💰 Big Spender Hunt

The UK spent more than it was meant to in February, Kingfisher’s profits are hit by a lack of DIY, SPACs forge a revival, another UK company considers moving their listing and Credit Suisse see their bonuses cancelled.

March 22, 2023

Good morning. In today’s update - The UK spent more than it was meant to in February, Kingfisher’s profits are hit by a lack of DIY, SPACs forge a revival, another UK company considers moving their listing and Credit Suisse see their bonuses cancelled.

Markets

Stocks ticked higher on Tuesday as faith continued to be restored in the banking system following the last few days of chaos. Banking stocks surged higher yet again, with Barclays (+5.0%), Lloyds (+4.5%), Standard Chartered (+4.7%) and HSBC (+2.0%) all closing considerably stronger. Gains for miners from the previous day were wiped out as gold dipped sharply; Endeavour mining (-3.9%), Fresnillo (-3.9%) and Centamin (-6.4%) all finished lower. All eyes are now firmly fixated on Wednesday’s Fed rate decision.

Top Stories

💰 UK runs biggest February budget deficit in 30 years

The UK borrowed significantly more than economists forecasted in February due to “substantial” support for sky-high energy bills. The ONS said borrowing hit £16.7bn across the month, far more than the £11.4bn forecasted and the largest February deficit since 1993. Government inflows were also higher than 2022 (by £4.9bn), due to higher tax receipts and proceeds from the energy profits levy. Despite the heavy spending in February, the government is still on track to undershoot borrowing forecasts for the year, which Jeremy Hunt will be hoping can be spent on pre-election tax cuts.

🔨 Dampened enthusiasm for DIY hits B&Q owner’s profits

Despite a solid uptick in demand for energy and water saving products, Kingfisher reported a 20% drop in profits as the company continued to struggle with a post-Covid drop in demand, along with inflationary cost pressures. Pre-tax profits dropped to £758m (from £949m), with city analysts expecting this to sink even further this year to £633m.

🤝 SPACs aren’t dead

British biotech Zura Bio has become the first UK company to list on the NASDAQ this year, raising $65m via a SPAC. The Cheshire-based business becomes the latest company to opt for the US rather than a London listing, with CEO Dr Someit Sidhu claiming the decision should be viewed as a “sign of success” for the UK biotech industry. Hmm. (Official)

…and on the subject of overseas biotech listings 👋

Oxford Nanopore has signalled a potential exit from UK markets, with CEO Gordon Sanghera claiming he would be open to having shares trade on an alternative exchange. Sanghera said the result of the review completed at the time of the IPO as to where they should list was “marginal”, with the recent share price performance providing little comfort in that decision. Shares in the company have dropped by two thirds since its IPO in 2021. However, shares did get a leg up today after reporting 2022 results, surging +13.8%.

What Else Happened?

Economics / Politics / General

Bojo finally admitted those Covid parties happened, but claims he did nothing wrong

An HMRC report showed the number of housing transactions during February decreased 18% compared to 2022, with mortgage rate rises only just “starting to see impact” (Official)

The Government has scrapped plans to bring forward an increase in the state pension age to 68, opting to wait until after the next election

Deals

London-listed education group Pearson announced the sale of its Online Program Management business to PE group Regent, with proceeds deferred over a 6-year period (Official)

Directors of £1.2bn Kape Technologies released their response document relating to Teddy Sagi’s hostile offer, warning shareholders they may need to accept the offer if Sagi succeeds in taking the company private. (Official)

Company News / Trading Updates

Takeaway delivery company Just Eat U-turned on a decision to employ some of its riders full-time, despite originally claiming ‘gig-working’ led to “precarious” working conditions

Review site Trustpilot posts 13% growth in revenue for 2022 and expects to become EBITDA profitable in 2023, despite macroeconomic uncertainties. (Official)

Listed cloud communication services provider, Gamma Communications, saw its shares drop -3.4% after reporting a fall in profits, despite raising the dividend. (Official)

Polling company YouGov hails strong demand from Silicon Valley clients despite choppy tech operating environment; shares rise +3.4%. (Official)

London-listed mobile payments company Boku shares rise +8.4% on better-than-expected results

Turns out it was JP Morgan who owned the bag of nickel (stones) at the London Metals Exchange

Mike Ashley has stumped up nearly £200m on a bet that Frasers Group (owner of Sports Direct and House of Fraser) will reach 900p a share

🌎 Global Snapshot

Nike smashed Q3 estimates despite a continued overhang of inventory and poor China demand

2022 bonuses at Credit Suisse that were deferred until later this year have now been suspended, in latest gut punch for employees…

…and UBS look set to block a deal that would have seen Michael Klein merge his advisory business with Credit Suisse’s investment bank

Media conglomerate Liberty Global has offered €929m to acquire the remaining shares of Belgian cable provider Telenet; a 59% premium to the latest share price

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