Friday 12/03/21

1. In MACRO & VACCINE NEWS, Biden makes the stimulus law and a vaccine commitment while Australia targets independence, Brussels has more AstraZeneca problems, Johnson & Johnson’s one-shot gets EU approval and UK ministers review City rules
2. In M&A, IPO AND SPAC NEWS, BAT buys into cannabis, Coupang has a strong debut and Grab could go SPAC-wards
3. In RETAIL NEWS, John Lewis gets bleak and Morrisons benefits from Amazon
4. AND FINALLY, I bring you an old favourite…

So Biden signs and makes a vaccine commitment while Australia makes plans, Brussels has more AstraZeneca issues, J&J gets EU approval and UK ministers review City rules…

President Biden has been a busy boy! Joe Biden signs $1.9tn stimulus bill into law (Financial Times, James Politi) shows the president turning the $1.9tn stimulus package into law yesterday as he signed the legislation in the Oval Office a day earlier than anticipated. I guess that the clock starts ticking now on the American economy’s upward march, but Biden’s huge stimulus gift may have a nasty sting (Daily Telegraph, Tom Rees) cautions that such a large stimulus (it is equivalent to 8.5% of US GDP!) could make the economy grow too quickly, meaning that there would have to be an earlier-than-expected interest rate hike to tame inflation despite the Fed committing to unchanged interest rates. Then in Biden tells states to make all adults eligible for Covid-19 vaccine by May 1 (Wall Street Journal, Andrew Restuccia and Sabrina Siddiqui) we see that the president looks to concentrate vaccine efforts with the prospect of citizens being able to “have a cookout or a barbecue and celebrate Independence Day”. It seems to me like he’s having a pretty good presidency so far!

Things aren’t so cosy elsewhere, however. Australia considers funding vaccine maker to curb reliance on imports (Financial Times, Jamie Smyth) shows Australia reacting to Italy blocking vaccine exports to the country in a bid to become more independent in future. The government is looking at putting money towards a A$1bn biopharmaceutical plant and is also making moves to get a “coalition of countries” together to fight back against EU export bans, including New Zealand, Japan, Norway and Canada.

Talking about Europe, Brussels warns that AstraZeneca will miss already reduced targets (Financial Times, Sam Fleming, Michael Peel, Dontato Paolo Mancini and Richard Milne) shows that things are getting worse on the Continent as supplies from AstraZeneca look like they will fall short of already reduced targets in the first quarter and hope of the US riding to the rescue with more jabs also proved to be over-optimistic. There was some mildly good news, though, in Johnson & Johnson vaccine wins EU approval but rollout likely to be slow (Financial Times, Donato Paolo Mancini, Hannah Kuchler, Michael Peel and Sam Fleming) as the American drug-maker got the go-ahead for its one-shot jab from the European Medicines Agency but there are current issues with production capacity.

In the UK, Ministers plan overhaul of capital market rules to boost City (Financial Times, Daniel Thomas, Philip Stafford, George Parker) shows that ministers are now going to be looking at how to boost the prospects of the City post-Brexit. Targets for change could include MiFID II (the EU’s big piece of financial services legislation hated by many), the EU rules which set out where investors can trade stocks (which helped to force trading out of London and into Amsterdam once Brexit hit) and the cap on the amount of trading that can be done in “dark pools” (private marketplaces that are used to hide who is trading until execution). It is also thought that the government wants to give the FCA powers to make changes rather that do it all by parliamentary legislation. Bankers’ bonus cap may be lifted in City rules revamp (Daily Telegraph, Michael O’Dwyer) is another thing that could also really stop any potential “brain drain” to Europe because, under current rules, bonuses are limited to “only” 100% of salary or 200% with shareholder approval 😁. * SO WHAT? * They just need to get on with it! London has already lost its trading crown – so it is imperative to address this post-Brexit slump whilst at the same time not getting too lax.

BAT buys weed, Coupang has a strong debut and Grab considers the SPAC route to market…

BAT increases exposure to cannabis with Canadian joint venture (The Times, Alex Ralph) shows that BAT, which owns cigarette brands such as Lucky Strike and Dunhill, has ploughed £126m into a partnership with OrganiGram, a Canadian company with Nasdaq and Toronto listings. The idea is that the two will work together on R&D in adult cannabis products, initially concentrating on cannabidiol. Shares in OrganiGram shot up by 39.8% in New York trading last night on the news! * SO WHAT? * Tobacco companies are continuing their search for cigarette alternatives, and this seems to be the latest development on that front. I presume, though, that at least some of that big uptick was due to hopes that OrganiGram could enter the US market, where there is HUGE potential.

Then in IPO news, Coupang shares surge in trading debut (Wall Street Journal, Dave Sebastian), we see that shares of the South Korean e-commerce behemoth Coupang shot up by 41% in its first day of trading on the NYSE. This is the biggest float of a foreign company since Alibaba in 2014 and is the largest IPO in terms of dollars raised and valuation on the exchange so far this year. Not bad for a

company that was founded in 2010! It has since become one of the three biggest private sector employers in South Korea and has been very successful at neutering any threat from the likes of Alibaba and Amazon thus far. Fun fact: so far this year, 311 companies have floated on US markets versus 36 at this point last year, according to Dealogic statistics! After Coupang, another South Korean delivery company catches US IPO fever (Wall Street Journal, Eun-Young Jeong) highlights Market Kurly, a competitor of Coupang, as being another potential US-listing candidate. Watch this space! * SO WHAT? * It’s interesting to see how many non-US companies are lining up for a US listing! It seems that US investors are rocking – and with the prospect of Biden stimulus feelgood, things could get even hotter! On the other hand, Coupang: comparisons with Amazon have been greatly exaggerated (Financial Times, Lex) points out that Coupang is not an Amazon at the moment as it is still burning cash and falls way short of Amazon’s dominance of its domestic market, implying that it should trade at a discount to Amazon’s rating.

Then in Grab is in talks to go public through a SPAC merger (Wall Street Journal, Maureen Farrell) we see that the Singaporean ride-hailing start-up is looking at reversing into a SPAC (one of two owned by Altimeter Capital Management LP) that could give it an implied valuation of up to $40bn. It is thought that a deal could be announced in the next few weeks.

John Lewis cautions and Morrisons benefits…

John Lewis to close more stores as pandemic wipes out profits (The Guardian, Sarah Butler) highlights more woes at the John Lewis Partnership said that it does not expect to reopen all stores in April. If you are interested in knowing more detail about the demise of the retailer, The economic earthquake that has levelled a colossus of the high street (Daily Telegraph, Laura Onita) is a really good place to look. Things do not seem to be looking up at the moment.

Then in Morrisons’ tie-up with Amazon looks tasty (Daily Telegraph, Simon Foy and Laura Onita) we see that Morrisons has benefited from getting access to Amazon Prime customers, with online sales tripling over the year. On the other hand, it was hit by Covid costs and handing back a massive chunk of business rates relief.

…in other news…

I couldn’t really find anything today that I thought was worthy of this section in Watson’s Daily, so I thought I would leave you with one of my favourite videos – the incredible K-Tigers doing some amazing taekwondo moves and dancing all at the same time! Not for the taekwondo purists of you out there, but entertaining nonetheless – their acrobatics are incredible! Inspiration for the weekend, perhaps??