Halister News

(Bloomberg) -- The U.K.’s current-account deficit may be about to get bigger, weighing on the pound, if internationally-focused companies follow BHP Billiton’s lead and cut their dividends, Deutsche Bank analysts Oliver Harvey and Robin Winkler write in client note.

• If dividend payouts continue to fall, GBP will start to feel the full brunt of the deterioration in the primary income account for the first time
• Financial services, mining and quarrying, information and communication, and petroleum and chemicals make up 73% of FDI assets held abroad; ONS data show they account for 84% of decline since 2011 in U.K. FDI earnings
  • But while profitability has fallen, dividend payments remitted back to the U.K. have been rising, suggesting saving decisions have mitigated the economic impact of the fall in FDI profits
• NOTE: Shell, Vodafone appear in screen for dividends at risk, Citigroup said last week; HSBC’s dividend increasingly at risk, Nomura says