Assets under management at Man Group hit record high
Assets under management at Man Group, the world’s largest listed hedge fund manager, hit a record high in the first half of the year, although the group’s profits fell.
Man had assets under management of $152bn at the end of June, up from $143.3bn at the end of last year as customers gave the company more money to manage. However adjusted pre-tax profits fell from $395mn to $137mn, driven by lower performance fees.
The $32mn in performance fees, down from $404mnin the first half of last year, reflected a “difficult first quarter” for trend following strategies, which make money by betting on the overall direction of markets, the company said.
Drones hit Moscow’s business district for second time in three days
A skyscraper in Moscow’s premier business district, Moscow City, was damaged on Monday night by a drone strike for the second time in three days.
“Several drones were shot down by air defences as they tried to enter Moscow. One hit the same City tower as the last time. The facade of the 21st floor was damaged,” said Moscow mayor Sergei Sobyanin, adding that there was no information about casualties.
The 50-story tower contains the offices of Russia’s economic development, trade and industry ministries.
There was no immediate statement from Kyiv on responsibility.
Two towers in Moscow City were damaged by drones on the night of July 30. A security guard at one of them was injured.
Diageo beats estimates as consumers turn to premium spirits brands
Diageo outperformed forecasts in the year to June, lifting net sales 6.5 per cent after it raised prices and consumers opted for more expensive spirits.
The maker of Johnnie Walker, Tanqueray and Guinness reported net sales of £17.1bn, the company reported on Tuesday, while pre-tax profit rose 5.1 per cent to £4.6bn. Premium brands made up 63 per cent of sales, 7 percentage points higher than before the pandemic.
In the US, where demand for premium spirits has been lagging since the at-home drinking boom during the pandemic subsided, sales in whisky, rum and vodka declined compared with the previous year, while tequila grew 15 per cent.
The company said price increases “more than offset the absolute cost inflation impact on gross margin”.
Metro Bank records first half-year profit since 2019 scandal
High street challenger Metro Bank reported its first profitable half-year results since a 2019 scandal in which investors were misled over risk, as the Bank of England’s continued rate rises helped the lender’s turnaround efforts.
Underlying profit before tax for the period was £16.1mn, up from a loss of £48mn a year ago and ahead of consensus figures of £6mn. Revenues for the first half of the year rose 20 per cent year on year to £286.4mn, although they missed analyst estimates of £308mn.
“Our statutory profitability in H1, making this the third consecutive quarter of underlying profitability, demonstrates that our strategy is working,” said chief executive Dan Frumkin.
Metro has faced an uphill battle since 2019, when investors were misled over a key risk measure, leading to a 39 per cent share price collapse, more than £15mn in fines, and the departure of its previous leadership team.
Russian drones hit Ukraine’s second-largest city
Russian drones struck residential buildings in Ukraine’s second-largest city of Kharkiv early on Tuesday, destroying the top two floors of a colleague dormitory, according to the head of the region’s military administration, Oleh Syniehubov.
Suspilne, Ukraine’s public broadcaster, showed footage of smoke rising from the destroyed section of the dormitory. It quoted Kharkiv region’s chief of police Volodymyr Tymoshko as saying at least one person had been injured.
Kharkiv mayor Ihor Terekhov said that three drones targeted “the middle of the city, in densely populated areas”.
BP raises dividend and announces shares buyback even if earnings slump
BP increased its dividend and announced further share buybacks even as earnings slumped from the record levels set last year.
The group’s underlying profits for the second quarter were $2.6bn, down almost 70 per cent from the $8.5bn it recorded in the same period last year, undershooting average analyst estimates of $3.5bn.
BP blamed lower refining margins and planned maintenance work for the drop off in performance as the upheaval in energy markets that had supercharged earnings for the previous five quarters receded.
Despite the decline in profits, BP said it remained committed to “delivering for shareholders”, increasing its dividend by 10 per cent to $0.7 per share and announcing $1.5bn in share repurchases. That followed $4.5bn in share buybacks already announced and completed this year.
UK house prices record biggest drop since 2009
UK house prices have dropped by the largest amount in 14 years, according to fresh data from Nationwide.
Prices for July fell 0.2 per cent on the previous month and 3.8 per cent on the same month last year, the largest fall since 2009, the Nationwide house price index showed. The average cost of a home in the UK is now £260,828.
