News & Insight Weekly Newsletters

15 May 2020 | William Buckhurst

That Was The Week That Was


  • A slight easing of lockdown measures announced by UK Prime Minister, Boris Johnson, and an announcement by Rishi Sunak to extend the furlough scheme
  • Saudi Arabia trebled its VAT rate to 15% as part of austerity measures to cope with the falling oil price
  • UK GDP shrunk by a 5.8% in March – the largest monthly drop since comparable records begun in 1997
  • US jobless claims show 36million Americans out of work, suggesting that nearly 40% of low-earning households have experienced job losses

Statistic of the week

James Anderson, manager of the highly successful Scottish Mortgage Investment Trust, pointed out that the market capitalisations of Amazon and Alphabet, now outweigh the entire universe of UK-listed companies

Company news

  • US orthopedics company, Zimmer Biomet, released slightly disappointing quarterly earnings at the start of the week and noted that it saw a 60% decline in revenue in the last two weeks in March with April revenues declining 70% year on year. But management stated that business performance was strong before the virus hit and that the company had ample liquidity and financial flexibility
  • Vodafone saw slightly better than expected numbers. They re-affirmed their dividend (although they had cut it six months ago). Interestingly, we saw tentative signs of an improvement in their service revenue
  • Prudential provided a business update on Thursday which reinforced the market’s view that the US business, Jackson, is acting as an overhang on the group’s long-term potential and that a minority IPO could be imminent
  • Specialist UK engineer, Spirax-Sarco, issued reassuring numbers showing their defensive qualities but the shares still trade on around 40x

Small-cap news

Unlike a number of the larger companies who have raised money to repair their balance sheets, a number of the smaller companies we follow, namely Keywords Studios and BooHoo Group, have done so for M&A action. These two operate in the computer gaming and fast fashion areas of the market and have updated investors recently with better than expected results and positive outlooks.  We look forward to seeing the targets they identify and the multiples that they will pay.


A Japanese fund manager who seeks out income producing stocks told us this week that Japan is still a fertile hunting ground for dividends. Starting from a much lower base, with payout ratios in the 30% region, Japanese companies have a lot more scope than many western companies to maintain or even grow their dividends.

This week in history

1911: Standard Oil, which at its peak in 1904 controlled 91% of oil production in the US, was ordered by the Supreme Court to be broken up following a five-year anti-trust lawsuit.

1997: Talking of large, dominant US companies, this was the week in 1997 that Amazon floated its shares on the US stock market at $18 per share. 23 years on they finish the week at $2,409 per share.

Lockdown lowdown

We at Vermeer send a socially distanced pat on the back to the clever ladies and gentlemen at the All England Lawn Tennis Club, who had the foresight post the 2003 SARS outbreak to take out pandemic insurance for the Wimbledon Tennis Tournament. An annual premium of around £1.5m has netted a pay-out estimated to be in the region of £114m.

Market Data

% returns

1 Week

1 Month

1 Year

5 Years

UK Equities (% return GBP)





World Equities (% return GBP)





10 Year US Treasury Yield (%)





GBP / USD (fx rate)





as at 15th May 2020. Source: Financial Express

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