TODAY’S FAYRE – Monday, 19th October 2015
“Good-night? ah! no; the hour is ill
Which severs those it should unite;
Let us remain together still, Then it will be good night.
How can I call the lone night good,
Though thy sweet wishes wing its flight?
Be it not said, thought, understood —
Then it will be — good night.
To hearts which near each other move
From evening close to morning light,
The night is good; because, my love,
They never say good-night.”
Percy Bysshe Shelley – poet – 1792-1822
What a momentous weekend of sport! But for bad light England would undoubtedly have beaten Pakistan in Abu Dhabi. Hats off to not only Alistair Cook for making 263 over 3 days but also to Adil Rashid who took 5 for 64, when some had written him off after nought for plenty in the first innings.
Those of us privileged to be at Ascot on Saturday for QIPCO’S ‘Champions Day’ saw probably the best day’s flat racing since the Tuesday of Royal Ascot with Freddie Head’s ‘Solow’ the winner of Queen Elizabeth Cup and Charlie Hills’s sprinter ‘Muhaarar’ the picks of the day!
The weekend was blessed with four outstanding World Cup rugby matches. Most Northern Hemisphere fans send heart-felt commiserations to Wales, Ireland and especially to Scotland; they beaten by two points, thanks to a cruel penalty award by referee Joubert a minute from time. Joubert should have gone upstairs for confirmation. In fairness Australia did concede three very soft tries from dire defensive errors. Ah well there’s always 2019!!
Sunday’s missive was long enough, but I felt that today’s Chinese data was worthy of comment ahead of President Xi Jinping’s state visit. This is a really important visit and I do hope all these passionate ‘human rights’ activists and the media don’t spoil the party. General displeasure is understandable, but a degree of pragmatism would be sensible. We have tipped far too many trading eggs in the EU’s basket. We need to spread our wings and explore every avenue in Asia, Africa, America and our beloved Commonwealth to broaden our trading base. To the latter we already owe a huge debt of gratitude.
We need China’s trade and investment prowess. 5 years ago the UK had drifted in to 5th position in terms of China’s European trade partners. We are now in 3rd place, behind Germany and France, with Messrs Cameron, Osborne, Lord Ian Livingstone and yes, Sir Vince Cable, all of whom have made a great effort to court China’s custom.
It attempting to pick the bones out of this morning’s data, particularly GDP, my friend and colleague Panmure’s chief economists, Simon French, believes that the worst has passed in terms of China’s economic downturn. The introduction of stimulus packages in terms of fiscal and monetary relief earlier this year plus the easing of bank reserving requirements and the provision of liquidity in stock and foreign exchange markets seems to be doing the trick. GDP in the last quarter through September fell from 7% to 6.9%, though better than expected that estimates of 6.8%. The services sector grew by 8.4%. Industrial Production by 5.7%, less than the estimated 6% and Retail sales beat estimates of 10.8% reaching 10.9%. The most worrying aspect of all this data was the drop in Fixed Asset Investment over the past 9 months – 103% was the lowest since 2009 and below estimate of 10.8%.
It is as well to look at the number of investments China is involved in already, excluding the potential £24 billion commitment to nuclear power at Hickling Point, Sizewell and Bradwell in Essex as well as some infrastructure projects. There have been massive investments in Thames Water, Weetabix, Heathrow, property in the City, House of Fraser and Pizza Express. There is more where that came from.
It has only taken John Cryan, Deutsche Bank’s new CEO a few weeks to clear the decks of ‘yesterday’s heroes’ from this titanic German investment bank. Mr Cryan replaced joint CEOS Anshu Jain and Jurgen Fitschen. Deutsche Bank’s corporate banking and securities operation will be split in to two with Jeff Urwin set to run both investment banking and Global markets to include sales trading. Deutsche Bank has been under duress for some months on fears that the bank has been too committed to trading, particularly derivatives together LIBOR and possibly FX misdemeanours. Deutsche share price has fallen 25% in the last six months. On Wednesday Tidjane Thiam, Credit Suisse’s new CEO post interim results and is also expected to announce new management appointments, perhaps not as dramatic as Deutsche’s.
US companies posting interim results today – HALLIBURTON, MORGAN STANLEY, SONIC and RAMBUS
David Buik – market commentator
Panmure Gordon & Co