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Hong Kong offer for LSE; ECB rates; Morrisons sales fall

London Stock Exchange

Shares in the Hong Kong stock exchange fell more than 3% as investors cast doubt on the merits of its $39 billion (£32bn) takeover approach to London Stock Exchange.

The proposed deal aims to create an exchange powerhouse spanning Asia and Europe which would be better able to compete with US rivals.

Shares in Hong Kong Exchanges and Clearing (HKEX), which is behind the potential offer, were 3.4% lower.

Morrisons

Britain’s fourth biggest supermarket chain reported its first fall in quarterly underlying sales since 2016, partly reflecting a tough comparison with last year when it was boosted by a hot summer.

The company, however, said it had seen “robust progress” in sales and profit, with the latter rising 5.3% in its first half.

For the six months to 4 August, pretax profit before one-off items came in at £198m.

Group like-for-like sales, excluding fuel and VAT sales tax, fell 1.9% in its second quarter, having increased 2.3% in the first quarter. Analysts had on average forecast a 2.0% fall.

Ed Monk, associate director from Fidelity Personal Investing’s share dealing service said: “A special dividend confirmed in interim results from Morrisons today will ease investor concerns about a tough summer for the supermarket. Trading suffered this time round compared to last year, when the weather and a World Cup boosted sales. Nevertheless, earnings-per-share came in on target, up 4.1%, despite like-for-like sales and total revenue that were flat.

“Further news of success from its tie-up with Amazon and rebadging of McColl stores indicate that Morrisons is searching hard for areas it can grow into. That’s important because the groceries sector looks very crowded right now and other supermarkets – and in particular the discount chains – are growing market share at the expense of Morrisons.

“The shares will appeal on value grounds, however, with a high and well-supported dividend giving confidence to those looking for a bargain. Morrisons is a well-run business with an improving balance sheet, but it competes in an unforgiving market.”

Interest rates

The European Central Bank announces its latest interest rate decision later today and it is “widely assumed” that the rate will be cut by 0.1 of a percentage point.



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