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The following is a summary of top news stories Tuesday.
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COMPANIES
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Indian state-owned insurance for, LIC slumped on its market debut Tuesday following the country's biggest-ever initial public offering, opening 7% below the offer price. Prime Minister Narendra Modi's government raised $2.7 billion by selling 3.5% of Life Insurance Corp of India as his administration seeks to privatise state assets to plug a gaping budget deficit. But it was forced to cut back the offer from a planned 5% after markets turned volatile following Russia's invasion of Ukraine and China's Covid lockdowns. The offer price of 949 rupees had valued LIC at $77 billion, but it opened Tuesday on Mumbai's exchange trading 7% lower. The share price dropped to 9.4% down, before recovering slightly.
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Vodafone reported strong revenue growth in financial 2022, aided by Service revenue growth in Europe and Africa, but offered no further updates on its new largest shareholder, Emirates Telecommunications. For the financial year that ended March 31, Vodafone's pretax profit fell by 10% to €3.95 billion from €4.40 billion. Earnings before interest, tax, depreciation and amortisation after leases was €15.2 billion, within the company's updated guidance range of €15.21 billion to €15.4 billion given in November and 5.0% higher than the €14.39 billion achieved the previous year. Revenue rose 4.0% to €45.58 billion from €43.81 billion, with Service revenue up 2.6% to €38.20 billion. Chief Executive Nick Read said: ‘Our near-term operational and portfolio priorities remain unchanged from those communicated 6 months ago. We are focused on improving the commercial performance in Germany, actively pursuing opportunities with Vantage Towers and strengthening our market positions in Europe. These actions, together with the simplification of our portfolio and the ongoing delivery of our organic growth strategy, will create further value for our shareholders.’ Vodafone left its annual dividend unchanged at 9.00 euro cents. Emirates Telecom, formerly known as Etisalat, has taken a 9.8% shareholding but said it has no plans to make a takeover offer. On Saturday, it said subsidiary Atlas 2022 Holdings Ltd purchased 2.77 billion Vodafone shares for about $4.4 billion, praising the quality of the business and its brand.
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Vodafone spin-off Vantage Towers dubbed its first year as a listed company a ‘successful’ one, with revenue and profit both growing. Revenue in the financial year to March 31 nearly doubled to €1.02 billion from €545 million the year before, with pretax profit jumping to €466 million from €218 million. The Germany-based mobile phone mast operator's revenue excluding pass-through growth was 4.6%. During the year, the company said it added 1,680 net new tenancies in total across its footprint, and macro site new build ramp up further progressed with more than 190 new sites in the fourth quarter compared to 130 in the third, taking the year's total to over 510.
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Imperial Brands shares rose after the tobacco firm backed its prior guidance and reported that its core Combustible business is stabilising. In the six months that ended March 31, Bristol-based Imperial reported a 27% fall in operating profit to £1.20 billion from £1.64 billion a year before. Imperial explained that operating profit in the recent year suffered from £201 million in charges for its exit from Russia, while the year before benefited from a £281 million gain from the sale of its cigar business. Pretax profit sunk 39% to £1.26 billion from £2.06 billion, while net revenue fell by 1.3% to £15.36 billion from £15.57 billion, which was blamed on lower excise duty in Europe. Imperial upped its interim dividend to 42.54 pence, rising 1.0% from 42.12p issued in the same period a year prior.
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UK competition regulators have said they will be taking a closer look at London Stock Exchange's acquisition of Quantile. Earlier this month, Competition & Markets Authority had given LSEG a week to soothe the competition concerns it had about the deal. On Tuesday, however, the CMA said it will refer the merger for ‘an in-depth investigation’. The regulator said the undertakings that LSEG had offered did not provide ‘clear-cut solutions’ to its concerns. In December, LSEG announced that it would acquire portfolio, margin and capital optimisation services provider Quantile for up to £274 million, an acquisition which would allow the stock exchange operator to expand its range of post-trade risk management solutions to its customers.
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AstraZeneca said it signed a license agreement with RQ Biotechnology to develop, manufacture and sell Covid antibodies worldwide. RQ Bio is a company co-founded by LifeArc, a London-based medical charity. ‘RQ Bio today emerges from stealth mode, announcing its launch as a new UK-based biotechnology company,’ LifeArc trumpeted in a separate press release. The license deal is worth up to $157 million, LifeArc said. RQ Bio will be eligible to receive single digit royalties on sales, it continued. The antibodies against Sars-CoV-2, the virus that causes Covid-19, provide instant and long-lasting immunity for vulnerable people at risk of severe disease or death from viral infections, it said. The antibodies are generally used in the early stage of a Covid infection.
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ContourGlobal has agreed to a takeover by US private equity firm Kohlberg Kravis Roberts. New York-based KKR has offered 263.6 pence per share for ContourGlobal, valuing the London-based power generation firm at about £1.75 billion. It closed trading in London on Monday at 193.40p, giving it a market cap of about £1.25 billion. ContourGlobal's board have unanimously recommended the deal. Chair Craig Huff said the offer will ‘provide an opportunity for all shareholders to crystallise their investment in ContourGlobal at an attractive price’. ‘The board of ContourGlobal welcomes KKR's intention to provide capital and operational expertise to support ContourGlobal's strategy, including accelerating investments in the energy transition,’ he added.
