Fears of rampant inflation and expensive oil prices had started to subside when I began this article, as President Trump appeared to be looking for a way out of the war he started with Iran.
However, on 8 July, the US military announced that it hit more than 80 targets in Iran in response to Iranian attacks on three commercial vessels that were transiting through the strait of Hormuz the day before.
“Iran’s demonstrated aggression was unwarranted, dangerous, and a clear violation of the ceasefire,” US central command said, referring to the three tankers. Iran responded by launching attacks on US military sites in Bahrain and Kuwait, with the Islamic Revolutionary Guards Corps claiming 85 facilities had been targeted. Air raid sirens were heard in both countries and the Kuwaiti army said air defences were confronting “hostile” missile and drone attacks, but there was no confirmation of any damage.
It is too soon to tell what impact this will have on inflation, and share prices, but the cost of a barrel of Brent crude oil soared by 6% on the news.
After shares in our PIN Fund (a fictional fund of 10 property-related listed companies) collapsed by 16.8% in Q1, they rebounded slightly in Q2, returning 7.1%. However, over half of that figure in the second quarter was thanks to SEGRO, which saw its share price surge by 36.6% in Q2, returning 40% when dividends were included. The reason for the price rise is due to interest from Prologis, the world’s largest logistics real estate company.
Prologis is pursuing a takeover of SEGRO to consolidate the European logistics market and accelerate growth. The US giant wants access to SEGRO’s pipeline and believes its massive capital reserves are necessary to unlock the full potential of those assets. On 24 June, Prologis proposed to buy SEGRO at 881p per share and in the week that followed the share price, unsurprisingly, surged to around that level.
However, even at the offered level, the SEGRO share price is still almost 50% lower than its peak in February 2022 before Russia invaded Ukraine, which led Andy Harrison, chairman at SEGRO, to respond that Prologis is attempting to buy SEGRO “on the cheap”.
