TheChek News Flow

The storm, which is currently between Africa and the US over the Northeast Atlantic, became the 29th named storm of the season, breaking a previous record set in 2005, according to the Hurricane Center.

In 2005, the National Hurricane Center named 27 storms, but later determined another storm had formed that year and bumped up the number to 28, the New York Times reported.

Theta was producing sustained winds of about 45 mph and gusts of up to 55 mph, the agency said in an advisory.

No coastal watches or warnings had been issued because the storm was too far out to sea to threaten any territory.

The storm formed as Tropical Storm Eta slammed into Florida on Monday, flooding streets in Miami before turning back out to sea.

At least 200 people were listed as dead or missing as Eta cut a path of destruction through Central America.

Florida Gov. Ron DeSantis declared a state of emergency in the southern counties Saturday in advance of the storm.

President Trump on Monday suggested, without providing evidence, that the Food and Drug Administration and the Democratic Party conspired together to delay the release of a coronavirus vaccine until after the 2020 presidential election.

Trump made the claim in a tweet Monday evening, hours after the Pfizer drug company announced an initial analysis of their COVID-19 vaccine showed it to be 90 percent effective.

“The @US_FDA and the Democrats didn’t want to have me get a Vaccine WIN, prior to the election, so instead it came out five days later – As I’ve said all along!” Trump wrote.

Since his loss to Joe Biden in the 2020 election, which was called on Saturday, Trump has repeatedly claimed he was cheated out of victory by Democrats who created a widespread voting fraud campaign. Trump has provided no evidence to back up his claims.

Prior to the election, Trump said on a number of occasions that a coronavirus vaccine was in the works and would be available to the American people “very soon,” but did not provide a timeline for when it would happen.

The Pfizer vaccine, which was announced the same day the US surpassed 10 million cases of COVID-19, may begin to be administered to the population as soon as later this month, Dr. Anthony Fauci said in a television appearance Monday.

“You have to go through the hoops of making sure all of the Is are dotted and the Ts are crossed about the safety and the regulatory aspects of it, but we would be giving vaccine to people very likely before the end of this year. That is good news,” he said.

Fauci added that another vaccine by another drug company could likely also be made available soon.

Anvisa said in a statement late Monday that the event occurred on Oct. 29, without giving further information, or an explanation of why it took more than a week to communicate the problem.

Brazil’s Butantan Institute, the research center in São Paulo that has been developing the vaccine in partnership with Sinovac, a private Chinese company, said Monday that it was surprised by Anvisa’s decision. It said it was investigating, and would hold a press conference Tuesday morning.

Brazilian local press reported that the director of the Institute said one volunteer had died but the death was unrelated to the vaccine trials and didn’t warrant the suspension. The institute didn’t respond to a request for comment on the press reports.

The Chinese vaccine has been at the center of a political battle in Brazil between President Jair Bolsonaro and São Paulo’s powerful state governor João Doria. Mr. Doria, who is expected to run against Mr. Bolsonaro in Brazil’s 2022 presidential elections, has spearheaded the development in Brazil of the Sinovac vaccine. He has said he hopes to vaccinate everyone in São Paulo state as early as March next year.

Brazil has been one of the countries hardest hit by the pandemic so far, registering more than 160,000 deaths, second only to the U.S.

Earlier Monday, Mr. Doria said that the state has also begun construction of a facility to produce the vaccine locally, which will be ready by September next year.

Meanwhile, Mr. Bolsonaro has backed a rival Covid-19 vaccine being developed by the University of Oxford and AstraZeneca, issuing a decree in August to set aside more than $350 million to purchase 100 million doses. The federal government has said it hopes to start administering that vaccine in April, after clinical trials were temporarily put on hold in September when one participant fell ill.

Russian state media, however, voices support for Trump campaign’s effort to challenge results

Russian state media voiced support for President Trump’s view that the Nov. 3 presidential vote was marred with irregularities, as President Vladimir Putin, like the leaders of China, Brazil and a handful of other countries, remained silent about Joe Biden’s victory in last week’s election.

Leading pro-Kremlin broadcasters appeared to follow Mr. Trump’s lead in questioning the conduct of the vote and in at least one instance criticized the way several U.S. broadcast networks cut away from him as he made unfounded allegations that the election had been stolen. Some Russian politicians, meanwhile, predicted that a Biden presidency would further sour relations between Moscow and Washington.

