29th October 2019

Written by Scott Reid, Associate Partner

Edited by Harriet Moll, Creative Director

Good morning,

So that’s another small step for Sir Richard Branson. And one giant leap for space tourism? Okay; perhaps my tone is a little unkind to Sir Richard. In reality, his fortunes yesterday were literally out of this world – if you’ll pardon the pun – as his majority-held Virgin Galactic company made its debut on the New York Stock Exchange. It is the first space tourism firm to list on a public equity market. And really, what’s not to love? Heralding a welcome change in tone to the habitual gloom which seems to have met IPOs this year, investors sent shares in Virgin Galactic up nearly ten per cent in early trading before seeing the day out at a cool 1.2%, lending the firm a market cap of about $2.5 billion. As a boon for domestic trade, The Times also reports today that five UK spaceports are on the shortlist to host the first commercial spaceflights which will start at an equally cool ticket price of $250,000. Still, Sir Richard is feeling lucky. Projected annual sales in 2023, when Virgin Galactic expects to be operating five spacecraft, each carrying at least five passengers on five separate 90-minute flights a month, would only be a third of the valuation figure it was handed yesterday when you deduct cash reserves. I have no doubt that a huge part of that luck lies in the canny way Virgin Galactic came to IPO. Having on Friday completed a merger with Social Capital Hedosophia, a so-called “blank check company” already listed on the NYSE, Sir Richard overnight gained access to $450 million via its various hedge fund backers. When you consider that Virgin Galactic’s losses have totalled more than $360 million over the past 30 months, that’s a useful rabbit to have pulled from his sleeve. Risk remains. As one Bloomberg market commentator put it, whose write-up of the IPO is worth a read this morning, space travel remains the ultimate discretionary spend. To state the bleeding obvious, nobody needs to go there yet. Virgin Galactic’s real opportunity, then, might be to partner with the likes of Elon Musk’s Space Exploration Technologies Corp in the meantime. Working on side projects which avoid the need to use government space agencies, including ways to shorten international flight times and send satellites into orbit, might be useful money earners while the rest of us would-be punters save our pennies. And, of course, work out how to get our selfies into space.


Boris Johnson has confirmed he will repeat his attempt to approve a general election for December 12 after losing a vote in the House of Commons last night. MPs voted by 299 votes to 70 in favour of the motion, falling short of the two-thirds majority required to overturn the Fixed Term Parliaments Act. Today’s bill, which is expected to draw support from the Liberal Democrats and SNP although they favour a poll date on 9 December, only requires a simple majority of votes in favour to pass. EU leaders have meanwhile approved an extension to the UK’s departure until 31 January 2020. The UK will still be given the opportunity to leave at the end of each calendar month during that time, however, if parliament ratifies a Withdrawal Agreement. France reportedly relented in its opposition to a January departure which had been reported over the weekend. The US House of Representatives will take its first formal vote on an impeachment inquiry into Donald Trump on Thursday, House Speaker Nancy Pelosi has announced. Thursday’s vote will not consider evidence the president’s position, but will establish ground rules for the inquiry. Although not required by the US constitution, Pelosi has said a vote would “eliminate any doubt” as to whether the White House could avoid participating with the inquiry. Thousands of websites and a national TV station have been hit by a large-scale cyber attack in the Republic of Georgia. More than 2000 websites, including non-government organisations and private companies, were targeted. The origin of the attack is not yet known.

Business and economy

Shares in fitness technology manufacturer Fitbit have jumped on rumours that it is subject to a takeover bid by Google. Despite stating that there is no certainty that current discussions will lead to a deal, a Reuters report led Fitbit Inc’s share price up by 27%, giving the company a market capitalisation of $1.4 billion. Shares in its current owner, Alphabet, also rose two per cent. Hong Kong chief executive Carrie Lam has warned that the city state is likely to enter recession. Speaking ahead of preliminary GDP figures due on Thursday, Lam said that ongoing protests had hurt the tourism and retail sectors, making it “extremely difficult” to achieve a pre-protest government forecast of annualised growth between zero and one per cent in 2019. The chief executive of Boeing will today begin a two-day hearing to the US Senate over “mistakes” his company made with the design of the 737 Max aircraft. In a written statement to the Senate commerce committee, Dennis Muilenburg said Boeing were now correcting those errors. Meanwhile, the chairman of the House of Representatives transport committee, Peter DeFazio, revealed that Muilenburg had refused an earlier opportunity to testify before Congress in June because the 737 Max had not yet been re-certified for flight.


