The week’s news included; No fault divorces introduced, UK to become global crypto-hub, Goldman Sachs head convicted for 1MDB involvement, Shein reaches $100 billion valuation.
Below are our top 10 stories that you need to know about. Be sure to check our twitter page, Facebook page and Instagram Page, for regular posts of important headlines. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
Opinion articles of the week:
- City A.M – Rishi Sunak’s bid for crypto is very welcome, but investment must be accompanied by education and awareness, so that people can finally take the world of crypto seriously.
- BBC News – Are paper football programmes on their way out?
- CNBC – How Amazon plans to fix its massive returns problem.
- The Guardian – The three Fs: why UK farmers fear the soaring cost of fertiliser, feed and fuel
1. NO FAULT DIVORCES INTRODUCED
Last week, saw the introduction of “no fault” divorce laws in England and Wales. Married couples seeking divorce will no longer have to assign blame for the breakdown of their marriage. Adultery, desertion or unreasonable behaviour were the only means to immediately begin divorce proceedings without the agreement of both spouses under previous laws. Failing this, parties would have to live separately for at least five years.
Historically, these requirements have created animosity between married couples, even where there wasn’t any. Couples who sought an amicable split had no means to facilitate this under old rules as they had to prove bad behaviour by their spouse. The new rules will help avoid any unnecessary conflict. Spouses can now individually or jointly file for divorce without a reason or apportioning blame. The process takes 26 weeks before a divorce is granted. These rules will also apply to civil partnerships.
2. UK TO BECOME CRYPTO HUB
The government plans to make the UK a “global crypto hub”. Chancellor Rishi Sunak unveiled new measures to develop cryptocurrency technology and boost investment in The UK. This will see the UK launch its very own “stablecoin”, a digital currency backed by stable assets. These could allow for faster, cheaper payments than traditional systems. There will also be new “sandboxes” for companies to innovate and experiment. There will even be a UK government non-fungible token (NFT) for good measure. This marks a huge progression in attitudes towards cryptocurrencies and indicates that mainstream acceptance is here.
The UK’s Financial Conduct Authority has already introduced requirements for crypto firms to register with them for AML purposes. Rather than clamping down on crypto, the UK government is clearly set on embracing it and integrating it into mainstream financial oversight. The government website provides more details on the announcement.
3. CHANNEL 4 PRIVATISATION
The government is moving forward with plans to privatise Channel 4. The culture secretary believes that the broadcaster could compete with streaming giants like Netflix and Amazon if it was privatised. Privatisation would give it more freedom to raise capital to invest in production and advertising. Many however, question the decision to sell the broadcaster given that it does not receive any public funding. Although it is publicly owned, over 90% of its revenue comes from advertising, so the true rationale behind the sale is unclear. Furthermore, as a public broadcaster, it provides competition to the likes of the BBC. Channel 4 has said it is disappointed in the government’s decision and hopes to continue to play its unique part in Britain’s media.
The government says funds from the sale of Channel 4 would be reinvested in the creative sector. It is expected that Channel 4 would not be sold to “hostile countries” such as Russia.
4. FOOTBALLERS & INFLUENCERS FACE GAMBLING AD BAN
New rules will introduce a ban on footballers, celebrities and social media influencers appearing on gambling adverts. From October, any gambling advert with a star who has “strong appeal” for young people or youth culture cannot be broadcasted. This includes top footballers and reality TV stars for example. Adverts referencing video games or gameplay that is popular with young people will also be banned. The rules are designed to safeguard young and vulnerable people from gambling addictions. Gambling firms have welcomed the changes, introduced by the Committee for Advertising Practice. Many politicians however, say the rules do not go far enough given gambling firms sponsor numerous football clubs already. Nine Premier League clubs and six Championship clubs currently have betting companies as their main front-of-shirt sponsors. There have been calls for total bans on gambling advertising, by all means, within sport. Whether this will ever happen remains to be seen.
5. GOLDMAN MALAYSIA HEAD CONVICTED FOR 1MDB
Roger Ng, the former head of Goldman Sachs in Malaysia, has been convicted for his involvement in the 1MDB scandal. The banker was found guilty on all charges relating to the $6.5 billion embezzlement of Malaysia’s sovereign wealth fund. Mr Ng allegedly received $35 million in kickbacks for his role. He faces a total of 25 years in prison for money laundering and bribery charges and is the only Goldman Sachs banker to face a jury for the firm’s involvement in the scandal.
