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Trainline insiders cash in during fourth quarter

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Bosses at Trainline were intent on accentuating the positive when the rail and coach ticketing platform revealed its half-year figures at the beginning of November.

Under the circumstances, it may seem churlish to question whether its ability to scale back operations as passenger numbers slump will be enough to ward off the worst effects of the pandemic. But the company is uniquely exposed, not only to the immediate impact of the Covid-19 lockdowns, but also to a potential decline in commuter journeys over the long haul.

Towards the end of October, it was announced that Clare Gilmartin, who has been at the helm of the business for seven years, intends to step down from the board next February. Ms Gilmartin successfully took the company public midway through 2019, but she could not have imagined how events would pan out within six months of the initial public offering. In the lead-up to her resignation, she offloaded shares in the company to the value of £3.2m, which should provide a degree of solace.

Another insider has just followed suit. Chief financial officer Shaun McCabe has sold 600,000 shares in the FTSE 250 constituent, at an average price of 480p a share, giving a total value of £2.88m. The news came a fortnight after it was revealed that Mr McCabe had been appointed as a non-executive director of embattled fast-fashion retailer Boohoo — he clearly does not mind a challenge.

With Trainline that amounts to new lockdown measures and expansion of the tier systems. We cannot be sure whether the rollout of vaccination programmes through the early part of 2021 will result in a significant increase in commuter numbers, so we remain downcast on immediate prospects despite the recent share price rally.


Precious metals miners have had a charmed run in 2020 for the most part. While there were some shutdowns, most producers saw earnings skyrocket as gold cracked $2,000 (£1,488) an ounce and silver stayed comfortably above $20/oz.

Hochschild Mining was not so lucky as the Peruvian government brought in tougher restrictions than most other mining countries. Hochschild’s largest mine — Inmaculada — was closed twice this year, in April and July, to stop Covid-19 outbreaks from worsening. 

Its production will probably be down 40 per cent from 2019, putting unit costs under pressure. The higher precious metals prices have insulated the company from a collapse in earnings, however, and the board has brought back the half-year dividend, which will be paid on December 31. 

In one of the largest deals of the year, Eduardo Hochschild has offloaded over £120m in shares, although the miner said this does not amount to the company chairman bailing out. The 200p a share sale, equal to 12 per cent of the company’s shares on issue, was undertaken because “Mr Hochschild believes now is an appropriate moment to recycle some capital from his holding in the company to facilitate investments elsewhere across his existing businesses and in new opportunities”. The chairman now holds 38 per cent of the miner. His grandfather founded Hochschild over a century ago, and the company listed in London in 2006. 

The strike price was 15 per cent below the closing price on the day prior to the deal, and the company fell to 198p on the next day of trading. Fellow Americas-focused precious metals miner Fresnillo has been one of London’s best performers this year, climbing 76 per cent to 1,136p. Hochschild’s share price is up 12 per cent from the opening 2020 price of 176p — so perhaps it was an opportune moment for the chairman. 

The march of the precious metals prices slowed in the past two months. Gold dipped below $1,800/oz and silver came back from almost $30/oz. The continued equity boom, at least in the US, and the upcoming distribution of Covid-19 vaccines could see investors moving away from precious metals. This could be Mr Hochschild’s approach — although Fresnillo investors would be in a far better place to take profits.



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PayPal to acquire ‘buy now, pay later’ provider Paidy for $2.7bn

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Mergers & Acquisitions updates

PayPal, the US online payments company, has agreed to acquire Paidy, a Tokyo-based “buy now, pay later” group, for ¥300bn ($2.7bn) in the latest shake-up in the industry.

The deal announced late on Tuesday, which will be paid for principally in cash, deepens PayPal’s push into the crowded BNPL sector, in which consumers spread the cost of goods over a small number of payments, typically without interest and often without requiring a credit check.

Last month, Square, the payments company led by Twitter chief executive Jack Dorsey, acquired BNPL group Afterpay for $29bn, in the largest takeover in Australian history.

Shares in San Francisco-based Affirm, another BNPL company, soared last month after it announced a partnership with Amazon allowing shoppers who spend more than $50 to make payments in monthly instalments.

Paidy, founded in 2008, is one of Japan’s few “unicorns”, or start-ups worth more than $1bn. The company launched the country’s first zero-interest post-payment service last year.

While the global BNPL market has exploded in popularity owing to the pandemic-driven boom in online shopping, the trend is only starting to catch on in Japan, where consumers still depend heavily on cash payments.

Paidy allows its 6m registered users to split the cost of goods into three equal instalments with no interest. Users can pay off their balance using cash at convenience stores or bank transfers.

According to Yano Research Institute, the volume of transactions made through post-payment services in Japan is expected to more than double from an estimated ¥882bn in fiscal 2020 to ¥1.88tn by fiscal 2024.

Paidy was valued at $1.3bn when it raised $120m in March, and was expected to list its shares in Tokyo later this year. It has been backed by trading house Itochu, Goldman Sachs and Soros Capital Management along with PayPal.

Russell Cummer, the Japanese fintech’s founder, recently told the Financial Times that a public listing “made sense” — though no firm timetable had been established. Instead, the company is now expected to become part of PayPal by the fourth quarter of this year.

“Paidy pioneered ‘buy now, pay later’ solutions tailored to the Japanese market and quickly grew to become the leading service, developing a sizeable two-sided platform of consumers and merchants,” said Peter Kenevan, PayPal’s vice-president and head of business in Japan.

