Private Investor: Mighty Mittal poses threat to Corus's impressive revival
Saturday 30 October 2004
Some folk go for fundamentals and some for charts. I'm a great believer in gut feeling and right now I feel like avoiding the high street and buying into housing.
That means betting against the market trend, something I hate doing, and I have the nagging feeling that sheer obstinacy could be blinding me. None of us like to admit we were wrong and I have been a fan of housebuilders for some time, while I think retailers are being hopelessly squeezed by price wars that can only end in tears.
I have watched Sainsbury shares rise this week in a triumph of hope over reality. In my opinion, only bid rumours can justify holding these shares and I don't really buy the rumours. OK, so Allan Leighton is stepping down from the chair at Lastminute. com and could link up with Archie Norman, who is quitting politics at the next general election to spend more time with his groceries.
Sainsbury must be tempting for this duo, as it is in as big a mess as Asda was before they turned it round, but the next election is still some way off and Norman may not be in any hurry to put himself through a repeat ordeal in the supermarket stakes. The sector has become much more concentrated over the past few years. Tesco dominates it in a way that Sainsbury never did when it was top dog, Asda now has the might of Wal-Mart behind it and Morrison has mopped up Safeway. The Sainsbury challenge is daunting.
The one chain that fascinates me now is Somerfield, which has taken a real bashing from time to time. This week it bought 114 Safeway stores from Morrison for £260m. That's something Somerfield could not have contemplated even a year ago. Somerfield shares have been sliding for most of this year. I reckon this could be the time to get in on the cheap as it gets back into expansion mode.
I also fancy one or two housebuilders, on the same principle that the shares have fallen more than enough. It seems that the constant drip of stories claiming that house sales and prices will slump is having an effect, and I was disappointed on Thursday to read that the Nationwide house price index had slipped 0.4 per cent in October. Yikes! So prices are only 15.3 per cent higher than this time last year.
I stick to the view that the market has flattened out from its unsustainable rise and is unlikely to fall far. The fact is, there is a shortage of housing and interest rates are near or at their peak in the current cycle - I go with the popular opinion on that one. Shares in the sector will be held back for a while by current adverse sentiment, but Barratt and Persimmon look pretty solid to me.
Another old favourite, Corus, sprung to mind when I read on Tuesday about Lakshmi Mittal putting together three steel companies in an £11.4bn deal to create the world's biggest steel group. My first reaction was that this demonstration of faith in the industry, which has been boosted by strong demand from China's roaring economy, is good news for all steel producers. Then I started to worry about how Corus, valued at a mere £2.2bn on the stock market, will cope with such a mighty competitor. As Mittal paid himself £1.1bn in dividends, in a couple of years he will have as much as the whole Corus group.
Corus is only the seventh largest steelmaker in the world. With China's economy driving steel prices higher this year, Corus is set to make a profit for the first time. Mittal's move brings him closer to big customers in Asia such as Toyota and it also gives him a group of mills in the US. I reckon that is shrewd in case we get a repeat of the George Bush protectionist measures that hurt Corus.
Corus shares have risen over the past 18 months from 4p in March 2003 to around 50p now. This is the highest for two years and is quite an achievement for a company that will fail to pay a dividend for the fourth year in a row. For 2005, analysts think Corus could pay out as much as 2p a share but I have an aversion for lossmaking companies unless I am convinced they will move into sustainable profits and start paying up. Corus doesn't quite stack up.
The writer is editor of Hemscott Invest, www.hemscott.net
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Children's bookseller wins The Independent's new author search
Board creates magnetic field to achieve lift
- 1 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 2 Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
- 3 Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
- 4 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
- 5 Paralysed man Darek Fidyka walks again after treatment by British doctors on brink of 'cure'
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Jose Manuel Barroso warns David Cameron against making 'historic mistake' over immigration reforms
Worst Airports of 2014: Poll names Islamabad airport in Pakistan worst in the world
iJobs Money & Business
£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...
£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...
£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...
Day In a Page
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village