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Bargain-hunters eye Standard Life as FTSE slumps
by Chris Marshall on Aug 21, 2013 at 09:35
European shares continued to make losses on Wednesday morning, with investors anxious ahead of an update from the US Federal Reserve this afternoon, but Standard Life (SL.L) shone as the insurer and asset manager received a pair of broker upgrades.
Britain’s FTSE 100 was faring particularly badly, 0.5% lower to 6,420 in its fifth downer of the past six days. That makes a loss of 2.5% so far in August and 4.5% over the past three months. The benchmark index is, however, still up 9.4% so far in 2013.
The declines came ahead of the publication of the minutes of the latest meeting of Fed policymakers (the decision-making FOMC committee), with markets anxious to see whether views on the fate of the massive US stimulus scheme will have changed.
Also weighing on the London index was a batch of blue chips trading ‘ex-dividend’. Shares including Intercontinental Hotels (IHG.L), Hammerson (HMSO.L) and British American Tobacco (BATS.L) were trading without their dividend appeal, placing them in the losers’ column.
More generally, investors have been fretting over the state of emerging markets, with angst about the impact of the 'tapering' of US stimulus on flows to countries like India, which are heavily dependent on foreign investment. With a crisis seemingly looming – amid a slumping currency and worsening economy – the Indian authorities yesterday announced plans to buy $1.2 billion of government bonds to boost liquidity.
Standard Life 'well-positioned'
Standard Life was trading 3% higher to 353p after both Bank of America Merrill Lynch and Credit Suisse upgraded their ratings on the shares to ‘neutral’ from ‘underperform’.
The analysts cited the insurer and asset manager’s 11% share price fall over the past two weeks after a disappointing financial update.
‘We have always believed that Standard Life was well-positioned for regulatory changes in the UK but felt that the valuation fully reflected this. Following the recent pull-pack, we believe that the stock has become more interesting,’ commented the Bank of America Merrill Lynch team.
The stock still trades at a small premium to its competitors.
‘We believe that this premium to the UK life sector is justified given Standard Life’s increasingly asset management focused business model and strong capital base,’ they added.
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- Standard Life PLC (SL.L)
- InterContinental Hotels Group PLC (IHG.L)
- Hammerson PLC (HMSO.L)
- British American Tobacco PLC (BATS.L)
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