Friday, 25 April 2014

Weekly Wrap Up: Man Utd, Moyes & Market Movements

What's the difference between the four pieces of news that the City’s advisers, investors and market makers awoke to during the course of this week?

1. “Glencore Xstrata PLC (GLEN) has signed an agreement for the sale of its entire interest in the Las Bambas copper mine”

2. “French Connection Group PLC (FCCN), in the 11 weeks to 12 April 2014, have seen UK/Europe LFL’s up 11%”

3. “AstraZeneca PLC (AZN) report that Profit Before Tax falls by 50% Q1 of 2014 to £380m”

4. “Manchester United Plc (MANU) sack Manager, Moyes, after just 10 months”



Or at least that is the view taken by the regulators of our capital markets.

Whilst all four announcements were of interest to advisers and investors alike and significantly affected the share price of the publically listed companies they related to, only three were announced to the market before the media were approached.

Following the football club Manchester United Plc’s announcement that it was to part ways with Mr Moyes on Tuesday, their share price jumped 7%. As a result, the New York Stock Exchange was considering launching a formal investigation into the sacking of Moyes and the way that it was communicated to the market.

It has since been reported that no formal action will be taken by the NYSE, and the club firmly deny that they breached regulations in any way. But what lesson can be learnt here?

Rules dictate that regulators must be notified and the market informed of any major changes or news that could affect a company’s share price before the media is informed. Clearly, Manchester United Plc didn't do this. The rules have been set in place to ensure that all audiences and investors are treated fairly. No advantage should be given to the lucky few who pick up a particular newspaper or tweet over breakfast, enabling them to act upon the news earlier than those who, for example, prefer to listen to Chris Evans and his golden oldies on BBC Radio 2 in the morning.

Manchester United is, in most people’s eyes, a football club first and foremost (rather than simply an investment opportunity). Perhaps the decision of how to release the news about Mr Moyes reflects the tendency of companies to value their traditional audiences over their investor audiences.

As the number of consumer-facing companies coming to market continues to increase, careful attention will need to be paid as to how they communicate corporate news, especially if said news could affect the share price and the shareholders.

It is essential that CEOs and companies operating in public markets continue to seek the advice of those who have often made the tight and often tricky call about news releases before letting the cat slip out of the proverbial bag.

This week's Market Lunch discussed the recent flurry of Technology movements across the globe. Abchaps also learnt a great deal about the future of Energy Saving Companies at EcoConnect’s Green in the City Event, hosted by Squire Sanders. We also enjoyed a very cultural evening at EY's lecture series on Sikh Art with Jasleen Kandhari.

“RNS” – The London Stock Exchange’s Regulatory News Service: Any piece of Company news that could affect the share price (such as a Board Appointment or acquisition) should be released on this service before being released to the media.

Reminiscent for a time when British music was “swinging”? The Blitz Party, an event to celebrate the World War II-era hits of Glenn Miller and Dame Vera Lynne, is being held this Saturday evening down in Shoreditch. Head along to this event where ration-book menus, wartime films and uniform costumes will transport you back in time.

In a sophisticated celebration of St George’s day, on Sunday the Royal Albert Hall will be hosting an afternoon of classics performed by the Royal Choral Society and Royal Philharmonic Concert Orchestra. Head on down to this famous London landmark to enjoy patriotic music, readings and a selection of poems.

Friday, 4 April 2014

Weekly Wrap Up: FCA rules on Crowdfunding

This week The Financial Conduct Authority did a lot to help consumers. This was, however, at the expense of businesses. In short, it set out new rules on payday lenders that would shut-down about half of the industry. Similarly, it has imposed rules on the nascent crowdfunding industry that could severely hinder its growth.

The concept of crowdfunding - by Rocio Lara
The FCA has always had a tough balance to strike when dealing with alternative funding; on one hand it has to encourage the industry to grow in order to open up an important access route to capital for SMEs struggling to obtain credit. At the same time it has to ensure that it is adequately protecting investors from risky start-ups. The result of this balancing act is that whilst the FCA seems to have struck a fair deal for peer-to-peer lenders (whose business models work around debt based finance), its equity-based finance counterparts in the crowdfunding sector have been hit punitively. These news rules may stop this form of finance in its tracks.

Under the new rules, equity-based crowdfunding will be subject to the “10 per cent” rule whereby investors must certify that they are not committing more than 10% of their net investible assets, excluding their home, pensions and life insurance. This rule will only be waived for those deemed to be “sophisticated investors”, and will not apply to peer-to-peer loans. This arbitrary limit on the amount of money that an individual can invest into crowdfunding ventures will, therefore, inevitability exclude small investors.

It would be a great shame for the crowdfunding industry, a great source of innovation that has opened up a new pool of capital to small businesses, to be quashed at such an early stage in its development. SMEs are driving the British economy and, therefore, the recovery of it. With lending levels by Banks at historic lows, putting these draconian rules in place will only reverse some of the great progress that has been made to kick-start lending and the economy.

This week, Abchaps attended the Global Mining Finance Spring Conference at the London Chamber of Commerce and Industry, which brought together miners and financiers looking at the most favourable regions for mining, as well as the hottest commodities for investments.

Who can resist a fun quiz? Abchaps enjoyed Farrer & Co's fab Quiz Evening, as well as hosting an environmental-themed market lunch. In view of the need to have effective Non-Executive Directors to support the reputation of a company, we attended the Peel Hunt NED Awards - a great opportunity to recognise the contribution that London’s NEDs make to the City.

To end the week on a high, we will be sipping cocktails tonight at the Association of Chinese Financial Professionals’ UK networking drinks.

This week saw Brewin Dolphin appoint Guy Foster as Head of Research having made a considerable impact at the firm over the last eight years. Panmure Gordon also appointed a new Head of Equity Research, Jeremy Grime. Over at Field Fisher Waterhouse Owen Talfan Davies joined as a Real Estate litigation partner. Charles Stanley Group also announced that Anthony Scott will take on the role as Head of Investment Management.

Crowdfunding”: the collection of finance to sustain an initiative from a large pool of backers. Companies who have recently turned to crowdfunding to source capital have also used the opportunity to market the business as well as fund it; Naked Wines is one such example.

In the mood for some contemporary art? Sunday 6th April is the last day of the Institute of Contemporary Arts’ display of Richard Hamilton’s famous ‘Man, Machine and Motion’ and ‘An Exhibit’ exhibitions. Composed of thirty steel frames and installed photographs, this re-showing of his mid-1950s work will certainly distract even the busiest of minds.

Another event not to be missed, and which is fast on its way out, is the London Coffee Festival, being held at 15 Hanbury Street until 6th April. This is the UK’s largest coffee and artisan food event, celebrating London’s vibrant culture and love of this favourite type of “brain fuel”. Tickets for this event can be bought for different sessions; bunch, lunch or tea-time.

Finally, an event for the contemporary Londoner: The Ceramic Art London show being held at the Royal College of Arts. This show will display the work of over 75 ceramic artists, with collections up for sale as well as for display. This three-day event, which ends on 6th April, includes talks, discussion and demonstrations.

Follow us on Twitter @AbchurchComms