Published: 06 December 2023
By Suzanne Evans, Director, Political Insight
Israel is investigating claims some investors had advance knowledge of Hamas's attack on 7th October. An academic study by Robert Jackson Jr from New York University and Joshua Mitts of Columbia University found that in the run-up to the attacks, there was significant short-selling focused on shares in Israeli companies on the Tel Aviv Stock Exchange that "far exceeded the short-selling that occurred during numerous other periods of crisis, including the recession following the financial crisis, the 2014 Israel-Gaza war, and the Covid-19 pandemic". "Days before the attack, traders appeared to anticipate the events to come," they said. They also noted a spike in selling activity in an investment that tracks movements in Israeli shares known as an Exchange Traded Fund (ETF), allowing investors to buy or sell a whole class of assets - in this case, Israeli companies. Short-selling activity in the MSCI Israel ETF "suddenly, and significantly, spiked" on 2nd October, based on data from the US financial watchdog, the Financial Industry Regulatory Authority, they added, noting that: "Just before the attack, short-selling of Israeli securities on the Tel Aviv Stock Exchange increased dramatically." The Israel Securities Authority said: "The matter is known to the authority and is under investigation by all the relevant parties." However, The Tel Aviv Stock Exchange says the report is inaccurate as it is based on currrency exchange errors, and that its publication is irresponsible.
The European Commission looks set to propose a three-year delay to the imposition of 10% tariffs on electric vehicles traded between the EU and the UK, to the relief of car manufacturers who have lobbied hard against the tariffs, which were due to come into force on 1st January 2023. Major European firms including BMW, Volkswagen and Stellantis had warned that failure to lift the tariff would add costs of up to €4.3bn (£3.7bn), which would be passed on to the consumer or absorbed by the industry. The proposed delay will go before the full cabinet of European commissioners on Wednesday, and is widely expected to be approved. The EU has also announced an investigation into claims of state subsidies of Chinese EVs, amid concerns about the EU’s growing trade deficit with China which has doubled in the last two years to almost €400bn.
Home repossessions are rising among properties worth more than £5m, because even the wealthiest are feeling the hike in mortgage interest rates, the Telegraph reports. The newspaper cites Jonathan Hopper, CEO of estate agency Garrington Property Finders, who says many owners have been reaching the end of lower fixed-rate deals after having made “emotional decisions during the pandemic, bought with their hearts not heads, and got it horribly wrong”. Philip Harvey, of buying agents Property Vision, also says there has been an increase in second homes being repossessed from international buyers in London. Typically these properties are worth £10m to £20m, he said.
UK Finance also says a record share of borrowers are taking out mortgages of more than 35 years to get on the housing ladder, with more than one in five first-time buyers signing such deals in September, the highest share since records began in 2005.
The London Stock Exchange (LSE) was forced to suspend trading in small cap stocks yesterday when its technology failed. The outage – the fourth in two months – did not affect the FTSE 100 or FTSE 250 but some 2,200 smaller shares, including online retailer Asos, drinks maker Fevertree, polling company YouGov and food delivery company Deliveroo were all unable to trade. The LSE is still investigating what went wrong.
Travel firm TUI is considering delisting from the London Stock Exchange, it said in a statement this morning. TUI currently holds a dual listing on the London and the Frankfurt Stock Exchange, but said it would take the company off London’s premier index if it proved to be “in the best interest of shareholders”. The FTSE 250 company noted that ownership of its shares and liquidity on the exchanges had evolved significantly with a “notable liquidity migration from UK to Germany” and there were “potential benefits to European Union airline ownership and control requirements,” should it be listed only in Frankfurt. The resolution to delist may or may not be submitted to its AGM on 13th February 2024. It will need 75% shareholder to be carried. The travel giant Tui also said it expected a 25% rise in operating profit this year after 2023 earnings more than doubled on resurging post-covid demand.
Adverts for Air France, Lufthansa and Etihad have been banned by The Advertising Standards Authority (ASA) for giving misleading consumers about their environmental impact. The ads, place on Google in July, showed Air France saying it was “committed to protecting the environment” and urging passengers to “travel better and sustainably”, while Lufthansa suggested that its customers would “Fly more sustainably”. Etihad’s ad claimed its service included “Environmental Advocacy”. An ASA investigation concluded the ads were misleading as there are currently no initiatives or commercially viable technologies in operation within the aviation industry that would adequately substantiate such claims. It ruled the three ads must not appear again.
Thames Water has scrapped the instillation of more than 200,000 smart meters in the Thames Valley South East because it missing out on £72m in funding from regulator Ofwat, because it failed to hit performance targets.
