FTSE 100 lower, concerns grow about Shein IPO, Prudential unveils $2bn buyback, Carlsberg secures PepsiCo waiver amid Britvic pursuit and SIG warns on profit

“The gloomy feel to markets at the back end of last week, as the technology giants like Nvidia which led stocks higher lost momentum, has bled into the new week with the FTSE 100 lower on Monday morning,” says AJ Bell Investment Director Russ Mould.

“Mining stocks were under some pressure early on, but bucking the negative trend was Asia-focused insurer Prudential as it confirmed weekend speculation by announcing a $2 billion share buyback. This follows a difficult 18 months for the share price as investors have fretted about risks relating to core market China.

“The big economic news comes at the end of this week with a reading of US core PCE inflation – the Federal Reserve’s preferred measure of prices. Investors will be looking for signs the inflationary pressure which has led to a ratcheting back of expectations on interest rate cuts are starting to ease.

“There have been signs of modest encouragement in recent UK and European economic releases but a profit warning from insulation building products firm SIG suggests conditions remain fragile.

“Notably, the company’s second-half recovery is predicated on it delivering productivity improvements and cost savings rather than a big improvement in its markets.”

Shein

“The rumour mill has gone into overdrive on Shein’s plans to float on a stock market. First, it was suggested the Chinese retailer wouldn’t be able to list in the US because of fragile geopolitical relationships. Now, its London IPO might be in doubt because growing negative comment appears to have displeased the Chinese government.

“There have been lingering concerns in the City over Shein’s supply chain, with many institutional investors, politicians and industry bodies worried about working conditions for the people who ultimately make its products, as well as other questions about its business practices.

“Shein needs approval from regulators in Beijing to list its shares in London and negative commentary has put the country in a bad light. Naturally, that is not a good look for China, and so the IPO is far from a done deal.

“Attracting a major business name like Shein would help to put the spotlight on the London Stock Exchange and potentially encourage other companies to list in the UK and help to revitalise the market. Equally, such a listing could also backfire if it turns out that certain parties were right to be sceptical about Shein.

“Approximately a decade ago we had a wave of Chinese firms join the UK stock market and a lot of them turned out to be duds. Since then, we’ve also had a number of London-listed companies, domestic and foreign, embroiled in a variety of dramas ranging from poor working practices, accounting scandals and more.

“It’s never a good look when investors are burned and the pressure is on to improve the reputation of the UK market, particularly as it is shrinking fast due to the ongoing wave of takeovers. No-one knows what will happen with Shein, but it can pay to sit up and take notice of any concerns before a company lists as it could save a lot of heartache if disaster strikes later on.”

Britvic

“Britvic shares were in demand as the market waits for the bid situation involving Carlsberg to play out. News the Danish beer maker has agreed with PepsiCo to waive the change of control clause on the latter’s bottling arrangements with Britvic is significant.

“This is a demonstration of Carlsberg’s commitment to the deal and, given the commercial attractiveness of this bottling contract, could give it the leeway necessary to come back with a more generous offer after being rejected twice so far.”

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