Gapping down
In reaction to earnings/guidance:
- GBT -30.8%, EPZM -22.9%, NEWR -14%, PS -13.3%, AZPN -9.8% (also provides update on 10-K and 10-Q filing), OTRK -9.8%, MTD -9.1%, CYRX -8.9%, AYX -8.8%, NVRO -8.3%, ELAN -7.9%, RDFN -7.8%, PETQ -7.7%, SAIL -7.6%, EA -7.5%, TNDM -7.2%, STMP -6.8%, CDAY -6.6%, FLS -6.1%, WSC -5.7%, PBYI -5.5%, PTON -5.5%, PLNT -5.4%, EXEL -5.2%, CZR -5.1%, DBX -4.9%, GH -4.6%, NLOK -4.4%, ANGI -4.1%, BLDP -4%, GLPG -3.8%, PK -3.7%, BHF -3.6%, XPO -3.5%, LYV -3.4%, EBS -3.1%, TWNK -3%, AAN -3%, WYNN -2.9%, VLDR -2.9%, BILL -2.7%, BMRN -2.7%, RRGB -2.7%, EPAY -2.5%, IOVA -2.4%, AES -2.2%, HRC -2.2%, LMNX -2.1%, MCHP -2% (also names new CEO and increases dividend), BFAM -2%, VSAT -1.9% (also names new CEO), SHO -1.9%, UBER -1.6%, FGEN -1.6%, ACLS -1.5%, NVTA -1.5%, BKNG -1.4%, TDC -1.3%, PRDO -1.3%, SWX -1.3%, MAIN -1.1%, GRPN -0.9%
Other news:
- ASMB -50.9% (says Phase 2 study of vebicorvir has not achieved meaningful sustained virologic response rates)
- MRAM -12.3% (files $100 mln mixed securities shelf offering)
- AFMD -9.3% (AFMD and Artiva Bio enter into collaboration agreement)
- PBYI -5.5% (announces interim results from Phase II SUMMIT trial)
- CCL -3.2% (announced the temporary suspension (from Nov 7 to Dec 26) of Costa Deliziosa cruises to Greece)
- CVBF -2.4% (announces stock repurchase plan)
- TTCF -1.9% (stock offering)
- FBC -1.9% (prices offering of 9,112,705 shares of the Company's common stock at $30.60 per share)
- TWLO -1.8% (stock offering)
- BLDR -1.6% (acquires Kansas City Building Supply)
- UFPI -1.2% (affiliate announces equity investment in Italy)
Analyst comments:
- BGNE -3.3% (downgraded to Underweight from Neutral at Piper Sandler)
- AMSC -3% (downgraded to Hold from Buy at Canaccord Genuity)
- MLM -1.2% (downgraded to Hold from Buy at Jefferies)
Gapping up
In reaction to earnings/guidance:
- GPRO +18.7%, GLUU +15.3%, COTY +15%, TTD +12.3%, NET +11.3%, UI +11%, IRWD +10.2%, INSG +9.6%, CNDT +9.2%, ZG +8.9%, HUBS +8%, IAC +7.7% (also IAC's Vimeo announces $150 mln equity investment from Thrive Capital and GIC), HLF +7.2% (also names new CFO; declares distribution of warrants; also Icahn entered into Letter Agreement with respect to support agreement), YELP +6.8%, MD +6.8%, APPN +6.4%, GKOS +6.2%, UFS +5.9%, LASR +5.8%, DISH +5.5%, ENDP +5.3%, TSE +5.1%, EVBG +5.1%, AAXN +5.1%, TMUS +5.1%, ROKU +5%, SQ +4.3%, COLL +3.8%, MTSI +3.8%, GOLF +3.8%, SSP +3.6%, ATGE +3.4%, CUBE +3.2%, TTWO +3.2%, DLX +3.2%, PFSI +3.1%, SPCE +3.1%, RUN +2.9%, NWSA +2.9%, NTRA +2.8%, MBUU +2.8%, NKTR +2.7%, CVS +2.7%, TPIC +2.6%, IRTC +2.5%, PRAA +2.4%, VIRT +2.4%, HSY +2.2%, BGS +2%, ESNT +2%, AINV +1.9%, TU +1.9%, TDS +1.6%, USM +1.6%, COLD +1.6%, HMC +1.6%, AMN +1.5%, SYNA +1.5%, ALTR +1.4%, EDIT +1.4%, AMRX +1.4%, CARG +1.2%, HMSY +1.2%, AVLR +1.1% (also acquires the operational assets of Business Licenses), MGA +1.1%, VIAV +1%
Other news:
- FTCH +11.4% (FTCH enters into partnership with BABA and Richemont)
- FBNC +8.6% (to be added to S&P SmallCap 600)
- HALO +7.8% (to be added to S&P MidCap 400)
- HGEN +7.2% (announces positive interim Phase 3 Data of Lenzilumab in patients hospitalized with COVID-19; also announces cooperative research and development agreement with the Department of Defense to develop lenzilumab for COVID-19)
- MD +6.8% (to be added to S&P SmallCap 600)
- MTG +6.2% (to be added to S&P MidCap 400)
- PROG +5.7% (announces encouraging preclinical data supporting the potential of the company's oral drug delivery system in targeting the colon)