Leonid Slutsky, chairman of the State Duma Committee on International Affairs, told reporters on Sunday that as vice president, Mr. Biden had worked with President Obama to launch what Mr. Slutsky called “a new containment of Russia.” Mr. Biden frequently criticized Russia’s foreign policy and strongly supported sanctioning Moscow for annexing Ukraine’s Crimean Peninsula in 2014, when U.S.-Russia relations slumped to a post-Cold War low.

Mr. Putin, though, has so far held his silence on the election, as have Chinese President Xi Jinping, Brazilian President Jair Bolsonaro and Mexican President Andrés Manuel López Obrador.

Dmitry Peskov, Russia’s presidential spokesman, suggested it was good practice to remain quiet for now. Mr. Trump’s campaign has filed lawsuits contesting the vote-counting process in several states, though it was unclear whether any, if successful, would change election results in any meaningful way.

“We consider it appropriate to wait until the election results are officially summed up,” Mr. Peskov told reporters on Monday.

China also said it would offer its formal congratulations to Mr. Biden once the election process is complete.

“We’ve noticed that Mr. Biden has already announced he’s been successfully elected,” Chinese Foreign Ministry spokesman Wang Wenbin said on Monday. “We understand the result of the presidential election will be determined in accordance with U.S. laws and procedures.”

The last time a Chinese leader didn’t congratulate the winner of a U.S. presidential election the day after the vote was in 2000, when the contest between Vice President Al Gore and Republican candidate George W. Bush stretched out for weeks amid a court battle over a recount in Florida. Then-Chinese leader Jiang Zemin sent Mr. Bush a congratulatory message two days after the U.S. Supreme Court ruled in his favor on Dec. 12, 2000.

Beijing, like Russia, has nonetheless signaled its openness to working with a new administration in Washington after trade and other disputes drove ties to their lowest level in years.

“We have always advocated that China and the U.S. should manage differences on the basis of mutual respect and noninterference in each other’s internal affairs,” Mr. Wang said.

In an editorial published late Sunday with the headline, “Relations can be reset for the better,” the state-run China Daily newspaper said that reviving trade talks would be the obvious way to repair U.S.-China ties.

“China hasn’t congratulated Biden on his victory as quickly as Western countries did,” Hu Xijin, editor in chief of the Global Times, a nationalistic Communist Party tabloid, said in a tweet. “I think it’s because China needs to keep a larger distance from the US presidential election to avoid getting entangled in its controversy.”

Despite the generally measured coverage, some within China’s state-media apparatus have adopted a more mocking tone on social media.

Hours after President Trump tweeted Saturday “I WON THIS ELECTION, BY A LOT!”, a verified English-language Twitter account run by the Communist Party’s official People’s Daily newspaper retweeted that post with the caption, “HaHa” and a laughing smiley face emoji. The retweet has since disappeared.

Prominent European leaders, in contrast, have congratulated Mr. Biden—notably French President Emmanuel Macron and German Chancellor Angela Merkel. Both support a multilateral approach to tackling trade disputes, climate change and other global problems in opposition to Mr. Trump’s more transactional approach to international relations.

Political analysts suggested there might be other, more complex factors at play in Russia holding back its formal congratulation of Mr. Biden.

Among those is the sway Mr. Trump might continue to exert in the Republican Party, which could retain control of the Senate and gained ground in the House of Representatives in the Nov. 3 vote.

“I think there is a rather complicated calculation,” said Nikolay Petrov, a senior research fellow at British think tank Chatham House. “At one point, it’s understandable that Donald Trump will keep being an influential political player and it’s better to make him a little bit happy…and not to demonstrate that the Kremlin switches sides that easily.”

Nor is Mr. Putin implacably opposed to Mr. Biden. The Russian president last month said he was encouraged by Mr. Biden’s willingness to extend the New START nuclear arms-reduction treaty that expires in February—something Russia has been eager to do while the Trump administration has been more reserved.

Still, suspicions run deep with regard to Mr. Biden and his running mate, Vice President-elect Kamala Harris.

Speaking on one of Russia’s most widely watched channels, Rossiya 1, news anchor Dmitry Kiselyov said Mr. Trump was right to challenge the conduct of the election. He also criticized the U.S. for not allowing foreign observers to monitor the polls and pointed to how some U.S. television networks cut away from Mr. Trump making unfounded allegations last week.

