Tonight:
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ONLY a day after the Abu Dhabi ruling family made £1.5 billion profit in just seven months from selling its stake in Barclays, it has emerged that a rival sovereign wealth fund has lost as much as £800 million through investing in the bank.
The Singaporean government fund Temasek is reported to have sold its 2% stake in Barclays in December and January when the share price ranged from 180p to just 51p.
Sheikh Mansour of Abu Dhabi sold his 1.3 billion shares yesterday at 265p.
Temasek supported two major fundraisings at Barclays in 2007 and last year paying 720p a share in the first instance and 282p in the second. That cost Temasek just over £1 billion but it could have collected as little as £200 million when it sold its shares.
Today Barclays lost another 15p at 258½p as the sheikh's sale called time on the banking sector rally despite a string of up-beat broker notes.
Credit Suisse said that the sheikh's sale has little effect on the fundamental value of its shares. The broker has kept its neutral stance, but today upped its target price from 285p to 295p.
Shares in London gave into profit-taking as traders warned that the recent recovery looks like it has gone too far, with the FTSE 100 falling 80.82 points to 4396.2. Blue chips going ex-dividend — including mobile phone giant Vodafone — didn't help, wiping around 15 points off the index.
Heritage Oil was one of the few stocks enjoying a day in the sun, adding 35p to 565p. The explorer hit an all-time high today and briefly had its shares suspended as the rumour mill once again went into overdrive.
Talk is that it has attracted a suitor, with the usual suspects — state-owned oil companies from China or India — mooted. The mutter from the gutter was of a bid at around the £7-a-share mark, giving founder Tony Buckingham, who still owns a third of the shares, cause to smile.
Housebuilder Taylor Wimpey claimed the top spot among mid-caps, rising 2¾p to 36½p. Collins Stewart has become enamoured of the stock, noting better-than-expected data from the housing market. Drax was also a big winner as Morgan Stanley's bears turned benign on the stock. They have upgraded the coal-fired power station to equalweight and raised their price target from 475p to 545p, betting that any bad news has now been factored into the share price. Its shares shot up 6¼p to 486¼p as the broker noted that Britain's biggest polluter's bid to turn green by investing in biomass could give a big profits boost.
Investors stubbing out their cigarette shares have left the tobacco companies looking cheap, according to Citigroup. The City big-hitter said today that the recent move out of the sector has been unprecedented and left shares at almost their cheapest price at any time in history.
Investors are nervous that smokers are switching from machine-made to rollies to cut spending. But while the broker admits that the recession and rising taxes have hit sales in the developed world, it reckons concerns have been overdone. Citi points out that smokers in emerging markets are continuing to puff away, propping up companies with a strong presence in the developing world.
Imperial Tobacco, which makes Lambert & Butler cigarettes, gained 7p to 1591p as Citigroup advised clients to snap up its shares. British American Tobacco, which it also said is worth a punt, marked time at 1686p.
Advertising giant WPP lost 19¼p to 434¼p after yesterday's gloomy trading update when it reported a 6.7% slump in like-for-like sales for the first four months of the year. Citigroup reckons this implies sales were down 9.5% in April — a much more severe deterioration than it expected. It has stuck with its neutral rating on Sir Martin Sorrell's company but warns that agency groups could suffer most in the media sector towards the end of the recession.
WM Morrison, Britain's fourth-biggest grocer, added 6¾p to 250¾p ahead of tomorrow's trading update. Analysts forecast a 6.5% jump in like-for-like sales. Gains were aided by Cazenove upgrading the entire supermarket sector from underweight to netural.
Circle Oil, the oil and gas tiddler, added ¾p to 34¾p on news that it has struck lucky again in Morocco. The small-cap explorer, in which Libya holds a 29% stake, said that is has now found gas at four of the five sites it has drilled in the Rharb Basin.
