Seeds for the next Apple
Apple, which is the world’s most valuable company after breaking through the $2 trillion mark, is also worth more than the value of all companies listed on the FTSe 100 index.
That means the iphone maker, which in sterling terms has a market cap of £1.5 trillion, is worth 20 times more than Unilever and Astrazeneca, the UK’s biggest listed companies, put together.
Add in a few more of Britain’s greatest names such as Glaxosmithkline, Bp and Barclays, and you get the sheer scale of Apple’s value.
Apple’s rise since the pandemic started is astonishing, jumping about $6.7bn a day in value or 60pc since March. The iphonemaker can add another record to its notch: its value is heading towards the size of the UK’s public debt, which has just smashed all records to break the £2 trillion barrier.
So what, you may say. Such comparisons are meaningless. You can’t compare apples and pears. But what Apple’s meteoric share price climb does show, is that if you create beautifully-crafted products that people covet and want to buy, you create wealth and jobs.
As Sir John Rose, former chief executive of Rolls-Royce, used to say, there are only three ways to make money: you dig it up, grow it or convert something in order to add value. Anything else is merely moving it about.
Unless the Chancellor Rishi Sunak has found gold reserves hidden in the dales around his Richmond constituency, he should be looking at a mix of measures which will help those who want to start their own Apples and to tempt those who do have wealth to grow the economy and to add value.
The greatest danger would be if Sunak, encouraged by his Treasury team, resorts to raising taxes wherever he can.
This would be a mistake: the tax take is already down because so many businesses have been locked in the deep freeze.
Hiking up personal taxes would be equally mistaken and cripple many families who are already struggling. The warnings are there: banks and credit card companies have started tightening lending to consumers.
Raising taxes would not only be foolhardy but maybe unnecessary as confidence is returning. The public is getting back the taste for spending, with figures for July rocketing back up to pre-Covid levels. Inflation is also creeping up again.
Almost two thirds of employees who were on furlough schemes are back working, which shows the idea was a success.
The latest ONS reports show that only one in eight workers are still being paid to stay home, well down on the one in three in May.
Sunak should be as imaginative in steering the economy out of the pandemic as he was creating his big bazooka rescue package. The Chancellor should be looking at all ways of encouraging investing in start-ups and SMes. He should also consider abolishing capital gains tax on all investment in smaller companies listed on the UK’s stock exchanges with, say, a market capitalisation up to £250m to improve liquidity.
private investors have money to spare but need to be persuaded to risk skin in the game: raising incentives for tax-efficient enterprise Investment Scheme and Seed enterprise Investment Scheme would be a starting point. Maybe one of those investments will turn out to be the next Apple.
Amazon eyes Asda?
YOU know corporate life is twitching again when two retail veterans go head to head to bid for Asda – by borrowing other people’s money. ex-Debenhams boss, Rob Templeman, is working with Apollo Global Management against paul Mason, who was Asda’s boss 20 years ago, and backed by lone Star Funds. Asda’s owner, the US Walmart, is running an auction for a majority stake in the UK’s third biggest grocery chain.
Both bidders have long retailing track records: Templeman, who is chairman of the RAC, worked at Halfords and Homebase while Mason did stints at Cath Kidston and Matalan. Both are said to be fired up at the prospect of getting hold of Asda, which they reckon has suffered from under-investment.
As we have seen since lockdown, consumers are addicted to shopping online. Now they want faster and faster home deliveries within the hour. Who could provide that?
Step forward Amazon’s Jeff Bezos, who says his secret is giving customers what they want before they know they want it.
Amazon is already working with Morrisons and recently announced 30 AmazonGo physical shops in the UK. How about gobbling up Asda as well? At £6.5bn, the supermarket chain would be a mere bagatelle for Bezos.