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Weekly Review: BooHoo, BoE and billions of missing dollars

Ben Weiss, Friday, 19 June 2020

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It was an interesting one this week as a whole host of different stories emerged from the markets. BooHoo continued to takeover the market as it capitalises on the downturn in highstreet retail. Football also returned, but even in an industry that deals with millions of dollars on a daily basis, some clubs are facing financial ruin. Elsewhere, there was a curious case of $2 billion being unaccounted for, and one firm paid a big price.

No surprises from the Bank of England

There were no real surprises from this week’s Bank of England monetary policy decision, with the slight possibility of rates going into negative territory (something that would have had a colossal impact on the markets) didn’t come to fruition this time around.

Interest rates were instead left unchanged, while the bank’s asset purchasing programme was ramped up. What was perhaps the most significant takeaway from Thursday’s announcement was that the MPC warned this QE programme would be slowed going forward.



4 main takeaways from the BoE decision:

●Interest rates were not changed, remaining at current lows of 0.1%

●The bank’s asset purchase programme (QE) was ramped up by £100 billion, taking it to a total of £745 billion

●Although the MPC voted in favour of the increased QE programme, it was not unanimous, with one member voting against it

●The QE programme will be slowed going forward

Wirecard missing money

Financial companies are used to keeping large financial capital aside for lending, saving or risk management purposes... but usually the money actually has to be real. This unfortunately wasn’t the case for German payments Wirecard, as this week they found infamy through a comical ‘mishap.’

Auditors found that a massive $2.2 billion in ‘cash balances’ actually didn’t exist when delving deeper into their accounts. It’s a colossal mess up that has been costly, but what’s more bizarre is that Wirecard themselves admitted that ‘spurious balance sheets had been created to deceive auditors.’ It’s a downright audacious move and it begs the question are other firms getting away with doing a similar trick and just not getting caught? Either way, a deterrent for others to try a similar thing is that Wirecard lost a whopping 80% of its share price value in the aftermath.

Wirecard Graph

On an unrelated note, I will be letting my boss know that last week’s Weekly Review was read by over 300 million people.**

**Some of these views may not exist and will not show up in our Analytics, nor is there any proof that this figure is accurate. 

Qantas axes foreign flights

We’ve covered a lot about Australia’s 2020 troubles, with first the bushfires and now the pandemic weighing in heavily on tourism - the most influential sector for its economy. But more bad news hit this week after it was announced borders are likely to be closed for the rest of the year.

As a result, the country’s largest airline, Qantas, has said it’s stopping all international flights until October, a move that has further impacted its share price, losing 5% this week.

This could be a familiar story across the world if a new outbreak continues to spread, and some airlines will undoubtedly not be able to survive several more months with low passenger numbers. But Australia in particular is an area to focus on, with their economy so dependent on tourism.

BooHoo profiting

There have been winners and losers from the pandemic, admittedly far more losers, but one firm that is striving amidst the adversity is BooHoo.

Its sales rose by 45% in March, April and May of this year as consumers had to turn to online retailers with shops closing. But BooHoo’s been very active from the acquisition side of things as well.

The Manchester-based company bought MissPap, Karen Miller and Coast earlier this year as those brands were struggling badly. This week, BooHoo also acquired Oasis and Warehouse for £5.25 million.

It’s more good news for a firm that has seen its share price rise by 34% this year alone. BooHoo is definitely one to keep an eye on going forward as it looks to dominate the online retail market.

Football may be back, but the money’s not

At last, we saw Premier League football return to our screens this week. VAR was as controversial as ever, David Luiz was busy being David Luiz and it just felt good to have it back.

 



The Premier League especially is a part of the sport that’s associated with billionaires, substantial TV deals and overpaid players, but it doesn’t make it immune from the financial difficulties the pandemic has brought upon most areas of life.

It can be difficult to feel sorry for these clubs that in themselves have become major global corporate brands. However, in England’s top division, clubs could seriously lose out if aspects of the game, such as fans being allowed back into stadiums, doesn’t return to normality soon.

Deloitte reported all Premier League clubs could lose a combined £1 billion. Manchester United Plc.(a market tradable on our TraderPro platform) lost 40% of its share price this year as the pandemic meant football was halted and revenue streams were stopped. It’s since recouped around half of those losses, but it shows even the biggest football clubs are not immune to the effects of the pandemic. As businesses, they are like any other firm caught in the crossfire.

Manchester United Graph

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