House prices have come under increasing pressure as lenders have ratcheted up mortgage costs in response to higher interest rates.
In June, house prices remained broadly flat compared with the previous month, Nationwide’s data showed, but were 3.5 per cent lower than the same month last year.
Uniper to invest €8bn in renewables over seven years
The nationalised German gas importer Uniper plans to invest €8bn in renewables in the next seven years as it seeks to harness strong earnings to shift away from fossil fuels.
The company, which last year received a multibillion euro bailout to prevent its collapse after Russia’s full-scale invasion of Ukraine, said it would capitalise on better-than-expected performance to triple the average annual investments made over the past three years, expanding renewables and decarbonising its gas business by pursuing green hydrogen.
Uniper, which posted earnings before interest and taxes of €3.7bn in the first half of 2023 compared with a €757mn loss last year, has come under pressure from environmental campaigners to help Germany meet its ambitious green targets after the government stepped in to rescue the company.
Toyota Motor’s profit surges despite price war with local China brands
Toyota Motor has bucked a sharp slowdown in China with quarterly profits surging 94 per cent as the group sold 2.75mn vehicles globally, a year-on-year increase of 8.1 per cent.
The company’s shares briefly rose 3 per cent on Tuesday after it reported that operating profit increased to ¥1.12tn from ¥578.6bn ($4bn) a year earlier. Analysts had expected ¥925.6bn, according to S&P Capital IQ.
Japanese carmakers have been hit heavily in China this year due to a slow transition to electric vehicles and rising local brands. Sales of Toyota and Lexus vehicles there rose 8.6 per cent but operating profits dropped 26 per cent due to a price war.
HSBC unveils $2bn share buyback as rising rates boost income
HSBC announced a further share buyback of up to $2bn and reported better than expected pre-tax profits, as rising rates boosted the UK-based lender.
The bank reported pre-tax profits of $8.8bn in the three months to June, beating analysts’ expectations of $8bn. Chief executive Noel Quinn said it was a “strong first-half performance”.
He added that the bank had “good broad-based profit generation around the world, higher revenue in our global businesses driven by strong net interest income, and continued tight cost control”.
China’s Country Garden stock falls after share placement cancelled
Shares in Country Garden fell as much as 10 per cent on Tuesday after one of China’s most important property developers abruptly abandoned an attempt to raise new funds.
The company, the largest developer in the country by sales last year and a barometer for the sector’s health, decided to cancel the $300mn share placement on Monday night, two sources briefed on the placement said, without providing a reason.
A successful placement would have been a rare example of a new capital markets deal in a real estate sector starved of investment. JPMorgan was the sole bookrunner.
Read more about Country Garden’s aborted share placement here.
What to watch in Europe today
Events: German economy minister Robert Habeck speaks about decarbonisation of the country’s power plants and the status of state aid regulations in talks with the European Commission. Poland marks the anniversary of the 1944 Warsaw uprising against Nazi German occupation.
Indicators: Still with Germany, the eurozone’s largest economy is expected to publish jobless data for July, after figures on Monday suggested inflation had eased across the bloc amid signs of a generalised recovery. July figures from the Nationwide house price and British Retail Consortium indices are expected. Despite a worsening outlook for the UK housing market, mortgage approvals rose unexpectedly on Monday.
Results: Investors are paying close attention to how inflation and rising interest rates are affecting consumer behaviour and companies’ bottom lines. Among UK companies reporting are alcoholic drinks giant Diageo, lenders HSBC and Metro Bank and energy major BP, which is expected to post second-quarter pre-tax profits of $6.4bn on revenues of $47.8bn, according to consensus estimates compiled by Refinitiv.
China consumption incentives and US rates sentiment lift Asia stocks
Asian equities rose on Tuesday as investors reacted to measures by Beijing to boost consumption in China and calculated that interest rate increases in the US were coming to an end.
Hong Kong’s Hang Seng index added 1.1 per cent, Japan’s Topix rose 0.6 per cent, South Korea’s Kospi gained 1.3 per cent and China’s CSI 300 advanced 0.4 per cent.
The Asia moves followed gains in the US as investors wagered that the Federal Reserve’s monetary cycle was likely to be finished for this year. Incentives for consumers in China were also cheered. The S&P 500 and Nasdaq Composite rose 0.2 per cent each on Monday.
