How an extended ‘crypto collapse’ could burnish gold prices in 2023
December is the time of year when City experts are on the look out for potential surprises in the year ahead. While their festive-season warnings are not full forecasts, they often contain some of the most tantalising prospects for market watchers.
This year, Standard Chartered says it’s possible that one of the most traditional stores of wealth could be well-placed to benefit from the storm over one of the newest global asset classes. Gold could be about to take off in 2023 should the collapse in crypto assets, continue, warns the London-listed bank in its annual look ahead to unlikely but not impossible happenings, known as “black swan events.”
Eric Robertsen, global head of research and chief strategist, draws up the following senario:
“Gold makes a staggering recovery in 2023, rallying 30% to over $ 2,250/oz as cryptocurrencies fall further and more crypto firms succumb to liquidity squeezes and investor withdrawals.
“More and more crypto firms and exchanges find themselves with insufficient liquidity, leading to further bankruptcies and a collapse in investor confidence in digital assets. Gold sees a surge in demand from retail and institutional investors, as well as sovereign nations looking to shore up their reserves.”
One thing is for certain — it has been a drmatic year for Bitcoin. Here’s a look at the price action in the most widely followed crypto coin out there, in a year when digital currency exchanges have collapsed, reputations have been won and lost and fortunes have vanished at the fastest pace seen on world markets.
Founders could net £32m from Boost transfer to AG Barr
The husband-and-wife founders of energy drinks company Boost are to collect at least £20 million after selling the brand to Irn Bru owner AG Barr.
Simon and Alison Gray, who set up the business in 2001 and are the sole shareholders, will stay on to operate the business after the sale. The Grays are also in line for up to £12 million in performance-related payments over the next two years.
Known for its budget-friendly sports and energy drinks, Leeds United sponsor Boost has recently branched out into canned iced coffee, and AG Barr said it sees “significant potential” for adding to the brand’s portfolio.
AG Barr CEO Roger White said: “Consumers are not only looking for liquid refreshment but for the functionality benefits [of a drink], such as energy or protein. We believe that’s an area of the market that’s going to keep growing.”
Downgrades hit shares in Persimmon and Savills
Persimmon was left out in the cold today after a City bank’s review of the best value stocks in construction focused instead on rivals Berkeley Group and Bellway.
The move by Jefferies to ditch its “buy” recommendation on Persimmon contributed to the housebuilder’s shares falling 17p at 1278.5p at the top of the FTSE 100 fallers board.
The shares are down by around 55% this year, with the US bank pointing out a recent change in dividend policy had removed Persimmon’s “previous predictability”.
Jefferies is otherwise optimistic that a fall back in mortgage rates and steadying in cancellation trends will shore up investor confidence in 2023, having seen valuations crushed this year by rising costs and house price fears.
Berkeley, which is behind a number of London brownfield regeneration schemes, added 10p to 3859p as today’s note included a 4554p target. Bellway was upgraded to a “buy” stance with an estimate of 2458p, helping its FTSE 250 shares up 2% or 42.5p to 1986.5p.
The FTSE 100 index was little changed — 14.38 points higher at 7570.61 — but this masked strong performances by Asia-focused stocks after more key cities in China relaxed Covid restrictions.
The improved demand outlook helped Rio Tinto add 3% or 157p to 5741p, while insurer Prudential rallied 5% or 54.5p to 1085p.
The FTSE 250 index edged up 55.18 points to 19,418.46, led by a 4% gain for Fidelity’s China Special Situations. The estate agency chain Savills led the fallers, sliding 7% or 68p to 871p after Peel Hunt removed its “buy” rating to reflect lower transaction activity.
It still regards Savills as a high-quality business with attractive long-term prospects, but for now the broker is cutting its target to 1000p. International Distributions Services also lost 7p to 227.5p as Royal Mail strike disruption continued in its key trading month.
Thames Water runs up first-half profit of almost £400 million
Thames Water reported first-half profit of almost £400 million pounds today, made at a time when the number of burst pipes rose by almost 40% and a lengthy hosepipe ban came during a long drought.
It said the summer heatwave was to blame for the increase in leakage “due to the hot weather and dry ground.” The 15-million customer company faced public criticism for imposing a hosepipe ban from August to September, while in a typical year almost a quarter of the 2.6 billion litres of tap water it supplies daily is lost to leakage.
Its chair, Ian Marchant, said that the summer of 2022 featured “one of the worst droughts on record, leading to an unprecedented decline in water storage,” and that the company “has been working round the clock to fix leaks and bursts, which have spiked as a result of the drought.”
Profit after tax was £398 million, up from a loss of £581 million over the same period a year ago.
