Susannah Streeter, Chief Investment Strategist:‘’The Footsie is flying higher at the end of a volatile week, with a slight easing in oil prices offering some respite. The blue-chip index has shrugged off a sell-off on Wall Street and a mixed performance in Asia to climb higher.
Investors in big AI players were unnerved by a reassessment of OpenAI’s revenue outlook. Although growth remains impressive, the report has prompted fresh questions about whether the artificial intelligence build-up may be overhyped. Given the tech-lite nature of the FTSE 100, the index has been less exposed to these worries, with the focus instead on global inflationary risks. The immediate pressure has eased a little, but the threat of higher energy costs has by no means disappeared.
President Trump has said the US will not attack Iran before the midterm elections, calming fears of a sharp escalation in the conflict. Nevertheless, the trajectory of the Middle East crisis remains highly uncertain, with Brent crude still trading around $103 in early trade on Friday.
In this febrile climate, with the risks of higher energy costs becoming embedded in economies, investors appear to have shown a renewed interest in precious metals as a ballast against rising prices and fractious geopolitics. Gold has had a bruising year so far, falling around a fifth from its January peak, although it is ending this week on a more positive note, rising by more than 1% as the dollar weakened and oil prices eased. The rebound offers some respite after a sharp retreat, but gold’s recent volatility is a reminder that even traditional safe havens can be buffeted by shifting interest-rate expectations and changing geopolitical risks.
This has helped give mining stocks a spring in their step, helped by other data indicating that China is proving remarkably resilient, with strong export flows despite ongoing trade disputes with the US. There are still question marks over the health of its domestic economy, but the strength of overseas demand, particularly for high-tech and AI-related goods, suggests the trade tensions haven’t knocked the wind out of China’s export sails.
Airtel Money shares are beginning conditional dealings on the London Stock Exchange today, ahead of the mobile payments business’s formal listing next Wednesday. Conditional dealings are early trading in the shares before formal admission, open only to investors who were allocated stock in the offer, with the retail offer closing yesterday.
This spin-off from Airtel Africa is a much-needed win for the London market. Although the valuation is lower than expected when the IPO was first mooted, it’s still one of the biggest listings in recent years. It should help cement London’s reputation as a major fintech centre, with Airtel Money valued at £5.3 billion at its offer price of 196p a share. It is a valuable boost for the market, showing London can still provide a launchpad for ambitious start-ups and spin-offs to take the leap into public markets, at a time when the UK is keen to breathe new life into its IPO scene.
Airtel Money has a compelling growth story, operating across 14 nations in Africa, a continent which has been at the forefront of digital payments technology. It has more than 56 million active users, and revenue has risen by over a quarter to $1.36 billion. The competition may be fierce, given Airtel Money goes head-to-head with the likes of M-Pesa, and by its very nature the business will be sensitive to macroeconomic forces. But it enjoys a strong position in Africa’s fast-growing digital payments landscape.
The real test now will be next week when we’ll see whether more investors are prepared to back its growth story and if this long-awaited flotation can help restore confidence in London as a place for ambitious businesses in other sectors to list.’’
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