Goldman Sachs helped raise $6.5 billion for Malaysia’s 1MDB sovereign wealth fund. The investment bank earned over $600 million in fees from its work. Over $4.5 billion was embezzled from the fund however, between 2009 and 2014. The money was siphoned away from intended development projects and spent on luxuries by Jho Low and his associates. Some of the spending included private jets, Picasso artwork and even funding for the Wolf of Wall Street film. Goldman Sachs agreed a $3.9 billion settlement with the Malaysian government in 2020 over its involvement. Financier and architect of the scandal, Jho Low, still remains at large.
6. SHEIN REACHES $100BN
Chinese fast fashion company Shein has become the most valuable clothing retailer after it reached a huge $100 billion valuation in its latest funding round. The firm operates only online, offering wide ranges of products at cheap prices. It’s catalogue of clothing changes frequently as it adds over 2000 new styles everyday. This is achieved through its on-demand model. Styles are first sold in small batches then will be mass produced if they become popular. Shein has grown exponentially and now operates in 150 countries. Its valuation has increased seven-fold since 2020. This huge valuation means it is worth more than retail giants H&M and Zara combined. The company employs 10,000 people worldwide.
Despite this, Shein’s fast fashion appears to come at a human cost. Various investigations found poor working conditions and breaches of employment law at its supplier workshops. In some cases, staff were working up to 14 hours a day and up to 28 days a month. There were also many complaints about hazardous work environments. Worker wages are not known but given the cheap prices of items, they are unlikely to be high. Shein claims it takes supply chain issues seriously and investigates any alleged problems.
7. SHELL PAYS ZERO TAX ON NORTH SEA PRODUCTION
Energy giant Shell paid no tax on its North Sea oil and gas production last year. This comes despite the firm posting an enormous £14.7 billion in profits. Shell benefited from a government scheme providing tax refunds for energy firms who decommission old oil platforms in the North Sea. This was introduced in 2016 to help incentivise firms to wind down old oil projects. Last week, Shell received £92 million in refunds, bringing its tax bill down to zero.
Oil and gas companies have enjoyed a bumper period fuelled by soaring global energy prices. During the first nine months of 2021, the largest companies made a combined $174 billion in profits. Despite this, Shell has said it will write down up to $5 billion in assets due to its withdrawal from the Russian market.
8. BUFFETT DECLARES HP STAKE
Warren Buffett’s Berkshire Hathaway revealed it owns an 11.4% stake in HP, sending the tech giant’s share price soaring. The news was revealed in a regulatory filing by Berkshire Hathaway. This 11.4% is worth roughly $4.2 billion and indicates a stamp of approval from investment guru Warren Buffett. Furthermore, given Berkshire Hathaway seldom invests in tech firms, so the revelation provided a huge boost for HP. HP’s shares spiked 14.8% in response to the news. The tech company is enjoying solid growth and is offering stock buybacks and increased dividends. HP turned over $63.5 billion in 2021, up 12.1%.
9. ELON MUSKS BUYS TWITTER STAKE
A new regulatory filing shows that Elon Musk has acquired a 9.2% stake in Twitter, making him the largest shareholder. Shares in Twitter soared around 26% upon release of the news. Some suspect he could be using his holdings to influence Twitter’s policies. Just a few weeks ago he criticised Twitter for failing to “adhere to free speech principles” and claims this “undermines democracy”. He ran a poll on Twitter asking his 81 million followers what should be done. He also warned “the consequences of this poll will be important. Please vote carefully.” Musk has now bought shares in the social media giant. It must be noted that Musk’s stake is a “passive” class of shares but whether this could all be part of a bigger plan remains to be seen.
10. PRIMARK LAUNCHES NEW WEBSITE
Primark has launched a new website but only for customers to browse products and check availability for purchase in-store. Customers will not be able to buy products on the website either for delivery or click and collect. Primark is one of the only major retailers not to offer online purchase options and was acutely impacted during lockdowns as its income fell to zero. The company has said online delivery would not be financially viable as its profit margins are already low. Primark’s main selling point is its inexpensiveness so adding delivery operations will push prices up and reduce profitability. Primark’s website will allow customers to check stock in its 191 UK stores. The parent company of Primark, Associated British Foods, cut 400 management jobs earlier this year. The company posted operating profits of £88 million in 2021.