What happened yesterday?

The London market benefited from a buoyant mood on both sides of the Atlantic yesterday as the New York S&P 500 hit record highs on good news in US-Chinese trade talks and an extension to Brexit was agreed by EU leaders gathered in Brussels. At close of play, the FTSE 100 was 0.09% higher at 7,331.28 points, while the pound was 0.28% higher on the dollar at $1.29 and up by 0.09% against the euro at €1.16. The FTSE 250 was 0.53% higher at 20,210.16 points. HSBC (-3.73%) was the day’s biggest faller after the bank reported a drop in third-quarter profits and forecast a “challenging” environment and lower revenue growth in the next half-year. Lloyds Banking Group (-1.78%) and Royal Bank of Scotland (-0.97%) both finished lower on the news. On the up was luxury brand Burberry (+1.43%) who benefited from a takeover approach by French sector peer LVMH for one of its subsidiary brands, Tiffany & Co. Burberry said it is “reviewing” the offer.

Source: FTSE 100, Financial Times

Whats happening today?


Vela Tech

UK Economic Announcements

(08.30) Consumer Credit (08.30) M4 Money Supply (09.30) Mortgage Approvals

Intl. economic announcements

(14.00) Pending Homes Sales (US) (14.00) Consumer Confidence (US)

Columns of Note

Former World Bank Group president Robert Zoellick writes in the Financial Times that Western diplomats working on improving global ties with North Korea and Iran could learn a thing or two from the history of German reunification. He argues that the denouement gave European integration a strategic purpose for the first time, and that peace was only found by giving both parties economic incentive to change. (£) In her latest instalment charting The Great Millenial Wealth Divide on Vice, Ruby Lott-Lavigna suggests sector wage gaps are breaking down traditional friendships among young people. She suggests that despite growing income inequality among millennials, so has the pressure to conform to lavish, city-based lifestyles only increased, where social media is selling the message that “everybody can have it all”.

Cartoon source: The Times

Did you know?

Between 25 and 30 per cent of the meat industry's environmental impact is estimated to come from the production of pet food.

Parliamentary highlights


House of Commons Oral questions Health and Social Care (including Topical Questions) Legislation Animal Welfare (Sentencing) Bill: 2nd reading Adjournment Mining of minerals in Barford – Matt Western House of Lords Introduction(s) Lord Ranger Oral questions Impact of electric scooters on public roads and pavements with regard to other road users and pedestrian safety - Lord Naseby Promoting new zero carbon emissions by 2050, as recommended in the National Infrastructure Report 'Strategic Investment and Public Confidence' - Lord Berkeley Fiscal framework of government's spending promises - Lord Haskel Replacing Victorian-era prisons with more modern facilities - Lord Lee of Trafford Legislation Health Service Safety Investigations Bill [HL] - Second reading - Baroness Blackwood of North Oxford Scottish Parliament Topical Questions Ministerial Statement Promoting the Safe and Appropriate use of Fireworks in Scotland Scottish Government Debate Improving Disability Assistance in Scotland Committee Announcements Members’ Business Asda Walmart, Contract Imposition – Pauline McNeill TOMORROW House of Commons Oral questions Northern Ireland Prime Minister’s Question Time General Debate Grenfell Adjournment Use of accounting system to facilitate cross-border trade – Luke Graham House of Lords Oral questions Farm subsidies after 2020 - Baroness Jones of Whitchurch Recycling plastic in England - Baroness Neville-Rolfe Estimate of additional deaths caused by doctors having to curtail their hours because of rates of tax incurred due to pensions regime in the NHS - Lord Balfe Deal brokered by the government of Saudi Arabia in Yemen and the prospects for lasting peace - The Lord Bishop of St Albans Legislation Pension Schemes Bill [HL] - Second reading - Baroness Stedman-Scott Sentencing (Pre-consolidation Amendments) Bill [HL] - Third reading - Lord Keen of Elie Scottish Parliament Portfolio Questions Culture, Tourism, Europe and External Affairs Committee Debate Glasgow School of Art Fire Members’ Business Charities, Scotland and Holyrood – Margaret Mitchell