Coronavirus - Love thy neighbour
7 August 2020
The World Health Organization has warned against “vaccine nationalism”, cautioning countries not to keep treatments to themselves. Hundreds of potential vaccines are being developed in several countries and the first vaccines are likely to go to the highest bidder. However, it might be more effective if they went to those countries less able to battle the virus. As Dr Tedros says: “For the world to recover faster, it has to recover together, because it’s a globalised world: the economies are intertwined. Part of the world or a few countries cannot be a safe haven and recover.”
• Hong Kong announces free mass testing to residents.
• US employers add 1.8m jobs.
• England virus cases up since June 'but may be levelling off'.
• Hargreaves Lansdown – “Revenue for the year was £550.9 million, up 15% (2019: £480.5m), driven by higher asset levels and record share dealing volumes seen in the second half of the year. This more than offset a fall in annual management charges on the HL Funds which fell in line with their lower average asset values seen this year. This strong revenue result in a period of difficult external conditions clearly shows the benefit of the Group’s diversified market-leading presence across our range of chosen asset classes. Our market share of the UK execution only market continued to grow, hitting a new high of 39.5% (as measured by Compeer's XO Quarterly Benchmarking Report Q1 2020). In the near term the UK economy faces a period of uncertainty as we work through the many issues arising from Covid-19. Unemployment levels have increased significantly whilst economic growth has decreased. The government has borrowed vast amounts to help the economy and society but the road to recovery could be a long one with various tax implications along the way. The impact on our clients and the wider investment community as a result is difficult to call. Interest rates are at all-time lows, which makes cash savings unappealing, but market uncertainty and volatility can equally deter people from investing and access to liquidity is a key part of building financial resilience.”
• Standard Life – “The Covid-19 pandemic and associated shutdowns of economic activity have precipitated significant negative growth shocks across the world. However, the contraction phase of the crisis has also been comparatively short-lived and we anticipate an element of recovery as restrictions are lifted. Nevertheless, the long-term consequences of the crisis will be profound, including a longer-term loss of output, labour market scarring, lower real interest rates, and an altered balance between monetary and fiscal policy. In addition, the Brexit process remains in a transition period up to 31 December 2020 and remains a further source of uncertainty.”
• TP ICAP# – “July trading activity has slowed down and is materially lower than 2019 levels. Consequently our full year guidance of low single-digit revenue growth remains unchanged. We will continue to monitor the impact of the Covid-19 pandemic on TP ICAP and its customers through the remainder of the year.
The Group continues to monitor and respond as appropriate to the challenges presented by Covid-19. The emergence and continuation of the Covid-19 pandemic creates unusually high levels of uncertainty in our major markets, but our intention is to continue our technology implementation in H2, and we expect to see some early benefits from recent hires, geographic expansion and product roll-out. H2 has started slowly with July volumes materially lower than in 2019. We remain cautious and expect to see continued episodic volatility and the frequency, duration and intensity of these periods will be more significant determinants of our performance than usual.”
• Hikma Pharmaceuticals – “We now expect our Injectables business to deliver revenue of between $950 million and $980 million for the full year, reflecting our strong performance in the first half of the year and expectations for continued demand for Covid-19 related products. This compares with previous guidance of low to mid-single digit growth, We now expect core operating margin to be in the range of 38% to 40%, up from our previous guidance of 35% to 37%.”
• Scapa Group – “Scapa has delivered FY21 Q1 revenues in the three months to 30 June 2020 well ahead of its Coid-19 scenario plan. Trading in both divisions has also continued to improve into FY21 Q2 to date. Scapa acted swiftly to implement structural costs changes across the business in response to the impact of the Covid-19 pandemic on the reduction in product demand, as well as ensuring variable costs were closely managed to match the new demand levels.”
• Rightmove – “Revenue down 34% year on year reflecting the impact of the 75% discount support offered to our customers for the period April to June 2020.
Home hunter demand has been strong since our customers started re-opening their businesses from 13 May, supported by changes in consumer needs and the recent announcement of temporary stamp duty holidays across the UK. Since 13 May we have recorded 65 days beating Rightmove's previous traffic record set on 19 February 2020. Between 1 June and 31 July demand for sales properties has been 50% higher than the same period in 2019 with rental demand being over 20% higher.
The positive metrics in June and July allied to the stamp duty holidays give grounds for cautious optimism that housing transaction levels will increase from the low point in Q2. Rightmove data suggests that the significant increase in activity is being driven not only from the pent up demand from the period of lock down, but an increased number of home hunters who have decided to move following the experience of lock down. However, it is too early to assess whether the strength of this positive momentum in the housing market will be maintained against the threat of further lock downs and wider economic slowdown.
The strong demand has led to positive trading momentum since the beginning of June. The number of branch based Estate Agency branches increased in both June and July and the number of products sold to Estate Agents were 7% higher in July 2020 than July 2019.”
• Newscorp – “Suffered a $1.5bn loss for the last financial year, company figures show today, as long-term decline in newspaper sales was compounded by the pandemic’s economic shock. News Corp Australia and News UK revenue declined 16% and 13% respectively across the year. In the last quarter, as Covid-19 hit, revenue declined 31% at News Corp Australia and 22% at News UK.”
• Approximately 28,300 people in homes in England have coronavirus – about one person in every 1,900 – according to the Office for National Statistics (ONS). It estimates that last week, approximately 27,600 people had the virus. This is up from the low point at the end of June (23,100), but the ONS doesn’t see evidence of a continued rise.
• Emmanuel Macron has called a meeting of France’s defence council over the country’s continued rise in Covid-19 cases. The president said he was calling for ‘the greatest vigilance’ among citizens after the number of infections grew by 33% in a week between 27 July and 2 August.
• Hong Kong has announced free mass testing for all residents.
• France saw lockdown remove 119,400 full-time private sector jobs in the second quarter of 2020, on top of nearly half a million lost in the first, according to an estimate by the Insee statistics agency.
• US employers added 1.8m jobs last month, down from a record 4.8m in June. There are 13m fewer people on payrolls around the country than at the start of the pandemic, and a US$600-a-week government unemployment benefit ended last Friday.
• Talks between US congressional Democrat leaders and the White House on the next stimulus package for the economy have broken-up without any agreement. Steve Mnuchin, the treasury secretary, said the two sides were close on a number of issues but still disagreed on others.
#corporate client of Peel Hunt