“The President of the United States is a whole state institution. To knock him off the airwaves with offensive comments is the destruction of a state institution,” Mr. Kiselyov said during his political news and current affairs talk show, News of the Week. He said there may be no hope of uncovering the correct result in last week’s election.

Vladimir Solovyov, another prominent presenter and talk show host, also pointed to Mr. Trump’s legal challenges. “It is too early for Trump to yield,” he said.

Margarita Simonyan, the editor in chief of RT, a 24-hour English-language news channel, said on social media that the election was neither free nor fair and made unsubstantiated claims of corruption.

Ella Pamfilova, chair of Russia’s Central Election Commission, said widespread use of mail-in votes opened up the possibility of fraud.

“There is no doubt that Biden will become president and many point to Harris as his successor,” said Dmitri Trenin, director at the Carnegie Moscow Center. “Both are seen as very anti-Russian.”

Swire’s dilemma over Cathay as China tightens grip on Hong Kong

Crisis in airline industry after Covid raises further questions over future of carrier

For many people in Hong Kong, it is hard to imagine the city with its home airline controlled by any group other than Swire Pacific.

Alongside Jardine Matheson, Swire is one of two British colonial trading houses that still loom large over the former UK colony. It has run Cathay Pacific Airways for more than 70 years. Under Swire’s stewardship, Cathay grew into one of Hong Kong’s most recognised global brands as the then British colony transformed itself from a sleepy Chinese entrepôt into a dynamic international business and financial hub.

But then Hong Kong is rapidly changing in lots of ways that were previously inconceivable, especially as a tough new Chinese national security law adopted in July chips away at the territory’s previously robust civil freedoms. Cathay becoming, say, just another subsidiary of its second-largest shareholder, Beijing flag carrier Air China, would be entirely consistent with the current zeitgeist in Hong Kong.

It would also arguably be a good thing for Swire, which is perhaps best thought of as a jumbo jet with four engines. These include a cash-cow property arm, a similarly successful Coca-Cola bottling division, Cathay and a maritime services unit whose fortunes are largely tied to the offshore oil industry.

Cathay and the maritime unit have traditionally hedged each other. Low oil prices flatter Cathay’s bottom line but depress servicing demand from offshore oil rigs. When oil prices are high, Cathay suffers but the maritime business booms. As a result, Swire shareholders have traditionally been able to assume at least three of the group’s engines will be firing nicely.

But then came Covid-19, which has hit both aviation and oil hard. Worse still for Swire, Cathay was already coming off a terrible year because of the increasingly violent clashes between Hong Kong pro-democracy protesters and police through the second half of 2019. The unrest had a big impact on business and tourist travel to Hong Kong. Shares in Swire have halved from January peaks.

In such circumstances, Swire shareholders have a tempting alternative. Like Cathay, Swire’s property arm is separately listed in Hong Kong. So why buy shares in Swire, with two of its four engines misfiring, when you can buy Swire Properties shares directly?

One answer for hanging on to Swire shares — and for Swire hanging on to Cathay — is “this too shall pass”. The unrest in Hong Kong seems to have subsided and the Covid-19 pandemic hopefully won’t last forever, at which point Cathay shall soar again.

Or will it? Russell Barling, an independent transport industry analyst in Vancouver, noted that the aviation industry wasn’t what it used to be. “Very few airlines are profitable and the business model does not survive economic shocks,” Mr Barling said. “Most are forced cap in hand to [their shareholders and governments] every decade and the gap between those begging missions seems to be shortening.”

In June, Cathay secured a HK$39bn ($5bn) bailout from the Hong Kong government, which was more than double the airline’s market capitalisation at the time. As part of the rescue, Swire paid HK$5.3bn for new shares issued by Cathay.

Cathay has also proven to be a big political headache for Swire. Cathay’s chief executive was forced to resign last year after the Chinese government accused the airline of not moving fast enough to distance itself from Hong Kong’s pro-democracy movement. Swire had no choice but to comply with Beijing’s demands. Had it not done so, even its non-aviation businesses in China could have been jeopardised.

But even with Cathay causing Swire as much trouble as it has over recent years, ditching the airline would not be easy for the conglomerate. After 70 years, the two companies are synonymous with each other and the group’s ultimate controller, the Swire family, has strong feelings about the airline.

Adrian Swire, the family’s late patriarch and father of the current group chairman, Merlin Swire, was an “aviation man” who served in Hong Kong’s auxiliary air force when the territory was a British colony and also flew a second world war-era Spitfire fighter plane.

