Business
Banks hold FTSE 100 back on windfall tax worry
The FTSE 100 ended Friday on the back foot as banking stocks came under pressure amid reports that the UK Government is considering a windfall tax on the sector.
The FTSE 100 index closed down 29.48 points, 0.3%, at 9,187.34.
The FTSE 250 ended 138.68 points lower, 0.6%, at 21,605.72 but the AIM All-Share finished up 2.89 points, 0.4%, at 764.10.
For the week, the FTSE 100 shed 1.3%, the FTSE 250 fell 1.0% and the AIM All-Share rose 0.4%.
Banking stocks in London were rocked by reports that Chancellor Rachel Reeves could target the sector to help shore up public finances.
Lenders NatWest, Lloyds Banking Group and Barclays PLC fell 4.9%, 3.4% and 2.2% respectively in London.
On Friday, a report by the Institute for Public Policy Research said the Treasury should impose a new levy to recoup “windfalls” made by lenders as a legacy of the Bank of England’s quantitative easing programme, undertaken in the wake of the financial crisis.
The think-tank said the UK taxpayer is spending £22 billion a year compensating the BoE for losses on the programme.
The scheme entailed the BoE purchasing hundreds of billions of pounds of government bonds, buoying commercial bank reserves at the central bank.
These are now being remunerated at the BoE’s official rate, which stands at 4.0%.
The IPPR recommended that the Treasury introduce a QE reserves income levy on commercial banks to save £7 billion to £8 billion a year over this parliament.
In addition, it suggests the BoE slows down quantitative tightening, by ending its fire sale of government bonds, to save more than £12 billion a year.
The Financial Times on Friday said fears are mounting that the autumn budget will target banks to help fill a £20 billion fiscal hole.
“Politically it is an easy target,” a senior banker told the FT. “No-one likes banks, they are seen as a whipping boy for the Government.”
Kathleen Brooks, research director at XTB, said August has seen a “torrent of leaks” from government and the Treasury about potential tax rises, ahead of the autumn budget.
“Tax rises that have been proposed include increases in capital gains tax, property tax rises, national insurance hikes on rental income and a levy on banks, among others.
“The impact of this drip feed of potential tax rises is eroding confidence and dimming the prospects for the UK economy. It is also starting to impact UK asset prices,” she said.
Faring better, ConvaTec, which rose 1.4% as interim chief executive Jonny Mason and interim chief financial officer Fiona Ryder picked up £167,000 of shares between them.
They took their interim roles after chief executive Karim Bitar went on a medical leave of absence earlier this month.
Prudential rose 2.3% as Bank of America said the insurer was its top sector pick, highlighting forecast dividend growth and share buybacks.
In New York at the time of the London equities close, the Dow Jones Industrial Average was down 0.4%, the S&P 500 was 0.7% lower, while the Nasdaq Composite was down 1.0%.
Across the pond, traders weighed a pick-up in inflation, albeit in line with expectations.
The Bureau of Economic Analysis said the headline personal consumption expenditures price index rose 0.2% month-on-month in July, slowing from 0.3% growth in June, and by 2.6% year-on-year, the rate unchanged from June.
Excluding food and energy, core PCE price index increased 0.3% on-month, the same pace of growth as in June, and by 2.9% on-year, accelerating from 2.8% in the 12 months to June.
The figures were in line with FXStreet-cited market consensus.
Core PCE is the Federal Reserve’s preferred inflationary gauge, and Friday’s reading will play an important part in how the FOMC acts at its September meeting.
The yield on the US 10-year Treasury was at 4.22%, flat from Thursday. The yield on the US 30-year Treasury was 4.93%, stretched from 4.89%.
The pound eased to 1.3510 US dollars late on Friday in London, compared to 1.3513 US dollars at the equities close on Thursday.
The euro rose to 1.1699 US dollars, against 1.1668 US dollars. Against the yen, the dollar was trading lower at 146.92 yen, compared to 147.02 yen.