- TFFP +4.1% (files for $100 mln mixed securities shelf offering; also files for 4.0 mln share offering by selling shareholder; also TFFP and Felix Biotech enter into a LOI to enter into a collaboration/license agreement)
- RUN +2.9% (to expand Brightbox offering to all active markets; also stock offering)
- GEO +2% (to be added to S&P SmallCap 600)
- UVV +2% (approves $100 mln stock repurchase program)
- EVH +1.3% (to provide oncology services to Florida Blue Medicare)
- XRX +1.2% (Carl Icahn boosts active stake and discloses purchase of more than 1 mln shares)
- AVTR +1.1% (prices secondary offering by certain of its stockholders of 71,569,765 shares of common stock at $25.25 per share)
- UNIT +1% (announces dismissal of litigation)
Analyst comments:
- TX +2.7% (upgraded to Overweight from Neutral at JP Morgan)
- IFRX +2.4% (upgraded to Outperform from Mkt Perform at SVB Leerink)
- TREE +2.2% (upgraded to Overweight from Neutral at JP Morgan)
Why PSA and Renault risk closing factories in the long term
Orders for new cars have collapsed since the dealerships closed. They are at 5% of usual levels. The factories are running. But there is a real risk of unemployment - partial unemployment at least. The government decides to extend the current bonuses and scrapping bonuses until June 30, 2021.
Officially, everything turns! “There is no partial unemployment in factories, no drop in production,” says Renault. Factories produce and orders are fulfilled. "The order book is high and stocks are low. We therefore continue to deliver by appointment," said a spokesperson for the diamond firm. But there you have it: if the repair-maintenance workshops remain open - with a 30% drop in activity, however - the commercial part of car dealerships is closed in France. The sale of cars is not considered an essential business, while, paradoxically, the two-wheeler dealerships remain operational! It is difficult in these conditions to choose a car model, let alone try it out ... and place an order. Certainly, "we can make an appointment with a seller," insists at Renault. It prevents.
Strong drop in order intake
“Order intake has fallen sharply,” notes a Renault dealer in the Paris region. "The level of orders for new new vehicles is ... 5% of its usual level," points out the CNPA (National Council of Automotive Professions) bluntly. Used car sales are also down 90%. The CNPA notes a 60% drop in calls from customers to concessions.
Manufacturers talk a lot about the use of digital. To configure a model, set your first choices, perfect. And potential customers are happy to use it. However, they are very reluctant to sign a delivery slip remotely. "This is extremely marginal," assures Vincent Salimon, chairman of the BMW France management board. The French auto market is therefore likely to be "beyond the 30% drop over the year 2020, or a decline of around 500,000 vehicles compared to 2019", underlines the CNPA. Or a floor level not seen for 50 years. With "complete uncertainty for 2021". Current scrapping premiums and bonuses for electrified vehicles will be extended until June 30, 2020, however the government said on Friday during a meeting with the industry.
First measures at PSA
"If it continues, we will be forced to stop the factories," says Franck Don, central delegate CFTC of PSA. For the moment, PSA has announced the postponement of the creation of a team Friday-Saturday-Sunday in Sochaux for the production of the Peugeot 3008 and 5008. It should have started in late November. All overtime has also been abandoned in Sochaux and Mulhouse. PSA management insists that the factories obviously also produce for other countries. However, the concessions remain open in Germany… But not across the Channel, for example!