“The family is very attached to Cathay,” says one veteran group executive. “It goes beyond hard-headed business logic. They built it up through mainly good times and some bad. I don’t think Merlin wants to see it going on his watch.” A Swire spokesperson said his company had “full confidence in Cathay’s long-term future”.

But Mr Barling is not so sure. Merlin Swire, he says, knows only too well “how vulnerable airlines are as the market relentlessly searches for dependable earnings growth”.

Codemasters/Take-Two: slipstream stocks

Take-Two’s offer for the sim racing specialist speaks to one of the hottest trends in equity markets right now.

FT Alphaville spent a good chunk of the first lockdown thinking about corners. Not in relation to home design or statistical outliers, but places where the rubber meets the road. More specifically ones of such infamy that they’ve even been given names like Rascasse, 130R and Eau Rouge.

Yes, over lockdown FT Alphaville got into Formula One via the medium of the video game. Perhaps it was the therapeutic nature of endlessly circling something, or simply a coping mechanism to make up for the lack of competitive professional sport, but gliding around the streets of Monte Carlo, Baku and Melbourne bought us great pleasure during Spring’s darkest days. Just don’t mention Montreal and the Wall of Champions.

It seems we weren’t the only ones. Here’s a statement from Codemasters, the UK-based video game studio who create the F1 video game franchise (and other racing titles), released Friday:

Statement regarding recent media speculation

Further to the recent media speculation, the Board of Codemasters confirms that it is in discussions with Take-Two Interactive Software, Inc (“Take-Two Interactive”) regarding a possible offer for the Company.

The Board of Codemasters has received a non-binding proposal from Take-Two Interactive Software, Inc (“Take-Two Interactive”) to acquire the entire issued share capital of Codemasters at a price of 485 pence per share (the “Possible Offer”), comprising 120 pence per share in cash and 365 pence per share payable in Take-Two Interactive shares. The Possible Offer remains conditional on, among other things, the completion of confirmatory due diligence by Take-Two Interactive and the recommendation of the Board of Codemasters. Take-Two Interactive reserves the right to waive any of these requirements.

The full FT story can be read here.

Take Two’s offer for Codemasters caps a pretty sensational year for investors in Sim-racing, as it’s now called. Codemasters’ shares are up 70 per cent year-to-date off the back of lockdown-induced enthusiasm, which included some races being broadcast on Sky featuring professional drivers and YouTube celebs.

Meanwhile, the “buy shovels in a gold rush” trade has been even more lucrative. €268m German-listed Endor AG, who own the gold-standard sim racing hardware brand Fanatec, has seen its shares rise a touch under 300 per cent this year after recording triple digit revenue growth. Gaming headset maker Turtle Beach is up 87 per cent this year, with its latest quarterly results revealing that earnings-per-share rose to $1.20 after a loss of $0.22 in the same period in 2019.

Signs of enthusiasm for the virtual sport are there in the soft data also. YouTube sim-racing influencers such as TRL Limitless and Tiametmarduk have seen both their page views and subscriber numbers jump over 50 per cent this year, according to YouTube data site SocialBlade. While current F1 drivers (IRL) such as Monégasque Charles Leclerc and token posho Lando Norris have been regularly sim racing on their own YouTube channels.

But the pressing question is, are Codemasters’ shareholders getting a good deal from Grand Theft Auto publisher TakeTwo? The 11 per cent premium to Thursday’s close seems a bit low to us for a business that’s been on a tear this year, and the analyst community seems to agree. Here’s Panmure Gordon’s Alasdair Young on the deal:

Not very generous?

If accepted, 485p implies a current-year PE of 21.5x, or 20.0x once the healthy net cash balance of £50m is stripped out. Furthermore, as stated at the time of the recent trading update, we think the likelihood of additional upgrades at the interim results on 23 November is extremely high. After over 100% revenue growth in H1, consensus implies 10% yoy growth in H2. Our EBITDA estimates are 10% ahead of consensus, and we believe them to be conservative. Moreover, we have long argued that the primary value driver for Codemasters is the ongoing shift to digital distribution which could see operating margins rise by over 10% in the medium term. In our view, these factors, let alone an attractive bid premium, do not seem to be fully captured in the proposed offer.

With the shares at pixel time trading tight to the offer price of 485p, the market reaction suggests this deal still has a few more laps to go until the finish line.