Masdar, a company controlled by The United Arab Emirates (UAE) government has taken a 49% stake in three East Anglian offshore wind farms, buying from Spanish developer Iberdrola. Just last week, Masdar also bought 49% of the £11bn Dogger Bank South project in the North Sea, a project that is being built by German-owned RWE.
Meanwhile, the prospective Abu Dhabi backed owners of The Telegraph will be asked to turn over their WhatsApp messages and emails to Ofcom as part of an investigation into whether their plans threaten press freedom. Deal insiders told the newspaper that RedBird IMI, which has part funded the deal allowing the Barclay family to take back control of the titles, has been told to expect demands from the media regulator to open up their communications to scrutiny at short notice as part of its public interest test. Last week, Culture Secrertary Lucy Frazer forced an investigation into the takeover on grounds of national security and the need for accurate presentation of news and free expression of opinion.
FTSE 100 tobacco and nicotine giant British American Tobacco (BAT) has announced a £25bn impairment charge as it moves to become a "predominantly smokeless business". The company is now committed to "building a smokeless world", it said, with 50% of revenue expected to come from non-combustibles such as vapes by 2035. "With only 10% of the world's 1bn smokers currently using New Category products, the long-term opportunity for growth as we deliver on our transformation is vast," said CEO Tadeu Marroco. "I am confident that the choices we are making today will drive our long-term success and deliver sustainable value for all of our stakeholders."
Sky News says that Ten Entertainment, one of Britain’s biggest tenpin bowling venue operators, will become the latest London-listed company to recommend a private equity takeover to shareholders, as it is set to disclose an offer worth about £300m from US-based Trive Capital today.
Former Bank of England Governor Mark Carney’s private equity firm, Brookfield, has been accused of massively under-reporting its carbon emissions, the Telegraph said yesterday. Brookfield’s true carbon emissions are as much as 13 times higher than what it officially discloses, campaign group Investors for Paris Compliance (I4PC) alleges, because Brookfield only reports the emissions for about 50% of its assets. For example, I4PC claims, Brookfield excludes emissions generated by Oaktree Capital Management, which is majority owned by the Canadian giant - Canada’s largest private equity investor - and makes up 22% of Brookfield’s assets under management, and has a stake in at least 118 fossil fuel assets. Brookfield disputed the figures, saying the analysis “deploys an opaque methodology that appears to run counter to standard global reporting requirements”. Carney has long pushed CEOs and policymakers worldwide to meet Net Zero goals. Speaking at the start of the COP28 conference last week, he said: “Let’s see who stands up in the UAE at COP amongst the oil and gas companies and countries and we’ll start to judge who’s performing and who isn’t.”
Pub operator and brewer Marston's has seen increased revenue in the past year and yesterday reported operating profit for the 52 weeks ended 30th September of 124.8m, an 8% increase on 2022. Marston's also narrowed its debts by £31m, and generated £54.5m from non-core strategic disposals, surpassing the net book value of those assets. "We have continued to make positive progress on our key goals and strategic initiatives," said chair William Rucker, who added: “The consumer has remained resilient despite the macro backdrop and Marston's continues to trade well, achieving market outperformance”. A new CEO, Justin Platt, will join in January, and Rucker said the business is “well-positioned to take advantage of the future opportunities open to us to create value for our shareholders under his stewardship."
The Royal Courts of Justice has approved a settlement between Ladbroke’s owner Entain and HMRC. Entain will pay the taxman £585m over the next four years to settle bribery allegations relating to a Turkish firm it owned previously, when known as GVC. The FTSE 100 gambling giant will also make a charitable donation of £20m and a £10m contribution towards the costs of HMRC and the Crown Prosecution Service. and the costs of the case. Barry Gibson, Entain's chairman, said: "This is the final step in a process that has hung over our business since HMRC launched its investigation into a business that was sold by a former management team six years ago. We have co-operated extensively and proactively at every stage of the process which, I am pleased to say, has been recognised by the Court. Entain has now fundamentally and profoundly changed. We can now concentrate on the future".
Former Serco boss Rupert Soames has been appointed as President of the Confederation of British Industry (CBI). Soames, the grandson of former British prime minister Winston Churchill, and brother to the former Conservative minister Nicholas Soames, said on his appointment: "I am pleased and honoured to have been nominated to be the next President of the CBI. After a decade of disruption and distraction due to Brexit, Covid, inflation and labour shortages, business and government need to work closely together to deliver a prosperous future where economic growth will lift living standards and sustainably fund the UK's vital public services." He made no mention of the ongoing scandal surrounding the business lobby group, namely allegations of rape and sexual abuse involving senior staff. Soames is currently the chair of London-listed medical tech group Smith & Nephew.
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