Thursday April 22 2010
CAMERON: HUNG PARLIAMENT WILL RISK ECONOMIC DISASTER
Conservative political party leader David Cameron has said he believes a hung Parliament would endanger Britain’s credit rating, damage the value of sterling and increase household and business bills. Cameron said an election resulting in a minority government would cause politicians to "endlessly haggle and bicker and scheme and swap jobs". He did not rule out a post-election agreement with the third party, the Liberal Democrats. Conservative Shadow Business Secretary Kenneth Clarke warned that Britain could require a bailout from international financial overseer the International Monetary Fund in the event of a hung parliament.
12 MISSING AFTER BLAST AT OIL RIG ON LEASE TO BP
12 oil workers are missing after an explosion at the Deepwater Horizon oil rig in the Gulf of Mexico. 98 of the 126 people working on the rig are safe, while 17 people are in hospital. The rig is owned by Swiss company Transocean and is on lease to UK energy company BP (BP.L). BP said that all six of its employees working on the rig are safe. The rig is said to be tilting by 70 degrees and is in danger of falling into the sea. The cause of the explosion is as yet unknown.
UNEMPLOYMENT HITS 15-YEAR HIGH
Unemployment figures released on Wednesday by the government’s Office for National Statistics have shown that unemployment increased by 43,000 in the three months to February to a 15-year high of 2.5 million. The number of people claiming unemployment benefits fell by 33,000 to 1.54 million, but an economist dismissed this as an indicator, saying that this could be due to "changes in the type of person who is unemployed". The number of people on government training or employment schemes rose by 12,000.
LSL Property (Buy)
Autonomy AUTN.L (Hold)
The Daily Telegraph
CITY OFFICE RENTS EXPECTED TO RISE, FIRST TIME SINCE 2007
A survey by the Royal Institute of Chartered Surveyors found that agents expect City office rents to rise for the first time in two years. The number of agents expecting City rents to rise in the second quarter of 2010 was 57 percent greater than the number expecting rents to fall. The figure is the first positive reading recorded by the survey since 2007 and the largest quarterly change on record. Across the UK, 14 percent more agents expect to see rents to fall rather than rise.
ANGLO AMERICAN IN TALKS WITH MARWYN OVER TARMAC DEAL
The mining and resources group Anglo American (AAL.L) has held discussions with private equity-backed materials business Marwyn Materials over the sale of a stake in Anglo’s Tarmac business. The quarries and cement maker is expected to be valued at up to 3.9 billion pounds ($6 billion). Marwyn heads, Peter Tom and Simon Vivian, have hired HSBC (HSBA.L) to advise on a potential deal. Options include a complete buyout of the Tarmac business by Marwyn or a deal that would leave Anglo in economic control, with Tom and Vivian assuming management control.
PUNCH TRIES TO DEFUSE BEER-TIE ROW WITH NEW PUB LEASE TERMS
On Thursday, Punch Taverns PUB.L, Britain’s largest pub landlord, will announce new lease terms as the group looks to assuage tenant anger and avoid tighter regulation. Britain’s big pub operators, including Punch and Enterprise Inns ETI.L, have faced criticism over the "beer-tie" practice of charging above-market rates for beer in exchange for lower rents. Punch will offer tenants the option to buy beer at the market rate in exchange for higher rent, after the Office of Fair Trading reopened an investigation into the beer-tie practice in response to an appeal from industry body CAMRA.
BARCLAYS REQUESTS LEHMAN PAPERS
Banking group Barclays (BARC.L) has filed an 11th-hour motion with the U.S. bankruptcy court to obtain documents used by collapsed investment bank Lehman Brothers and its advisers to value the sale of Lehman’s brokerage arm to Barclays’ investment unit, Barclays Capital. Lehman’s estate is suing Barclays for up to $11 billion that Lehman’s creditors allege were incorrectly transferred during the sale. Barclays has countered the allegations, claiming it is owed $3 billion from the estate.
LADBROKES WINS 80 MILLION POUND CASH REBATE FROM THE REVENUE
Shares in Ladbrokes LAD.L rose 5.3 pence to 162.7 pence on Wednesday after the bookmaker announced that it had won an 80 million pound cash rebate. The rebate came after Ladbrokes reached a settlement with HM Revenue and Customs covering outstanding tax issues for all accounting periods up to 2007. Ladbrokes will take a 262 million pound accounting credit in its 2010 accounts, while finance charges for 2010 will fall by 20 million pounds. Stockbroker Panmure Gordon increased its price target to 141 pence but maintained its "sell" position due to the difficulties facing incoming chief executive Richard Glynn.
Diageo (DGE.L) (Buy)
Bunzl (BNZL.L) (Buy)
BRITAIN WILL NOT MEET DARLING’S GROWTH FORECAST, WARNS IMF
International financial overseer the International Monetary Fund has released economic growth predictions that estimate that western economies will recover more slowly than dynamic emerging economies in the east. The IMF predicted the UK would recover "moderately" at 1.3 percent growth this year and 2.5 percent next year, less quickly than previous predictions by the IMF and the British chancellor. The IMF predicted unemployment in the UK will rise to 8.3 percent this year, higher than the government Office for National Statistics’ prediction of 8.0 percent.
RESURGENCE OF INFLATION WORRIES BANK OF ENGLAND
The minutes of a Bank of England Monetary Policy Committee meeting have revealed concern within the Bank about rising inflation. At the meetings on 7 and 8 of April, some MPC members expressed concern that rising oil and commodity prices over the last two months had raised inflation in the near-term, and that some measures of financial market participants’ inflation expectations had been drifting up. The minutes for the meeting have come to light following the release of higher-than-expected inflation figures on Wednesday.
ANGLO AMERICAN CONFRONTED BY ALASKAN PROTEST
The restriction of flights across Europe due to volcanic ash has meant that mining group Anglo American’s (AAL.L) annual general meeting will not be faced with a protest against the group’s explorations in Bristol Bay, Alaska. Local residents there are concerned that the mining activities will destroy fisheries that are a vital part of the local economy, but the flight restrictions mean they will not be able to deliver their 100,000 signature-strong petition to the meeting. Anglo has argued that the iron ore excavations would only be taking place on land designated for mining by local authorities.
Bunzl (BNZL.L) (Hold)
STV Group (Hold) ($1=.6495 Pound)