China new home sales post biggest monthly drop in a year
Sales of new homes in China slumped by the biggest monthly decline in a year in July, according to private-sector data compiled from the country’s top 100 developers, as the indebted property sector comes under renewed pressure.
Sales declined 33.1 per cent in value compared with a year earlier to a total of Rmb350.4bn ($48.9bn), according to data from China Real Estate Information Company. The July slump followed a contraction in June.
Chinese developers were roiled by a wave of defaults last year and the recent slowdown in sales comes as the economy has stagnated despite the unwinding of Covid-19 controls last year.
What to watch in Asia today
Events: The Reserve Bank of Australia issues an interest rate decision. Economists at Bank of America and Westpac expect a 25-basis-point rise to 4.35 per cent. The Bank of Japan releases minutes of its June monetary policy meeting. China marks Army Day, the anniversary of the founding of its armed forces in 1927 during the Chinese civil war. Thailand’s financial markets are closed for Asanha Bucha, a Buddhist festival observed on the full moon of the eighth lunar month.
Indicators: It’s a big day for purchasing managers’ indices, as Caixin issues its latest data for China. Japan’s Nikkei publishes the manufacturing PMI for July and S&P Global releases similar figures for India, South Korea, the Philippines, Taiwan and Vietnam. Australia also provides a manufacturing PMI. Indonesia publishes consumer price index figures. Hong Kong announces the latest retail sales data, Japan notes its June unemployment rate and South Korea releases June trade data.
Results: UK-based, Asia-focused HSBC issues first-half earnings, while Japan’s Mitsui & Co, Mitsubishi UFJ Financial Group, Nomura, TDK and Toyota publish first-quarter data. Hong Kong’s Kerry Group provides second-quarter results.
Former Trump donor gives $5mn to Democratic candidate Kennedy
A top Republican donor who helped fund Donald Trump’s past presidential runs has emerged as a top financial supporter of Robert F Kennedy Jr’s longshot White House bid, as conservative cash keeps flowing to Joe Biden’s main challenger for the Democratic nomination.
According to federal filings released on Monday, Timothy Mellon gave $5mn to American Values, the main political action committee, or outside spending group, supporting Kennedy’s White House bid.
Not only are some Republicans drawn to Kennedy’s views questioning vaccinations and US support for Ukraine, but they also see his candidacy as weakening Biden heading into the general election.
Biden nixes Trump plan to move Space Command to Alabama
President Joe Biden has decided to keep the US Space Command in Colorado, reversing Donald Trump’s plan to move it to Alabama, the Pentagon said on Monday.
The move comes as the Biden administration has grown increasingly frustrated with Tommy Tuberville, a Republican senator from Alabama, who has blocked the confirmation of dozens of senior military officers to protest the Pentagon’s efforts to protect abortion access in the military.
But even before then, Democratic lawmakers in Colorado had been putting pressure on Biden to overturn Trump’s decision. The move by the current president was heavily criticised by Alabama Republicans as brazenly political and designed to punish a conservative state.
Avis beats profit expectations on strong summer travel demand
High demand for summer travel helped car rental company Avis Budget Group exceed Wall Street’s expectations for profit.
Avis earned $436mn in net income in the three months ending in June, beating analysts’ forecasts by 18 per cent. Revenue was slightly below forecasts at $3.1bn, with Wall Street expecting $3.2bn.
Chief executive Joe Ferraro said the Avis team had been able to capitalise on “strong and increasing travel demand” and that “summer travel has continued to be robust with elevated peak period demand and seasonally improved pricing”.
While Avis’s revenue dipped 7 per cent on a per-day basis compared with the year-ago quarter, rental days increased by 4 per cent.
German sandal maker Birkenstock’s owner considers September IPO
The private equity owners of German sandal maker Birkenstock are considering an initial public offering of the company that may take place as soon as September, according to people familiar with the matter.
If L Catterton decided to go ahead with the listing, Birkenstock could be valued at more than $8bn, the people said.
An exit at that valuation would mark a bumper return for the private equity firm, which is backed by French luxury fashion house LVMH and has invested in consumer brands including Scandinavian fashion company Ganni and fitness company ClassPass.