Our Weekly Newsletter
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.
UK to launch first green gilt in 2021
Rishi Sunak has laid out plans in the House of Commons for a greener financial services climate, pledging to launch Britain’s first “green sovereign bond” next year to meet growing investor demand. The money raised by the bonds will be used to help fund projects to tackle climate change, build infrastructure investment and create “green jobs” in the UK. In addition, the Chancellor set out a roadmap for large companies and financial institutions to be mandated to disclose the threats to their business from climate change by 2025. (From FT Adviser, 10 November 2020)
Markets explode with euphoria but are they right?
This week saw blue-chip shares soar on the stock market following the announcement of a Covid-19 vaccine. However, while shares in British Airways, International Airlines Group (IAG) and airline engine maker Rolls Royce rose by upwards of 33%, these were the companies that had their value hit hardest by the coronavirus crisis; IAG is still worth more than 40% less than this time last year. The challenges in distributing the vaccine are also highlighted including the stiff competition to secure the 50 million doses. Regardless, it is stressed that the markets are sentiment-driven and that the potential of a vaccine has boosted optimism as reflected by the share rises. (From BBC, 10 November 2020)
Millions miss out as trading sites collapse
More than two million customers of some of Britain’s largest investment platforms faced being locked out of buying shares after the news broke on Pfizer’s Covid-19 vaccine. This was the busiest trading day on record, with many hoping to cash in on share value rises of companies that were hit hardest by the crisis such as airline and travel groups. However, some investors using Hargreaves Lansdown, AJ Bell and Fidelity were unable to execute trades due to high trading volumes that caused website crashes. (From The Times, 10 November 2020)
Vaccine hopes triggers dash for cash among pandemic-hit companies
Firms hit hardest by the pandemic are rushing to capitalise on market optimism triggered by the announcement of an effective vaccine by raising capital to see them through the crisis. The race to raise funds follows a sharp bounce back in share prices among companies in the aerospace, leisure and hospitality sectors. These firms have experienced a reduction in income and a hit to cash flows due to Government restrictions on economic activity stopping consumer facing and travel businesses performing their normal operations. These firms are likely to benefit the most from a resumption of normal consumption patterns. (From the FT, 10 November 2020)
Government weighs up Capital Gains Tax shake-up
The Government is considering a shakeup of the Capital Gains Tax regime to offset the pandemic’s impact on the UK’s public finances. Measures ministers are weighing up include reducing the amount of profits equity investors can make without paying tax. The changes were proposed in a report – commissioned by the Chancellor Rishi Sunak – published by the Office for Tax Simplification. If implemented, they are expected to raise an extra £14bn for the public coffers. (From The Guardian, 12 November 2020)