WeWork - goes bust, who is next?
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.
TOP BUSINESS STORIES
UK house prices rose in October for first time since March
Halifax House Price Index to October
Month on Month
Actual: 1.1% 🟢
Year on Year
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.
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.
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.
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
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