Shares surge at Dignity after price cap is buried
SHARES in the UK’s only listed funeral provider leapt by almost two-thirds after regulators parked plans to impose price caps on the industry.
The Competition and Markets Authority (CMA) launched an investigation into funeral firms last year after a 2018 study found high prices were being charged.
These, the regulator said, took advantage of grieving families unlikely to have the emotional resources to sift through and compare a range of different packages.
The pandemic has forced it to delay a crackdown on funeral directors, at least on a temporary basis, with panel inquiry chairman Martin Coleman saying some of the measures it was considering ‘could not safely be introduced in the middle of a national emergency’. The door will be left open to enforcing a price cap – its most drastic measure – at some point after the crisis passes.
But for the time being, funeral directors and crematoria will have to provide more transparent information on pricing and the different services they offer. Dignity, which has come under fire for its pricing, has backed calls for a crackdown – though it rejected the idea of price caps earlier this summer.
Last month, Dignity reported that profits had risen 11pc because it had to conduct more funerals during the pandemic – despite the fact that the services needed to be simpler and have fewer mourners, which meant the average price per funeral fell. Dignity’s shares surged earlier this week and rose a staggering 62.6pc, or 244p, to 634p yesterday. It means shares are up 8pc this year.
The FTSE 100 was dragged lower as a number of heavyweight stocks went ex-dividend, meaning that anyone who bought their stock from yesterday wouldn’t be entitled to receive the next payout.
A company’s share price usually dips whenever this happens periodically – though this round comes as investors have been starved of divis during the pandemic.
The index fell 1.50pc, by 94.50 points, to 6158.62, as pharma giants Astrazeneca (down 1pc, or 87.4p, to 8542p) and Glaxosmithkline (down 1.4pc, or 22.8p, to 1569.8p) both traded lower, as did
Legal & General (down 1.5pc, or 3.5p, to 228.5p).
Oil majors BP (down 2pc, or 6.1p, to 301.2p) and Shell (down 2.7pc, or 31.74p, to 1160.4p) went ex-divi too – but they were also put under pressure by forecasts from the International Energy Agency, which warned that the slump in air travel would lower oil demand this year by more than expected.
It came shortly after oil cartel Opec issued a similar prediction.
Brent crude fell by 1.1pc to below $45 a barrel last night. Wall Street had a mixed reaction to figures showing that the number of Americans filing for unemployment benefits had dipped below 1m – at 963,000 – for the first time since March. Economists had expected about 1.1m new claims – but the Dow and S&P 500 both fell, while the Nasdaq rose 0.6pc.
Back in the UK, the FTSE 250 closed down 0.91pc, or 164.99 points, at 17924.59.
Hipgnosis Song Fund shares were flat at 122.5p after acquiring the music royalty catalogue of music producer No ID, who has worked on tracks with Rihanna, Ed Sheeran and Jay-Z.
Cineworld backers sent shares 1.1pc higher, or 0.56p, to 51.94p, after it was disclosed that Chinese entrepreneur Liu Zaiwang’s company, Jangho Group, has a 3.3pc stake in the group.
Hefty director deals also caught traders’ eyes, including at Admiral. The insurer dipped 0.7pc, or 19p, to 2689p after The Waterloo Foundation, a charity connected to boss David Stevens, sold £6m worth of shares – 225,000 for 2670p each.