Market Prognosis

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

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January 30, 2023

Rates to rise but will the pause button be pressed?

Macro & Overnight

This week is central bank policy rate week. We hear from the Fed (Wednesday), the ECB and the BoE (Thursday). All three will raise rates. The questions remain, by how much and with what forward guidance?

Expect the BoE to raise the UK rate by 50bps to 4%. Will it hit the pause button?

The US Q4 earnings season continues. More tech layoffs?

The Adani Group’s response to the Hindenburg Research report was published overnight, suggesting any criticism of the Adani Group is a criticism of India and its institutions. I have no dog in this fight, but the wording of their response reminds me of Wirecard about eight years ago. As my teenage children would say, “I’m just saying.”

Pretty quiet in energy, commodities and FX.

 

Company Highlight - Sopheon

Sopheon, the software and services provider of Innovation Management, expect revenues for the year ended 31 December 2022 to be in line with market expectations and profits to exceed expectations comfortably. Due to revenue recognition timing differences between SaaS and perpetual license sales, revenue and profit development will slow in 2023. However, this should accelerate recurring revenue growth, delivering more predictable growth in subsequent years with a higher revenue quality. Moving a software business from license sales to SaaS is often painful, but after that, the gain is a better quality revenue stream and a higher market valuation. Sopheon is small and not widely known. See the Progressive note here.

 

UK Company News

Computacenter, the corporate IT provider, issued a positive trading update. The trading backdrop continues to be buoyant, with the group posting a solid year-end. 

Augmentum, the fintech investment fund, updated on its portfolio and announced that it had led a funding round into Berlin-based cyber insurance platform Baobab with a Euro 3 million investment. Baobaba is a pioneer in providing European cyber insurance for SMEs. The broader portfolio now comprises 25 private fintech companies. The top 5 portfolio companies had an average Year over Year revenue growth rate of 102%. Augmentum has “seen no information that would lead them to believe their holding value in Gemini (the cryptocurrency exchange) that requires revision.” 

DP Eurasia, the master franchisee of the Domino’s Pizza brand in Turkey, Russia, Azerbaijan, and Georgia, said that system sales increased by 13.1%, with good performance in Turkey. As previously announced, the company continues to evaluate its presence in Russia and is considering various options, including divestment. It will share formal guidance for 2023 in April.

Shell announced it is to streamline its corporate structure. 

Legal & General said that its long-serving CEO is to retire. 

 

Prognosticator

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