“Combining Paidy’s brand, capabilities and talented team with PayPal’s expertise, resources and global scale will create a strong foundation to accelerate our momentum in this strategically important market.”

PayPal said Paidy would “continue to operating its existing business, maintain its brand and support a wide variety of consumer wallets and marketplaces”. Cummer and Riku Sugie, Paidy’s president and chief executive, will continue to lead the company, according to a statement.

“Paidy is just at the beginning of our journey and joining PayPal will accelerate our plans to expand beyond ecommerce and build unique services as the new shopping standard,” said Sugie. “PayPal was a founding partner for Paidy Link and we look forward to working together to create even more value.”

The acquisition comes as PayPal rolls out its broader strategy to become a “super app” — incorporating payments, cryptocurrency investments and savings — drawing inspiration from under-one-roof Chinese apps such as WeChat.

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Bitcoin: El Salvador’s experiment does not warrant cross-cryptocurrency price rise

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Bitcoin updates

Early adopters of virtual currencies have a clear incentive to promote mainstream acceptance. The more buyers, the higher the price. Crypto fans, therefore, hatched an online plan to bolster bitcoin as El Salvador legalised the tokens for payments. That was logical. The knock-on rise in other cryptocurrency prices was not.

Bitcoin’s 8 per cent rise over the past seven days means that it is now worth about $51,000. But according to data from CoinGecko, which tracks more than 9,000 coins, it is not the largest mover. Ethereum, the world’s second-largest cryptocurrency, has leapt 16 per cent over the past week. Solana’s SOL tokens have risen 69 per cent.

There is no sensible reason for these rallies. El Salvador is not expected to make other virtual currencies legal tender. Instead, the jumps reflect a soupy mixture of low rates, blind faith and better investor access.

Trading apps make it easier for retail investors to buy cryptos. The initial public offering of Coinbase in April raised its profile, leading to a jump in downloads.

The make-believe world of nonfungible tokens, or NFTs, has also given cryptos a boost. These prove ownership of digital assets such as art, music or even virtual pet rocks. Many use the ethereum network. Solana, which is backed by Andreessen Horowitz, has its own NFT marketplace, Solanart.

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None of this, however, has anything to do with El Salvador’s attention-seeking adoption of bitcoin. This diverts domestic attention from the failing economy of this impoverished Central American nation, the first country to embrace bitcoin as legal tender. It also supplies cheerier news flow to bitcoin fans than did the cryptocurrency’s collapse in value this spring.

Rising prices mean the total market value of cryptocurrencies has reached nearly $2.4tn. It is rapidly closing in on the previous record of $2.57tn set in May. Bitcoin’s share of the market has fallen. It is now about 40 per cent, down from 57 per cent a year ago. Yet bitcoin remains a powerful bellwether.

This could be a problem if bitcoin’s latest rally depends on success in El Salvador. President Nayib Bukele says the country has purchased 400 bitcoins — equal to just 0.002 per cent of the outstanding value. Local opposition is widespread, suggesting take-up will be low. A damp squib is more likely than the financial dislocation some critics are prophesying.

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Europe stocks notch best day in 6 weeks on sustained stimulus hopes

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Equities updates

European equities had their biggest rise since late July on Monday as weaker-than-expected US jobs data suggested pandemic-era stimulus, which has helped prop up markets, may continue for longer than anticipated.

The Stoxx Europe 600 index gained 0.7 per cent, the region-wide benchmark’s best day in six weeks, as traders analysed the implications of a large miss in US job creation. Employers in the US added 235,000 jobs in August, which fell wide of economists’ projections of more than 728,000 new hires.

“The weak jobs number gave the Federal Reserve ample room to take it easy in terms of how and when it will taper” its $120bn of monthly bond purchases that begun in March 2020, said Maarten Geerdink, head of European equities at NN Investment Partners.

Before Friday’s non-farm payrolls report, some analysts had expected the Fed to announce a reduction of its asset purchases as early as this month.

European stocks, Geerdink added, were “in a sweet spot with the eurozone economy doing well while financial conditions remain extremely loose”.

London’s FTSE 100 index also ended the session 0.7 per cent higher while US markets were closed for Labor Day.

Column chart of Stoxx Europe 600 index, daily % change  showing European stocks notch best day in six weeks

Economists expect the European Central Bank to provide an update about its own debt purchases at its meeting on Thursday, with government bond prices signalling some expectations of a pullback. The yield on the benchmark German 10-year Bund, which moves inversely to its price, was steady on Monday at minus 0.37 per cent, around its highest point since mid-July.

Technology shares, which tend to perform well when expectations of low-for-longer bond yields flatter valuations of growth companies, were the best performers in Europe with the sector rising 1.7 per cent on Monday.

In Asian equity markets on Monday, Chinese shares rallied after vice-premier Liu He said the government would continue to support private businesses despite a regulatory crackdown across the technology and education sectors. 

“Policies for supporting the private economy have not changed . . . and will not change in the future,” Liu said in comments reported by state news agency Xinhua. The CSI 300 index of mainland Chinese stocks climbed 1.9 per cent. 

Japan’s Nikkei 225 gained 1.8 per cent as investors bet that last week’s abrupt resignation by prime minister Yoshihide Suga would usher in a successor more focused on protecting the nation’s economy from rising Covid-19 cases. 

Brent crude, the international oil benchmark, slid 0.7 per cent to $72.10 a barrel.



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