China data surprises, housebuilders hit, Supreme saves Typhoo Tea, reports of new US clampdown on semiconductor sales into China, Topps Tiles fires back on criticism and Stellantis boss quits

“Beijing’s economic stimulus effort seems to be having a positive effect, judging by better-than-expected manufacturing data from China,” says Dan Coatsworth, Investment Analyst at AJ Bell.

“The Caixin Manufacturing PMI data hit 51.5 in November against a forecast of 50.7%. The data sent Chinese shares flying, including a 1.1% rise in the Shanghai SEE Composite index. The big unknown is whether the stimulus efforts will have a long-lasting effect or just a short-term boost.

“The Chinese manufacturing data also needs to be viewed in the context of what’s happening in the US. The threat of punishing tariffs on Chinese goods imported into the US from January 2025 once Donald Trump returns to power is likely to have spurred factories to boost output ahead of the event. The theory being that some US customers might stockpile goods while they can buy cheaply before the threatened tariffs come into power.

“European shares got off to a disappointing start, including a 1.1% drop in the CAC 40 as concerns grow over French political chaos. The FTSE 100 bucked the negative trend by holding firm at 8,286.

“UK housebuilders were hit by negative broker comment, with Persimmon and Vistry downgraded by RBC amid concerns about margins and negative news flow from the sector. Morgan Stanley also trimmed its price target for Persimmon from £17.21 to £16.00, which combined with RBC’s more cautious tone served to spook investors hoping for the sector to bounce back after recent weakness.”

Supreme / Typhoo Tea

“The Typhoo Tea brand lives on. Supreme has bought the loss-making business out of administration, spotting an opportunity to snap up a well-known brand on the cheap and diversify its interests to be less reliant on sales of vaping products.

“Supreme is a real hotchpotch of a business, also selling a broad range of products including batteries and vitamins. While it has existing interests in the drinks sector, Typhoo will take it into a new segment of that market.

“Supreme has a plan to make Typhoo profitable again, but buying any business out of administration comes with significant turnaround challenges.”

US clampdown on China accessing chip technology

“The one thing that Joe Biden and Donald Trump seem to agree on is a desire to stop China using Western technology to strengthen its military capabilities.

“Strict rules are already in place to block exports of the most advanced US chip technology to China and now there is talk that Biden could tighten the rules further, imposing export restrictions on high bandwidth memory chips used in AI training and chipmaking equipment from various non-US countries. Dutch semiconductor equipment manufacturer ASML has already guided for a significant drop in Chinese sales in 2025 so tougher rules from the Biden administration shouldn’t come as a surprise.

“Trump is expected to keep the export restrictions in place when he returns to the White House in January, but he will want to put his own mark on the initiatives by potentially tightening the rules even further. It suggests a more complicated backdrop for the likes of US chip equipment manufacturers Applied Materials, KLA and Lam Research.”

Topps Tiles

“Topps Tiles may have delivered a defence of its strategy in the face of brickbats from its largest shareholder MS Galleon but with the share price close to decade lows there are cracks in the facade of the company’s argument.

“Among the criticisms was that Topps had failed to develop a larger e-commerce operation – it points to 18% of its revenue being online but that is a relatively modest proportion.

“The deal to acquire rival outfit CTD from administration may have felt like an opportunistic move but it also drew fire from MS Galleon for a lack of due diligence and suggestions that Topps overpaid. It is also now mired in a probe by the competition authorities.

“Topps refutes these criticisms of the deal and the acquisition could ultimately prove to be a successful one. However, it could take time to demonstrate its merits.

“MS Galleon previously tried to oust chair Darren Shapland in 2022, and while he survived the vote, he stood down the following year.

“The current management argue they are taking share in a difficult market. However, doing less badly than the competition is not the most compelling argument to make, even if it is a valid one.”

Stellantis

“He may be a respected name in the industry but given Stellantis has been stuck in reverse gear for some time, the resignation of CEO Carlos Tavares shouldn’t come as any great surprise.

“That’s not to say life will likely be much easier for his successor, who is expected to be named in the first half of next year. The sector faces multiple pressures including the uncertain timing of any transition to electric vehicles and competition from rivals in China. The key North American market has been looking rather tricky for Stellantis, too.

“Tavares has been at the helm of the group since it was formed by the merger of Fiat Chrysler and Peugeot-owner PSA in 2021 and further consolidation could be on the cards given the challenges being thrown at carmakers.

“Stellantis blamed its recent decision to shut a Vauxhall van factory in Luton on stringent electric vehicle rules in the UK. It’s this regulatory push to shift into EVs when the demand is not yet fully formed which is creating headaches in the automotive space.

“It looks like governments are beginning to recognise this situation and relax or delay some of the EV-related rules but the new Stellantis boss will still face a significant challenge as they look to get the business and the company’s share price motoring again.”

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