In Europe, the CAC 40 in Paris ended down 0.7%, while the DAX 40 in Frankfurt closed 0.6% lower.
In London, takeover activity kept traders busy.
John Wood finally agreed a bid of about £210 million from long-term suitor Dar Al-Handasah Consultants Shair and Partners Holdings, known as Sidara, worth 30 pence for each Wood share.
In addition, Sidara said it will provide a 450 million US dollar capital injection into John Wood to provide financial stability, although the long-running takeover saga remains subject to several conditions.
John Wood chief executive Ken Gilmartin said the deal brings “us closer to finalising a challenging chapter in Wood’s history”.
“The acquisition by Sidara will solve our near-term liquidity challenges and strengthen the company in the longer term,” he added.
The agreement is subject to a number of conditions including publication of 2024 audited accounts on or before the end of October and the audit opinion not being the subject of any modified opinion in relation to the 2024 balance sheet.
Shares in Wood are currently suspended at 18.20p pending publication of 2024 accounts.
Meanwhile, JTC shot up 18% for a market value of £1.92 billion as it said its board has rejected a takeover proposal from private equity firm Permira Advisers.
Earlier on Friday, Permira said it approached the Jersey-based professional services company regarding a possible cash offer for the business.
Permira and JTC did not detail the terms of any potential offer.
However, Bloomberg reported, citing people with knowledge of the matter, that Permira has made a proposal to purchase JTC that values it at about £2 billion.
“We think there is quite a good chance of a bid – this is a market that PE has been active in and that Permira knows well,” analysts at RBC Capital Markets said.
A barrel of Brent traded at 67.41 US dollars late Friday, down from 67.51 US dollars on Thursday. Gold climbed to 3,445.38 US dollars an ounce against 3,407.04 US dollars on Thursday.
The biggest risers on the FTSE 100 were Rentokil Initial, up 9.0p at 365.0p, Prudential, up 22.2 pence at 988.6p, Fresnillo, up 35.0p at 1,788.0p, Endeavour Mining, up 44.0p at 2,536.0p, and ConvaTec, up 3.2p at 236.5p.
The biggest fallers on the FTSE 100 were NatWest, down 26.0p at 510.6p, JD Sports Fashion, down 4.0p at 96.0p, Lloyds Banking Group, down 2.7p at 79.5p, Barclays, down 8.2p at 360.4p and Kingfisher, down 5.9p at 257.4p.
Monday’s local corporate calendar has a trading statement from Workday partner and provider of IT services, Kainos Group, and half-year results from leisure and entertainment company, XP Factory.
The global economic calendar on Monday has a slew of manufacturing PMI releases, eurozone unemployment figures, and UK mortgage approvals data. US financial markets are closed for Labour Day.
Contributed by Alliance News
Business
Private sector data: Over 2 lakh private companies closed in 5 years; govt flags monitoring for suspicious cases – The Times of India
NEW DELHI: The government on Monday said that over the past five years, more than two lakh private companies have been closed in India.According to data provided by Minister of State for Corporate Affairs Harsh Malhotra in a written reply to the Lok Sabha, a total of 2,04,268 private companies were shut down between 2020-21 and 2024-25 due to amalgamation, conversion, dissolution or being struck off from official records under the Companies Act, 2013.Regarding the rehabilitation of employees from these closed companies, the minister said there is currently no proposal before the government, as reported by PTI. In the same period, 1,85,350 companies were officially removed from government records, including 8,648 entities struck off till July 16 this fiscal year. Companies can be removed from records if they are inactive for long periods or voluntarily after fulfilling regulatory requirements.On queries about shell companies and their potential use in money laundering, Malhotra highlighted that the term “shell company” is not defined under the Companies Act, 2013. However, he added that whenever suspicious instances are reported, they are shared with other government agencies such as the Enforcement Directorate and the Income Tax Department for monitoring.A major push to remove inactive companies took place in 2022-23, when 82,125 companies were struck off during a strike-off drive by the corporate affairs ministry.The minister also highlighted the government’s broader policy to simplify and rationalize the tax system. “It is the stated policy of the government to gradually phase out exemptions and deductions while rationalising tax rates to create a simple, transparent, and equitable tax regime,” he said. He added that several reforms have been undertaken to promote investment and ease of doing business, including substantial reductions in corporate tax rates for existing and new domestic companies.
