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British tech firm Imagination for sale amid Apple dispute

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UK computer processor firm Imagination Technologies Group is on the market and has received takeover interest from a number of parties, the group announced in a statement today.

The company, which designs and makes graphics and processing chips for products such as Apple’s iPhone, said that following approaches from potential buyers “the board of Imagination has therefore decided to initiate a formal sale process for the group and is engaged in preliminary discussions with potential bidders”.

Imagination’s share price collapsed in April after Apple said it would no longer use its licensed technology in 15 months’ to two years’ time. “Apple has not presented any evidence to substantiate its assertion that it will no longer require Imagination’s technology, without violating Imagination’s patents, intellectual property and confidential information. This evidence has been requested by Imagination but Apple has declined to provide it,” the company announced at the time.

“Further, Imagination believes that it would be extremely challenging to design a brand new GPU architecture from basics without infringing its intellectual property rights, accordingly Imagination does not accept Apple’s assertions.

“Imagination has reserved all its rights in respect of Apple’s unauthorised use of Imagination’s confidential information and Imagination’s intellectual property rights,” it said in April.

The company “remains in dispute with Apple Inc”, today’s statement also said.

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Markets Update: Steady as she goes

With the global index and commodities such as gold, silver and oil losing ground, Ian Slattery examines the markets to see where gains can be made.

It was a choppy trading week for equities, as the market struggled to gain momentum in either direction. At the June Federal Reserve meeting interest rates were increased by 25 basis points, boosting the target range to 1%-1.25%. This move had been well flagged by Fed Chair Yellen and her colleagues, and thus invoked very little market reaction.

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Ian Slattery

Data emanating from the US somewhat disappointed last week, as softer than expected inflation data led to a fall in Treasury yields (yields move inversely to price). Housing and retails sales figures also came in slightly weaker than forecast.

In Europe, French President Macron led his En Marche party to a decisive parliamentary victory.

En Marche and its centrist ally Modem secured 350 of 577 seats, which reinforces Macron’s position post the Presidential election. However, opponents will point to the record low turnout as a sign that issues remain for the French electorate.

The global index lost some ground last week, down by 0.1%. Gold and silver both slipped further this week, down by 1% and 3% respectively.

Oil continued to lose ground on the back of higher US stockpiles and increased Libyan production.

The price of the US 10-year bond rose as yields fell to 2.15% from 2.20% a week ago.

Oil continued to lose ground on the back of higher US stockpiles and increased Libyan production

The equivalent German yield rose slightly to 0.28% from 0.26%. The EUR/USD rate was broadly steady at $1.12, whilst EUR/GBP closed at 0.88.

THE WEEK AHEAD

Thursday June 22nd
Eurozone consumer confidence data goes to print where a further rise is expected. This will be a positive follow on from the May figure, which was the best in ten years.

Friday June 23rd
Eurozone manufacturing and services PMI data for June is released. Manufacturing figure is forecast to edge down slightly, whilst services are expected to continue to improve.

 

The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €21.6bn in investment of which pension assets amount to €9.6bn. To find out more about Zurich Life’s funds and investmentsw: zurichlife.ie/fundsTwitter: @ZurichLifeLinkedIn: linkedin.com/company/zurich-life-assurance-plc

Warning: Past performance is not a reliable guide to future performance. Benefits may be affected by changes in currency exchange rates. The value of your investment may go down as well as up. If you invest in these funds you may lose some or all of the money you invest.

 

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Are businesses turning away from Theresa May?

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Katya Puyraud of Euro Start Entreprises interprets the mood in advance of election day.

Think Conservatives and you think business. The current governing party has always been inextricably tied to the interests of commerce in the UK, back to Thatcher and beyond. Their policies of privatisation, corporation tax cuts and red tape reduction have developed an image of economic competence that has seen businesses back them to the hilt. A combination of vocal support and party funding has formed a significant part of the last two Tory electoral victories.

Recently, however, this cast-iron support has come under question. An apparent move away from the party’s favoured free market economic model has left businesses lukewarm and wondering where the Tories are headed. While it’s debatable whether the opposition’s vision is more palatable to business, the fact that this debate is even being had may worry the current government in the run up to June 8th.

Manifesto malaise
The Conservative manifesto has been a difficult sell for many groups, but the most unusual dissent has come from business interests. Analysis by the Telegraph of small business leaders suggests that the reaction on social media has been almost overwhelmingly disapproving: over 50% of responses were negative, and only 8% were clearly positive. Larger businesses have not taken it much better, with Morrisons boss Andy Higginson calling their policies an “attack on business.”

