24 January 2019

Scott Reid

24 January 2019

Good morning,

Finally! Some headline business news that isn’t all about Brexit.
Except, of course, when it is... at least according to every commentator and politician in the land.
But looking into Tuesday’s news that Dyson is to move its corporate HQ from Malmesbury, Wiltshire to Singapore, I suggest the ensuing frenzy has more to do with our present national psychodrama than Sir James’ actual motives for leaving. Despite reassurances that it had “nothing to do with Brexit” or perhaps because Sony announced it was leaving precisely due to Brexit on the same day, we have convinced ourselves that so it must be for Dyson. Case closed.
But there is merit in taking the decision at face value, Sir James writes in this morning’s Telegraph. As the household appliance brand moves to become a manufacturer of electric vehicles, it makes sense for its corporate HQ to be next to where it’s constructing a new Singaporean car factory – its largest investment to date. And exorbitantly expensive hair-dryers, air purifiers and lighting products are all the rage among Asia’s growing middle classes, a region which accounts for more than half of Dyson’s £1.1 billion pre-tax profit, jumping by a third in 2018. The UK, meanwhile, languishes at just four per cent of sales.
Which brings us to tax, of which corporates have the potential to pay exactly nil in Singapore, compared with 17% in the UK from 2020. The UK consumer is getting more savvy, and as we get richer, we care more about how the companies we choose to buy from behave. But if tax incentives really are going to be required for growth, that certainly supports the line that Dyson’s Asian move was all about “future-proofing”.
For now, Dyson’s existing UK-based IP, and any profit it generates, will remain here, not least for the sheer costs of moving. But if Sir James decides all future patents should be registered in its new homeland, Singapore will soon vacuum up (ahem) all the benefits of hosting a corporate HQ. Meanwhile, finding a way to retain global companies is a very real challenge for Britain’s reputation and financial future, Brexit or no Brexit.


Next Tuesday’s State of the Union address has been delayed after the Democrat-controlled House of Representatives rescinded an invitation to President Trump over the US government shutdown. Speaking to legislators yesterday, Speaker of the House Nancy Pelosi said the invitation would not be extended again until the government was re-opened. Senators will today vote on two competing proposals to end the shutdown, which at 33 days, is already the longest in history. (£)
Global leaders have rushed to welcome opposition leader Juan Guaidó as interim president of Venezuela following mass protests against Nicolás Maduro. President Maduro had responded by breaking off all diplomatic and political relations with the countries involved in the co-ordinated messages of support for Guaidó, which have so far included the US, Canada, Brazil, Colombia and other Latin American countries. (£)
Health secretary Matt Hancock will unveil a five-year plan to tackle overuse of antibiotics and drug-resistant superbugs. The plan will introduce a “subscription model” for drug companies, allowing the NHS to pay firms up front that are able to produce effective therapies. The move is intended to separate profit from sales for manufacturers who have so far been reluctant to invest in costly research without financial recompense.

Business & Economy

Four former Barclays Bank senior executives have been charged with conspiracy to hide a £322 million payment to Qatar during the 2008 financial crisis. John Varley, ex-group CEO, and Roger Jenkins, former executive chairman of investment banking and management at Barclays Capital were the most senior employees implicated. The case, which opened yesterday at Southwark Crown Court relates to the bank’s 11-year inquest to find financial alternatives to a UK government bailout in 2008.
Carlos Ghosn is said to be preparing to formally stand down as chief executive and chairman of Renault following a rejection for bail. According to the FT, Renault and the French government had been discussing removal mechanisms ahead of a board meeting later today, where they are expected to appoint Jean-Dominique Senard, chief executive of tyre maker Michelin, as chairman, whilst acting CEO Thierry Bolloré will assume his role permanently. (£)
Santander is to close 140 branches across the UK, affecting up to 1,270 jobs. The bank said it hoped to redeploy about a third of the staff affected, but that closures were necessary as more customers moved to digital platforms. It also announced a £55 million investment package to refurbish a further 100 branches.


What happened yesterday?