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MARKETS
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Stock prices and the pound were on the rise on Tuesday, amid positive economic indicators from the UK and Europe, allowing markets to move on from weak Chinese data on Monday. The pound was back near to $1.25, as UK jobs figures suggested the Bank of England needs to remain on the path of policy tightening. Signs that the severe Covid-19 lockdown in Shanghai is being lifted improved market sentiment, giving Hong Kong shares and global oil prices a boost.
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CAC 40: up 1.4% at 6,436.09
DAX 40: up 1.4% at 14,161.36
FTSE 100: up 0.8% at 7,521.15
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Hang Seng: closed up 3.3% at 20,602.52
Nikkei 225: closed up 0.4% at 26,659.75
S&P/ASX 200: closed up 0.3% at 7,112.50
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DJIA: called up 1.1%
S&P 500: called up 1.5%
Nasdaq Composite: called up 2.1%
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EUR: up at $1.0484 ($1.0402)
GBP: up at $1.2484 ($1.2250)
USD: up at JP¥129.33 (JP¥129.10)
Gold: up at $1,828.60 per ounce ($1,812.63)
Oil (Brent): up at $114.60 a barrel ($112.19)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Shanghai declared it has achieved ‘zero-Covid’ across all its districts, sparking derision on social media as millions in China's biggest city remained under lockdown. Confronted with its worst outbreak since the beginning of the pandemic, China the last major economy still closed off to the world put the city of 25 million under heavy restrictions in early April. The government's insistence on squashing the Omicron variant-driven outbreak prompted rare protests and angry scuffles with authorities as Shanghai residents reject the prolonged confinement and food shortages. ‘All 16 districts of Shanghai have already achieved zero-Covid at the community level,’ Shanghai health commission official Zhao Dandan told reporters on Tuesday. That means none of the over 1,000 new infections recorded on Tuesday was detected outside of quarantined areas, city authorities said.
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Growth in the eurozone continued its steady rise over the spring quarter, but growth slowed slightly in the EU, according to preliminary data. In the three months to March 31, gross domestic product in the eurozone grew by 0.3% and by 0.4% in the EU, according to a flash estimate from Eurostat, the EU statistical office. This is compared to growth of 0.3% and 0.5% respectively in the final quarter of 2021. On an annual basis, GDP grew by 5.1% in the eurozone and by 5.2% in the EU during the period, picking up speed from the 4.7% and 4.9% respective growth seen in the final quarter of 2021.
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The UK labour market is in a better state that expected, but conditions remain tight, official data showed. Joblessness was reduced and wages increased, though not by enough to keep pace with inflation. The UK unemployment rate was estimated at 3.7% in the three months to May, 0.3 percentage point lower than the previous three-month period, and 0.2 percentage point below the pre-coronavirus pandemic level - which covers the period from December 2019 to February 2020. The figure also beat the market consensus forecast, according to FXStreet, of 3.8%. Wage figures were less positive. In real terms - adjusted for inflation - in January to March 2022, growth in total pay, which includes bonuses, was 1.4%, but regular pay fell by 1.2% on the same period a year prior.
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The governor of the Bank of England has warned there is ‘very real income shock’ coming from energy prices and ‘apocalyptic’ food prices but stood by the bank's policy decisions. Andrew Bailey said he felt ‘helpless’ as he defended the bank of England's monetary policy despite households being battered by soaring inflation. Bailey told MPs at the Treasury Select Committee on Monday that UK consumer demand will be impacted by current inflation, which is the highest in 30 years, and this is expected to cause higher unemployment. The Office for National statistics recorded inflation at 7% in March and later this week is expected to unveil over 8% inflation for last month. The Bank of England has said inflation is likely to peak at 10.25% during the final quarter of 2022.
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UK Prime Minister Boris Johnson said his plan to legislate to rip up Northern Ireland's post-Brexit trading arrangements was an ‘insurance’ policy if a fresh deal could not be reached with the EU. The row over the Northern Ireland Protocol has created an impasse in efforts to form a new executive in Stormont, with the Democratic Unionist Party refusing to join a new administration unless its concerns over the arrangements are addressed. The prime minister travelled to Belfast to meet leaders of the Stormont parties in an attempt to secure progress but Johnson also used the trip to issue a warning to Brussels that the UK is prepared to rewrite unilaterally the terms of the Brexit deal he signed. The move could risk a trade war with the EU, but Johnson is frustrated that talks with Brussels to resolve the protocol problems have not made sufficient progress.
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French President Emmanuel Macron named Labour Minister Elisabeth Borne as his new prime minister, the first woman to head the French government in over 30 years, the Elysee said in a statement. Outgoing French Prime Minister Jean Castex earlier handed his resignation to the president, part of a widely expected reshuffle to make way for a new government in the wake of Macron's re-election in April. The departure of Castex, who was a surprise choice for the role in 2020, enables Macron to reshape the cabinet ahead of crucial parliamentary polls in June.
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