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WeWork - goes bust, who is next?

14:31, 7th November 2023
Justin Waite
Taking Stock

Taking Stock Tuesday 7th October 2023

Taking Stock: Is a look at today's top business news & investment views plus we cover the winners, losers, the most read company news & the most followed. Today this includes:

WeWork forced to file for bankruptcy in the US

Is it the canary in the coal mine for the US commercial real estate sector?

WeWork, the shared office firm that was once valued at $47bn (£38bn), has been forced to file for bankruptcy in the US.

Based on its latest share price, WeWork is now worth less than $50m.

What does this mean for commercial real estate?

Commercial real estate has been one of the hardest-hit sectors of the US economy over the last year. Developers rely heavily on debt, and their loan payments have soared due to the Federal Reserve hiking interest rates from nearly zero to north of 5% since last spring, in response to historic inflation.

Moreover, a combination of higher rates and the remote-working boom have pushed down prices of offices and other commercial spaces in cities. The blow to asset values, and the failure of several regional banks this year, have led to smaller banks pulling back from lending to commercial developers.

The upshot is the industry is navigating steeper debt costs, reduced access to credit, and big declines in the value of their properties, not to mention the prospect of a wider economic downturn or recession.

Everyone from Elon Musk and Charlie Munger to Jeff Greene and Ross Perot Jr. have raised the alarm on the embattled sector in recent months.


Companies discussed on “Taking Stock” today:

04:50 Avacta #AVCT
05:25 Helium One Global #HE1
05:50 Harland & Wolff #HARL
06:00 Predator Oil & Gas #PRD 
06:55 Curry’s #CURY 
07:00 & 31:15 Novacyt #NCYT 
10:38 Atlantic Lithium #ALL
12:00 Persimmon #PSN 
13:58 Taylor Wimpey #TW.
16:55 Watches of Switzerland #WOSG
17:50 Curry’s #CURY 
18:00 Solid State #SOLI
18:32 Mirriad #MIRI 
20:00 Roquefort Therapeutics #ROQ 
21:09 Angl-Asia Mining #AAZ 
22:20 XP Power #XPP 
23:20 Croma Security #CSSG 
25:50 Baron Oil #BOIL 
28:00 Naked Wines #WINE 
35:05 Intelligent Ultrasound #IUG



UK's midcap stocks edged higher on Tuesday, lifted by a slew of positive earnings, while the benchmark FTSE 100 was down as a drop in energy shares outweighed the gains in homebuilders and Associated British Foods.

The midcap index FTSE 250 rose 0.3%, while commodity-heavy FTSE 100 was down 0.1%.

Homebuilders were the top gainers, rising 2.0% as British house prices ended six consecutive months of decline in October, reflecting the fewer number of homes being put up for sale.

Persimmon added 3.4% after it said it would build more homes this year than its earlier expectation.

Personal goods sector climbed 1.3%, led by a surge in Watches of Switzerland (WOSG) as the company kept its sales and profit forecast for 2024 unchanged.

Associated British Foods topped charts on FTSE 100, surging 6.8%, after it forecast "meaningful progress" in its new financial year, driven by a strong recovery in the margin of its Primark fashion business.



UK house prices rose in October for first time since March

Halifax House Price Index to October

Month on Month
Actual: 1.1% 🟢
Expected: 0.2%
Previous: -0.3%

Year on Year
Actual: -3.2%
Previous: -4.5%

UK house prices rose in October for the first time since March, amid a shortage of properties available, but remain lower than a year ago.

The latest house price index from Halifax shows that the average house price rose by 1.1% in October, following a 0.3% drop in September. That’s the first monthly increase since March.

That lifted the price of the average house sold to £281,974, an increase of around £3,000 over the month.

But on an annual basis, property prices are now 3.2% lower than a year ago, compared with a 4.5% fall in the year to September, with prices down sharpest in South East England.

(Click here to read more)

UK consumer spending grows at slowest pace in over a year

British consumer spending grew at the slowest pace in more than a year last month, reflecting concerns about the cost of living in the run-up to Christmas, according to a survey released on Tuesday.

Barclays said spending on its debit and credit cards between Sept. 24 and Oct. 21 was 2.6% higher than a year earlier, the smallest annual increase since September 2022 and down from growth of 4.2% the month before.

Adjusted for consumer price inflation - which was 6.7% in September - the volume of goods and services bought by British shoppers fell.

(Click here to read more)

UK grocery inflation in single digits for first time this year

- UK grocery inflation 9.7% in 4 weeks to Oct 29
- Prices falling in butter, dried pasta and milk
- Grocery sales up 7.4% year-on-year in same period

British grocery inflation has fallen below 10% for the first time since July 2022, industry data showed on Tuesday, providing some relief for consumers as they enter the key Christmas shopping period.

Market researcher Kantar said annual grocery inflation was 9.7% in the four weeks to Oct. 29, down from 11% in last month's report.

"While the drop ... is positive news and something of a watershed, consumers will still be feeling the pinch," Fraser McKevitt, head of retail and consumer insight at Kantar, said.

(Click here to read more)

China's imports unexpectedly grow as demand makes cautious comeback but exports fall further than expectations

China's imports unexpectedly grew in October while exports contracted at a quicker pace, in a mixed set of indicators that showed the world's second-largest economy facing persistent risks despite a recent improvement in domestic demand.

The trade figures follow a run of mostly upbeat data that showed Beijing's support measures have helped bolster a tentative comeback, although a protracted property crisis and soft global demand continue to dog policymakers heading into 2024.

Exports shrank 6.4% from a year earlier in October, customs data showed on Tuesday, faster than a 6.2% decline in September and worse than a 3.3% fall expected in a Reuters poll. Imports rose 3.0%, dashing forecasts for a 4.8% contraction and swinging from a 6.2% fall in September. Imports snapped 11 straight months of decline.

Exports Year on Year

Actual -6.4%
Forecast -3.3%
Previous -6.2%

(Click here to read more)


Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.