The latest Brexit machinations made for mixed movements on the stock and currency markets yesterday, with a mooted “no-deal blocking” Labour amendment sending sterling higher, whilst poor manufacturing data led corporates down. By close of trading, the FTSE 100 was down 0.65% to 6,842.88, whilst the pound rose 0.87% against the dollar to $1.31 and by 0.58% versus the euro at €1.16 – its highest level since mid-November against both currencies.
The latest quarterly trends from the CBI showed the outlook for UK manufacturing at its worst since the Brexit vote in June 2016. Industrial orders fell to an outlook of -1 this month, from +8 in December, and missing expectations for a reading of +5.
In corporate news, shares in Metro Bank (down 38.92%) were in free-fall on the FTSE 250 as the challenger bank reported underlying pre-tax profit for 2018 grew by 138% to £50 million, but below analysts’ expectations by around 16%. Metro led other financials lower on the news, including Brewin Dolphin (down 3.05%).
Analyst ratings were behind the day’s biggest gains, as JPMorgan and Berenberg upped their price targets for EasyJet (up 3.69%), which allowed airline group IAG to reach similar heights at the top of the table. (up 1.97%). Activity in the grocery market also spurred on supermarket chains Morrisons (up 1.77%), Tesco (up 1.45%), Ocado (1.18%) and M&S (1.08%).

Benchmark Holdings
Blue Prism Group

Trading Announcements
CMC Markets   
Daily Mail and General Trust A (Non.V)  
EMIS Group     
Fevertree Drinks
Haynes Publishing Group         
ITE Group        
Kier Group
NCC Group
Restaurant Group
St James's Place

NCC Group

Countryside Properties
ITE Group
Equatorial Palm Oil
RDI Reit
Schroder UK Mid Cap Fund

Int. Economic Announcements
(12:45) ECB Interest Rate (EU)
(13:30) Continuing Claims (US)
(13:30) Initial Jobless Claims (US)

Columns of Note

Andrew Wilson writes in The National that population growth and a multinational understanding of modern Scotland is key to its conception as a successful independent state. He celebrates that parties across the constitutional divide have embraced this viewpoint, but urges thought on how words can become deeds, making an inclusive case for independence to Scots of all creeds.
In the New Statesman, Andrew Gimson gives a profile of Philip May – the prime minister’s husband and closest political advisor. Although initially expected to be the political high-flyer of the couple, Philip instead has preferred to take a backseat role, subbing for the PM in political wargames, and remaining a steadfast grassroots campaigner.

Did you know?

According to a 2015 Gallup survey, 50% of Americans would not vote for a socialist candidate who they considered to be “generally well-qualified” person for the office of president. This is followed by 40% who would not vote for an Atheist, whilst only 7% would not consider voting for a female or African American candidate.

Parliamentary highlights

House of Commons
Oral questions
Exiting the European Union (including Topical Questions)
Business Statement
Business Questions to the Leader of the House of Commons - Andrea Leadsom
Backbench Business
Holocaust Memorial Day 2019 - Ian Austin
Appropriate ME treatment - Carol Monaghan, Nicky Morgan, Alex Chalk
Effectiveness of regulation of Newcastle United Football Club - Chi Onwurah

House of Lords
Oral questions
Brexit negotiations - Lord Pearson of Rannoch
Progress towards the restoration of devolved government in Northern Ireland - Lord Lexden
Prosecution of grooming gangs - Baroness Cox
Ensuring a sufficient supply of insulin when the UK leaves the EU - Lord Roberts of Llandudno
Ability of local authorities to deliver essential services - Lord Scriven
Threats presented by climate change - Lord Teverson
Short debate
Social and human rights issues in the Philippines - Lord Hylton

Scottish Parliament
General Questions
First Minister’s Questions
Members’ Business
Remembering the Holocaust – Richard Lyle
Finance and Constitution Committee Debte
Committees Budget Scrutiny

House of Commons
No business scheduled

House of Lords
No business scheduled
Scottish Parliament
No business scheduled