Shareholders will this week see the impact of five months of political protest in Hong Kong on HSBC Holdings (HSBA) and its fellow London-listed international bank, Standard Chartered (STAN), when they report third-quarter figures. The pair are highly vulnerable to the turmoil as each derives a high proportion of their profits from Hong Kong. It may be too soon for the full effect of the protests to have made themselves felt on the bottom line but, if they continue, serious damage seems inevitable. The turmoil has led to businesses closing and has hurt retail sales. There has been a drop in visitors from mainland China and elsewhere. HSBC and Standard Chartered are putting in place support for small and medium businesses to help them get through the protests, alongside the government. They have also been carrying out ‘stress-testing’ on some clients to assess their resilience. To make matters worse, the protests are taking place against a troubled global economic backdrop. China is locked in a corrosive trade war with the US and the world is facing what the International Monetary Fund calls a ‘synchronised slowdown’.
The founding family of Cobham (COB) may demand that a judge reviews the £4 billion takeover of the British defence firm if it is waved through by the Competition and Markets Authority (CMA) tomorrow. Lady Cobham has been a vociferous opponent of the sale to US private equity firm Advent International.The family, which has a 1.5% stake, had pushed the Government to refer the deal to the CMA after raising concerns that it posed ‘grave risks’ to national security and understated Cobham’s importance to the UK defence industry. They said they would consider a judicial review if the CMA backs the deal when it publishes its findings.
Mothercare (MTC) has brought in restructuring experts from accountancy giant KPMG, raising concerns for the future of its 79 stores and 2,500 staff. The struggling High Street retailer, which fell to a £36.3m loss and shut 55 stores last year under a controversial company voluntary arrangement (CVA), has been trying to sell its UK arm. The company is now considering closing more stores or asking landlords for rent cuts, but a sale is believed to be preferred, The Sunday Times reported. Mothercare boss Mark Newton-Jones wants its UK stores to become franchises, to mirror its profitable international business – effectively turning the retailer into a branding and product supplier.
Amazon is recruiting a small army of delivery drivers in a direct challenge to Royal Mail (RMG). The internet shopping giant is urging entrepreneurs across the UK to set up businesses for as little as £10,000 as part of a major scheme to bring more of its operations in-house. And as ‘delivery service partners’, Amazon will guarantee them work from its vast network. Amazon’s logistics arm handles around 260m packages a year, but uses Royal Mail and its rivals to complete the final part of the journey to a customer’s front door. Royal Mail is already under enormous pressure from low-cost rivals and years of rows with unions over pay and conditions. The listed company has seen £4.2 billion wiped off its value in the past 18 months – or two-thirds – as its share price plunged. As part of Amazon’s scheme, drivers wear branded uniforms and their vans are emblazoned with the company’s logos, but the businesses are owned by the entrepreneurs, with Amazon contracting them to carry out deliveries.
billionaire Mike Ashley has become embroiled in a bitter legal row over his ambitious plan to take a slice of the lucrative United States sportswear market. The row centres on Sports Direct’s $100million (£78million) acquisition of 50 shops to ‘provide a footprint in US retail and a platform from which to grow US online sales’. But the complex deal to seize the Eastern Outfitters retail group, in Chapter 11 bankruptcy protection at the time, has turned sour after Sports Direct was accused of short-changing one of the company’s lenders.
Marks & Spencer Group (MKS) is preparing to announce a profits slump after a slide at its clothing business, according to analysts. Tony Shiret at stockbroker Whitman Howard has forecast that profit before exceptional costs fell to £185million in the six months to the end of September, from £224million the year before. He said sales at its general merchandise division, which mainly sells clothing, may have fallen by as much as 4%, offsetting improved food sales, based on like-for-like figures. Analysts also expect the half-yearly figures, due to be published on November 6, to be further affected by exceptional costs. These include falling property values for its estate.
ASOS (ASC) has primed its warehouses for a Black Friday sale blitz that could be a major blow to high street retailers. The company is understood to have built up fashion stocks by a third compared with the same time last year, when it failed to capitalise on the event. Stockbroker Peel Hunt said Asos is preparing to ‘go hard’ at the event and planning ‘a big peak season’. News of the Asos plan will not be welcomed by high street shops which have desperately tried to row back from Black Friday discounting. The end of November is regarded by high street fashion shop operators as the worst time to cut prices heavily as shoppers go hunting for Christmas party outfits.
Lloyds Banking Group (LLOY) will this week reveal its profits were practically wiped out by a flood of claims for missold payment protection insurance (PPI) ahead of the deadline for customers seeking redress. The bank is expected to reveal a £1.7billion hit from missold PPI – eliminating most of the £2billion it made in profits. Analysts fear the figure could be even higher after RBS last week swung to a loss in the third quarter, having set aside £900million for redress. Barclays set aside an extra £1.4billion.
Residents near the former Earls Court Exhibition Centre in London are putting pressure on the Saudi Arabian ambassador over a £2.3billion deal that would see the Gulf state and British property tycoon Nick Candy join forces to build on the site. It emerged last week that the $320billion Saudi sovereign wealth fund and Candy were in talks over a takeover deal for Capital & Counties Properties (CAPC). Local residents want reassurances from the potential new owners after a decade-long battle with Capital & Counties over threats to demolish their homes in the redevelopment. Andy Slaughter, MP for Hammersmith, last week wrote to Prince Khaled bin Bandar bin Sultan Al Saud, the Saudi ambassador to the UK, to explain that a delegation from the West Kensington and Gibbs Green estates planned to visit the embassy to deliver letters about their concerns. Sources said the ambassador has told Mr Slaughter he would be ‘happy to meet’ him to discuss the matter.
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