Chief among the complaints is the lack of costing throughout the manifesto, making up 34% of complaints logged by the Telegraph. This is thrown into particularly stark relief by the ‘fully costed’ Labour manifesto, though there are indications that this was rushed and is not entirely accurate. Still, combined with the recent U-turn on the cost of social care, May seems to have undermined the ‘strong and stable’ slogan that has been the bedrock of her campaign.

It is the general willingness to complain that might hurt May the most. The manifesto pledges are only the latest in a line of decisions that have tested the resolve of the business community; these include raising the minimum wage, a controversial apprenticeship levy and a flagship policy to cap energy prices. With the additional burden of slowing consumer spending and political uncertainty, business leaders say they are struggling to shoulder these burdens.

Deal or no deal
Dwarfing these, however, is the thorny issue of Brexit. Businesses have put a brave face on things, and most feel confident of pulling through what will be a challenging period. But they still face a significant instability, not least because of the government’s insistence on a ‘hard Brexit’, and an unwillingness to clarify its negotiating position this early on.

For businesses contributing to the UK’s £14.3bn trade deficit, import costs have risen thanks to the weakened pound sterling. These now have to be passed on to consumers who are spending less, contributing to the recent fall in growth. And the future of exporters remains uncertain, with 44% of UK exports going to other EU countries.

It’s notable that in the weeks since the manifesto launch, Theresa May has moved away from domestic policy issues and back towards Brexit. While she notably did not support it, her apparent willingness to leave negotiations with ‘no deal’, as opposed to ‘a bad deal’, has won plaudits.

Whether this is an economically sensible approach is questionable; any deal involving billions of pounds in settlements is likely to be seen as a bad deal. But what some would see as stubbornness, many see as strength – a quality that the more demure Jeremy Corbyn sometimes is perceived to lack.

Opinion still varies on Brexit when it comes to ideological grounds, as well as other political factors, but it did not represent the pragmatic choice. The ability to acquire the best person for the job and trade freely only benefits business, and these abilities remain under direct threat. The last thing SMEs want from the government at this uncertain juncture is policies that upset the status quo.

Labouring the point
On these grounds at least, Labour do not present a particularly credible alternative. Jeremy Corbyn has proposed a tax rise for the top 5% of earners in order to pay for massive public expenditure, as well as nationalising certain keystone industries; none of this plays particularly well to larger businesses. Questions have also been raised of Corbyn’s leadership qualities following Labour infighting, something that may inhibit his influence on the global stage.

But smaller enterprise will not be hit by these tax cuts, and big business is hardly in favour of the Tories’ move to give employees more power in the boardroom. While its position on Brexit has been muddled, Labour also represents the most likely choice to pursue a softer approach to negotiations, and would do so without the dubious services of Boris Johnson.

What this shift represents remains uncertain. It is entirely possible that business interests will continue to simmer, aware that there are few options other than to quietly lobby government. But the outcome of the election could prove decisive.

A more likely scenario than a Labour victory would be a coalition government. This would have the potential for more balanced policymaking, involving both sides of the spectrum – and both sides of the Brexit vote – in decisions with decades of consequences. But it could also descend into unwelcome chaos and uncertainty, given the polarised opinions on each side. It would also throw doubt on Theresa May’s mandate to continue as both prime minister and party leader.

As ever, British enterprise will try to adapt to the hand it’s given. Brexit is not an immediate positive or a long-term one, but enough remains to be negotiated that businesses can be optimistic. While social issues have altered the momentum of the election campaign, the battle for Brexit is probably where the war will be won.

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Former journalist Katya Puyraud is the co-owner of Euro Start Entreprises, specialising in company formation in France and the rest of the EU. Since 2007 Euro Start Entreprises has helped budding digital nomads, entrepreneurs and expanding SMEs to open their companies in over 30 countries worldwide.

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No ‘rationalisation’ at Vauxhall, says Business Secretary

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UK Business Secretary Greg Clarke has claimed that GM-owned carmaker Vauxhall’s UK future is secure.

“There is some way to go in discussions between GM and PSA but I was reassured by GM’s intention, communicated to me, to build on the success of these operations rather than rationalise them,” he said having met General Motors president Dan Ammann amid reports of a sale of Vauxhall and Opel to the parent company of Peugeot and Citroen.

“We will continue to be in close contact with GM and PSA in the days and weeks ahead,” said Clark.

GM was more cautious in its announcement: “While we have no definitive news to report at this time, we can affirm that our objective in exploring opportunities with PSA Group is to build on the success of Opel Vauxhall and to put the business and the operations in the strongest possible position for the future. We look forward to engaging with our stakeholders as part of these ongoing discussions,” it said.

The proposed deal is facing union opposition and political uncertainty, with details of the plan still thin after news of takeover talks emerged earlier this week.

