Chinese state media has seized on the rejection by the London Stock Exchange Group (LSE) of an unsolicited £30bn takeover bid by the Hong Kong bourse. The People’s Daily, a Communist Party mouthpiece, published a scathing commentary giving a laundry list of reasons as to why the LSE would rebuff Hong Kong Exchanges and Clearing (HKEX), given “persistent worries” over ongoing political unrest, a lack of strategic vision, and a lowball bid. LSE’s rejection is a sign that Hong Kong cannot break away from the mainland and develop on its own without the support of a China brimming with opportunities, according to the piece. It also praised the LSE for identifying its existing tie-up with the Shanghai Stock Exchange as its preferred way to access the market in China. The LSE “won’t worry about Shanghai … as long as China continues to rise, so will Shanghai”.
Eddie Stobart Logistics (ESL) added to a lorry-load of woes by warning that profits would be “significantly below” expectations. The trucking operator also raised the spectre of tapping investors for cash after drawing down “more heavily” on its bank loans. The company’s shares have been suspended since last month after failing to publish its half-year results in time. Boss Alex Laffey quit with immediate effect as an accounting review was launched after a £2m error in its 2018 profits was identified. Last week, major investor DBAY Advisors made a preliminary approach to buy the company. On Monday Eddie Stobart, which was spun-off from Stobart Group as a separate listed company in 2017, said it had failed to deliver against “an ambitious budget” and had been forced into exiting a “problematic” contract.
The global oil market after a devastating drone attack on Saudi Arabian production facilities dominated markets yesterday, sending European equities tumbling and ending a five-day winning streak for the continent’s top indices. The price of Brent crude spiked in the early minutes of Asian trading, but pulled back quickly to stand around 10% up throughout London trading. Saudi Arabia lost around half its production capacity – about 5% of the global supply – as a result of the attack, which the US has blamed on Iran. Even after surging, oil still stood around its mid-August levels, reflecting the steady drop it experienced throughout a summer period wracked by trade war doubts. Oil giants gained from the price increase BP (BP.) and Royal Dutch Shell ‘B’ (RDSB) rose 20.2p to 524.6p and 43p to £23.22 respectively.
BT Group (BT.A) managed to also find a spot among the top risers, after chief executive Philip Jansen bought just under £1m worth of shares in a show of confidence in the business.
Almost a fifth was wiped off software company Alfa Financial Software Holdings (ALFA) value after it warned profit would be “significantly below” earlier expectations due to customers stopping spending on “optional upgrades”. Alfa said that while its revenue looked set to dip to £31m in the first half of 2019, from £32.9m in the same period last year, its operating profit would plunge to £5m from £8.6m. This, together with one-off legal costs it expected to incur in the second half and pay hikes to ensure it could ward off attempts to poach talent, meant it would take the profits hit. The company said it was suffering with delays in a number of its projects as well as customers spending less on non-critical work and upgrades amid broader uncertainty.
Questor: yes, a no-deal Brexit could knock Grafton Group Units (GFTU) – but these worries are in the price. Questor share tip: the valuation now looks tempting, especially in view of the builders’ merchant’s strong dividend record. Hold
