The FTSE 100 is up just 0.5% as of writing, as investors and traders react to the news that the Chinese government is open to a “partial trade deal” with the US.
While this proposed stopgap measure wouldn’t move the needle on the major issues that are important to both sides, it does propose limiting future tariff increases and includes some Chinese concessions, like increasing purchases of US agricultural produce.
Still, given the fact that the Chinese proposal does not address key US demands like intellectual property rights, it’s easy to see why the market is skeptical and waiting to see what happens next.
Elsewhere, the Bank of England commented on the risk of a no-deal Brexit, saying that although the UK financial system is in a better position to withstand the shock today than it was several months ago, investors and consumers would still see significant price fluctuations, adding that “financial stability is not the same as market stability”.
GVC Holdings
One of the biggest winners today was sports betting operator GVC Holdings (LSE: GVC), which is up 6.4% on the day. The group, which owns bookmakers Ladbrokes and Coral, reported an improved earnings forecast for the second time in three months. In today’s trading update, management said that revenue had increased by 12% year on year for the period 1 July to 30 September, even though the 2018 FIFA World Cup took place over the same time last year. The full-year earnings guidance was upgraded from £650m-£670m to £670m-£680m.
Interestingly, these improved results come at the same time that the group is closing down many of its brick-and-mortar locations – 41 this quarter. The long-term plan is to close 900 retail locations in a strategy that will see the group shift to a primarily online model. Net gaming revenue for GVC’s online segment rose 14% year on year, highlighting the wisdom of this switch.
Baillie Gifford Japan
Investment trust Baillie Gifford Japan (LSE: BGFD) reported a fall in net asset value of 5% for the year ended 31 August. Although the stock has remained essentially flat on the day, I think this is an interesting development, given the composition of Baillie’s portfolio. It’s biggest holding is Softbank, a Japanese holding company that has very large stakes in both Uber and WeWork.
Uber has slumped in the months following its much-publicised IPO earlier this year, while WeWork has made headlines due to the collapse of its own IPO plans. Both companies continue to haemorrhage money, and have led many to question Softbank’s CEO Masayoshi Son.
Softbank only represents around 6.2% of Baillie’s Japanese portfolio, but the high-profile nature of this investment suggests that there could be a lot more to come than today’s small stock price move would suggest.
