Fines fail to faze bank investors By Laura Chesters
HUGE fines for banks didn’t put punters off piling in to HSBC and Standard Chartered yesterday as expectations about the pair quitting the UK led to hopes of improved performance.
Expectations that HSBC could sell off its UK banking business on top of news that it may move its headquarters away from London pumped up the share price. Fellow overseas focused bank Standard Chartered topped the leaderboard.
Tony Cross, market analyst at Trustnet Direct, said: ‘The stand-out story remains the London-listed banks with an Asian focus – both HSBC and Standard Chartered are up as it looks increasingly likely as if they are candidates to abandon their UK headquarters in order to avoid the increasingly expensive tax and regulatory burden this brings.’
Investors hope the news will mean HSBC, under chief executive Stuart Gulliver, is considering radical steps to improve the bank’s performance after a series of regulatory fines and the ongoing scandal over its Swiss private bank.
HSBC rose 19.6p to 649.3p and Standard Chartered was top of the benchmark index, up 4.25pc or 45.5p to 1115.5p.
The FTSE 100 surged to a record high during trading but fell back at the close and finished the day up 33.28 points to 7103.98 – short of the 7119.35 set on April 16. The FTSE 250 rose 55.31 to 17784.67.
Mike Ashley’s Sports Direct International was the subject of an undercover Channel Four investigation last night but that didn’t stop punters backing the stock after an analyst gave the thumbs up.
Analysts at RBC Capital Markets said Sports Direct is in good shape and ran the numbers on its much-hated zero hour contracts for staff. RBC said even if it was banned from using zero hour contracts the change would not be detrimental to its bottom line. RBC said: ‘We think it would be relatively easy to move staff onto fixed short hour contracts as are widely used elsewhere in retail and think the overall cost burden would be fairly immaterial. Sports Direct could choose to move away from zero hours contracts for more favourable publicity but this historically has not been its style.’
The documentary series Dispatches revealed the hidden cost of the firm’s products and how much Ashley, who also owns Newcastle United, makes from the chain but the shares closed the day up 12.5p to 625.5p.
Housebuilders were broadly out of favour after plans announced by the Labour Party for rent controls spooked the market. Traders were concerned Labour leader Ed Miliband’s market intervention to ban private landlords from raising rents by more than the rate of inflation for the duration of new three-year contracts would be bad news for housebuilders.
Taylor Wimpey (down 0.8p to 168.4p), Barratt Developments (down 4p to 537p) and Berkeley Group (down 14p to 2625p) were among the worst performers however some housebuilders picked up towards the end of the day and Persimmon advanced 1p to 1760p and Redrow rose 6.1p to 385.2p.
BP’s first quarter earnings are due today with expectations it will reveal a 60pc drop in first quarter operating profit.
There was chatter about the Government stepping in to protect BP from any potential hostile takeover and the shares slipped 1.5p to 476.9p.
Tullow Oil got the go-ahead for its oil field development off the coast of Ghana, pushing its shares higher in morning trade. Tullow shares have risen over recent weeks amid rumours it could be a takeover target following Royal Dutch Shell’s £47bn swoop on BG Group. Analysts at First Energy said: ‘Tullow Oil share price has already appreciated by over 40pc since Shell announced the acquisition of BG Group. We therefore anticipate that this positive news is already somewhat priced in the share and we would suggest taking profit on highs.’
Tullow could not hang on to its gains and closed down 7.7p to 410.3p.
Recruitment firm Staffline is buying welfare-to-work and skills and training provider A4e for £34.5m – including debt. It will become the largest provider of the government’s £5bn programme to get people back into work once the deal is completed. Staffline shares soared 152p to 955p.
Invoice financing company Tungsten Corporation has launched its Tungsten Centre for Intelligent Data Analytics in a joint venture with Goldsmiths University of London to undertake research and development into advanced Artificial Intelligent (AI) techniques for undertaking ‘Big Data’ analysis. Tungsten rose 2.5p to 184.75p. ÷ FORMER Barclays boss Bob Diamond is back in the news with the African bank he co-founded. The bank, called Atlas Mara, is in talks to invest £15m in Banque Populaire du Rwanda (BPR) and merge it with its existing Rwandan bank. The merger would create Rwanda’s largest bank by branch locations and second largest bank by assets of around £200m. Atlas Mara said it plans to work with Dutch lender Rabobank which is an existing shareholder in BPR.