|Day's range||7,370.63 - 7,436.70|
|52-week range||7,004.40 - 7,727.50|
Equities retreat following a surprise pullback in U.S. markets on Thursday. The risk of a coronavirus-driven market correction grow daily.
IHS Markit’s Euro Zone Composite Flash Purchasing Manager’s Index (PMI), seen as a good gauge of economic health, rose to 51.6 in February from January’s final reading of 51.3, beating all forecasts in a Reuters poll.
The yield on the 30-year US Treasury hit a record low and Wall Street posted its first weekly drop in three on Friday as renewed fears about the economic fallout of the coronavirus and disappointing data stirred concerns about the outlook for the US economy. The yield on the US 30-year bond fell below 1.9 per cent for the first time, sinking as much as 7 basis points to a record low of 1.89 per cent on Friday morning, New York time. The yield on the US 10-year was trading at 1.4713 per cent at pixel time.
GBP/USD has come under pressure this week, despite an upbeat inflation report, as the greenback dominated the major currencies.
US and European stocks pulled back from record highs, with Wall Street’s main equities gauges at one point tumbling more than 1 per cent. The S&P 500 and Dow Jones Industrial Average each closed about 0.4 per cent below Wednesday’s record highs, staging gradual recoveries in the afternoon to recover from drops of as much as 1.3 per cent late in the morning session.
Smith & Nephew said revenues have surpassed $5bn for the first time, and it envisages sales increasing this year by up to 4.5 per cent, yet the group faces “additional uncertainty” from the coronavirus outbreak sweeping through Asia. Fourth-quarter revenue for the group that produces joint repair sports medicine rose 8.7 per cent, while for the full year Smith & Nephew generated $5.2bn in sales, up 4.8 per cent from a year earlier. Thursday’s fourth-quarter earnings report is the first under the steerage of Roland Diggelmann, the former Roche Diagnostics boss who stepped into the top role on November 1.
UK companies are imposing third-party checks on financial planning firms providing retirement advice to employees in a sign of growing boardroom nerves over pension mis-selling. Independent financial advice firms pitching to work for multibillion-pound corporate pension schemes are being required to have the transfer advice they give to pension scheme members reviewed by an independent third party not linked to the regulator. of DB transfers may have proceeded on unsuitable advice, with tens of thousands of members now at risk of running out of money in retirement.
Lansdowne Partners has continued a run of disappointing performance into this year, after the bet by one of Europe’s biggest hedge funds on a recovery in UK stocks failed to pay off. Mayfair-based Lansdowne, which manages about $15bn in assets, suffered a 5.7 per cent fall in its flagship Developed Markets hedge fund in January, according to numbers sent to investors and seen by the Financial Times. “Our conviction in the UK opportunity is very high,” Lansdowne wrote in a recent letter to clients.
It’s a busy week ahead, with private sector PMI numbers likely to reflect the impact of COVID-19 on economies. Falling cases should soften the blow, however.
Khalifa al-Muhairi, one of NMC’s controlling shareholders, has resigned from the board of the healthcare group after a turbulent few months in which the company’s finances and ownership structure have been questioned. The largest private healthcare provider in the United Arab Emirates said Mr Muhairi, the executive vice-chairman, stepped down on Friday. Along with India-born founder BR Shetty, he had been asked to step back from board duties earlier this week when it was disclosed that their shareholdings had been inaccurately reported.
Equity markets plunge after China upped the number of coronavirus cases and deaths, this outbreak is far more impactful than investors realize.
FT subscribers can click here to receive Market Forces every day by email. There was some tapping of the brakes across equity markets and risk assets on Thursday as the latest development from China reminded investors that the terrain is sinuous rather than a smooth climb. The trigger for a bout of renewed market caution was a jump in reported deaths and infections of coronavirus in China.
The announcement from NMC Health was the kind of thing that gives corporate governance experts nightmares. The FTSE 100 company disclosed on Monday that it had asked its founder, BR Shetty, and another of its top three shareholders to step back from the board after learning that the size of their stakes, and that of a third big investor, had been “incorrectly reported”. Mr Shetty was previously described as holding a 15 per cent stake.
(Bloomberg Opinion) -- When short-sellers such as Muddy Waters Capital LLC accuse listed companies of balance sheet manipulation, the target typically responds with their own lengthy rebuttal. Other investors caught in the middle often don’t know what to think and so a lot depends on the board’s credibility and transparency.NMC Health Plc, the subject of Muddy Waters’s latest attack, is now a little short of both.On Monday, the United Arab Emirates’ hospital operator and member of the FTSE 100, admitted that it doesn’t know how much of the company its major shareholders actually own. (This is separate to the Muddy Waters allegations, which focused on the asset values, debt and cash balances that NMC reports, as well as governance issues).Founder and chairman Bavaguthu Raghuram Shetty is conducting a legal review to verify the size of his stake and that of two other Emirati controlling shareholders. These may have been “incorrectly reported historically to the company and the market,” NMC said in a statement.The details are complicated, but the upshot is that Shetty and vice chairman Khaleefa Butti Omair Yousif Ahmed Al Muhairi must absent themselves from board discussions until their holdings and any “security arrangements” are clarified, and until the board decides whether they should remain directors. The concern is that some of the shares may have been pledged as collateral and could be sold by financial institutions without prior approval from the shareholder, whoever that turns out to be.Such worries may have merit. The stock has plunged 70% since Muddy Waters published its report in December. Share sales by major holders who’ve needed to settle margin calls on loans might have contributed to the rout.Needless to say this is pretty embarrassing for NMC who accused Muddy Waters in December of issuing “false and misleading” research. Now, in one respect, the company has had to admit that its own disclosures to the market were false and misleading, albeit for reasons beyond its direct control.The best hope now for long-suffering minority shareholders is that someone comes along and makes an offer for the healthcare operator. In a separate and rather fortuitously timed statement, NMC confirmed on Monday that it had received “highly preliminary” approaches from Kohlberg Kravis Roberts & Co LP and GK Investment Holding Group SA.NMC was worth about 8.5 billion pounds ($11 billion) at the share price peak in 2018 so it’s not surprising the company has drawn takeover interest now that it’s capitalized at just 1.6 billion pounds. NMC’s valuation — less than 7 times estimated earnings — is pretty undemanding for a healthcare stock; even one that’s subject to those Muddy Waters claims of balance sheet manipulation, which it denies. The shares rose 7% on Monday, a surprisingly decent outcome given the embarrassing share ownership revelations.However, potential bidders will still have concerns about how to conduct due diligence on a company that’s accused of being less than candid. The findings of an independent review of those Muddy Waters allegations by former Federal Bureau of Investigations director Louis Freeh aren’t yet known.The boilerplate caveat accompanying NMC’s regulatory announcement that “there can no certainty that any offer will be made for the company”, or at what price, seems more pertinent than usual.To contact the author of this story: Chris Bryant at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
It’s a busy week ahead. While the stats will influence, there’s Brexit, Trump and the coronavirus to consider and the RBNZ…
Women account for a third of FTSE 100 board seats for the first time, a big target for a government-backed initiative to encourage gender equality at the highest levels of British business. Just 15 per cent of FTSE 100 finance directors are women, for example, while there are only five female CEOs in the FTSE 100. In total, about 28.6 per cent of FTSE 100 leadership roles are held by women, falling to 27.9 per cent of FTSE 250 roles.