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Breakfast Briefing: Trump Speech, Samsung Surges & Capita Tanks

Trump Praises Economic Progress

In his first State of the Union address, President Donald Trump focused on the US economy.

Editor’s Remarks: During the speech, Trump attempted to paint a favourable picture of the progress his administration has made over the last 12 months. Speaking to Congress, Trump said there has “never been a better time to start living the American dream” – a direct reference to the share price gains and tax cuts his government has overseen. As ever with Trump, the speech was heavily self-praising and described his first year in office as an “extraordinary success” due largely to the 2.4 million jobs that have been created. As in Davos, Trump was conciliatory and made an effort to avoid inflammatory remarks.

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Samsung Overtakes Intel’s Chips

The Korean tech giant’s figures show that it generates more revenue from chip sales than Intel.

Editor’s Remarks: The report, which detailed Samsung’s accounts for Q4 2017, rounded off what has undoubtedly been an eventful year for the company. Last year, Jay Y. Lee, widely expected to one day lead Samsung, was jailed for corruption in a far-reaching investigation into influence-peddling. Next week, he will face a ruling on his appeal against his five-year sentence. Samsung also announced a 50-to-1 share split to boost liquidity, which sent its stock surging further. Recently, Samsung stocks had slipped due to fears that demand for its flagship memory chips was waning, coupled with Apple’s efforts to build more hardware in-house.

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Capita Tanks 45%

Shares in the troubled UK outsourcer crashed after a profit warning and planned rights issue.

Editor’s Remarks: In an unusually open statement, Capita’s new CEO said that the company was “too complex” and needed fundamental restructuring. The costs of that restructuring programme are expected to be over £250m and will also include the disposal of several of the group’s non-core businesses. Despite the sale of Capita’s asset management fetching £800m last year, most of which was used to reduce net debt from £2bn to its present £1.1bn level, Lewis announced the company also needed to raise cash from its shareholders. Overall, Capita is down 84% in the last over years.

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Fintech Startups Love Paris

Fintech firms descend on Paris to seek both mergers and financing.

Editor’s Remarks: The French capital’s annual Fintech Forum is well underway, and many startups are actively looking for competitors to merge with and institutional lenders such as BNP Paribas and Society Generale to extend financial backing. Many of the startups are focused on payments but rather than challenge big banks, they are taking on firms like Alipay and M-Pesa, which are popular banking alternatives. Banks are also keen to acquire these startups in order to boost their competitive advantages. If Paris puts on enough of a show, perhaps it can persuade some of London’s fintech firms to cross the Channel.

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Lisk Surges for a Moment

The cryptocurrency surged as much as 60% after it was released on a new exchange.

Editor’s Remarks: After listing on Japan’s x exchange, the price of decentralised platform Lisk soared as much as 60%. However, the exchange was soon forced to stop trading due to technical issues. Lisk’s price promptly rose to around $26 per token, up from $23 the day before. The episode highlights the potentially weak infrastructure that numerous exchanges operate upon. Just last week, Japan’s Coincheck exchange was hacked, leading to over $500m worth of XEM tokens being stolen. Similarly, a flash crash back in November left many leveraged traders on Bitfinex hundreds of thousands in debt. ​

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