Market Wrap

Market Wrap: Hot air in Cornwall, social media frenzy and the Reddit meme brigade are at it again

Annie Charalambous, Friday, 11 June 2021

Estimated reading time: 6 minutes

ETX Capital Market Wrap

Clover Health's stock skyrocketed by 5.9% on Thursday, its highest level since it listed on the NASDAQ in January. Earlier this week it had soared by over 80% as retail traders on Reddit focused their influence on new stocks.

The company landed on the NASDAQ in January due to a controversial SPAC listing, and has now become the latest Reddit target, diverting the online forum's attention away from AMC and GameStop. And as if this wasn't enough, US authorities and short-sellers are now looking into Clover Health's business practices amid concerns of how the company incentivises doctors and patients to buy insurance and use its technology.
 

FTSE 100 female CEOs are being targeted by disruptors. Could it go down from 6 to 4?

Of the 100 most prestigious publicly-listed companies in the United Kingdom, only 6 have female CEOs. Now, following the attack on GlaxoSmithKline's Emma Walmsley by investor Elliot Management, AVIVA's CEO Amanda Blanc is under fire.

Activist investors, an individual or group that buys a significant stake in a public company in order to influence how the company is run – such as by obtaining seats on its board of directors, are now targeting both CEOs. This means Amanda Blanc faces ambitious targets set by new investor Cevian Capital, in what could be considered an attempt to oust a woman who was looking very likely to achieve her goals.

Cevian Capital, a Swedish hedge fund, has worked with Elliot Management in the past, one example being their combined attack on German steel giant ThyssenKrupp, which led its incumbent Chairman Ulrich Lehner to denounce the activists for 'psycho-terror' which was a massive news story across Europe.

Shares in AVIVA, one of the UK's largest insurance companies, decreased in value by 1.71% when this came to light, which does not seem very much, but when looked at on a 1-day chart, it's a significant plunge. If these activists get their way, it certainly would be one in the eye for inclusivity!

And speaking of inclusivity, we're now on Telegram! Join our channel and stay ahead of the markets.
 

Oh no it isn't… oh yes, it is!

Yes, AMC Entertainment, the NYSE-listed theatre production company, has been the darling of the new generation of social media influencers who have taken to Reddit. Since January, certain firms have seen their price dramatically fluctuate, and this week AMC stock was driven up by an astronomical 95%, from $10 per share to an astonishing $62 per share before settling at $47.91 as the week began.

Keyboard warriors and theatrical artists may have little in common, but this time, Reddit's 'WallStreetBets' members have concentrated on AMC Entertainment, to the point that share prices rose by 95.6% to $62 per share after the company announced it would launch an exclusive web platform for retail investors.

Shareholders would receive many perks under this new web platform, including free popcorn, exclusive new screenings, and the chance to speak with CEO Adam Aron.
 

Which has more value? A picture of the Queen or a cardboard box?

Amazon is now the first brand that comes to mind when anyone makes a purchase from the internet.

Nobody thinks of Royal Mail, which was established over 505 years ago by King Henry VIII. Perhaps the only head he did not chop off was the one which appeared on the postage stamps that were applied to letters to prove that payment had been made for mailing letters.

Amazon is considered a 'big tech' company. A Silicon Valley leviathan. Royal Mail is considered as cutting edge as a retired geography teacher on a caravan holiday in Skegness.

How did this happen? What made even the most traditional members of British society eschew the red metal post-box in favour of the all-American recyclable cardboard package?

It may be purely down to clever advertising and image. Amazon is perceived as a high tech, internet giant with a well-funded television channel that is as avantgarde as can be. People who watch Amazon Prime are seen as contemporary, while there's a perception that BBC viewers wear deer-stalkers.

This is really all there is to it. Royal Mail is by no means an outsider, and is now preparing to go into direct battle with Amazon on its core business which is parcel and mail delivery.

Just as Royal Mail prepares to be re-admitted to the FTSE 100 index alongside the 100 most prestigious publicly listed companies in the UK, its shareholders cheered the company's decision to out-Amazon the global powerhouse by allowing Royal Mail customers to choose delivery time slots.

Royal Mail will let customers pay more to send and receive letters and parcels at specific times and on specific days, at a time during which 'premium' services and subscription products in everything ranging from rental apartments to cars and even clothing.

Investors backed the idea and Royal Mail shot to the top of the FTSE 100 index, up 1.4 per cent, or 8.4p, to 599.4p.

Royal Mail has been quietly raking it in over the past year, and profit has more than doubled to £702million as lockdowns and restrictions drove a surge in online shopping.
 

Mark your calendars

Hong Kong and mainland China are due for a long weekend. Monday, June 14 is one of the most revered public holidays in Chinese national culture – the Dragon Boat Festival. No markets will be open. Meanwhile, it's business as usual in Europe, with Portugal set to announce its industrial production figures for April this year at 10am GMT. These are expected to be down substantially from 37.4% to 10.9%.

Tuesday will see an announcement of the British unemployment rate at 7am GMT, which appears steady at 4.8% in April compared to 4.7% in March. What it would be like if the furlough were discounted may be a different matter, but the official figures are stable and the GBP remains strong. The European trade balance will be declared at 10am GMT, estimated to be 15.8 billion Euros. At 11am GMT, we will learn of Europe's total reserve assets, which is speculated to stand at 851 billion Euros. Then, later in the day at 9.30 GMT, US API weekly crude oil stock will be announced, with an estimated negative figure of 2.1 million USD.

At 3am GMT on Wednesday, China will state the nation's unemployment rate, estimated to be even higher than the UK at 5.3%. Then, at 10am GMT, wages in the Eurozone will be announced, and they are likely to be 3.50% up for Q1 of this year compared to the previous quarter. In step with expected inflation, the US MBA 30-year mortgage rate is expected to be 3.15%, though the actual figure will be announced at 12pm GMT. Finally, at 3.30pm GMT, US Crude Oil inventories are set to be down 5.241 million barrels.

Thursday sees plenty of automobile activity. For those who thought a 673% increase in new car registrations in the UK was high in April, try May's figure for size. It's expected to be an astonishing 3,776.8%! This will be announced at 7am GMT. The Italian public are also going on a new car frenzy, with a 3,276.8% increase in May over last May, though that will be confirmed at 7.00am GMT. Conversely, Germany has faced a downturn in new car purchases, with a 21% decrease in new car registrations. Similarly, France bought less new cars than last year with a 23.2% drop since May 2020. Both figures will be announced at 7am GMT.

On Friday, we'll learn the British core retail sales for May. They are expected to have grown 9% compared to 4.2% in May 2020 – but this will be confirmed at 7.00am GMT.

 

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