Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

October 24, 2023

Bitcoin rallies

Macro & Overnight

Chevron, the world’s second-largest non-state-owned oil company, announced plans to buy Hess for $50bn. This deal is the second super major oil M&A deal in a week when most commentators and politicians tell us fossil fuels are history. Those who know the market most intimately are doubling down. Higher for longer might be more applicable to energy prices than interest rates.

While most macro asset classes continued stabilising with bond yields and oil prices slightly lower, the star turn this week has been Bitcoin, which rose by 10% yesterday and by 35% in the last month.

Discussing Bitcoin is not easy in polite society. It’s like saying Brexit wasn’t so bad, or Liz Truss actually got a few things right.

A few things are happening in the Bitcoin world. First, there is ongoing speculation that the SEC will sanction a spot Bitcoin ETF and give greater access to this asset as a store of value. Second, for those who see Bitcoin as a hard asset, its next halving cycle is approaching. Every four years, Bitcoin’s protocol dictates the number of new coins issued to miners for verifying each block on the blockchain halves. The last time this happened was in April 2020, and the Bitcoin price went up fivefold in the following 12 months. This time, of course, it could be different. As they say, past performance is not a definitive guide to the future, but it can be instructive.

UK Company News

Furniture retailer ScS received a recommended cash offer worth £100m, a 56% premium, from an Italian sofa retailer.  

Angling Direct reported H1 revenue up 11.4% to £43.3m, and gross margin increased by 50 bps. UK EBITDA increased 24.1%2 to £2.8m, and Europe’s EBITDA loss was reduced by 27.2% to £0.5m. August and September sales were up 13.9%, and it expects FY results to align with consensus market expectations. 

Recently IPO’d CAB Payments, a foreign exchange provider specialising in hard-to-reach markets, has seen changes to the market conditions in some of its key currency corridors. These include uncertainties surrounding the Naira, impacting the Central African franc (XAF) and West African franc (XOF), compressing margins and reducing trading volume. It now expects Group revenue for 2023 to be at least 20% ahead of the prior year (2022: £109.4 million); this is around 17% below previously issued guidance.  

Although weak in recent months, CAB Payments has been hit hard today (-50%), which is not a good look for the London IPO market. The world dollar shortage impacts the world’s poorest nations the most. CAB, formerly Crown Agents Bank, specialises in the FX requirements for institutions and agencies remitting currency in countries such as Nigeria and the Central African Republic. Unfortunately, severe economic hardship and military coups are becoming more common in this region. It is hard to see an easy way out of these issues for CAB Payments or the devasted countries in whose currencies they transact.   

Prognosticator 

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