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Shell in major North Sea oilfield selloff

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Petrochemicals giant Shell has agreed to sell off a major tranche of its North Sea oilfield holdings to private-equity firm Chryasor in a deal valued at $3.8bn.

The deal, which is expected to close in the second half of the year, involves the sale of the Buzzard, Beryl, Bressay, Elgin-Franklin, J-Block,  Greater Armada cluster, Everest, Lomond and Erskine holdings, plus a 10% stake in Schiehallion.

The holding to be sold represents 115 thousand barrels of oil equivalent per day (kboe/d), with the Shell’s total North Sea production last year coming in at 211 kboe/d. “Following completion, Shell will retain a significant, more focused and strengthened presence in the UK North Sea, with production from the Schiehallion redevelopment and Clair Ridge project expected to come onstream,” the company said in a statement.

“Shell has a long and proud history in the UK North Sea, to which we remain committed,” said the company’s upstream director, Andy Brown. “This deal complements the great strides we have made over the last two years in improving the competitiveness of our UK upstream business.

“We believe this deal is a vote of confidence in the UK North Sea and offers proof that the industry’s increasing competitiveness, and improvements to the fiscal and regulatory regime, are starting to produce positive results. It will deliver value to Shell, Chrysaor and the UK as a whole, enabling us to continue to strengthen and optimise our UK portfolio and providing a springboard for Chrysaor to bring new investment and growth into the basin.

“It also contributes to the UK’s goal of maximising economic recovery of oil and gas from the UK North Sea, which will continue to be a source of energy, and revenue, for the country for many years to come.”

The deal will see around 400 staff move from Shell to Chryasor in a deal that is subject to partner and regulatory approvals.

“This deal shows the clear momentum behind Shell’s global, value-driven $30bn divestment programme,” said CFO Simon Henry. “It builds on recent upstream divestments in the Gulf of Mexico and Canada. It is also consistent with Shell’s strategy to high-grade and simplify our portfolio following the acquisition of BG, to ensure the company represents a world-class investment case.

“Importantly, the value here represents a profit against the book values of the assets, and a breakeven oil price above that for the BG acquisition.”

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Britain “open for business” says May at Davos

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UK Prime Minister Theresa May addressed trade, globalisation and Brexit at Davos this morning in a keynote World Economic Forum speech.

May, who set out a Brexit strategy for the first time earlier this week, used the opportunity to speak in more general terms about the issues of the day – particularly globalisation and the UK’s place in the world.

“The United Kingdom – a country that has so often been at the forefront of economic and social change – will step up to a new leadership role as the strongest and most forceful advocate for business, free markets and free trade anywhere in the world,” she said.

May also said that the Brexit vote was a choice on the part of voters “to build a truly global Britain” and said that critics and said that international critics have failed to understand voters’ motivation.

She also focused on the pressures facing international institutions. “I believe strongly in a rules based global order. The establishment of the institutions that give effect to it in the mid twentieth century was a crucial foundation for much of the growing peace and prosperity the world has enjoyed since. And the tragic history of the first half of the last century reminds us of the cost of those institutions’ absence,” she said.

May said that Britain is “open for business” but set out a need for better corporate governance and social responsibility if globalisation is to attract popular support. “That is why I have talked a great deal about our country delivering yet higher standards of corporate governance, to help make the UK the best place to invest of any major economy.

“That means several things,” she said. “It means businesses paying their fair share of tax, recognising their obligations and duties to their employees and supply chains, and trading in the right way; companies genuinely investing in – and becoming part of – the communities and nations in which they operate, and abiding by the responsibilities that implies; and all of us taking steps towards addressing executive pay and accountability to shareholders.”

The prime minister concluded by referring to “that great Conservative principle – change in order to conserve”. “I am determined to make sure that centre-ground, mainstream politics can respond to the concerns people have today. I am determined to stand up for free markets, free trade and globalisation, but also to show how these forces can work for everyone,” she said.

This year’s Davos conference concludes tomorrow.

Is the FTSE set for a tumble?

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Analysts predict bullish-to-bearish market reversal

While European stocks are enjoying sharp gains, boosted by the auto, mining and banking industries and optimism that the European Central Bank will extend its stimulus programme. However there are fears that the FTSE 100 Index could fall by as much as 10% after this year’s impressive benchmark performance.

Since June there has been a marked pattern, known by technical analysts as a “head and shoulders” pattern; this is normally a precursor to a bullish-to-bearish market trend reversal.

After near-record close in October, some analysts are predicting a fall to below 6,650, to as low as 6,164, Francis Hunt, known as The Market Sniper, told Bloomberg. He has previously accurately predicted the crude prices slump in 2014 and the failure of the eur0-Swiss franc floor in 2015.

