Capital Markets Corporate

May 22, 2020

Our Weekly Newsletter

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Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

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Pandemic to accelerate dramatic shift in traditional City working patterns 
A survey from Deutsche Bank reveals that the pandemic is rapidly accelerating a dramatic shift in attitudes towards traditional working patterns in the City. Almost two-thirds of fund managers and traders think they will work from home for at least one day a week after the pandemic, according to the survey. Installing trading floor technology at home has allowed workers to conduct trading and monitor movements in financial markets from their home offices, helping them to maintain productivity levels. These improvements to home technology may incentivise a greater proportion of traders to work from in home in the future. (From The Times, 19th May 2020)

Investors suffer sharp income drop as companies turn off dividend taps 
Institutional and other income-focused investors hoping for generous dividends this year have had their forecasts upended by companies severely cutting pay-outs to conserve cash to weather the pandemic. Strict lockdown measures have forced companies to temporarily close or drastically scale back activity, creating severe cash-flow problems for many of them. This has resulted in several blue-chip companies and so-called “dividend heroes” slashing payments to shareholders. The cuts have led to huge losses for dividend-focused investors, such as pension funds, which are used by older savers to fund their retirement. (From the Financial Times, 17th May 2020)

Double the ISA allowance to £40k, says investment boss 
Chief Executive of Standard Life Aberdeen, Keith Skeoch, argues that the annual ISA tax allowance should be doubled to £40,000 to encourage people to invest in the stock market and boost the economy amidst the Covid-19 crisis. Skeoch says that raising the allowance would act as an incentive for savers to branch out from savings deposit accounts with low returns, and to instead put their money into backing British businesses in need of capital following the pandemic. (From Daily Mail, 18th May 2020)

Remortgage applications up 110% in April  
Online broker Trussle has found that remortgage applications rose by 110% year-on-year in April. Given that borrowers who remortgage could save an average of £334 per month, this suggested that more homeowners were looking to save money in April by switching to a lower rate. In addition, data from Moneyfacts found that at the beginning of May, average mortgage rates had fallen to their lowest point since June 2007 for all except the riskiest loans. (From FT Adviser, 19th May 2020).

Global lockdown transfers demand to contactless payments
Contactless payment providers are benefiting from a rapid rise in demand as consumers increasingly switch to purchasing goods and services online. Strict lockdown measures have severely reduced physical economic activity, with much of the world’s high streets being forced into hibernation to stem the spread of Covid-19, resulting in payment volumes drastically falling. Contactless payments may represent a larger proportion of global payments in the future as a result of consumers becoming accustomed to making discretionary purchases online, while more small businesses may adopt contactless payments to encourage social distancing. (From the Financial Times, 19th May 2020)

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