Maitland/AMO Morning Monitor – Monday 15 June 2020
In the news
- China locked down parts of Beijing yesterday after detected its highest number of daily coronavirus cases in months
- After 11 weeks of grounding its fleet due to coronavirus, easyJet resumes flights
- Secondary schools across England are reopening today to students in Years 10 and 12 as they are due to take GCSEs and A level exams next year, respectively
- Ikea is discussing returning furlough money to all nine countries that gave their support during the pandemic as it suffered less than expected
- Unilever has announced plans to invest €1bn in environmental projects and is setting a target of net-zero emissions from all its products by 2039
- President Macron said yesterday he was accelerating France's exit from lockdown and that COVID-19 has shown the country's need for greater economic independence
- Almost 11,000 German holidaymakers will begin arriving in the Balearic Islands today as part of a pilot scheme to help Spain reactivate its tourism sector
- Government-backed China Eastern (China’s second largest airline) is to launch a new airline called Sanya International Airlines despite travel downturn
- A big day for Brexit: Boris Johnson will tell European leaders (over a ‘high-level’ video conference) that they must conclude Brexit talks by autumn at the latest and that negotiations must be “swiftly concluded” now. Between 29th June and 27th July, there will be weekly talks to try to reach an agreement
- 2.30pm - Communities Secretary Robert Jenrick will be questioned in the Commons over his intervention in a planning decision to save a property developer millions of pounds
- Trade negotiations between the UK and US are set to resume
Stock market moves
- In Europe, the FTSE 100 and Eurostoxx 600 have both opened down this morning.
- Stocks across Asia are also down today, after a jump in new coronavirus infections across the US and China boosted investor concerns over a potential resurgence in the pandemic. Japan’s Topix dropped 2.5%, while the Hang Seng fell nearly 2%.
- US Futures as of 8:15BST point toward a negative open this afternoon.
Corporate announcements* Maitland Client
BP PLC BP revises price assumptions; expects charges at 2Q
- BP has released the below update as part of its review of its portfolio and capital development plan.
- The company has revised its long-term price assumptions, lowering them and extending the period covered to 2050 so that it is now consistent with its ambition horizon.
- As part of its long-term strategic planning, and in the context of its continuing focus on capital discipline, BP is also reviewing its intent to develop some of its exploration intangible assets.
- Frank van Zanten, CEO, said: “The Group’s resilient business model is expected to deliver a strong performance in the half year against the background of challenging trading conditions due to the COVID-19 pandemic. Revenue is expected to increase by approximately 6% at both actual and constant exchange rates. After adjusting for the impact of the number of trading days in the period relative to the prior year, at constant exchange rates revenue is expected to rise by approximately 5% as a result of an increase in underlying revenue of approximately 2% and an increase of approximately 3% as a result of recent acquisitions.”
- “The Company remains cautious about the outlook given the risks and uncertainties associated with the emergence of global economies from lockdown and the timing of recovery of the Group’s markets in the second half, particularly as the volume of orders for COVID-related products seen during the first half is not expected to be repeated with many customers having already built significant stocks of products for the remainder of the year.”
- AstraZeneca has reached an agreement with Europe’s Inclusive Vaccines Alliance, spearheaded by Germany, France, Italy and the Netherlands, to supply up to 400 million doses of the University of Oxford’s COVID-19 vaccine, with deliveries starting by the end of 2020.
- The IVA aims to accelerate the supply of the vaccine and to make it available to other European countries that wish to participate in the initiative. The IVA is committed to providing equitable access to all participating countries across Europe.
- Pascal Soriot, CEO, said: “This agreement will ensure that hundreds of millions of Europeans have access to Oxford University’s vaccine following approval. With our European supply chain due to begin production soon, we hope to make the vaccine available widely and rapidly. I would like to thank the governments of Germany, France, Italy and the Netherlands for their commitment and swift response.”
- During the period, the share price total return was -4.4% and the net asset value per share total return (with borrowings at market value) was -5.8%.
- During the period, the portfolio was conservatively positioned which, compared to wider market movements, was a hinderance early in the period and a boon during the turmoil.
- Outlook: “A long lasting legacy of the crisis is likely to be the consequences of the ‘whatever it takes’ actions to preserve jobs and prevent wholesale bankruptcies. Such a response was unquestionably required but it has had a ruinous effect on government finances and will be very difficult to withdraw. This is not necessarily bad news for equities as the potential for induced inflation could act as a catalyst for the more beaten-down areas of the market. However, at this stage, we maintain our capital preservation mindset.”
- The company announces that it has received planning consent and exchanged contracts with a world leading on-line retailer to pre-let a new Mega Box logistics building.
- The pre-let and planning consent covers the Phase 2 and part of Phase 3 plots of the Company’s Littlebrook, Dartford development, comprising a c.2.3 million sq ft logistics building on 35.5 acres within London’s orbital M25 motorway and next to critical transport infrastructure.
- Colin Godfrey, CEO, said: “This enhances our existing portfolio with a substantial, prime and sustainable logistics investment at an attractive yield on cost as we advance our plans to transform this disused brownfield site into a new premium logistics park. Working with our partner Bericote, the development of the site will not only deliver much sought-after high specification logistics space for London, but will also bring enhanced local infrastructure and significant employment opportunities to the local area, strengthening its economic growth.”