The industrial tool therefore risks at least partial paralysis in the weeks to come. What Bercy absolutely wants to avoid. The French builders had suspended production for two months during the first containment in the spring. This second confinement is certainly less draconian than the first, at this stage, authorizing work in the factory. Both manufacturers and equipment suppliers have also adopted very strict health protocols, unknown in March. But "we are not going to produce to generate stock and fill the fleets of cars as in the spring. Never again", warns an unofficial source at PSA.
Pourquoi PSA et Renault risquent de fermer les usines à terme
Les commandes de voitures neuves s'effondrent depuis la fermeture des concessions. Elles sont à 5% des niveaux habituels. Les usines tournent. Mais il y a un vrai risque de chômage - partiel à tout le moins. Le gouvernement décide de prolonger les bonus et primes à la casse actuels jusqu'au 30 juin 2021.
Officiellement, tout tourne! "Il n'y pas de chômage partiel dans les usines, pas de baisse de production", affirme-t-on chez Renault. Les usines produisent et les commandes sont honorées. "Le carnet de commandes est élevé et les stocks sont bas. Nous continuons donc de livrer sur rendez-vous", précise un porte-parole de la firme au losange. Seulement, voilà: si les ateliers de réparations-entretien demeurent ouverts - avec toutefois une baisse de 30% de l’activité -, la partie commerciale des concessions auto est fermée en France. La vente de voitures n’est pas considérée comme un commerce essentiel, alors que, paradoxalement, les concessions de deux-roues restent opérationnelles! Difficile dans ces conditions de choisir un modèle de voiture, a fortiori de l’essayer… et de passer commande. Certes, "on peut prendre rendez-vous avec un vendeur", insiste-t-on chez Renault. Il n'empêche.
Prises de commandes en forte chute
"Les prises de commandes sont en très forte chute", note un concessionnaire Renault en région parisienne. "Le niveau de commandes de nouveaux véhicules neufs est à… 5% de son niveau habituel", pointe carrément le CNPA (Conseil national des professions de l’automobile). Les ventes de voitures d'occasion sont aussi en baisse de 90%. Le CNPA constate une baisse de 60% des appels de clients en concessions.
Les constructeurs évoquent beaucoup le recours au digital. Pour configurer un modèle, fixer ses premiers choix, parfait. Et les clients potentiels y ont volontiers recours. Mais ils sont en revanche très réticents à signer un bon de livraison à distance. "C’est extrêmement marginal", assure ainsi Vincent Salimon, président du directoire de BMW France. Le marché auto français risque du coup d'être "au-delà des 30% de baisse sur l’année 2020, soit un recul de l’ordre de 500.000 véhicules par rapport à l’année 2019", souligne le CNPA. Soit un niveau plancher jamais vu depuis 50 ans. Avec "une incertitude complète pour 2021". Primes à la casse actuelles et bonus pour véhicules électrifiés seront prolongés jusqu'au 30 juin 2020, a toutefois affirme le gouvernement ce vendredi lors d'une réunion avec la filière.
Premières mesures chez PSA
"Si ça continue, on va être obligés de stopper les usines", affirme Franck Don, délégué central CFTC de PSA. Pour l’instant, PSA a annoncé le report de la création d’une équipe vendredi-samedi-dimanche à Sochaux pour la production des Peugeot 3008 et 5008. Celle-ci aurait dû entrer en fonctions fin novembre. Toutes les heures supplémentaires ont aussi été abandonnées à Sochaux et Mulhouse. La direction de PSA insiste sur le fait que les usines produisent évidemment aussi pour les autres pays. Or, les concessions restent ouvertes en Allemagne… Mais pas outre-Manche, par exemple!
L’outil industriel risque donc bel et bien une paralysie au moins partielle, dans les semaines à venir. Ce que Bercy veut absolument éviter. Les constructeurs tricolores avaient interrompu la production pendant deux mois durant le premier confinement au printemps. Ce deuxième confinement est certes moins draconien que le premier, à ce stade, autorisant le travail en usine. Les constructeurs comme les équipementiers ont par ailleurs adopté des protocoles sanitaires très stricts, inconnus en mars dernier. Mais "on ne va pas produire pour générer du stock et remplir les parcs de voitures comme au printemps. Plus jamais ça", prévient une source officieuse chez PSA.
