Zak Mir’s Scottish Stocks Special: RBS, Aberdeen Asset Management and Weir

Given that I was born in Glasgow, it should be the case I am an expert on the Scotland issue. Nevertheless, it should be admitted without actual Scottish heritage the saying, “being born in a stable does not necessarily make you a horse,” could apply.

In fact, I started off in the pro-Union camp on the basis that it was the vehicle with which Great Britain ruled the world. Unfortunately, this is not apparently a fashionable or helpful notion in the early 21^st century. Nevertheless, I would have stuck with no to independence if it were not for the totally one sided media coverage via the BBC (4 million potential license fee payers it could lose) and “English” newspapers of all political hues.

To provide an idea of how biased I think the coverage has been I would venture to suggest that the powers that be in Russia, Zimbabwe, China and North Korea could pick up some tips. We even had an unconstitutional intervention from H.M. Queen (formerly a constitutional monarch) urging the Scots to “think carefully”- posh English for “don’t go.” On this basis and others, I have been flipped from No to Yes, with the Orwellian media coverage patronizing and cajoling the Scots – one of the main reasons I think they should take the High Road.

Of course, they have been threatened with the loss of Sterling and a mass exodus of various blue chip companies, something which may very well be a concern. But a choice made under such menaces simply underlines how patriotism and money probably should not be mixed.

From a financial markets perspective there is indeed some evidence that the uncertainty over the vote has had an impact. It can be seen clearly how companies with Scottish HQ’s have underperformed since October last year. There are a couple of points to consider about this. The first is that even when the vote was seen as being a walkover for No, there was a drag on sentiment and valuations. The second is that for those who believe that the Scots are highly unlikely to leave the 300 year old party, companies that are based north of the border could represent a relatively “easy” catch up buy.

RBS (RBS)

Clearly, RBS (RBS) is the poster child for the Scottish issue. The irony is that among leading plays that are exposed to this event their charts are actually looking quite robust. This is particularly so given the sharp bounce off the 200 day moving average, now at 333p. In fact, we have a setup against the 50 day moving average at 344p, with the chance being that while there is no end of day close back below this feature the upside here could be as great as the April price channel top of 375p. This is of course the present technical position, not taking into account the vote – necessarily.

Aberdeen Asset Management (ADN)

While it may be possible to put a positive spin on the present charting position of RBS, the same cannot really be said with reference to Aberdeen Asset Management (ADN). Here the near term charting position is dominated by the as yet unfilled gap to the downside at 458p from the end of July. The risk now is that at least while there is no end of day close back above the 50 day moving average at 458p there will be a test of the January price channel floor at 395p over the next 2-4, unless we have a clean and clear win for the Unionists this week.

Weir Group (WEIR)

Finally, as someone born in the city in which Weir Group (WEIR) originates from, I can say that this FTSE 100 engineering company is one of the two best exports of the city. What can be seen on the Weir daily chart is the way that there has been an extended consolidation after the sharp impulsive move to the upside in February. But at least it can be said that while there is no end of day close back below the floor of the August gap at 2,577p we are at least in theory looking for a retest of post May highs at 2,800p over the next 4-6 weeks.

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