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Friday, August 10, 2012

Rebalancing the economy is no Olympian feat writes James Faulkner in the ShareCrazy Morning Market View

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Friday 10 August 2012
QUOTE OF THE DAY

By working faithfully eight hours a day you may eventually get to be boss and work twelve hours a day
- Robert Frost


ON THE SHARECRAZY BLOG

Rebalancing the economy is no Olympian feat

by James Faulkner

It is hard not be filled with pride at the spectacle of Great Britain's biggest medals haul in a hundred years; hell, my very own county of Yorkshire is currently 10 th in the world medals rankings . Coming on top of the Queen's Diamond Jubilee, the Olympics has cast the spotlight of the world upon our sceptred isle for the second time in what has been in many ways a truly glorious year for Britain.

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THIS MORNING IN LONDON

FTSE 100

5,834.89

-16.62   -0.28%

FTSE 250

11,438.08

-25.95   -0.23%

FTSE 350

3,095.19

-8.58   -0.28%



FTSE All Share

3,027.03

-8.20   -0.27%

AIM 100

3,119.46

12.37   0.40%

AIM All Share

686.90

2.20   0.32%


11:58 am

City approves of new Barclays Chairman

Footsie bumbled along for most of the morning a little in the red, weighed down by mining stocks, which have been under selling pressure after weak Chinese trade data.

The top-share index did briefly venture into positive territory around 11:00 but with US futures markets pointing to a soft opening on Wall Street the rally quickly ran out of steam.

Chinese exports grew 1.0% from a year earlier in July, which is not the sort of growth the market has become used to; economists had plumped for a growth rate of 8.6%.

Imports, meanwhile, grew less expected. The year-on-year rise was 4.7% versus market expectations of a 7.2% rise.

The trade surplus narrowed from $31.7bn in June to $25.1bn in July.

City approves of new Barclays skipper

Scandal-hit bank Barclays is to appoint City veteran Sir David Walker as its new Chairman. Walker will join the board on September 1st before replacing the outgoing Chairman, Marcus Agius, in November.

Walker has served as Chairman of Morgan Stanley International and Deputy Chairman of Lloyds Bank, but also has experience in government as Assistant Secretary to the Treasury and Executive Director of the Bank of England. His time as a regulator will be crucial for Barclays to rebuild trust after the agonies of the LIBOR debacle which saw the departure of the ultra-high profile Chief Executive, Bob Diamond.

Sector peer Standard Chartered, embroiled in an entirely different scandal to Barclays, is under a little pressure as ratings agency Fitch is making noises about reviewing the bank's AA- credit rating.

There has been speculation that the UK bank is pondering legal action against the New York State Department of Financial Services, which broke ranks from other US regulators to make some serious accusations about the behaviour of Standard Chartered Bank, a wholly-owned subsidiary of Standard Chartered. Many investors believe getting into a fight with regulators would not be a smart move.

The Fitch analysts expect to have more clarity on the possible outcomes after the hearing scheduled for August 15th.

"Standard Chartered has informed Fitch that deposit outflows have been limited so far and that its USD [US dollar] liquidity has remained strong. The bank has substantial sources of USD liquidity outside its New York branch," Fitch said.

Elsewhere in the financial sector, insurance titan Prudential is, not for the first time, thanking its Asian operations for a solid first-half performance.

Although the figures failed to wow the market - IFRS operating profit was up 13% to £1,162m from £1,028m a year earlier, beating broker Panmure Gordon's forecast for IFRS operating profit of £1,095m - performance in Asia was a bright spot, with IFRS operating profit up 21% year-on-year. IFRS stands for International Financial Reporting Standards. Insurance companies also present results using the European Embedded Value (EEV) guidelines, and on this basis operating profit came in at £2,109m, versus £2,147m the year before. Panmure Gordon had forecast headline European Embedded Value operating profit of £2,160m, up 1% on the first half of 2011.

Smaller companies

Flybe, Europe's largest regional airline, has warned that is has experienced another 'very challenging' year, with the forward booking visibility remaining 'extremely limited'. Looking ahead, the firm expects total year-on-year growth for the year ended March 31st to be between flat and 2.0%, below its previous expectations. The stock has lost altitude rapidly, dragging easyJet lower with it.

Another stock going down is UK Coal after the debt-laden firm announced a restructuring. The restructuring will see the pension fund defer contributions for two years while each of the firm's nine mines is hived off into a separate business, avoiding one mine failure from bringing down the rest of the group (which is essentially what is happening now).

Collectibles dealer Stanley Gibbons is leaving its stamp on the market after reporting rising interim profits and forecasting growth for the rest of the year 'irrespective of economic conditions' as it continues to lead the way in sourcing rare stamps.

Oil firms please

The US focused oil and gas firm Caza has reported increased production in the second quarter as new wells improved its extraction rates. Caza's production increased 38% to 25,107 barrels of oil equivalent (boe) for the three-month period ended June 30th from 18,130 boe for the same period in 2011. This represents an average daily production rate increase of 77 boe per day.

Oil and gas company Gulf Keystone is wanted after it reached a 'major milestone' by submitting a declaration of commercial discovery for the Shaikan Block in the Kurdistan Region of Iraq.