Mega Partnership: Farfetch Links With Alibaba, Richemont
Kering’s Pinault family is also putting funds into the new luxury retail venture.
The connections keep coming for José Neves.
The founder, chairman and chief executive officer of Farfetch, who has successfully planted himself at the intersection of luxury, e-commerce and physical retail, has solidified a partnership with Chinese giant Alibaba and European stalwart Compagnie Financière Richemont that just might transform high fashion.
In a landmark deal, Farfetch, Alibaba and Richemont will work together to offer “enhanced access to the China market,” but to also accelerate the digitization of the global luxury industry.
Farfetch will launch luxury shopping channels on Alibaba’s platforms, Tmall Luxury Pavilion and Luxury Soho, China’s premier luxury and luxury outlet destination within the Tmall marketplace, as well as Alibaba’s cross-border marketplace Tmall Global. The channels expand the reach of Farfetch’s global luxury platform to Alibaba’s 757 million consumers, offering luxury labels a multibrand solution through a single integration with Farfetch.
Luxury consumers will be able to shop either through the Farfetch integration or Richemont subsidiary Net-a-porter’s integration on Tmall Luxury Pavilion, which was set up last year.
It’s a complicated bit of dealmaking, with competitors, frenemies and high-powered players all in the mix — or interested parties — across two continents.
The idea is to not just extend Farfetch’s platform to Alibaba’s mammoth Tmall marketplace, but to push the entire luxury fashion sector into a future defined by a blended physical and digital experience — a future that might have been inevitable but seems to be coming all the quicker now because of the global pandemic.
Neves has long been building up this more connected approach, creating Farfetch as a platform, working with Chanel to create a more digital store environment that can now be used by anybody and generally bringing a bit of the high-tech approach to the tradition-bound world of luxury his way.
“People loved the vision, understood the potential and we knew it was only going to go in one direction, which would be the ultimate convergence of digital and physical. But I think the pandemic just exposed that as an imperative,” Neves told WWD in an interview Thursday. “It’s no longer a nice-to-have.”
Alibaba has been thinking along the same lines for years and developed its New Retail click-and-brick approach parallel to Farfetch’s own efforts.
“They are a true technology platform and we are a true technology platform,” Neves said of Alibaba. “We really see ourselves as enablers for the best retailers and brands in the industry. We’re not trying to fight physical retail, we see our biggest opportunity is to enable physical retail to thrive. We found that we have, actually, a suite of products and solutions that can really serve the industry at a very critical time, which is COVID-19.
“It’s really about the future of retail, the future of luxury, the future of online powered by two technology companies, Farfetch and Alibaba, and endorsed by Richemont and Kering, but hopefully by many others in the future,” he said. “This is really an industry movement here that we’re trying to start.”
(The deal unveiled Thursday has lots of interesting side notes. For one, Neves is, in a sense, switching dance partners, having linked with JD.com, which made a nearly $400 million investment in Farfetch and set up a store that “didn’t ramp up the way we expected,” said the ceo, referring to JD as a “cherished shareholder.” Earlier this year, WeChat parent Tencent Holdings — and JD’s largest shareholder — invested $125 million in the firm.
(Meanwhile, the vision of a “luxury platform” echoes one that Rupert laid out several years ago when Richemont eventually gained full control of Net-a-porter. His idea then was that other players in the luxury world would also be able to take stakes in Net-a-porter, which would become the luxury world’s global digital platform.)
This is a revolution that, to Neves’ way of thinking, is being implemented and planned at the same time, with many tools available now — including easy online access to Chinese consumers and the connected store concept developed with Chanel.
“This is really about very practical things,” Neves said. “So it’s not about the future in 10 years’ time. Of course it’s also about that, but it’s about bringing real solutions to the market when the market needs it and really about bringing the whole industry with us.”
Merchants will get more connections with more shoppers, especially in China, a vast market they can now tap into with a flip of the switch if they are on the Farfetch platform. And consumers in the West will see more stores that center around “a fully integrated seamless journey from physical to digital,” Neves said.
