Investors bet on a tourist rush from the cheap pound
MERLIN Entertainments, the owner of Thorpe Park, Alton Towers and Legoland, has had a strong run in the aftermath of the EU referendum.
One theory is that a weaker pound will keep Brits on these shores over the summer, spending their holiday money at UK attractions. Merlin is an obvious beneficiary of that. It also owns sites elsewhere, of course, whose profits will benefit from the fall in sterling – the company operates in five countries across three continents. There could also be a glut of tourists coming to the UK because of the cheaper pound – again splashing out on attractions.
This week JP Morgan raised its target price for the stock to 464p, while Citigroup named it in its top post-Brexit picks. The company found itself among the top risers yesterday, striding forward 3.1pc, or 13.8p to 454.1p.
The FTSE 100 continued its incredible climb, advancing 1.1pc, or 73.5 points, to finish the week at 6,577.83, almost 600 points higher than where it started on Monday.
Crest Nicholson topped the FTSE350 for the day – a welcome reprieve for the housing developer, which lost 27pc off its share price between last Friday and this Wednesday. Property firms have been among the greatest casualties of the Brexit vote amid fears that a potential recession could hit house prices and lead to an increase in mortgage defaults. Perhaps investors feel the industry has suffered enough for now. Shares recovered 11pc, or 39p, to 395p.
Persimmon also had a good day, advancing 6.4pc, or 93p, to 1540p. The housebuilder will publish its trading statement for the first half of the year on Tuesday.
Job market fears hit recruitment consultancy Robert Walters. Concerns about a possible recession in the coming months have led to uncertainty about hiring. Robert Walters has already lost around 15pc of its share price value over the past week. The firm’s first quarter trading statement is due on Thursday. Its last update showed income from fees was growing steadily, up 13pc in Asia and 12pc in Europe, but noted an ongoing slowdown in the UK especially in the financial services sector. That trend could intensify if economic uncertainty continues.
Last week Credit Suisse cut its target price for the stock from 425p to 260p. But the wife of company chairman Leslie Van de Walle used the share price slip as an opportunity to top up her holding in the firm. She bought 20,000 shares on Wednesday at 267p each. Van de Walle and individuals connected to him hold 0.06pc of the firm. Shares rose 0.3pc, or 0.75p, to 260.75p.
Insurers have, in recent years, been optimistic about the opportunities for their businesses in emerging markets. As the populations in these regions becoming increasingly wealthy and middle-class there is expected to be a greater take-up of insurance policies, particularly life cover.
Yet RSA Insurance yesterday announced the disposal of its operations in Uruguay to Colombiabased Suramericana. That was the group’s final business base in Latin America. It has already sold operations in Brazil, Colombia, Chile, Argentina and Mexico this year. RSA is focusing on its core business in the UK, Ireland, Scandinavia and Canada. Shares were off 0.1pc, or 0.6p, at 498.9p.
Petra Diamonds announced it had sold a white 121 carat white diamond for £4.5m. The huge stone was recovered from the Cullinan mine in South Africa and was bought in a joint venture by two leading diamond manufacturers.
The miner, which also has operations in Tanzania, announced the discovery of the gem on June 21. Despite the sale, shares slipped 1.5pc, or 1.75p, to 114.25p.
On the whole miners continued to rally. Hochschild Mining soared 9pc, or 16.5p, to 196.5p, while Centamin climbed 7.4pc, or 9.8p, to 141.7p. Credit Suisse more than doubled its target price for Fresnillo as the miner confirmed its gold and silver production figures. Shares in the firm purred up 7pc, or 116p, to 1760p.