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Market report - afternoon update
One of America's biggest hedge-fund operators has told customers they cannot have their money back - for the time being at least.
The Tudor BVI Global Fund, operated by Tudor Investment Corporation, has informed clients that it has imposed a temporary suspension of redemptions with immediate effect.
It blames the difficult stock-market conditions that have hit the Tudor BVI Portfolio. "We believe that all investors must be treated equitably, and that apart from our efforts for the Tudor BVI Portfolio to maximise profits in these markets, we must also structure the Tudor BVI Global Portfolio to ensure maximum flexibility and liquidity," the company said.
The fund said it is pursuing a plan that will restore liquidity and flexibility. "The disposition of illiquid positions at this time would be disorderly, impracticable and detrimental to the portfolio and all of its clients."
It plans to lift the suspension and begin redemption by 21 March next year. Tudor, founded by commodities trader Paul Tudor Jones in 1980 and headquartered in Greenwich, Connecticut, had at last count almost $18 billion (£12 billion) of funds under management. Tudor Jones made his fortune shorting positions ahead of Black Monday in October 1987.
With a fortune estimated at $3.3 billion, Forbes magazine ranks him as the world's 369th richest man. That will be of cold comfort to his clients, who had to continue watching their wealth shrink yesterday after another massive sell-off in London and New York.
Overnight the Dow slumped almost 8%. The selling continued in the Far East this morning, but London rallied from opening falls, which had seen its two-day deficit stretch to 7.2%. The FTSE 100 index briefly dipped back below the 4000 level before settling 30.37 higher at 4095.86. Turnover remained pitifully thin and accounts for the current volatility. Shares rallied on Wall Street this afternoon, with the Dow up 144.72 at 8293.81.
The trading update from Tesco was well-received, with the shares adding 29p at 317p, having recently traded at four-year lows. Brokers had been warning of a slowdown in sales growth as customers look for better value for money. Shore Capital continues to rate the shares a buy, while Pali International's Nick Bubb rates the shares at neutral, but has cut his target from 345p to 300p.
Once again, mining shares were among the biggest fallers in early trading, unnerved by news of a slump in Chinese industrial production. But they managed to reduce their losses and provided the basis for a rally by the rest of the market. Xstrata dropped 69½p to 744½p, and Rio Tinto 103p to 1322p. But Vedanta rose 37p to 553p and Antofagasta 23p to 424¾p.
Royal Bank of Scotland rallied 5p to 59.8p with more than 95 million shares changing hands after Merrill Lynch resumed coverage of the nationalised bank with a buy rating and 93p target. Morgan Stanley says that once the group's rights issue is completed, the number of shares in issue will surge to 39.6 billion with the free float halving to 50%.
The big institutions now have to adjust their weightings in the stock and that may require them to mop up a further 426 million shares during the short-term. Other banks lost ground, including Barclays, down 5.6p at 152.4p, and Lloyds TSB, off 3.8p at 152.6p.
Shareholders in the London Stock Exchange were getting it in the neck as the price fell 7½p to 582½p. Not only has turnover slowed to a trickle, but the UK's premier marketplace is also suffering competition from other platforms.
Speedy Hire fell 2¾p to 184¾p after UBS dropped its rating from neutral to sell. It warns there is a growing risk of the plant-hire company breaching its banking covenants.
