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Moving up

20 June 2005 Angelo Coppola

The (London) All-Share Index was trading at a four year high, which was buoyed by strength in the mining sector on strong Chinese industrial data, high base metals prices and positive analyst’s comments.

Consumer price inflation remained at 1.9% for the third month in a row in May, its highest level for seven years, as slower petrol and diesel price growth was offset by rising air fares and food prices.

House prices fell to its lowest level in over 12 years in the three months to the end of May as interest rates remained at a 3½ year high.

Jobless claims rose for a fourth month in May, the longest run of gains in 12 years, as slowing consumer spending dampened the economic outlook. The number of people claiming unemployment benefit rose by 13,200 to 855,300, ahead of expectations of a 5,000 increase. The jobless rate held at 2.7%, close to a three decade low.

Over the week the All-Share advanced 1.0%, with the FTSE 100 up 0.9%, midcaps 1.2% ahead and small caps gaining 1.1%. The best sector performances came from the resources sectors, with metals benefiting from optimism over Chinese demand and oils helped by a strong underlying crude price.

At the other end of the scale consumer staples were universally weak.

The UK’s largest IPO so far this year, Inmarsat (+17.6% to 288p), started trading at the end of the week.

The satellite communications company came to market at 245p a share, at the upper end of the expected range, valuing it at £1.12bn. The issue raised £367.5m, which the company plans to use to pay off existing debt. The issue was around five times oversubscribed.

Quick Polls

QUESTION

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?

ANSWER

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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