The Markets
The Financial Stability Board, an international regulator chaired by the Bank of England’s Mark Carney, has unveiled rules intended to ensure that losses at banks that are “too big to fail” would fall principally on shareholders and bondholders if the bank was unable to cover its own liabilities. Carney said that under the new rules, which are up for consultation, “instead of having the public, governments, [and] the taxpayer rescue banks when things go wrong; the creditors of banks, the big institutions that hold the banks’ debt – not the depositors – will become the new shareholders of banks if banks make mistakes”.
Greek inflation fell to -1.7% in October from -0.8% in September according to the latest consumer price data. On an EU Harmonised basis, prices where 1.8% lower than at the same point of 2013, as the country endured it’s 20th month of deflation. Industrial output figures were also released this morning and showed that production in the country during September was 5.1% lower than last year after output fell by 5.9% from August.
At the London close the Dow Jones had increased by 18.20 points to 17,592.13 and the Nasdaq had shrunk by 11.95 points to 4,172.45.
In London the FTSE 100 closed up by 44.01 points at 6,611.25 and the FTSE 250 rose by 131.70 points to 15,596.23. The FTSE All-Share had increased by 24.48 points to 3,535.46 while the FTSE AIM Index grew by 1.41 points to 723.26.
Broker Notes
Cantor Fitzgerald has retained its “buy” rating and 32p target price for natural resources outfit Orosur Mining (OMI). This is despite the falling market price for gold as the broker’s valuation of Orosur remains below its peer group. The firm continues to explore its Uruguayan base in a bid to add to reserves and extend the flagship San Gregorio mine’s operational life. Orosur has outperformed the AIM mining index by 37% over the year to date and today the shares rose by 0.5p to 10.875p.
Finnish steel company Afarak Group (AFRK) has been given a “hold” rating by Investec and a target price of 30p. This was after the firm met financial expectations despite a drop in output during the third quarter as the Turkish and Mecklenburg mines were not operational. While production has fallen, Afarak is able to cover excess demand via its current inventories. Investec cut its target price from 33p on the back of these results and benchmark settlement prices in the current quarter. The shares declined by 2.5p to 25p.
Agricultural products and services firm Carr’s Milling Industries (CRM) has been rated as a “buy” by Shore Capital after preliminary results for the year ended 30th August appeared to be in line with market expectations, with revenues dropping by 8.4% and profits before taxation rising by 7.8%. The broker views the results as positive and expects that further progress will be made over the coming year, despite challenges in the farming sector. The shares dropped by 51p to 1,600p.
Broker positive as agricultural firm’s profits grow
Blue Chips.
Insurance and financial services firm Prudential (PRU) has agreed to sell its 25% equity stakes in the PruHealth and PruProtect joint ventures to Discovery Group Europe for a cash consideration of 155 million pounds. The holdings represent financial, rather than strategic positions for Prudential and the deal allows the firm to realise the value of its investment at attractive terms. The shares rose by 5p to 1,442.5p.
Real estate investment trust Hammerson (HMSO) says consumer and occupier conditions are improving in prime UK retail locations as shopping centre sales rose by 2.6% between 1st July and 9th November, while French conditions remain subdued. Year-on-year rent growth for new lettings was 37%, at 21.7 million pounds. The firm sold its last remaining office assets during the period and made further retail acquisitions in the UK and Europe. The shares closed the day flat at 606.5p.
Hammerson still finds UK retail a good bargain
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Mid Caps
Pre-tax profits fell by 48% to 14.2 million pounds for the six months ended 30th September at Aveva (AVV), but the firm reiterated its full year forecasts. The information technology business recorded strong performances in China, India and the EMEA region, but these were offset by weaknesses in South Korea and Brazil. Accelerated sales of new products contributed significantly to revenues. The shares climbed by 105p to 1,500p.
Residential property developer Redrow (RDW) continues to trade well, with current projects in the London area almost entirely pre-sold. However, other areas have returned to more normal levels of seasonal activity, with weekly sales per outlet falling to 0.65 from an unusually high level of 0.87 in the same period of 2013. However, overall orders remain good and cancellations are at historically low levels. The shares dropped by 2.6p to 270.5p.
Natural resources outfit Lonmin (LMI) dropped to a $326 million (205 million pound) loss for the year ended 30th September, as five months of strikes at its South African operations cost the firm 391,000 saleable ounces of platinum. Management believe that the company has made progress this year in a number of areas and expect to maintain sales of around 0.75 million ounces per annum, but scaled back plans for capital expenditure to around $250-350 million (157-220 million pounds) a year. The shares grew by 7.6p to 195p.
Lonmin shares lift, despite lost weight of miner’s strike
Small Caps
Mobile marketing and entertainment outfit InternetQ (INTQ) increased revenues by 20% to €88.2 (69.2 million pounds) for the nine months ended 30th September, as revenues from consumers rose by 70% relative to the same period last year. This came as the company launched add-on services in a number of European markets and had additional Asian deals in the pipeline. The shares fell by 13.25p to 256.5p.
Security consultancy Red24 (REDT) increased profits before taxation from continuing operations by 6.5% to 0.48 million pounds for the six months to 30th September, which was ahead of expectations due to a major incident response significantly boosting revenues for the half year. The company maintains a healthy sales pipeline and the board hopes to swiftly recover from a drop in income linked to the loss of a major contract in August. The shares ended the day flat at 9.875p.
Mission Marketing Group (TMMG) has bought PR firm Raymond Loewy International for a consideration of 600,000 new shares in Mission, with further payments in future depending on the firm’s performance. Raymond Loewy will concurrently merge with Bray Leino PR to create a new entity called Speed Communications, with annual revenues in excess of 5 million pounds. The shares rose by 1.75p to 45p.
Peruvian cocoa plantation firm United Cacao has announced its intent to list on the AIM market and plans to raise around $16 million (10 million pounds) via the placement of new shares in Europe and South America. The company is looking to expand its planted operations to around 3,250 hectares by the end of 2016. United Cacao is planned to be admitted in the 4th quarter of 2014 and will be dual listed in London and Lima.
Premium drinks producer Distil (DIS) has secured a number of new distribution channels for its brands in the run up to Christmas, including Sainsbury’s, Tesco, Booker Wholesale and Mitchel & Butler’s Castle Pub estate, among others. Outside the UK, Australian retail chain Dan Murphy will be promoting the firm’s RedLeg Rum over the Christmas period with promotional pricing, distribution and displays. The shares rose 0.8p to 1.4p.
Distil looking forward to CHristmas season