Pakistan’s textile exports surged to $6.4 billion during the first four months of the 2025-26 fiscal year, marking the highest trade volume for the sector in this period.
According to the Pakistan Bureau of Statistics (PBS), value-added textile sectors were key contributors to the growth.
Knitwear exports reached $1.9 billion, while ready-made garments contributed $1.4 billion.
Significant increases were observed across several commodities: cotton yarn exports rose 7.74% to $238.9 million, and raw cotton exports jumped 100%, reaching $2.6 million from zero exports the previous year.
Other notable gains included tents, canvas, and tarpaulins, up 32.34% to $53.48 million, while ready-made garments increased 5.11% to $1.43 billion.
Exports of made-up textile articles, excluding towels and bedwear, rose 4.17%, totaling $274.75 million.
The report also mentioned that the growth in textile exports is a result of improved global demand and stability in the value of the Pakistani rupee.
UK investment bank Peel Hunt has given some support to under-pressure Chancellor Rachel Reeves over last week’s Budget as it said efforts to boost the London market and invest in UK companies were “positive steps”.
Peel Hunt welcomed moves announced in the Budget, such as the stamp duty exemption for shares bought in newly listed firms on the London market and changes to Isa investing.
It comes as Ms Reeves has been forced to defend herself against claims she misled voters by talking up the scale of the fiscal challenge in the run-up to last week’s Budget, in which she announced £26 billion worth of tax rises.
Peel Hunt said: “Following a prolonged period of pre-Budget speculation, businesses and investors now have greater clarity from which they can start to plan.
“The key measures were generally well received by markets, particularly the creation of additional headroom against the Chancellor’s fiscal rules.
“Initiatives such as a stamp duty holiday on initial public offerings (IPOs) and adjustments to the Isa framework are intended to support UK capital markets and encourage investment in British companies.
“These developments, alongside the Entrepreneurship in the UK paper published simultaneously, represent positive steps toward enhancing the UK’s attractiveness for growth businesses and long-term investors.”
Ms Reeves last week announced a three-year stamp duty holiday on shares bought in new UK flotations as part of a raft of measures to boost investment in UK shares.
She also unveiled a change to the individual savings account (Isa) limit that lowers the cash element to £12,000 with the remaining £8,000 now redirected into stocks and shares.
But the Chancellor also revealed an unexpected increase in dividend tax, rising by 2% for basic and higher rate taxpayers next year, which experts have warned “undermines the drive to increase investing in Britain”.
Peel Hunt said the London IPO market had begun to revive in the autumn, although listings activity remained low during its first half to the end of September.
Firms that have listed in London over recent months include The Beauty Tech Group, small business lender Shawbrook and tinned tuna firm Princes.
Peel Hunt added that deal activity had “continued at pace” throughout its first half, with 60 transactions announced across the market during that time and 10 active bids for FTSE 350 companies, as at the end of September.
Half-year results for Peel Hunt showed pre-tax profits jumped to £11.5 million in the six months to September 30, up from £1.2 million a year earlier, as revenues lifted 38.3%.
Peel Hunt said its workforce has been cut by nearly 10% since the end of March under an ongoing savings drive, with full-year underlying fixed costs down by around £5 million.
Steven Fine, chief executive of Peel Hunt, said: “The second half has started strongly, with the group continuing to play leading roles across both mergers and acquisitions and equity capital markets mandates.”
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