Market Wrap

Market Wrap: Morrisons takeover sparks concern from UK lawmaker, Chinese giants swoop on Western markets

Andrew Saks, Friday, 9 July 2021

Estimated reading time: 6 minutes

ETX Capital Market Wrap

Plus, silicon chip manufacturer Newport Wafer Fab has been acquired by China's NXP – an example of growing Chinese influence on Western markets.

Didi or didn't he?

Once upon a time, in the old days of pre-internet analogue business, taxi companies had distinct rivalries. Men in donkey jackets and pronounced regional accents shouted at each other through the windows of their 1980s Nissan Bluebirds to “Get off my manor!”

These days, the windows are closed, and the comfort of the air-conditioned taxi has removed the boisterousness. Instead, the scuffles on the rank have been replaced by giant corporate competition in the form of ride-hailing apps, which mostly hail from Silicon Valley.

This week, the competition has become even more fierce. Uber, Bolt and Lyft, as well as Israel's Gett have been faced with an onslaught from Chinese company Didi.

Didi is, quite simply, enormous. Headquartered in Beijing with over 550 million users and tens of millions of drivers, this week it was publicly listed on the New York Stock Exchange. Just one day after its incredible $80 billion debut, Didi's stock declined considerably – 13.73% during its initial day.

To formulate its IPO, Didi sold 316.8 million American Depository Shares (ADS) versus the planned 288 million, at $14 apiece, giving it an initial value of $73 billion.

The decision to increase the deal size came after the Didi investor order book was oversubscribed multiple times in the advent of its flotation yesterday on the New York Stock Exchange.

Where to, guv? Global domination, that's where.

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Supermarket sweep: Morrisons stock volatile after getting MP's attention

It isn't often that anything positive comes from government interference in private sector enterprise.

Usually, any involvement with public sector bureaucrats results in socialist 1970s-style inefficiency. It's been proven, during the trial of free market and government-operated economic models in several regions of the world, that business is best when it is left to the businessmen.

However, in the case of thwarting unfair practice, this is where independent adjudicators from elected positions in public office come in.

WM Morrison Supermarkets PLC, a London Stock Exchange-listed retail food supply giant, has been in the headlines almost consistently for two weeks due to a proposed £5.5 billion takeover by Clayton Dubilier & Rice (CDR).

Since that bid was made, analysts have looked at the figures and valued the supermarket at £1 billion more than the offer made by CDR, with yesterday's clamour from the City indicating the real value of the company is £6.5 billion.

Now, after two weeks of watching from the side-lines, Darren Jones – Chairman of the House of Commons' Business Committee – has written a letter to the Competition and Markets Authority (CMA) to raise his concern that "British supermarkets are the latest area of interest for private equity and other buyers using significant amounts of debt. Some stakeholders have raised concerns about what this might mean for the protection of jobs, pension funds and supermarkets presence on British high streets."

Morrisons has been playing this game very cleverly. It rejected the CDR bid, then got a higher one, and now Apollo looks to be heading for the stratosphere (groan).

Well, oil be damned – look at Shell's share price!

Surely the elbow-bumping, grinning media-obsessed populists who ‘lead' Western countries would have everyone believe that demand for such an unsophisticated relic as oil would be almost nil. They purport this as they pose for photos wearing lab suits, football shirts or whatever the social media craze is during any five-minute period.

Given the omnipresent fluffy propaganda, anyone would be forgiven for thinking that motive power is now produced by windmills, solar panels and hydro-electric facilities. That's all it is, though - propaganda and posturing. Not only is oil in massive demand, but it's becoming increasingly valuable. This is demonstrated by many official statements following this week's OPEC+ meeting, as I discussed on Bloomberg. And if it can be taken as read that the figures never lie, then also by Shell's incredible share price increase by 112 points in just one month to a massive high by Wednesday this week.

Oil is being consumed at a huge rate by APAC nations and North America. Therefore, President Vladimir Putin, who leads a government which has the largest stake in the world's biggest publicly listed gas and oil provider, is unlikely to be trading in his 7.7 litre ZIL 4112R limousine for an electric scooter with a recyclable pulped paper cup holder – at least not quite yet.

Mark your calendars – times below are in GMT

At 2pm on Monday July 12, France will have its three, six and 12-month BTF auctions, all of which are expected to be down by approximately 0.64%.

On Tuesday, at 11.00am GMT, there will be a meeting held by all EU finance ministers. Then at 7pm, the US' Federal Budget Balance for June will be released, expected to be a negative figure of 132%. Also, an incredible metric is due to be announced by New Zealand at 11.45pm: a huge 1,755.4% increase in external migration that illustrates how many people moved to the country in May.

2pm on Wednesday will see the latest figures of European industrial production, estimated at 39.3% for May.

On Thursday at 1.30pm, the Philly Fed indices will be announced for July with varying figures.

And finally on Friday, the UK leads the announcements with new car registration figures, up a remarkable 10% in June over May. The UK has registered 674% more new cars in June this year compared to June last year – these figures are set to be confirmed at 7am and are way ahead of European figures.


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