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HSBC has cast its expert eye over the real estate investment trust (Reit) sector following a plethora of heavily discounted rights issues, running into billions of pounds, which have been launched recently to shore-up weakened balance sheets.
The broker does not seem impressed. It has responded by slashing the target for the retail outlet developer Liberty International, a penny better at 357¼p, from 320p to 190p. Hammerson, up 1¾p at 258p, is also dropped from 320p to 190p, while Great Portland Estates, steady at 232½p, is cut from 180p to 160p and Derwent London, up 13½p at 669½p, from 430p to 400p. Most of the companies targeted have been rated at underweight.
The only exception was Brixton, which has been raised from underweight to overweight, although its target is cut from 110p to 80p.
British Land fell 11¼p to 375p despite the success of its rights issue to raise £740 million. Shareholders have taken up 96.6% of the new shares issued. The rump will be placed today with institutional shareholders. HSBC has subsequently cut its target for BL from 435p to 320p.
Falls in the property sector partly reflected the rest of the market, which had earlier taken its lead from Wall Street's strong showing overnight. Even so, the best gains were not held as the FTSE 100 index lost an early lead to trade 3.93 down at 3801.06, after briefly touching 3844.8.
Prudential received a cautious thumbs-up from the City following its results and the departure of chief executive Mark Tucker. The shares rose 22¼p to 274p. Dealers pointed to a late sell-off in the shares last night which raised fresh suspicions about the health of the life assurance market in the wake of recent figures from rival Aviva, up 8¾p at 206p. Aviva's decision to pay a dividend was heavily criticised by the market, which felt it could not afford such generosity.
Other insurers fell into line behind the Pru. Legal & General put on 1.6p to 32.8p, while Old Mutual, which reported yesterday, added 1.9p to 43.2p.
Jefferies has begun coverage of Sage with a buy rating and 195p target. That compares with the current share price of 169p, unchanged. It reckons Sage offers attractive defensive qualities during tricky times. The company is firmly established as a leading vendor in the business management software market
A move by the US Federal Reserve to ring-fence toxic assets and protect the balance sheets of banks and other financial institutions provided the basis for another charge by share prices in New York overnight.
The Dow Jones closed 90.88 points higher at 7486.58 while the S&P 500 was propelled briefly back above the 800 support level. Once again the best gains were seen among the banks, the biggest beneficiaries of the Fed's move to boost the asset protection scheme.
Citigroup leapt 22.7% to $3.08 and has now more than doubled in value during the past couple of weeks. Bank of America also jumped 22% to $7.67 and Fifth Third was lifted 14% to $2.22 after declaring a dividend worth $0.01 a share. Among insurers, Metlife and Prudential were also marked higher following the latest moves by the Fed.
In Tokyo today, blue-chip shares traded a touch softer as a stronger yen hit the likes of Honda Motor and other exporters, but steps by the US and Japanese central banks to ease the credit crisis helped boost banking shares. The Nikkei 225 ended down 26.21 points at 7945.96 after briefly rising above 8000. It has gained 5%, so far this week.
Hong Kong investors sold HSBC following seven consecutive days of rises, offsetting gains in select Chinese resource stocks. China's top juice maker, Huiyuan Juice, plummeted 42.5% as it resumed trading after Beijing rejected a takeover bid by Coca-Cola but clawed its way back to HK$4.77.
The Hang Seng index ended the day 13.75 points higher at 13130.92.
