High-profile investors including Crispin Odey took a battering on Tuesday as financial trading firm Plus500 Ltd (DI) (PLUS) shares slumped as much as 40% on a shock profit warning. Odey, whose fund is the biggest holder in the Israeli-based firm with a 7.5% stake, was the biggest casualty as the stock tumbled 628p to 1000p at one point. Other major investors, including BlackRock and Invesco, also nursed wounds as Plus said profits would be “materially below” expectations this year. But Plus is also the one of the most-shorted stocks in the FTSE, with 10% of its stock on loan, so hedge funds including Sessa Capital and Rubric Capital Management were counting their winnings.
Struggling Debenhams (DEB) on Tuesday got some breathing space after it secured a £40 million cash injection to try to turn itself around. The debt-saddled department stores chain, which warned on profits three times last year, raised the funds from its banks and bondholders. The loan is on top of borrowings of £520 million. The immediate £40 million of extra headroom will help it to pay its rent bill, due at the end of March, until it lands a more permanent funding arrangement. Its annual rent bill is estimated at around £220 million. Investec’s Kate Calvert said: “This shows that ongoing discussions with its existing lenders are constructive.”
The huge importance of the London economy to the rest of the country was highlighted on Tuesday by figures showing that the capital accounts for almost half of all services exported by the UK. In 2016 — the most recent year for which figures are available — London businesses sold services abroad worth £117.3 billion out of a total for the UK of £251.2 billion, according to data from the Office for National Statistics. The City and Westminster alone accounted for more than £60 billion of services exports. This is more than the combined figure for Scotland, Wales, the North-East, North-West and South-West regions of England. Tower Hamlets, which includes most of the Docklands financial district, was responsible for almost £12 billion of services exports.
Shares in bookmakers galloped ahead on Tuesday as investors breathed a sigh of relief that racing will recommence after an outbreak of equine flu. The British Horseracing Authority last night announced a “risk-managed” return — with health security measures in place — to the sport tomorrow. The update came after meetings were called off last week when a number of horses tested positive for equine influenza. The City took a punt on investing again today, driving shares in FTSE 100 firms and Ladbrokes-owner GVC Holdings (GVC) up 43.6p to 6408p and 6.25p to 661.25p respectively.
Barclays (BARC) edged up 0.92p to 157.6p. Bloomberg reported that the bank, which has come under pressure from activist investor Ed Bramson calling for a shake-up of the board, may unveil plans to pay out more money to shareholders. Returning surplus capital could be part of a “cohesive strategy to improve returns,” said Shore Capital’s analyst Gary Greenwood. Jefferies’ Joseph Dickerson added: “Investors should look forward to hearing management’s aspirations around capital return.” The bank will report earnings on February 21.
British Airways-owner International Consolidated Airlines Group SA (CDI) (IAG) said it will cap ownership of its shares by non-Europeans at the present 47.5% level to maintain its status as a European-owned airline. UK shareholders will not face new restrictions on their holdings, and they will not be treated as non-EU shareholders. The move comes ahead of Britain’s looming departure from the trading bloc. Carriers no longer majority-owned by EU nationals after Brexit face the threat of losing their right to fly within the area beause of share ownership rules. Under EU regulations, IAG’s airlines must be majority owned and controlled by EU shareholders.
Shares in logistics firm Wincanton (WIN) gained 3.06p to 240.06p. The business revealed it has won a five-year contract with HMRC. Wincanton will work with the Government to check inbound shipments into the UK, and provide storage and distribution services.
AIM-listed Firestone Diamonds (FDI) sparkled on Tuesday after it announced it unearthed a 70-carat white diamond in its Liqhobong mine in Lesotho. One of its other most recent discoveries — a 46-carat diamond — sold for more than $1 million (£780,000).