“We see Amazon Go, a few experiences in supermarkets, but we have not really seen it in the luxury industry, a fully, fully integrated physical and digital retail experience, that is what we’re really trying to bring to the market with Alibaba and Richemont,” he said.
Neves has always talked the talk of tech ceo with mega ambitions and is increasingly walking the walk.
“Our ambition is to be the global platform for luxury,” he said. “It’s really to enable the luxury industry to really elevate the consumer experience. For us, this is not about online. This is about online [and] off-line, this is about enabling potentially every single transaction in luxury both in physical spaces and online in a way that’s win-win and benefits the consumer and the brand.”
That’s a sentiment that very much syncs with the approach Alibaba has used to become not just the online giant in China, but a key facilitator for physical retailers.
In a statement on the deal, the partners each gave the broader vision their own take.
• Alibaba’s Zhang said: “This highly complementary partnership brings together some of the world’s leading luxury retail and technology platforms, representing another milestone in Alibaba’s strategy to meet the rapidly growing demand for luxury products in China. The Chinese luxury market — which is expected to account for half of global luxury sales by 2025 — consists of hundreds of millions of young, digitally native consumers. By partnering with Farfetch and expanding our existing relationship with Richemont, we will accelerate the digitization of the global luxury retail industry and transform the luxury shopping experience for consumers.”
• Richemont’s Rupert said: “These developments represent a further meaningful acceleration of our journey toward Luxury New Retail. This initiative brings together a powerful combination of highly complementary strengths — notably with our maisons’ luxury retail expertise and Yoox Net-a-porter’s deep brand partnerships, expert curation and exceptional customer care — that will help us deliver a seamless omnichannel experience to our discerning clientele. Partnerships make you stronger. I am delighted to partner with Daniel, José and François-Henri to bring our shared vision to fruition, setting new standards for the future of luxury.
• And Pinault of Artemis/Kering said: “The growth potential of luxury e-commerce has never been so promising, and the importance of China for the luxury industry is only becoming more obvious every day….The investment by Artemis demonstrates our belief in the future of Farfetch and I am personally looking forward to exploring the future of luxury retail with this group of visionaries and experts.”
As part of the global partnership, Alibaba and Richemont will invest $600 million, or $300 million each, in private convertible notes issued by Farfetch. Alibaba and Richemont will also invest $500 million, or $250 million each, in Farfetch China, taking a combined 25 percent stake in a venture that will include Farfetch’s marketplace operations in the China region.
In addition, Alibaba and Richemont have an option to purchase a further combined 24 percent of Farfetch China after the third year of the venture’s formation. Alibaba and Richemont will explore additional opportunities to work closely with Farfetch to provide services to luxury brands.
The investments by Alibaba and Richemont in Farfetch China and the establishment of the joint venture are expected to be completed during the first half of calendar year 2021, subject to the satisfaction of closing conditions.
Separately, Artemis will increase its investment in Farfetch by buying $50 million in stock.
In all, it adds up to a power move for Farfetch that comes just as the ultracompetitive U.S. web leader Amazon moves into its turf.
Amazon finally unveiled revealed its by-invitation Luxury Stores platform for eligible Prime members in the U.S. only this fall, including shops-in-shop with designers Oscar de la Renta, Roland Mouret and others.
Interestingly, Mouret was one of the first designers to join Net-a-porter, “when nobody said it would work. But I am always challenging myself to envision what the future should be, and how designers can sell their creativity.”
Mouret described Amazon as “the next frontier” for luxury fashion online.
But clearly there are now other, powerful forces out there on the next frontier, where the competition could still get rough.
Noted Apple analyst Ming-Chi Kuo is out with a new report today in which he suggests that the 2021 iPhone models are likely to outsell the iPhone 12.
Kuo suggests that this will in part be due to ‘significant’ improvements to the ultra-wide camera on next year’s models …
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Three ultra-wide camera improvements
Supply-chain sources suggest that Apple plans three improvements to the ultra-wide camera on next year’s Pro models over this year.
First, he expects the aperture to be widened from f/2.4 to f/1.8. All other things being equal, that would let in more than twice as much light, significantly improving the low-light performance. In particular, it should allow for sharper and cleaner night shots.
