News & Analysis

London's crypto ups and downs; hospitality stock volatility on the horizon!

Andrew Saks, Monday, 19 April 2021

Today as the markets open for the first time this week, there are two major trends which are worthy of note.

The Bank of England has stated that a new division which will focus on a potential digital currency issued by Britain's central bank under the direction of finance minister Rishi Sunak is likely to be the subject of comprehensive consulting before any such idea is given the green light.

The idea of going down the digital currency route follows that of the Chinese government which is currently engaged in releasing a digital Yuan, and the European Central Bank which has been mulling the idea of a digital Euro since late last year.

In Britain, this could well create even more volatility in the digital currency sector because cryptocurrency trading among retail traders is illegal in the United Kingdom, having been outlawed by the Financial Conduct Authority in the latter part of 2020, however Britain's world-leading fintech sector and banking sector is very much engaged in the development of blockchain based cryptocurrency orientated electronic solutions, and now the Bank of England's proponency may lead to a division as to whether it has a tremendous future within the very fibre of British financial services, or whether it will remain on the fringe.

Spring has sprung, as has market sentiment!

As the new season is very much underway and notable by the fresh spring flowers adorning Britain's parks and gardens and the clear blue sky, a different dynamic to any Spring in history is clearly visible. That being the mass exodus of people to newly opened restaurant and bar terraces, public parks and areas served by outdoor hospitality.

Couping people up for a year, and then allowing a very restricted amount of socializing in outdoor conditions combined with a newly sunny sky has boosted morale even though the majority of the country's customer facing outlets remain under draconian lockdown.

This week, given the year of no revenues that the government foist upon businesses that rely on customer footfall, the potential to recover their losses has been experienced by battered restaurant and bar owners who now see customers returning, but not to full capacity.

This has led to a legal battle being launched by pub and restaurant owners against the government in the hope that the courts will quash the restrictions they are bound by.

A judge will this week consider evidence in the case brought by Sacha Lord, the night-time economy adviser for Greater Manchester and a co-founder of Parklife festival, and Hugh Osmond, the founder of Punch Taverns and a former boss at Pizza Express. The case has been expedited.

Last week, publicly listed stock of JD Wetherspoon, Michells & Butlers and Marston's were down 0.4%, 1.7% and 1.5%, respectively. This could now go either way as they are now open to small capacity - outdoor only - but if they succeed in trampling the government's anti-business lockdown, they may be ones to get in now whilst their revenues are still on the floor.

Next week, theatres and events - some of which are operated by publicly listed firms - will be open and we will see which soldier on and which have gone bankrupt during a year of lockdown. Those that survive are also stock to watch carefully.

It may be a David and Goliath battle, but the resolve of the British public has always been to preserve their liberty, and in doing so, the prices of major hospitality stocks are ones to watch.


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