Week Commencing 4th September 2023

Misery for Manchester United


Major Indices

Index Performance
S&P 500 -1.29%
DOW Jones -2.86%
NASDAQ -1.36%
FTSE 100 +0.18%
DAX -0.063%
Nikkei 225 -0.32%
Shangai Composite -0.53%

S&P 500 Sector Performance

Misery for Manchester United

Manchester United lost over $700 million in market cap this week in repsonse to news that the Glazers have abandoned the sale of the club. They have valued the club between 8 and 10 billion dollars, but buyers clearly don't agree. Sheikh Jassim has made five bids to buy MUFC, with his most recent being an offer to buy 100% in a debt-free deal. This has been their biggest one-day sell off, and shares fell by over 18% in New York on Tuesday. The Glazers completed one of the most (in)famous LBO's in 2005, investing £250mn in equity and £540mn in debt. Since then, the Glazers have not spent a penny on Manchester United. After this sell off, the clubs stock market valuation is $3.2bn. Since the takeover, over £1bn has been spent on interest and debt repayments, whilst £1.18bn has been spent on transfers.

Apple in China

China have banned the use of Apple iPhones for government workers while in office. Shares fell 3.6% in response, lowering the market cap to below $3tn. This move is said to be in attempt to boost national security whilst giving room for Chinese competitors to step up. Inside China though, there is ambiguity as this has not been reported to the public. China accounts for 19% of Apples revenue, and less than 1% of their population work for the government. Analysts forecast this ban to remove $8bn of value which may seem a lot, but is only 0.2% of their market capitalisation. This is uncertain though as we do not know what China will do next, and a stigma may grow surrounding Apple products.

Apple's net sales in Greater China since FY 2010 (Statista)

Bankrupcy for Europes largest local authority

Birmingham city council has effectively declard bankrupcy as they are required to settle a £760m bill for equal pay claims. The council is run by the Labour party who will halt all spending other than services that must be provided by law such as social care, waste collection and protecting those in need. In 2022, the BBC reported that Labour massively outspent the Conservatives, £44.5m to £33.06m. Keir Starmer also ran a £5.2m deficit in 2021. The Labour council leaders will not take responsivility however, blaming Conservative government funding cuts over the last decade, the cost of their Oracle IT system, and the eaual pay settlement previosuly mentioned. There are fears across the UK for other councils, with 26 at risk of issuing a section 114 in the next 2 months.

China CPI August Data

CPI YoY was in line with expectations for august at +0.1%, this is a positive indicator that deflation is easing after Julys data. PPI also came in at -3% YoY, a smaller decrease than the previous two months. Core inflation remained at 0.8% in August (MoM). Goldman Sachs said the CPI data was down to non-food inflation and rising crude oil prices. The key issue for China appears to be a mixture of a fragile domestic economy and a drop in exports due to high inflation in the West that is eroding consumption levels. Exports dropped 8.8% in August compared to 2022.

China inflation data (Reuters)

The poor state of the economy and outflows from their stock market has contributed to the weakening of the Chinese Yuan, which has reached its weakest level against the US Dollar since 2007. The SSE index recently hit its lowest level since December last year.

CNYUSD since 2007

Other Headlines

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