The FTSE 100 enjoyed broad-based gains, with only the energy sector in the red.
Brent crude oil fell back below $100, much to the relief of the market. This gave a boost to interest-rate sensitive stocks including real estate and consumer cyclicals. Investors are praying that inflationary pressures start to ease off and central banks have less of a need to keep interest rates higher for longer.
Borrowing costs eased on 10- and 30-year UK and US government bond yields, albeit remaining at elevated levels relative to the past decade or so. US Fed meeting minutes published tomorrow should give investors a better picture of what’s going through the mind of the central bank in the wake of a resilient economy and energy price pressures.
Shipping services group Clarkson jumped 7% as it benefited from record freight rates amid a volatile geopolitical backdrop. Both its broking and financial arms enjoyed a purple patch, taking the shares to new record highs.
Well-known UK fund manager Nick Train has been navigating a long period of underperformance, but he will be vindicated by investing in Clarkson just under two years ago as a major position in the Finsbury Growth & Income Trust. It has provided some much-needed good news to the trust’s portfolio, with Clarkson’s latest trading update fuelling that positivity.
Kenmare Resources
Mozambique-focused titanium minerals producer Kenmare Resources has once again garnered takeover interest.
The Irish company has attracted multiple bids over the years, yet no deal has ever made it over the line. Shareholders have either objected to proposals, or the bids were diluted amid factors such as weakener economic conditions or changes to government royalties. It seems that Kenmare is the elusive name in the mining sector and continues to slip through the fingers of bidders.
Fourteen years ago, at the peak of the commodities boom, there was lots of speculation that Rio Tinto and Dow Chemical were both interested in buying Kenmare. Australian miner Iluka pursued the UK-listed miner in 2014 and 2015 with no luck. Last year, Kenmare founder Michael Carvill and private equity group Oryx together tried and failed to take the business private.
Kenmare operates the Moma mine in Mozambique and produces ilmenite, rutile and zircon. These products are used across multiple areas such paint, sunscreen and anti-perspirants. Moma contains one of the world’s largest resources of titanium minerals and at current production rates is expected to run for at least another 100 years. That makes it a highly attractive asset for a rival miner looking to expand operations or to a private equity group looking for long-term cash flows.
Despite the high-profile status of the Moma mine, Kenmare is only a small company in size, it has substantial debts, and demand for its products is cyclical. That makes for a rocky ride for shareholders. The latest bid looks opportunistic but also potentially credible.
International Resources Holdings (IRH) is the latest suitor with a cash proposal confirmed by Kenmare. This is an Abu Dhabi-based ‘mine to market’ investment group with copper assets in Zambia and a variety of trading and technical services. IRH has bold ambitions to be a major player in the mining sector and is backed by $216 billion Abu Dhabi conglomerate IHC. That suggests deep pockets to finally get a deal done on Kenmare.
Losing Kenmare would be another blow to the London Stock Exchange as the outflow of UK-listed stocks continues. While the investor audience for Kenmare is relatively niche, losing it would still be a crying shame given it has been a long-standing name in the UK-quoted mining space.
Informa
Informa is not alone in combining events with academic publishing, but its latest announcement suggests time is up on this arrangement.
The events arm has benefited from a post-pandemic surge in demand, and management are looking to double down through the sizeable acquisition of rival Clarion and by spinning off its academic arm Taylor & Francis.
The deal adds major events like the consumer electronics-focused IFA Berlin, gaming conference ICE in Barcelona and defence event DSEI to Informa’s roster. It is expected to accelerate growth and enhance earnings from next year.
Informa has expanded the ways it makes money from events through initiatives like charging companies to set them up with buyers through AI-backed matchmaking apps, offering data insights, selling VIP experiences and taking a cut from local hotel bookings and logistics partners.
While potentially less profitable and exciting, the publishing side is arguably more defensive and less exposed to fluctuations in the economy. In the future, that could mean Informa is more of a rollercoaster ride for shareholders.
Although Covid felt like a once in a generation episode, it had a massive impact on the events world. Some investors may be nervous about Informa being exposed to the risk of in-person gatherings being disrupted in the future.
For now, the market has taken the news positively, despite the dilution implied by a major fundraise, but will be keen for clarity on plans for the future of Taylor & Francis which have been promised alongside next year’s full-year results.
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...