News & Insight • Weekly Newsletters

12 February 2021 | William Buckhurst

That Was The Week That Was

MACRO

• In the UK, official GDP figures for 2020 come in at -9.9%, the worst economic performance in over 300 years
• In the US, the S&P 500 and NASDAQ indices close the week at all-time highs
• Renewed hope for an improved investment climate in Latin America as Brazil finally gives its central bank autonomy from its politicians

STATISTIC OF THE WEEK

Our thanks to RM Funds this week for pointing out an obvious but often overlooked statistic.  As the reflation trade gathers pace and the nominal bond yield rises, investors who had sought refuge in 30-year risk-free government bonds will have seen c.8.25 years’ worth of interest coupons evaporate (in 10 days). Counter-party risk might be low, but the duration risk not so low.

COMPANY NEWS

• Coca Cola’s revenue fell 3% to $8.6bn in the fourth quarter, reflecting lower volumes and prices. Revenue was also held back by reduced consumption in pubs and restaurants because of the pandemic. Full year organic net revenue fell 9% to $33.0bn
• Royal Dutch Shell said its oil production and carbon emissions have peaked and that it will spend up to $6bn a year in its push towards renewables
• Shares in Eli Lilly finished the week lower after announcing that CFO Joshua Smiley had resigned. The company stated that he had resigned after it became aware of an inappropriate relationship with an employee

SMALL-CAP NEWS

A company at the coal face of British business updated the market on Friday with expectations that they would beat current consensus and therefore upped their dividend. Unfortunately FRP Advisory are administration experts and their “outlook…remains positive, although there is still uncertainty around the shape and scale of the economic recovery from the Covid-19 pandemic and additional pressures on some businesses from the UK leaving the EU," said Chief Executive Geoff Rowley

THIS WEEK IN HISTORY

1987: Having been instructed to prepare for privatisation in 1981 by the Thatcher Conservative government, British Airways led by Lord King is floated on the London Stock Exchange and takes over British Caledonian, the UK’s “second airline” in July that year.

2000: Pets.com, the poster-boy for the internet bubble of the late nineties, IPO’s at $11 per share. The share price peaks at $14 before collapsing

LOCKDOWN LOWDOWN

A lot of talk about crypto-currencies this week, but in China both Beijing and Suzhou announce that they will issue a total of 40mn Yuan (US$6.2mn) in the latest trials of the nation’s digital currency this week in a bid to boost consumption over the upcoming Lunar New Year holiday. The digital yuan, known officially as the Digital Currency Electronic Payment (DCEP), is part of China’s plan to move towards a cashless society fuelled by the rise of dominant fintech platforms like Tencent's WeChat Pay and Alibaba's Alipay.

MARKET DATA

As at 12^th February 2021. Source: Financial Express

Download the PDF here

This publication has been produced by Vermeer Investment Management Limited (VIM) trading as Vermeer Partners. It is provided for information purposes only. VIM makes no express or implied warranties and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to any data included in this publication. VIM will not treat unauthorised recipients of this publication as its clients. Prices shown are indicative and VIM is not offering to buy or sell or soliciting offers to buy or sell any financial instrument. Without limiting any of the foregoing and to the extent permitted by law, in no event shall VIM, nor any of its officers, directors, partners, or employees, have any liability for (a) any special, punitive, indirect, or consequential damages; or (b) any lost profits, lost revenue, loss of anticipated savings or loss of opportunity or other financial loss, even if notified of the possibility of such damages, arising from any use of this publication or its contents. Other than disclosures relating to VIM, the information contained in this publication has been obtained from sources that VIM believes to be reliable, but VIM does not represent or warrant that it is accurate or complete. VIM is not responsible for, and makes no warranties whatsoever as to, the content of any third-party website referred to herein or accessed via a hyperlink in this publication and such information is not incorporated by reference. The views in this publication are those of the author(s) and are subject to change. VIM has no obligation to update its opinions or the information in this publication. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the client who receives it. Any securities discussed herein may not be suitable for all investors. VIM recommends that investors independently evaluate each issuer, security or instrument discussed herein and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.This material has been issued and approved for distribution in the UK by VIM. ©2021 Vermeer Investment Management Limited. All rights reserved. No part of this publication may be reproduced or redistributed in any manner without the prior written permission of VIM. VIM is authorised and regulated by the Financial Conduct Authority (FRN: 710280) and is incorporated in England and Wales (company number: 09081916).