“We have a head-and-shoulders pattern that is well-formed, showing a degree of exhaustion,” Hunt told Bloomberg. “All we need is a sustained move below the neckline — the 6,650 level — for a final confirmation. That’s when people should short.”

  • The FTSE 100 traded at 6,871.13 as of 10:43 a.m. in London. Hunt predicts it will breach the 6,650 level in the early weeks of 2017.
  • Cyclical shares, including banks and commodity producers that are among the FTSE 100’s biggest members, are “at risk of taking a breather,” UBS Group AG’s technical analysts including Michael Riesner wrote in a note Tuesday.
  • Weaker sterling and increased stimulus from the Bank of England after the U.K.’s secession vote boosted exporters in the months after Brexit. The FTSE 100 is up 10 percent this year, outperforming all western-European benchmarks except Norway’s.
  • “The pound is coming back up, which makes things pretty difficult for the FTSE 100,” said Andrea Tueni, a trader at Saxo Bank in Paris. “It’s trading not far from the head-and-shoulders neckline. Crossing it could spark a selloff.”
  • Sterling hit a two-month high on Tuesday, following its first monthly gain since April.

Source: Bloomberg

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The latest Brexit shock in FTSE reshuffle

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Building supply company relegated from FTSE after dramatic share price drop

The UK’s largest building supply company has fallen foul of Brexit and is to leave the FTSE 100. Travis Perkins is the second company to be demoted from the index, in the final reshuffle of the year. House building company Berkeley Group lost their footing in the September revamp.

The builder’s merchant had issued a profit warning last month and predicted a tough trading backdrop for next year, in light of a 30% share price drop since the June referendum. 

Polymetal International also moves off the listing after gold fell by 8% post-US elections. The reshuffle sees Irish paper-packaging giant Smurfit Kappa and healthcare company ConvaTec join the listing.

Russ Mould, ofonline investment platform AJ Bell told The Telegraph: “Smurfit Kappa’s promotion represents a remarkable turnaround in fortunes, as the shares collapsed following its 2007 flotation to barely 140p in 2009, weighed down by the recession and hefty debts.”

FTSE 100 Advances 4th Time in 5 Days in Pursuit of Record

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Gains push the FTSE close to capping April’s all-time closing high

Gains in commodity producers boosted the FTSE 100 Index, pushing it within 1 percent of a closing record that has proved elusive in October.

Anglo American Plc and BHP Billiton Ltd. rose at least 2.3 percent, sending a gauge of miners toward its highest level since June 2015. EasyJet Plc gained 3.2 percent after UBS Group AG recommended buying the shares. Petra Diamonds Ltd. climbed 6.4 percent after reporting a 30 percent increase in quarterly production.

The FTSE 100 rose 0.4 percent at 9:15 a.m. in London. The benchmark has struggled to close at a record after briefly reaching it on an intraday basis earlier this month. It’s 0.8 percent away from the all-time closing high of April 2015. The gauge of megacaps is on track to be the biggest winner of 2016 among western-European markets, up 13 percent as commodities rallied and a Brexit-induced sterling losses boosted its exporters.

The FTSE 250 Index of mid-cap shares climbed 0.5 percent today, extending its fourth straight monthly advance. That would make it the longest rally since February 2015.

Among other shares active on corporate news, Cobham Plc tumbled 16 percent after the U.K. aerospace and electronics supplier downgraded its full-year earnings forecast, its third profit warning in less than a year.

by Namitha Jagadeesh

(Bloomberg)

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Latest figures show sharp drop in credit demand

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Corporate and mortgage lending down while consumer credit cards still in demand

The latest results released from the Bank of England Credit Conditions Survey show that credit demand has retreated sharply post-Brexit, despite measures including a cut in the base rate and the introduction of the term funding scheme. The most notable drop has been in demand for credit from corporates, which has shown a sharp drop,  particularly among medium and large enterprises. This echoes the findings of the recent Deloitte CFO survey, which revealed that 57% of CFOs surveyed in FTSE 100 and FTSE 250 companies were planning for cutbacks to  capital investment in the next 12 months.

Mortgage lending also saw a lessening of demand, with the largest decline in the buy-to-let sector, since the survey began after the regulatory changes in Q2. Overall, new lending is set to slow down over the coming months in the mortgage market.

Strong demand was still evident in the unsecured lending demand sector in Q3, particularly for credit card lending, which suggests the UK consumer will continue to support GDP growth in the near term. Analysts expect, however, that Tuesday’s CPI data will reveal a sharp uptick in inflation in September, pointing to the possibility of real wage growth turning negative in the near future, with a knock-on effect of slowed household spending.