FTSE struggles, CRH plans switch to US listing, Tesla investor day underwhelms and ITV hit by advertising slowdown

“With a plethora of companies reporting today in the UK, it’s all about the numbers and the outlook statements for investors. Sadly, the likes of Flutter, Schroders, Haleon and Taylor Wimpey get sufficiently weak scores from the judging panel that the FTSE 100 is anchored to the floor,” says Russ Mould, Investment Director at AJ Bell.

“Bid chatter about Macquarie potentially lining up a takeover bid for M&G didn’t trigger a rally in the target’s share price. That suggests the market is sceptical about a deal emerging, or that a bid premium won’t be generous.”

Stock Market Listings - CRH, ARM

“So much for making London the go-to place for companies to list their shares. London Stock Exchange is having to work overtime just to keep those already listed, let alone attract new ones.

“This week has delivered a triple blow to the stock exchange operator. First, we had reports that Shell looked at shifting its stock market listing and headquarters to the US, although that doesn’t seem to be on the table now. Second, reports suggest that chip designer Arm will not return to the London stock market and instead opt for a US listing.

“Now we’ve got the news from construction group CRH that it wants to switch its primary listing to the US. That would mean it no longer qualifies for inclusion in FTSE indices and therefore would leave the prestigious FTSE 100 index.

“There is logic to the move. A large chunk of CRH’s earnings come from the US, so that’s where it spends a lot of time both operationally and talking to investors. There is also the fact that it could get a higher valuation by trading on the US stock market which could come in handy if it wants to issue shares for acquisition deals. Plumbing group Ferguson did exactly the same thing.

“Efforts to relax the listing rules to attract more companies to London come across as a bit desperate. It should be a badge of honour to list in the UK, but that reputation is dwindling fast. Overseas investors lost interest in the trading venue as soon as the UK voted in favour of Brexit, and valuations have got even cheaper. That’s hardly a good sales pitch to attract more big companies to the UK market.

“There are plenty other companies in the FTSE 100 which do business in the US that could easily follow Ferguson and CRH. That’s not a good look for the London Stock Exchange.”

Tesla

“Have investors lost faith in Elon Musk? Tesla had been on a tear so far in 2023, the share price nearly doubling.

“Then Musk raises his head above the parapet in an investor day presentation and the shares are sputtering again in after-hours trading. It may just have been a case of failing to live up to the hype.

“The markets were primed for a big announcement, perhaps on something like a more affordable new model. However, details were thin on the ground and Musk’s big reveal, a plan to build a new facility in Mexico, had been trailed by an eager Mexican government earlier this week.

“It would be wrong to dismiss the significance of what was announced in Austin entirely. The company did outline how it might become more efficient and reduce costs, which would be key to delivering a new ‘large-volume’ vehicle.

“If Tesla can truly deliver the Model T Ford of the electric age the rewards could be massive and that explains why there is still so much excitement around the shares. However, is Musk the right person to get them there?”

ITV

“It’s no surprise that ITV’s advertising revenue is suffering given the current backdrop but that doesn’t make it any less sobering.

“At a time when the company is trying to get its ITVX platform off the ground it is particularly unhelpful that advertising is challenging. The business is having to flex the balance sheet to invest in ITVX with net debt increasing materially, while profit is also down.

“Early reports on ITVX since its December launch continue to be positive and you can see a slight gap in the market for a free platform given many people are cutting back on streaming subscriptions thanks to cost-of-living pressures.

“ITV still needs the content to attract sufficient eyeballs to drive advertising spend to the platform and it cannot afford to spend the kind of sums Netflix, Amazon and Apple do on programming.

“Perhaps with judicious use of its back catalogue and smart acquisitions the company can establish itself as a real presence in the streaming market. The strong showing for its ITV Studios production business at least shows it knows how to make good TV.

“Coming up on its 70th birthday ITV needs to prove it is not set for retirement and can remain relevant in a highly competitive entertainment market.”

These articles are for information purposes only and are not a personal recommendation or advice.