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Surging EV demand helps new car market bounce back
A jump in demand for electric vehicles helped the UK new car market grow 23.5% in November, according to data from the Society of Motor Manufacturers and Traders (SMMT), as the Tesla Model Y became the second best-selling car of the month, with almost 25,000 sold since January.
The 32% surge in EV registrations comes despite the removal of the road tax exemption for new EVs by Chancellor Jeremy Hunt in his Autumn Statement, a move which could add upwards of £500 to their running costs.
SMMT boss Mike Hawes said: “As the sector looks to ensure that growth is sustainable for the long term, urgent measures are required – not least a fair approach to driving EV adoption that recognises these vehicles remain more expensive.”
Vodafone shares rise on CEO exit, FTSE 100 flat
Vodafone shares are 1.5p higher at 92.65p after the mobile phone giant announced that chief executive Nick Read is to step down at the end of this month.
The reopening of more key cities in China also boosted dealings in a number of Asia-focused stocks, including miner Rio Tinto with a gain of 109p to 5693p and the insurer Prudential after a rise of 23.5p to 1054p.
The FTSE 100 index was unchanged at 7556.02, with housebuilder Persimmon the biggest faller after analysts at Jefferies removed their “buy” recommendation and lowered their price target to 1436p. Shares fell 35.5p to 1260p.
The FTSE 250 index drifted 19.10 points to 19,344.19, led by estate agency business Savills after a fall of 5% or 42p to 897p.
Royal Mail owner International Distributions Services lost 7p to 227.5p as electricals retailer Currys said it had temporarily stopped using the company for parcel deliveries amid the impact of ongoing strike action.
Bitcoin prices could plunge 70% next year amid drop in investor confidence, Standard Chartered warns
Bitcoin prices could plunge as much as 70% next year according to a note released by Standard Chartered bank.
Prices falling to $5,000 in 2023 could be a scenario that markets are “under-pricing,” Head of Research Eric Robertsen said, adding we could see more crypto “bankruptcies and a collapse in investor confidence in digital assets.”
That drop in confidence could lead investors to switch out of digital assets and into real assets like gold, Robertsen added, cautioning that the possible scenario did not constitute a market prediction.
The price of Bitcoin has already fallen 60% since the start of the year.
Brent crude $86 a barrel, FTSE 100 seen flat
The decision by OPEC+ ministers on Sunday to keep production at current levels came as little surprise to traders, with Brent crude holding firm at around $86 a barrel today.
The policy, which involves reducing monthly output by two million barrels a day, comes after Friday’s EU decision to cap the price of Russian crude at $60 a barrel from today.
Other factors influencing the Brent crude price today included a potential demand boost from China after Shanghai and Hangzhou followed other cities in easing some Covid restrictions over the weekend.
US markets closed broadly unchanged on Friday after a stronger-than-expected non-farm payrolls figure had earlier fuelled interest rate rise jitters.
The reading of 263,000 for November was much higher than the 200,000 forecast, while growth in average hourly earnings topped expectations.
The FTSE 100 index rose 0.9% last week, with CMC Markets forecasting a gain of three points to 7559 ahead of this morning’s round of updates from Europe’s services sector.
National Express names Stamp as next CFO
Transport business National Express has named James Stamp as its next permanent CFO.
Stamp had been acting as interim CFO since September, and joined the firm in July 2017. He was previously a partner at KPMG where he ran the firm’s transport practice.
CEO Ignacio Garat said Stamp “brings a highly complementary skill set to the executive team and will be central to the next phase of National Express’ development.”
Nick Read out as CEO at Vodafone
VODAFONE shocked investors today when it suddenly parted company with chief executive Nick Read.
The immediate appointment of Margherita Della Valle as only “interim” CEO suggests the decision on Read was made quickly, since there is no successor lined up.
Read’s departure package is likely to be extensive. He hold 17.2 million Voadfone shares and was paid £4.1 million last year, and £3.5 million in 2021.
He joined Voda as finance director in 2001, becoming group CEO in October 2018.
The shares have struggled lately, down 60% in the last five years. They open today at 91p which has the business valued at £25 billion.
Vodafone said Della Valle will “accelerate the execution of the Company’s strategy to improve operational performance and deliver shareholder value”.
Read said: “I agreed with the Board that now is the right moment to hand over to a new leader who can build on Vodafone’s strengths and capture the significant opportunities ahead”.
Jean-François van Boxmeer, Chairman of Vodafone, said : “During his four years as CEO, he led Vodafone through the pandemic, ensuring that our customers remained connected with their families and businesses. He has focused Vodafone in Europe and Africa as a converged connectivity provider and led the industry in Europe in unlocking value from tower infrastructure.”
