FOXGROVE

RECOVERY HELPS TO SHIELD GOVERNMENT FROM CUMMINGS’ ALLEGATIONS

  • RECOVERY HELPS TO SHIELD GOVERNMENT FROM CUMMINGS’ ALLEGATIONS

    RECOVERY HELPS TO SHIELD GOVERNMENT FROM CUMMINGS’ ALLEGATIONS

    Data Sourced from FE Analytics, and Bloomberg Finance LP

    RECOVERY HELPS TO SHIELD GOVERNMENT FROM CUMMINGS’ ALLEGATIONS

    This week we saw the man suspected for a time of running the government, trash said government. While Dominic Cummings might not be the most reliable witness, his account of poor planning and decision making is certainly believable. How or if this changes anything is not clear, as most people appear to have made their minds up regarding the government’s competence. Despite the scale of the tragedy alleged, accountability is the only real consequence for those in charge and the successful vaccination programme has won the government a lot of tolerance.

    Elsewhere we saw talk about ESG and ethical investing actually manifest itself in clear cut action. Exxon had two, possibly three, new directors forced onto its board by activists concerned it wasn’t taking climate change seriously. Notably the activists weren’t an environmental group, but a hedge fund whose challenge was backed by both BlackRock and Vanguard. The main concern being that if management didn’t take climate change into account they would damage profits and the share price. Climate change is now big business, and big business needs to take note.

    UK: RATE OF GOVERNMENT BORROWING SLOWS AFTER RECORD YEAR

    UK government borrowing is beginning to slow as the country reopens after the Covid restrictions. Figures out this week show monthly borrowing fell compared to a year ago, but it still came in at the second highest for April since records began at £31.7bn, down from £46.6bn last year. A slight decrease in the rate of borrowing and a pickup of economic growth has seen total government debt as a percentage of GDP fall slightly to stand at 98.5 per cent at the end of April.

    As the recovery continues the picture should also continue to improve and the latest forecast from the Office for National Statistics is for the government to borrow £234bn this year. The extremely low rates of interest on government bonds mean that despite the increase in total borrowing the cost of servicing this debt has barely moved and April’s interest payments were £0.1bn above last year – mainly due to an increase in the yield on index-linked bonds.

    OIL: ENERGY COMPANIES UNDER PRESSURE TO ADDRESS SUSTAINABILITY

    Big oil companies endured a tough week as activist investors and environmental campaigners stepped up efforts to get them to address their behaviour. Royal Dutch Shell suffered a setback in the Dutch courts as environmental activists won their case to force the company to accelerate its plans to reduce carbon emissions. Shell has appealed the ruling but if it loses the case it could set a precedent for campaigners to challenge other energy producers. Separately this week shareholders in Chevron passed a resolution calling on the company to ‘substantially reduce’ its emissions.

    Most significant, perhaps, is the victory by activist hedge fund Engine Number 1 which succeeded in nominating two directors to Exxon Mobile’s board. The hedge fund’s motivation is financial rather than environmental but it has been very critical of Exxon’s lack of focus on cleaner energy and failure to prepare for a world less dependent on oil and gas. It warned that without action Exxon faces existential risk and its campaign was backed by the majority of shareholders despite opposition from Exxon’s management.

    EQUITIES: THE BILLION DOLLAR BATTLE FOR CONTENT

    The fight for subscribers intensified this week as Amazon agreed to buy film studio Metro-Goldwyn-Mayer for $8.45bn. The acquisition will bring a vast content library to Amazon Prime Video and is evidence of further consolidation in the streaming sector following the merger of TimeWarner and Discovery last week. It is Amazon’s largest acquisition since its purchase of Whole Foods for $13.7bn in 2017 and pushes media deals to their highest level in several years.

    Streaming content remains extremely competitive in 2021 after the pandemic drove a surge in subscribers. Netflix is still the market leader but its growth has slowed sharply after a big increase last year. The recent launch of services like HBO Max and Disney +, the relaunch of Apple TV plus the presence of dozens of other smaller streaming services means companies are having to work harder to produce content to maintain subscriber interest.

    For more information regarding our weekly market reports, we encourage you to give us a call on 01732 746188 or send us an email at enquiries@foxgroveassociates.co.uk.

    This document has been prepared for general information only. It does not contain all of the information which an investor may require in order to make an investment decision. If you are unsure whether this is a suitable investment you should speak to your financial adviser. This information is not guaranteed to be correct, complete, or accurate. Financial Express Investments Ltd, registration number 03110696, is authorised and regulated by the Financial Conduct Authority (FRN 209967). For our full disclaimer please visit https://www.fefundinfo.com/en-gb/about/legal-and-policies/.

    admin

    Leave a comment

    Required fields are marked *