Insurance company Prudential (PRU.L) was one of the biggest risers on a flat FTSE 100 after the insurer announced targets that analysts said could mean bigger payouts for investors.
Among muted market moves, with the FTSE 100 little changed at 6,558 despite more gains overnight on Wall Street, Pru edged up 1.3% to £12.83.
Ahead of its investor day, the company announced plans to generate free surplus of at least £10 billion by the end of 2017. ‘We interpret this to mean significant returns of surplus capital for shareholders,’ commented Panmure Gordon analyst Barrie Cornes.
‘In our view there is a strong possibility that there might not only be the usual significant hikes in the dividend every other year but also the very real possibility of special dividends,’ he added.
Fahad Changazi, an analyst at Nomura, said the Pru's plan, which also included a target of generating 15% annual pre-tax profits growth in its Asian business, ‘reaffirms the good growth outlook for the group, which we believe still makes Prudential stand out amongst its larger UK listed peers’.
Of other London risers, Smiths Group (SMIN.L) rose 2.4% to £14.11 after analysts at Morgan Stanley raised the stock to an ‘overweight’ rating.
At the other end of the index, Whitbread (WTB.L), the owner of Premier Inn and Costa Coffee, fell 1.3% to £34.81 despite posting a 4.3% rise in third quarter sales and telling investors its full year results were on track to meet expectations.
Several analysts raised their target prices for Whitbread, among them Numis’s Wyn Ellis who said ‘the update is sufficiently positive to help maintain momentum for the shares’.
The weak performance on the FTSE 100 came despite the US S&P 500 closing at another record high. Investors seemed unmoved by more relatively upbeat data on China’s economy, with retail sales growth in November and a slight slowdown in industrial output.
That comes after reports earlier this week showed that China’s exports growth rebounded to a seven-month high of 12.7% year on year in November, up from 5.6% in October. Imports though grew by just 5.4%, a five month low. Consumer price inflation meanwhile slowed more than expected from 3.2% in October to 3% in November.
‘With a muted inflation and a pace of GDP growth in line with China’s potential, we expect the government to maintain neutral monetary and fiscal policies in the next couple of quarters while increasing their efforts on drafting and carrying out structural reforms,’ commented Ting Lu, an economist at Bank of America Merrill Lynch