Company asserts that ongoing investment in its multinational and technical capabilities, which continued throughout 2020 despite the challenges of Covid-19, has enabled it to play an important role in these large projects with both corporate and public sector customers. It concludes that the second half of the financial year remains difficult to forecast, but the Company is significantly ahead of where it expected to be at this stage.

Plus500 Ltd.
The leading technology platform for trading Contracts for Difference (“CFDs”) internationally, today issues a trading update for its financial year ended 31 December 2020. The Company delivered a record performance in FY 2020, with revenue for the year expected to be approximately $872m (Q4 2020: approximately $91m), ahead of the Board’s expectations. The Company states that its strong performance during FY 2020 demonstrates once again its “exceptional ability to respond to news events and volatile financial markets while maintaining a sophisticated, efficient and responsible business model.” It continues, stating that “this performance, driven by record platform usage, was achieved despite the unprecedented and uncertain market conditions experienced throughout the year.”

 

Pharmaceuticals 

BioNTech SE 
The German biotechnology company has warned there was “no data” to support plans to delay the second dose of the vaccine with the aim of reaching as many people as possible with limited supplies. Speaking to the Financial Times today, the Mainz-based company stated “[The] safety and efficacy of the vaccine has not been evaluated on different dosing schedules as the majority of trial participants received the second dose within the window specified in the study design.” BioNTech’s comments echoed those of its partner Pfizer, which also called the UK decision into question last week by restating the recommended 21-day period between doses.

 

IN THE NEWS

Parts of NHS facing collapse in three weeks, say medical chiefs – The Times

Boris Johnson orders third lockdown for England – Financial Times

Analysis: why the South African coronavirus variant is so worrying – The Telegraph




DAILY CORONAVIRUS BRIEFING - How business is responding to the crisis MENU