Second, sources indicate that the number of elements in the lens will be increased from five to six. There are pros and cons to adding elements to a lens, but when a manufacturer takes an existing lens design and adds elements, this is generally done to reduce distortion, which is especially important in wide-angle lenses.
Finally, he expect the ultra-wide lens to get auto-focus for the first time. The current ultra-wide lens is fixed-focus. This might sound surprising, but isn’t generally a huge issue in very wide-angle lenses as they are mostly used for landscapes and cityscapes, where everything in shot is far enough away to be in focus. However, switching to auto-focus will be useful for closer wide-angle shots.
Other advantages for the 2021 iPhone models
Additionally, Kuo believes that there are two broader reasons to be more optimistic about next year’s sales.
A (hopeful) end to the coronavirus crisis should mean fewer production challenges. Apple CEO Tim Cook commented in last month’s earnings call that supply constraints are limiting sales of a number of core Apple products. A more recent report has suggested that iPhone 12 Pro production is being hit by shortages of power management chips.
Finally, Kuo believes that demand for 5G iPhones will be higher by next year, once more infrastructure is in place. Right now, 5G coverage is extremely patchy, so inclusion of the faster mobile standards doesn’t, in many people’s eyes, provide a compelling reason to upgrade.
Early premarket gappers
- Gapping up:
- IRWD +22.4%, GPRO +21.3%, CNDT +16%, INSG +14.9%, TTD +12%, GLUU +11.5%, NET +11.2%, FTCH +11.1%, ZG +10.5%, YELP +10%, FBNC +8.5%, TSE +8.3%, HALO +7.8%, IAC +7.7%, HLF +7.2%, GOLF +7.1%, GKOS +6.2%, TMUS +6.2%, ENDP +6%, LASR +5.8%, MTG +5.5%, AMRX +5.5%, EVBG +5.1%, AVLR +4.8%, APPN +4.4%, SQ +4.4%, ROKU +4.2%, TFFP +4.1%, RUN +3.9%, RUN +3.9%, PFSI +3.9%, MD +3.8%, COLL +3.8%, MTSI +3.8%, MD +3.8%, LGF.A +3.7%, ATGE +3.4%, CUBE +3.2%, TTWO +3.2%, DLX +3.2%, AAXN +3.1%, CSOD +3.1%, NWSA +2.9%, NTRA +2.8%, NKTR +2.7%, HUBS +2.6%, HHC +2.5%, IRTC +2.5%, TILE +2.5%, PRAA +2.4%, UVV +2%, BGS +2%, OTEX +2%, DXC +2%, AINV +1.9%, AMCR +1.7%, SPCE +1.7%, USM +1.6%, COLD +1.6%, HMC +1.6%, GEO +1.5%, AMN +1.5%, SYNA +1.5%, XRX +1.4%, ALTR +1.4%, EDIT +1.4%, EVH +1.3%, HMSY +1.2%, UNIT +1%, VIAV +1%, TM +1%
- Gapping down:
- ASMB -37.1%, GBT -28.9%, NEWR -13.5%, MRAM -12.5%, PS -12.3%, AZPN -9.8%, AFMD -9.3%, AYX -9.1%, NVRO -8.3%, TDC -7.8%, STMP -7.7%, PETQ -7.7%, EA -7.3%, PBYI -7.2%, PBYI -7.2%, TNDM -7.2%, PTON -6.7%, FLS -6.1%, ANGI -6.1%, RDFN -5.9%, WSC -5.7%, NLOK -5.5%, CYRX -5.2%, DBX -4.6%, TWLO -4.1%, PLNT -3.9%, BHF -3.6%, GLPG -3.6%, LYV -3.4%, EXEL -3.4%, BLDP -3.4%, CDAY -3.3%, UBER -3.3%, TTCF -3.2%, EBS -3.1%, TWNK -3%, AAN -3%, GH -2.9%, SAIL -2.8%, RRGB -2.7%, MITK -2.6%, EPAY -2.5%, ADT -2.5%, CVBF -2.4%, IOVA -2.4%, MAIN -2.4%, VLDR -2.3%, BKNG -2.2%, LMNX -2.1%, BMRN -2.1%, CZR -2%, WYNN -2%, INFN -2%, BFAM -2%, VSAT -1.9%, SHO -1.9%, BILL -1.7%, BLDR -1.6%, XPO -1.6%, FGEN -1.6%, BIGC -1.6%, PK -1.5%, LTHM -1.5%, ACLS -1.5%, NVTA -1.5%, PRDO -1.3%, SWX -1.3%, UFPI -1.2%, AIG -1.2%, FBC -1.1%
Danish mink cull highlights the unknowns of Covid-19
Virus transfers from animals to humans carry significant risks
While governments around the world are doing their best to beat coronavirus with a new wave of lockdowns, there are worrying signs that the virus itself might have other plans. In Denmark, the country’s entire population of 17m mink is to be culled after a mutated version of the disease — one that has already spread to humans — was found on mink farms. Danish authorities said the mutation appeared to weaken the ability to form antibodies, raising concerns about the effectiveness of a future vaccine. If the animals were not killed the pandemic could restart, this time in Denmark, according to a worst-case scenario painted by the country’s top epidemiologist.
