Market Round Up

Apple, the world’s third most valuable company, has recently scrapped its Apple Pay Later feature. The buy now, pay later (BNPL) scheme enabled US-based Apple users to borrow up to US$1,000 for purchases, which were then paid back over a six-week period. The loans were provided by Apple Financing, an Apple subsidiary, with no fees or interest charged. This was an attractive proposition for borrowers, who could access cheap loans in a ‘higher for longer’ interest rate environment.

However, the tech giant has now deemed the scheme unfeasible, deciding to withdraw it only a year after its launch. The BNPL market in general has proven challenging to break into, with lenders struggling to compete against incumbents with established merchant networks, such as Klarna and Affirm. Natwest for instance, announced the axing of its BNPL feature this March, citing low usage.

Despite this, Apple intends to remain in the deferred payment market with a new global instalment loan service. In contrast to Apple Pay Later, the replacement scheme will offer payment plans via regional lenders, like HSBC in the UK, rather than being run solely in-house. The new payment option will be available on the forthcoming iOS 18 operating system update.

The London Stock Exchange (LSE) has clawed back its title of Europe’s largest stock market, overtaking its Parisian peer for the first time in almost two years. The position swap was primarily driven by the calling of a snap-election by French President Emmanuel Macron, with the accompanying uncertainty causing a fall in the valuation of French companies.

The LSE was originally dethroned back in late 2022, due to a weak pound and a valuation downturn caused by poor investor sentiment and the fateful mini-budget. It has now recovered slightly, with the total value of LSE-listed companies increasing from US$2.82tn in November 2022, the moment it was initially overtaken, to US$3.18tn at time of writing. Despite this, the gap between the continent’s two largest exchanges has diminished significantly. As of June 17th, it was US$50m, compared to a difference of US$1.4tn in 2016.

US exchanges are partly to blame for this, proving to be tough rivals for the LSE, by offering access to a wider pool of investors and in turn potentially higher valuations. This was best evidenced by last year’s largest Initial Public Offering, in which UK microchip designer Arm, the "crown jewel" of the UK technology sector, decided to list solely on the New York-based Nasdaq exchange, rather than on the domestic LSE.

Please note that this communication is for information only and does not constitute a recommendation to buy or sell the investments mentioned. Investments and income arising from them can fall as well as rise in value. The information and views were correct at time of publication but may have changed at point of reading.