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  • Business and finance update 20th May 2024

Business and finance update 20th May 2024

Mining giant turnaround

Good morning. Today we're talking about Anglo American’s turnaround plan, a rollercoaster week for meme stocks and the Tesco boss’s bumper pay.

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Mining giant turnaround

Facing a takeover bid from rival BHP, the mining giant Anglo American, is shaking things up with a dramatic restructuring plan. This strategic shift involves exiting the De Beers diamond unit as well as the platinum and steelmaking operations to prioritise copper and iron ore – the very resources BHP covets. Anglo hopes this focus will create greater shareholder value and position them to compete with BHP's vision for the future of the mining industry. Their decision coincides with a surge in copper prices, driven by the growing demand for electric vehicles and renewable energy, which rely heavily on the metal. This restructuring comes after Anglo rejected BHP's second takeover attempt, which valued the company at $43bn. Shareholders were already pressuring Anglo to accelerate its turnaround plan, and BHP's bid intensified the need for a clear strategy. By carving out less desirable assets and concentrating on high-demand resources, Anglo hopes to solidify its future and potentially outmanoeuver BHP.

Meme stock rollercoaster

GameStop stock experienced a volatile surge this week, fuelled by the unexpected return of Keith Gill, the online investor known as "Roaring Kitty" who played a pivotal role in the 2021 meme stock frenzy. Following a three-year hiatus from social media, Gill's posts triggered a surge in GameStop's share price, with a jump of nearly 74% at its peak. This rekindled interest in meme stocks, reminiscent of the trading frenzy of three years ago. However, unlike 2021 the rally quickly lost steam, with GameStop's price dropping sharply later in the week. This rapid decline suggests that investors may have been more cautious this time around and hedge funds were able to mitigate potential losses. By the end of the week, GameStop's stock price settled at a 27% gain, a significant increase but far less dramatic than the heights reached during the initial surge. Capitalising on this renewed interest, GameStop itself announced plans to sell additional shares to raise capital while the stock price remained elevated.

Tesco boss pay doubles

Tesco CEO Ken Murphy's compensation surged to £9.9m last year, more than double the previous year's amount and exceeding any prior Tesco CEO pay. This significant increase coincides with Tesco's rising profits during a time of economic hardship for many Britons. Murphy's pay included a long-term bonus of £4.9m in shares and a £3.4m annual bonus tied to performance. In contrast, Tesco's 220,000 staff shared a £70m "thank you" bonus, amounting to roughly £300 per full-time worker. While Tesco recently increased hourly wages by 9.1%, critics argue that Murphy's pay increase is excessive compared to the modest gains for employees facing a cost-of-living crisis. This incident reignites the debate about executive compensation in the UK, with some arguing for competitive pay to retain talent and others advocating for fairer distribution of profits.


New AI: OpenAI has unveiled a new model with real-time speech and vision capabilities.

New owners: The owner of Royal Mail is poised to accept an improved takeover bid worth about £3.5bn from shareholder and Czech billionaire Daniel Kretinsky.

Out of fashion: Burberry’s profits have slumped by 40% in a year amid a wider slowdown in demand for luxury goods that has pushed down sales in Asia and the Americas.

New high: The Dow Jones Industrial Average closed above the 40,000 mark for the first time in the US blue chip index’s 139-year history.

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Number of the Day

$12.5 billion

How much Melinda French Gates will retain for charitable donations after announcing she is leaving the Bill and Melinda Gates Foundation to focus on her own philanthropic work.

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