Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

All that glitters...

Written by Li-Ann Chin, associate 
Edited by Tom Gillingham, associate partner
24 June 2021

Good morning,

A forest of glass and steel, a hub of glittering skyscrapers and high-rise towers located on the western side of the Isle of Dogs, Canary Wharf has in a short three decades gone from a troubled docklands enterprise zone to a global financial powerhouse rivalling that of New York’s Wall Street.
 
A recent report by Ernst & Young reveals that Britain remains Europe’s most attractive destination for international investment into financial services, despite Brexit. Foreign companies invested in 56 financial services projects in the UK last year – 14% more than France, the second most popular location – with London securing a total of 38 projects as the leading European city.
 
But is this trend set to continue?
 
Research by a thinktank estimates that a combined $1.4 trillion pounds in assets and at least 7,400 jobs have been shifted away from the UK, as a result of Brexit. Numbers are expected to increase over time. “We are only at the end of the beginning of Brexit,” the study warned. In February, it was reported that Amsterdam had surpassed London as Europe’s largest share trading centre.
 
France has, in the meantime, stepped up its charm offensive to entice global banks to invest in Paris. President Emmanuel Macron, a former Rothschild banker, is expected to host an elite group of bank bosses at the Palace of Versailles for a “Choose France” event next week. Attendees are set to include the likes of Jamie Dimon, chief executive of JP Morgan and David Solomon, head of Goldman Sachs.
 
In a memo to staff, chairman and chief executive of the Canary Wharf Group, George Iacobesco, once wrote, “over the last 30 years we not only secured the future of financial services in the capital, we were crucial in establishing London as the No. 1 business and financial services centre in Europe, if not the world.”
 
The next three decades may well be different.

News

Chief executive of JP Morgan, Jamie Dimon, will not visit London on his upcoming trip to Europe as a result of UK quarantine rules, it has emerged. He will instead join president Emmanuel Macron at a “Choose France” event in Paris. This comes on the back of senior executives at Wall Street firms lobbying British ministers to lift travel restrictions for workers who have been double vaccinated, warning that the City’s role as a global finance hub could be damaged unless normal business travel is reinstated. (£)
 
Germany and France have reportedly called for a new EU strategy of closer engagement with Russia to build on discussions with Moscow following US president Joe Biden’s discussion with Vladimir Putin in Geneva. The proposed new outreach came shortly after Moscow’s defence ministry fired warning shots and bombs at HMS Defender, accusing it of entering Russian territorial waters near Crimea. The UK has denied that any warning shots were fired, vowing that it “will not be impeded” by Russia. (£)
 
Measures including enhanced contact tracing and testing have been implemented after 41 cases of the “Delta plus” have been identified in the UK. The Delta plus variant is similar to the original Delta strain, with an additional mutation called K417N which makes it more transmissible. German chancellor Angela Merkel has, in response, urged all EU countries to subject UK travellers to a mandatory quarantine.
 
The UK government is today set to announce that fast food and confectionery giants will be banned from advertising products high in fat and sugar online and before 9pm on television by the end of next year. However, companies will still be able to advertise if they do not show banned foods and online audio is expected to be exempted. (£)

Business and economy

Pharmaceutical giant GlaxoSmithKline cut its dividend to invest in research and set ambitious sales targets, as chief executive Dame Emma Walmsley pledged to lead the company through a corporate shake-up next year. GSK will look to spin off its consumer healthcare business with the remaining vaccines and pharmaceuticals division – provisionally named New GSK – targeted to grow by five percent annually over the next five years. (£)
 
According to a survey by IHS Markit, the manufacturing and services industry – which accounts for more than 80% of business activity in Britain – expanded at near-record rates in June, building on a burst in output growth enjoyed in May. Analysts, however, have warned that the boom could be short-lived if shortages of skilled staff and hold-ups to vital supplies continue into the autumn.
 
The Climate Change Committee published two progress reports on Thursday which showed the UK lagging behind on its key goal of 78% cuts to greenhouse gases by 2035, alongside a call for Boris Johnson’s government to come up with a clear roadmap and policies to limit global heating to 1.5C. Recommendations include replacing the scrapped green homes grant insulation scheme and stiffer taxes on flights.

