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“Asian shares were out of favour on Monday with big declines seen across China, Hong Kong, India and Japan. Market chatter suggested that investors were no longer betting on sharp interest rate cuts in the US and so appetite had dampened for equities,” says Russ Mould, Investment Director at AJ Bell.
“European markets were less volatile with only minor losses seen across the UK, Germany, France and other geographies.
“The FTSE 100 was flat at 7,545 with strength in miners and tobacco stocks helping to offset weakness in utilities and banking."
Imperial Brands
“Imperial Brands’ decision to change its dividend policy has understandably been well-received by the market.
“The tobacco manufacturer says it will no longer grow dividends at 10% a year, instead adopting a ‘progressive’ dividend policy, which essentially means they will grow in line with earnings.
“Imperial Brands’ shares are popular among retail investors for their generous pay-out, with the shares currently yielding circa 10%. However, there had been growing concerns in the market that its rate of dividend growth was unsustainable if the company were to keep the rate of net debt to earnings at comfortable levels.
“Its share price has been in a falling trend for the past two years as investors didn’t like the threat of growing regulation in the US and lacklustre expansion of next-generation products.
“Having capital discipline is a good step to right-sizing the business for the next stage of its life. This change in policy also gives it more freedom to buy back shares at depressed prices.
“Imperial Brands joins a growing line of FTSE 100 stocks which have cut their dividend in the past year, including Vodafone and Marks & Spencer. Utilities firm Centrica is expected to join the gang in the near future.”
International Consolidated Airlines
“The blockbuster fine imposed on British Airways owner International Consolidated Airlines for a material 2018 data breach, which saw customers’ card details stolen, is proof of how important this issue is becoming for companies.
“Businesses keep more and more of our personal data and today’s news suggests that if they lose it, there are significant real-world consequences.
“Not only are regulators becoming increasingly strict but consumers and other customers are also likely to be unforgiving of failures in this area.
“A strong consumer brand like British Airways relies on trust and it could be highly damaging if prospective flyers feel they can’t trust the company with their data.
“Most cyber security experts tend to agree that hackers don’t identify specific targets and instead are opportunistic, looking for outfits which have left their digital door unlocked.
“There is likely to be little sympathy on offer for businesses who fail to take the necessary precautions to protect themselves from cyber-crime.
“This creates a big onus to invest properly in this area and to ensure the right structures and processes are in place to keep sensitive information safe.
“And for this reason chief information officers are likely to play an increasingly important role within most big companies.”
These articles are for information purposes only and are not a personal recommendation or advice.