MARKET REPORT

Monday 30th November 2020

Market Headlines

Dr Anthony Fauci warned the US could see ‘surge upon surge’ of coronavirus cases linked to Thanksgiving travel.

China’s NBS manufacturing index was 52.1 in November, above the 51.5 level forecast and the 51.4 figure in October, as factory activity grew at its fastest pace in over three years.

Sir Philip Green’s Arcadia empire was the brink of collapse with Mike Ashley’s Frasers Group interested in any sale process, having offered emergency funding.

The Nikkei 225 fell 0.8%, the Hang Seng dropped 2.1% and the Shanghai Composite closed down 0.5%. UK indices were higher.

Investments on our buy list

Hipgnosis Song Fund (SONG) – the fund’s net asset value (NAV) got a boost from a 0.5% cut in the discount rate used by valuer to value its song catalogues. This boosted the NAV for the ordinary shares by 9%, and underlying growth added 1.9%, pushing it to 125.35 pence per share. The reduction in the discount rate has been talked about for some time, and many believe that it may reduce further as the asset class matures. The underlying performance was good despite forex headwinds. We remain positive.

Source: Bloomberg (PETS) – today announced that it has acquired The Vet Connection, a Surrey-based veterinary telehealth provider, for £15m using existing cash reserves. Chief Executive Peter Pritchard commented “the acquisition of The Vet Co marks an important next step in the development of our digital capabilities providing trusted advice and even more convenient pet care services.” The shares have achieved our target level of 430p but the positive momentum, helped by today’s news, may take them higher.

Source: Bloomberg

Chart of the day

Copper futures have gained 50% in Shanghai since the end of March, underpinned by China’s turnaround. Copper demand should benefit from a revival in global trade as coronavirus vaccines win approval. Copper futures have shown a strong correlation with China’s manufacturing PMI and CSI equity index. The large copper refinery running rate in the nation has risen 93% from 78% in February. Unwrought copper has led a rebound in imports.

Source: Bloomberg

Recap of Friday

Reach fell 9.1% as sales for the five months to 22 November fell 14% year-on-year due to declining print sales whilst digital revenues grew. Costs have been reduced significantly.

Indivior sunk 24.7% as it announced that Reckitt Benckiser has submitted a claim for £1.07bn pursuant to an indemnity contained in the Demerger Agreement entered into between the two companies.

JD Wetherspoon added 1.2% as Chairman Tim Martin bemoaned the new tier restrictions, noting it had 435 pubs in tier 2 and 315 pubs will remain closed in . He claimed errors of judgement by the government and SAGE.

The UK blue chip index added 0.1% on Friday to close the week flat.

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