Trying to combat its reputation as an elitist gathering, the World Economic Forum has published a number of blogs ahead of the official opening at 4.30pm GMT today. This year’s theme is how do we “create a more cohesive and sustainable world”.
Blogs include a discussion of whether, as businesses are thriving while societies aren’t, this is the end of an era for shareholder capitalism; “financing fossil fuels risks a repeat of the 2008 crash;” and “The route to true gender equality? Fix the system, not women”.
Trading volumes are thin as US markets will be closed for Martin Luther King Day.
In London, the shopping centre firm Intu, which owns the Trafford centre in Manchester and Lakeside in Essex, suffered a 7% fall in its share price after confirming that it was in talks with investors about a fund raising by the end of February to shore up its battered finances. It is thought to be looking to raise as much as £1bn, although the company’s market value is only £288m. Intu has been hit as a number of well-known retailers have gone under or negotiated rent reductions in a bid to stay alive.
Tonic maker Fever-Tree, the former stock market darling, has seen its shares slump 21% today. It admitted that trading had been tough in the UK over Christmas and blamed general belt-tightening among consumers, although it remains the market leader with its premium drinks mixers. The company now expects 2019 profits to be 5% below 2018, when it enjoyed a 34% jump in pre-tax profits to £75.6m.
Annual revenues are now set to come in at £260.5m, lower than expected. This equates to a 10% year-on-year growth rate, well below the 40% surge in sales seen in 2018. Fever-Tree already cut its sales outlook in November. Tim Warrillow, the chief executive and co-founder, said then that the company would hold off heavy promotional discounting over the Christmas period.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, says:
Falling sales in the UK will inevitably spark fears the gin boom has turned to bust, while guidance for weaker sales in the US and lower margins undermine Fevertree’s long term pitch that it can replicate its success across the pond.
European stock markets open lower, oil rises
The European stock markets have opened.
- UK’s FTSE 100 flat
- Germany’s Dax down 0.2%
- France’s CAC down 0.1%
- Spain’s Ibex down 0.1%
In Asia, shares held on to their gains despite a jump in the oil price. Japan’s Nikkei rose 0.2% to near a 15-month high, China’s CSI 300 gained 0.75% and Australia’s main index added 0.2% to an all-time peak.
Crude oil prices have hit their highest level in more than a week due to production shutdowns in Libya. Brent crude rose as high as $66 a barrel and was later up 68 cents to $65.53, a 1% gain.
And the world’s 22 richest men are wealthier than all the women in Africa combined, says Oxfam.
The world’s 2,153 billionaires have more wealth than the 4.6 billion people who make up 60% of the planet’s population, according to the latest inequality report from the charity Oxfam.
The climate crisis will loom large over Davos, and Mark Carney, who becomes the new UN special envoy for climate change and finance once his term as governor of the Bank of England ends in mid-March, will be attending. He will also be the UK’s key adviser for the next UN climate change conference in Glasgow in November (COP26). The other thing on people’s minds are trade disputes.
Philip Shaw, chief economist at Investec, says:
Those surveyed in the WEF’s Global Risks Report 2020 identified economic disputes, including trade tensions, as the number one risk to the global economy this year. Alongside this, “domestic political polarisation” and “extreme heat waves” were flagged as top threats.
We also expect world leaders to debate the 2020 events which have already unfolded and the repercussions of these, not least the US-Iranian conflict. Note that the WEF will get underway hot on the heels of the release of IMF’s World Economic Outlook update, providing the macroeconomic context for the discussions.
Larry Eliott, the Guardian’s economics editor, has looked back at the last few decades since the annual talkfest in the snow started. The World Economic Forum is “committed to improving the state of the world” but in key respects things look worse today than they did in the early 70s.
Introduction: Davos kicks off
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s Davos week. Nearly 3,000 people from 117 countries will descend upon the Swiss ski resort this week, including 53 heads of state or government, for the 50th annual gathering of the World Economic Forum (WEF). Even more than last year, it is overshadowed by the escalating climate crisis, and the slowing global economy amid trade tensions.
US president Donald Trump (who faces impeachment at home) is coming again this year, as is the Swedish teenage climate activist Greta Thunberg. The German chancellor Angela Merkel, European commission president Ursula von der Leyen, and Chinese vice-premier Han Zheng will all be speaking over the next few days.
My colleagues Larry Elliott and Graeme Wearden are on their way to Davos too. Graeme has looked ahead to what the next four days might bring:
Ahead of the event, which is attended by some of the world’s richest people and always attracts scores of protesters, a WEF report said said greater social mobility would help shrink the gap between rich and poor and lift global growth by almost 5% in the next decade. But it found that only a handful of 82 countries surveyed had put in place policies that would foster social mobility.
At lunchtime, we’ll get the latest economic forecasts from the International Monetary Fund.
- 1pm GMT: IMF publishes World Economic Outlook
- 4.30 GMT: World Economic Forum opening ceremony
- 5pm GMT: PwC survey of global CEOs released