At this stage, despite the drastic measures being taken, the Danes’ bleak prognosis should be treated with caution. International researchers of Sars-Cov-2, the coronavirus strain behind the outbreak in this pandemic, have said that significant questions remain over the exact nature of the mutations and how the variant was tested. Scientists have also warned that it is too early to assess the implications on the efficacy of a vaccine. Virologists will now study the latest mutations to establish how they infect people, including their production of antibodies. A key question will be whether this strain is more virulent in humans.
Even before the outbreak in Denmark, researchers had become concerned about what happens when the virus moves back and forth from one species to another. America’s Centers for Disease Control and Prevention (CDC) in August highlighted reports from infected mink farms in the Netherlands that suggested that the virus could spread from mink to humans. Some cats and dogs on mink farms in Europe had also tested positive, the report added. And in September, Dutch scientists published a paper — still to be peer-reviewed — describing cases of transmission of the virus from animals to humans on mink farms in the country.
The Denmark cull serves as a reminder of the zoonotic origins of this pandemic and the perils inherent in overly-close proximity between humans and animals. Close to three-quarters of emerging infectious diseases in humans come from other animals and the majority of these originated in wildlife. Greater proximity increases the chances of the spread of these diseases by making the transmission of pathogens between animals and humans easier.
The pandemic has prompted calls for governments to put in place conditions for a “green recovery” but the focus so far has been primarily on climate change. The potential loss of biodiversity is of equal importance and indeed interlinked with the climate. Investors are slowly waking up to the significant financial risks stemming from the loss of biodiversity. Damage to ecosystems, including forests, grasslands and coral reefs — and the associated loss of biodiversity — could drain nearly $10tn from the global economy by 2050, according to the WWF, the conservation group.
The culling of the mink may devastate Denmark’s fur industry for years to come — perhaps for ever — but it should also serve as a reminder of the many ways in which humans exploit animals, some of which are risky as well as cruel. Animal rights groups have been quick to seize on the issue with denunciation. Several European countries have already banned fur farming, including the UK in 2003. The Dutch government this summer brought forward the mandatory closure of mink farms in the country by three years to next spring. As large parts of the globe endure further lockdown restrictions, the plight of Denmark’s mink highlights the many lessons the world still has to learn from Covid-19.
Richemont hedges online bets with Farfetch stake
Online bandwago
Richemont is trying a new route to get on the online luxury bandwagon. The Swiss owner of Cartier on Thursday announced it’s investing $550 million in funky deluxe e-tailer Farfetch, alongside with Alibaba. That should help Richemont grab a larger share of China’s booming e-commerce market. It may also be a way to hedge its struggling online bets.
Investing in the People’s Republic makes sense. Chinese consumers are the main source of growth for Richemont and its competitors. They represented about a third of global luxury sales before the pandemic, much of it by shopping abroad.
Unable to travel, many customers this year turned to online platforms to buy Gucci and Prada bags, and continued to do so even once physical shops reopened, luxury brands have said. Farfetch founder and CEO José Neves believes there’s about $70 billion of overseas spending on bling by Chinese consumers bricks-and-mortar retailers cannot meet. Teaming up with Alibaba, which has about 750 million customers, should help fill the gap. Investors seem to agree, adding more than $3 billion to the Swiss company’s market value on Friday morning.
