Macro now less volatile

Macro & Overnight

The macro-environment remains challenging but has become more known and less volatile over the last week.

Oil traded lower, the dollar is weaker but stable, yields are less volatile, and precious metals have stopped rising.

The US is quiet and on holiday later this week while UK markets took one look at the latest government budget, kept calm and carried on.

Earlier today, Asian markets declined amid concerns that China may tighten Covid curbs after a string of reported deaths and Hong Kong CEO John Lee tested positive.

Berenberg’s global outlook update summarised that “newsflow has turned less negative over the last four weeks for the three major economies in the world, the US, China and the Eurozone. The balance of risks to some of our key calls has shifted to the positive side. Most importantly, the tail risk that the US Fed could raise rates well above 5% has receded”.

UK Company News

Listed PE investment trust Chrysalis Investments updated that September’s NAV represented a 41% decline over the year to 30 September 2022, compared to a 62% decline in the GS Non-Profitable Tech Index. The Company holds approximately £67m in cash and total liquid assets of £80m. Of their investee companies, 35% of the portfolio is now profitable, 32% is funded to profitability based on company budgets, and a further 14% with a cash runway of approximately two years. This leaves 19 % of the portfolio with less than a two-year cash runway. The shares trade at more than a 50% discount to its September 2022 NAV. 

Contractor Costain has announced a debt refinancing deal.  

Specialist distributor Diploma reported that it had started the new financial year from a position of strength. While the broader backdrop is one of macroeconomic uncertainty and volatility, the achievements of the last three years mean that the Company is larger, more diverse and, therefore, more resilient than ever. 

Music industry supplier Focusrite announced a delay to its results. 

Computer games outsourcer Keyword Studios updated that it now expects full-year profit before tax will be comfortably ahead of current analysts’ consensus.  

Irish healthcare distribution group Uniphar has acquired BModesto Group. The Netherlands-headquartered healthcare services business focuses on improving access to pharmaceutical and healthcare products across the Netherlands, Germany, the UK and Europe. As such, it is a classic bolt-on deal for the Irish acquirer. The acquisition is expected to deliver a return on Capital Employed in line with Uniphar’s target rate of 12%-15% within three years.

Prognosticator