China opens a new front
DoNALd Trump’s armwrestle with China has not been unhelpful to Britain. Recent data show that in 2017 Chinese foreign direct investment in the UK reached £16bn – twice the previous year – making this country the lead recipient of money from Beijing.
China is investing in almost every aspect of Britain. It is a key financial backer of EdF’s nuclear plant at Hinkley Point in Somerset, has bought Britain’s online travel site Skyscanner and much else.
In the latest foray, Ant Financial, an offshoot of Jack Ma’s Alibaba empire, is buying UK payments group Worldfirst in a $700m (£546m) deal.
The transaction flies in the face of the US decision to block Ant’s purchase of a US money transfer outfit Moneygram on national security grounds.
The Committee on Foreign Investment in the US has confined most rulings against overseas acquisitions to defence and technology. Financial technology (fintech) companies have moved into the firing line as they embrace the latest software, and potentially could be used to facilitate money laundering, sanctions-busting and the like.
At a time when the UK is seeking to present a global face to the world, the twoway traffic with China is appreciated. The City is the lead overseas centre for trading in the Chinese currency, the renminbi.
A highlight of Astrazeneca’s latest numbers (see below) was a 22pc lift in sales to China. As the Chinese economy matures, stuff the UK is good at – services and sciences – will be greatly sought after.
The sell-off of Worldfirst fits into an unfortunate pattern. The UK currently is the world’s bargain basement because of sterling weakness and stock market queasiness as a consequence of Brexit uncertainty.
The biggest loss in the fintech space was Worldpay, swallowed by US rival Vantiv. A smaller payments company Earthport is under siege from credit card rivals Visa and Mastercard. The country’s first digital financial group, Atom Bank, now has France’s Socgen as its biggest investor.
That Britain is a powerhouse in the fintech sector is brilliant and speaks well of skills and innovation.
But the tendency of founders to sell out rather than persevere in a space where the UK excels is disappointing. Chinese involvement adds a new security complication. Compound growth WHEN the French chief executive of Astrazeneca, Pascal Soriot, saw the British boss of US giant Pfizer, Ian Read, off the field of battle in 2014, he did so with fantasy sales forecasts.
He also promised that if investors stayed with Astra, its pipeline of new medicines would deliver. It has taken an age and it had to work its way through a soft period when statins compound Crestor lost its patent.
But those who stuck with Soriot are seeing the payoff. He is winning on several fronts. Treatments which use advanced immunology science to attack cancer cells took off in 2018. The main drugs – Imfinzi and Tagrisso for lung cancer, and Lynparza for ovarian cancer – are being widely adopted and sales climbed 61pc to £1.4bn.
Astra finds itself in a better position than Britain’s other pharmaceutical champion, GlaxoSmithKline. It is playing catch-up with immunology, having just bought Tesaro in the US for £3.9bn in the hope of gaining traction.
It is also doing well in China. Contrast that with Glaxo which never has fully recovered from a 2014-15 corruption scandal.
If there is a nagging uncertainty, it is over the future of Soriot. Ideally, he would be around to see the completion of the Cambridge research centre, at least a full year of fast growth sales for its cancer compounds and a rise in earnings.
A breakthrough for efforts to find a blood test which can precisely detect cancer cells, improving the chances of cure at an early stage, could be a crowning glory.
Soriot says he is staying. Good! Pier fears HoW romantic that Patisserie Valerie, which specialises in sumptuous cakes, found a saviour in the shape of Causeway Capital on St Valentine’s day.
Serial entrepreneur Luke Johnson walks away much poorer.
Investors in his other enterprises, notably the Brighton Pier Group, will be counting on him to pay more attention to what goes on under the bonnet. Pier shares look to be on the ghost train to nowhere after a 50pc fall from the 2018 peak.