Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

Social (media) trading

Written by Li-Ann Chin, associate 
Edited by Adam Shaw, associate partner
23 July 2021 

Good morning,

Jam’an Nurchotib Mansur isn’t your run-of-the-mill Ustadz or Islam preacher. When not preoccupied with his day job, he recommends stock picks on his social media accounts, where approximately 13 million followers across Indonesia tune in for investment tips.
 
His posts have the power to create – or destroy – billions of dollars in equity value. In November, Mansur posted an endorsement of PT Garuda Indonesia, a state-owned airline which had furloughed at least 980 of its staff during Covid-19. The company’s stock surged by as much as 45% over the next week. In December, shares in PT Garuda Maintenance Facility Aero Asia increased by 55% in two days after he talked up the aircraft maintenance provider on his Instagram account.
 
Mansur is, in reality, just one of the many. Social media platforms have increasingly experienced a surge of “personal finance influencers” and so-called investment accounts that freely dispense stock-picking advice to the new generation of retail traders. These videos are widely watched – and, indeed, taken as gospel – by many millennial and Generation Z investors. On mobile video app TikTok alone, the hashtag #stocks has amassed more than three billion views. We appear to be on the cusp of a global emergence of influencers as a stock market force.
 
Should institutional investors and companies be concerned? According to Credit Suisse, retail traders are estimated to have, at times throughout 2021, accounted for a third of all US stock market trading. As demonstrated by previous ‘meme stock’ rallies, they have the ability to move markets and challenge large established players. And yet, retail investors are also wildly susceptible to investing in – or short selling – a stock on the say so of these cultish social media accounts.
 
Amateur traders are fond of moving in a pack, or an army. And sometimes, all it takes is one viral Tweet for another trading mania á la GameStop to be unleashed, a trend fostered by the current social media environment that lends influencers a platform and provides retail investors with forums, messaging groups and even live trading sessions in which they can congregate.
 
No one knows if the current burst of hyperactive retail trading is set to last beyond the pandemic. But if it does, the potent combination of retail investors and social media might just prove a force to be reckoned with.

News

A group of Conservative MPs led by Steve Baker and Mark Jenkinson have threatened to boycott the party’s annual conference in autumn over concerns they will require a vaccine passport to gain entry. The outcry follows Boris Johnson’s announcement on Monday that certification will be required in some venues, including nightclubs, from the end of September.
 
In an exclusive interview with City A.M yesterday, London Mayor Sadiq Khan sent a clear message to citizens of Hong Kong that “London is open for them” under the UK government’s Hong Kong British National (Overseas) visa scheme launched earlier this year. A total of 34,300 applications had been submitted by the end of March.
 
Sir Jeffrey Donaldson, leader of the DUP, has warned that Northern Ireland ministers will unilaterally suspend checks on goods arriving from Britain if the prime minister signs up to an “unacceptable” new Brexit deal. His comments came as European Commission president Ursula von der Leyen rejected Boris Johnson’s call to renegotiate the deal on Northern Ireland, stating that Brussels would be “creative and flexible” over the protocol but would not renegotiate. (£)
 
Akamai Technology, a content delivery company, apologised yesterday after a software update in its services resulted in a large number of website outages, including those of Barclays, HSBC, British Airways and Airbnb. Akamai confirmed that the interruption to services was caused by a software configuration update and not a cyberattack. The disruption lasted for an hour with normal operations restored shortly after.

Business and economy

Supermarkets have warned that the rising number of retail workers forced to self-isolate is beginning to affect the availability of some products – soft drinks, personal care products and beer, in particular. However, Lidl, Sainsbury’s and Iceland have all have downplayed fears of shortages and urged customers not to panic.
 
Ministers confirmed yesterday that the UK government would roll out an aggressive testing regime to at least 500 food-related distribution depots, effectively allowing critical workers to take daily tests in place of having to self-isolate in the event that they are ‘pinged’ by the Covid-19 app. The emergency plan has reportedly been backed by Boris Johnson despite being criticised as inadequate by some in the supermarket industry. (£)
 
Figures from the Office for National Statistics (ONS) have shown that retail sales in the UK rose by 0.5% between May and June, boosted by the demand for food and drink as millions tuned in to watch the Euro 2020 football tournament. Retail sales in June were 9.5% higher than before the pandemic in February 2020, boosted by a 4.2% increase at food stores.

Columns of note

A new survey of the world’s largest listed companies reveals that integrity, innovation, sustainability and responsibility topped the list of most popular words used in annual reports over the last two years. Are these buzzwords merely nice-to-haves or do they indicate an actual shift in corporate behaviour? This piece by Brooke Masters in the FT is well-worth your time. (£)
 
As the UK battles an unprecedented heatwave this week, hundreds of low-paid workers – fruit pickers, warehouse packers and delivery riders, to name a few – are forced to face unbearable working conditions that may put their lives at risk. Mika Minio-Paluello, policy officer for climate and industry at the Trades Union Congress, writes in The Guardian that this heat is a wake-up call for the government to take climate action and create sustainable, long-lasting working conditions for all.

Cartoon source: New Yorker

Markets

What happened yesterday?

London stocks were a mixed bag on Thursday, as investors picked their way through a raft of corporate news and digested the latest policy announcement from the European Central Bank.
 
The FTSE 100 ended the session down 0.43% at 6,968.30, while the FTSE 250 climbed 0.6% to 22,677.28.
 
Sterling was up 0.26% against the dollar at $1.3749, but dropped 0.43% on the euro to change hands at €1.1680.
 
Wall Street stocks were also up despite an unexpected increase in weekly jobless claims. At the close, the Dow Jones Industrial Average was up 0.07% at 34,823.35, the S&P 500 gained 0.2% to 4,367.48 and the Nasdaq Composite added 0.35% at 14,684.60.
 
In company news:
 
Visa signed £700m deal to buy London payments group CurrencyCloud in its latest move to swoop in on the booming British fintech sector.
 
HBO Max gained 2.4m new subscribers in the June quarter in the US. By contrast, it was reported on Wednesday that Netflix had lost 430,000 subscribers in the US and Canada.
 
It was confirmed that Brian McNamara will head Glaxosmithkline’s consumer healthcare division – nicknamed “new GSK” – when the unit is spun off into its own business next year.

What’s happening today?

AGM
Personal Assets Trust
Premier Foods
United Utilities

Trading Announcements
Record
Brewin Dolphin

Source: Financial Times

did you know?

When an American general attempted to restrict the amount of ice cream served to overseas troops during the Korean War, the Pentagon made an official statement to reassure the troops that they would still be served ice cream at least three times a week.

Parliamentary highlights

House of Commons

The House of Commons is in recess. The House will next sit on 6 September 2021.

House of Lords 

The House of Lords is in recess. The House will next sit on 6 September 2021.

Scottish parliament 

The Scottish parliament is in recess until 30 August but will be recalled on 3 August for Covid updates.

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