Category Investments

Last week in London…

05 September 2004 Angelo Coppola

Helped by bid rumours, the London market moved ahead for a second week, reaching its highest level in three months.

Quentin Smith, from OMAM UK reports that while a number of economic releases pointed to a slowdown in the housing market, which suggested that interest rate rises are beginning to take effect.

Mortgage lending rose at the slowest pace in almost a year in July, while mortgage approvals were at their weakest since November 2000, providing further evidence that five interest rate rises since November are having an effect on the housing market.

House prices rose less then expected in August as higher interest rates reduced demand for property, according to the monthly Nationwide Building Society survey. Prices rose 0.1% in August after a 2.1% gain in July.

This equalled the rise seen in April 2003, which was the lowest since in October 2001, when prices fell 0.3%.

The corresponding HBOS survey showed prices falling 0.6% in August, the largest fall since December 2000, giving an annual rate of 21.3%. HBOS commented that the figures provide further evidence that the housing market is slowing in response to interest rate rises.

Over the week the All-Share, FTSE 100, FTSE Mid 250 and FTSE Small Cap indices all advanced between 1% and 1.5%. The best sector performances came from consumer staples, including health, food producers and beverages, with selected financials also having a good week, while of the larger sectors, telecoms was the weakest performer.

Associated British Ports Holdings (+1.4% to 434p), the UK's largest port operator, reported a fall in first half profit slumped because of a £44.9m charge relating to the government's veto of a plan to develop the port of Dibden, near Southampton, southern England.

The company does not expect the government's decision to have a significant short term impact on its underlying UK ports business.

ABP also announced plans to invest £400m in the UK over the next 10 years as it looks to focus on shipping. This includes a new coal terminal in northeastern England, as well as a roll-on/roll-off facility.

The company also plans to sell another £50m of property assets, making a total of £300m of disposals since the start of 2000.

Rank Group (-2.1% to 285p), the owner of the Hard Rock Cafe chain and the Mecca bingo outlets, reported a 42% decline in first half profit after losses at its film processing and postproduction unit increased.

Rank said it may separate its Deluxe film distribution business, which lost a contract with studio Fox International in May to make and distribute DVDs in Europe. The contract accounted for 48% of Deluxe's DVD output in 2003.

After a challenging first half, Rank believes that now would be an opportune time to separate both Deluxe Film and Deluxe Media from the rest of the group.

Quick Polls


The second draft amendments to Regulation 28 will allow retirement funds to allocate up to 45% of their assets to SA infrastructure, with a further 10% for rest of Africa; but the equity & offshore caps remain unchanged. What are your thoughts on the proposal?


Infrastructure? You mean cash returns with higher risk!?!
Infrastructure cap is way too high
Offshore limit still needs to be raised
Who cares… Reg 28 does not apply to discretionary savings
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