Columns of note

Hong Kong’s largest pro-democracy newspaper, Apple Daily, is regrettably set to print its final edition today, following a crackdown by Beijing which saw five executives arrested and journalistic materials seized. Simultaneously heart-breaking and enraging, many will mourn the city’s loss of media freedom. The FT editorial board writes about how the national security law imposed last year was a watershed moment that has utterly decimated Hong Kong’s political environment.
 
Last summer, Dominic Cummings was practically the most loathed man in Britain. He drove to Barnard Castle during the height of lockdown and subsequently held an unprecedented press conference to justify himself. Fast forward to almost a year later and no one can get enough of his online revelations. Each blogpost has us all aflutter. Is this all it takes? A few scandalous Tweets and all is magically forgiven? Joel Golby questions in The Guardian.

Cartoon source: The New Yorker

Markets

What happened yesterday?

London stocks retreated during a late session of trading on Wednesday as investors fretted over the latest data on the UK services and manufacturing sectors.
 
The FTSE 100 was down 0.22% at 7,074.06, while the FTSE 250 decreased by 0.09% to end at 22,659.42.
 
Sterling, on the other hand, ended in positive territory, gaining 0.18% on the dollar at $1.3974 and trading 0.14% up against the euro at €1.1697.
 
In the US, stocks on Wall Street were a mixed bag, as the Nasdaq Composite eked out its 16th record close in 2021, a day after Federal Reserve Chairman Jerome Powell testified before a House committee, reassuring investors that rising inflationary pressures will prove to be transitory. The Dow Jones Industrial Average fell 71.34 points to end at 33,874.24, the S&P 500 tumbled by 0.1% to end at 4,241.84.
 
In the last 24 hours, Bitcoin fell by 2.71% to $33,104.43, having briefly dropped below $30,000, while Ethereum decreased by 4.09% to $1,930.77. Dogecoin, the ‘meme’ cryptocurrency, on the other hand, gained a whopping 8% and is now valued at $0.234218.

In company news:

Lego Group unveiled a prototype building block from recycled drinks bottles in a bid to wean itself off oil-based plastic.
 
Public relations group Brunswick agreed to sell a minority stake of its business to BDT Capital Partners in a deal that will value it at approximately £500m and trigger a £140m pay-out to its 200 partners.

What’s happening today?

Finals
Alpha Fin. Mkts
First Property
Latham Timber
Sdcl Energy Ef.
Xps Pensions

AGMs
Altynhold
Argo Blockchai.
Atalaya Mining
Fresnillo
Gemfields Grou.
Hms Hydralulic S
Itaconix Plc
Kavango Resour.
Nd Distressed
New Cent.2
Next Fifteen
Lukoil Adr
Robinson
Science Sprt
Scottish Mortgage
Serica
Stm Grp.
Tandem Group
Thg Plc
Union Jack
Vpc Specialty
Westminister Group

UK economic announcements
(12:00) BoE Interest Rate Decision

Int. economic announcements
(07:00) Import Price Index (GER)
(09:00) IFO Expectations (GER)
(09:00) IFO Business Climate (GER)
(09:00) IFO Current Assessment (GER)
(13:30) Gross Domestic Product (US)
(13:30) Continuing Claims (US)
(13:30) Durable Goods Orders (US)
(13:30) Initial Jobless Claims (US)
(13:30) Personal Consumption Expenditures (US)

Source: Financial Times

did you know

In 1942, as Japanese torpedoes slowly sank the U.S.S. Lexington, the then second-largest aircraft carrier in the Navy’s arsenal, the crew abandoned ship—but not before breaking into the freezer and eating all the ice cream. (Source: The Atlantic)

Parliamentary highlights

House of Commons

Oral questions
Transport
 
Business Statement
Business Questions to the Leader of the House – Mr Jacob Rees-Mogg
 
General debate
Comprehensive and progressive agreement for Trans-Pacific partnership
 
Backbench Business
UK Defence Spending – Mr Kevan Jones, Dr Julian Lewis
 
Adjournment
Use of patient data as part of NHS Digital’s General Practice Data for Planning and Research programme – Mr David Davis

House of Lords 

Oral questions
Various
 
Debate
Social care provision in the UK and the role of carers in that provision – Baroness Jolly
 
Need to promote tourism in the UK – Baroness Doocey

Scottish parliament 

Stage 3 Proceedings: Coronavirus (Extension and Expiry) (Scotland) Bill

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