FTSE 100 - Risers
Barclays (BARC) 183.80p +2.71%
Aviva (AV.) 321.80p +1.61%
ICAP (IAP) 335.30p +1.33%
Anglo American (AAL) 2,043.50p +0.94%
Kingfisher (KGF) 287.00p +0.81%
Schroders (SDR) 1,404.00p +0.79%
Antofagasta (ANTO) 1,136.00p +0.62%
Whitbread (WTB) 2,174.00p +0.56%
InterContinental Hotels Group (IHG) 1,678.00p +0.54%
Resolution Ltd. (RSL) 217.90p +0.41%

FTSE 100 - Fallers
Bunzl (BNZL) 1,123.00p -3.77%
IMI (IMI) 882.50p -1.89%
Amec (AMEC) 1,086.00p -1.54%
ARM Holdings (ARM) 573.50p -1.29%
Reed Elsevier (REL) 561.50p -1.23%
International Consolidated Airlines Group SA (CDI) (IAG) 149.60p -1.19%
Ashmore Group (ASHM) 352.00p -1.18%
Standard Chartered (STAN) 1,348.00p -1.10%
Smiths Group (SMIN) 1,046.00p -1.04%
Polymetal International (POLY) 923.00p -1.02%

FTSE 250 - Risers
Aquarius Platinum Ltd. (AQP) 37.57p +4.86%
Gem Diamonds Ltd. (DI) (GEMD) 195.60p +4.10%
Rank Group (RNK) 123.00p +2.50%
Rightmove (RMV) 1,617.00p +2.41%
SVG Capital (SVI) 266.00p +2.11%
Paragon Group Of Companies (PAG) 180.50p +1.98%
JD Sports Fashion (JD.) 690.00p +1.92%
Dixons Retail (DXNS) 16.30p +1.88%
Genus (GNS) 1,311.00p +1.79%
Oxford Instruments (OXIG) 1,272.00p +1.60%

FTSE 250 - Fallers
Heritage Oil (HOIL) 153.00p -6.71%
RPS Group (RPS) 239.10p -3.20%
Talvivaara Mining Company (TALV) 145.30p -3.13%
Avocet Mining (AVM) 90.25p -2.96%
Morgan Crucible Co (MGCR) 261.20p -2.90%
Daejan Holdings (DJAN) 3,228.00p -2.86%
Brewin Dolphin Holdings (BRW) 151.10p -2.45%
Ocado Group (OCDO) 71.25p -2.40%
Renishaw (RSW) 1,509.00p -2.39%
Petra Diamonds Ltd.(DI) (PDL) 102.50p -2.19%

FTSE TechMARK - Risers
Wolfson Microelectronics (WLF) 204.75p +2.12%
Phytopharm (PYM) 6.50p +1.96%
Vislink (VLK) 30.00p +1.69%
NCC Group (NCC) 850.00p +1.67%

FTSE TechMARK - Fallers
BioSeek (ATD) 0.38p -25.00%
AEA Technology Group (AAT) 0.050p -9.09%
E2V Technologies (E2V) 121.00p -2.42%
BATM Advanced Communications Ltd. (BVC) 14.00p -1.75%
WHAT THE BROKERS SAY
TUI Travel: Jefferies has maintained its 'buy' rating and 300p target price

Ocado: UBS has downgraded its recommendation from 'neutral' to 'sell'

Click here for the rest of the broker recommendations

FREE SHARE TIP OF THE DAY

Buy Solid State at 221p

Say the experts at UKMicrocap.com

Solid State is a specialist electronics business with particular expertise in batteries and ruggedised industrial computing products used in harsh environments; its operations comprise sales, marketing distribution and manufacturing. Having joined AIM in 1996, the firm has subsequently grown organically and through acquisitions - most notably, Blazepoint (October 2011) Rugged Systems (April 2010), RZ Pressure Systems (2007), Wordsworth Technology (2005) and Steatite (2002), acquired for an average exit multiple of 6 times earnings. Solid State operates in the UK through its two principal trading subsidiaries, Solid State Supplies Ltd and Steatite Ltd, although products are also marketed through a number of industry-leading brands including Wordsworth (displays, networking, embedded systems), Rugged Systems and RZ Pressure (batteries). Each company has considerable operating autonomy, which is important in enabling it to respond to customers' bespoke needs.

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THE LATEST ON THE CRAZY BOARD

The top 5 hot company threads on the Bulletin Board:

Mariana Resources -

Standard Chartered

Zoltav Resources

Fiberweb

Running trading thread

Click here to discuss shares with other ShareCrazy members


BOOK OF THE WEEK

Good Strategy, Bad Strategy

By Richard Rumelt

A book review by Aaron Padgham of t1ps.com

Richard Rumelt's book, Good Strategy, Bad Strategy explains the very definition of a strategy - a coherent response to one's obstacles in order to progress, and whether you're a high-flying CEO, head of a charity or the coach of a local sports team, you will know, or are soon to learn that the creation and implementation of a focused 'good' strategy is a key requirement to success.

Click here to view the rest of the article

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ShareCrazy Poll
Which will be the first country to leave the Euro ?

Germany
Greece
Portugal
Ireland
None will leave

View Results
 
 
 
 



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