Yet it’s not the first time Richemont Chairman Johann Rupert has placed a wager on online retail. Back in 2010 the Swiss group bought a majority stake in then-fledgling e-commerce platform Net-A-Porter. Five years later the group merged with Italian online player Yoox. And two years ago, Richemont paid a chunky 2.8 billion euros to acquire full control of the combined platform.
That investment has yet to pay off. Sales in the company’s Online Distributors division that includes Yoox Net-A-Porter fell 21% to just below 1 billion euros in the six months to September. The unit, which was loss-making before Covid-19 struck, remains in the red.
It’s also not the first time that Richemont has tried to expand in China. The company last year kicked off a different joint venture with Alibaba aimed at allowing YNAP to better penetrate the Middle Kingdom. Helping rival Farfetch establish a Chinese venture could potentially undermine that effort.
Rupert believes the two businesses have complementary features. Farfetch’s platform is probably more advanced technologically, while YNAP is more focused on curating luxury products. Even so, it’s clear Richemont is still searching for a profitable way to sell luxury goods online.
LSE and Refinitiv make commitments on trading to secure EU approval for deal
London Stock Exchange also offers to strengthen governance and oversight
The London Stock Exchange and Refinitiv have made commitments to Brussels antitrust authorities to keep trading and clearing of interest rate derivatives separate, according to documents seen by the Financial Times, in an effort to satisfy one of the regulator’s key concerns with their $27bn deal.
The formal offer was part of a package of measures the two sides submitted on Thursday and included the €4.3bn sale of Borsa Italiana to Euronext, which is intended to fend off another significant issue flagged by European regulators.
Alongside commitments on behaviour, the LSE offered to strengthen governance and oversight, with the creation of an independent trustee and arbitration process to resolve complaints, the documents said.
The UK exchange is making its push as it seeks to convince authorities in the EU and Singapore to allow a new player at the heart of global capital markets. US authorities have already passed the deal.
Buying Refinitiv will triple the LSE’s revenues to £7bn and create a powerhouse controlling widely used services in share, bond and swaps trading as well as clearing, data and indices. It will be better able to compete with companies such as CME Group, Intercontinental Exchange, S&P Global and Bloomberg.
EU authorities have until mid-January to make a ruling. The deadline was pushed back by a month on Thursday to allow authorities to examine the LSE’s new commitments.
Cross-selling trading, and clearing, as well as data and analytics to each other’s customers is a key part of the deal for the LSE and Refinitiv.
Trading and clearing interest rate swaps has emerged as one of the EU’s top concerns that must be addressed before it approves the deal. The assets are widely used by companies to hedge against unexpected moves.
The EU flagged that the deal would create a combination with “significant market power” both in trading and clearing when setting its concerns out over the summer, adding that barriers to entry in the market were high and customers rarely switched services.
LCH has about 90 per cent of the market for clearing euro-denominated swaps while Tradeweb has about 50 per cent of the interest rate trading market, according to Greenwich Consulting.
The issue of clearing euro-denominated interest rate swaps also became an unlikely flashpoint between the UK and EU after the Brexit vote, with the EU demanding more direct oversight of the business in London.
To assuage the concerns, the LSE formally committed to allowing rivals and customers choice over the venues they trade swaps and the venue they use for clearing.
Some other exchanges around the world confine trading and clearing in some widely traded products to their own exchanges, a model known as a “vertical silo”.
The LSE will “not co-ordinate its pricing with Tradeweb in a way that could result in indirect price discrimination between trading venues or middleware providers or otherwise based on a trade’s route to clearing”, the document said.
The LSE declined to comment.
The EU has also raised concerns that the tie-up between the LSE and Refinitiv could shut out rivals in providing access to critical trading information and data feeds. Regulators also have concerns that Refinitiv’s rivals that are licensing LSE data could receive a slower or more inferior service.
Last month David Schwimmer, chief executive of the LSE, said the potential sale of Borsa Italiana would “contribute significantly to addressing the EU’s competition concerns”.
The EU competition authorities declined to comment.