Market Report: Bank guru’s faith causes RBS to leap


Punters with an interest in financial stocks have been avid followers of the banking guru Ian Gordon at Investec, and his latest missive pushed up Royal Bank of Scotland by more than 5 per cent. Mr Gordon’s stance on the taxpayer-owned bank changed from negative – after more than five months as a seller – in March, when he moved to a hold rating. He raised this to a buy earlier in the summer, and now thinks RBS will be a “key beneficiary of last Friday’s strong mortgage data”. (May was the best month since October 2008.)

He thinks RBS’s core retail banking division has enjoyed “sustained growth in mortgage balances throughout the crisis”. He also thinks the move by the Prudential Regulation Authority to change to a 3 per cent capital ratio will benefit RBS.

He has raised his price target to 335p because he thinks it has “further to go”. RBS, which is already up 16 per cent since the end of June, added 15.6p to 320p, and was top gainer on the benchmark index.

Lloyds was dragged up on the better outlook for mortgage lending and a perception of an improved economic outlook. It added 1.71p to 69.44p.

On the blue-chip index, traders were relieved that Chinese data were no worse than expected, despite slowing for the second quarter in a row. The FTSE 100 was 41.17 points up at 6,586.11, continuing last week’s run, when it climbed 2.66 per cent over the week.

Investors dumped the computer software group Sage after several brokers, including Morgan Stanley, reiterated their negative rating on the stock. It finished 10.8p worse off at 356.1p, close to the bottom of the index. 

News last week that the Government is investigating the security outsourcers Serco and G4S was followed by a price reduction from analysts at HSBC. They reduced their target price for both, giving Serco a neutral rating with a 635p price target for shares that lifted 4p to 624.5p after it said it will co-operate with the investigation. HSBC rated G4S, which is being investigated by the Serious Fraud Office, a sell, with a 205p price target for shares that dropped 2p to 207.5p.

Burberry beefed up its technology knowhow in the form of the O2  owner Telefonica’s Matthew Key, who joins as non-executive director. Burberry rose 23p to 1,537p.

On the mid-cap index, chat of mergers and acquisitions were not stifled by the heat in the City. After revelations last week that the French power equipment-maker Schneider is in talks to buy the UK engineering group Invensys for £3.3bn, and further news over the weekend that the US giant General Electric might also be eyeing up the business, the City was rife with speculation about who else might want to join the throng.

Invensys has been viewed as a takeover candidate for a long time, so the City has been well-prepared. The Square Mile reheated the idea that Switzerland’s ABB, the US group Emerson Electric and Siemens could all be possible bidders.

Invensys is up more than 23 per cent since the beginning of July, and engineered another 1.5p rise to 509.5p.

Mike Ashley’s Sports Direct International was up 25.5p to 593p ahead of what is thought to be strong full-year results on Thursday.

After reports that AG Barr is considering a £1bn bid for GlaxoSmithKline’s Lucozade and Ribena brands, the Scottish maker of Irn-Bru dripped down 2p to 521.5p. AG Barr’s deal to merge with Britvic collapsed last week.

Thorntons, in its trading statement, reaffirmed that profits for the year just ended will be ahead of City expectations, following an uplift in the volume of chocolates sold to supermarkets, but it dipped 6.5p to 90.5p.

Still on the food theme, traders had an appetite for small cap-listed Hovis owner Premier Foods on the back of vague rumours about a possible bid for the group. Premier, which has been restructuring its debt, selling off brands and closing loss-making factories, gobbled up 6p to 77p.

Corporate governance battles at Aim-listed Gulf Keystone Petroleum with the City investor M&G Investments continued and Gulf slipped 19.5p to 156.75p.

The computer games developer Frontier Developments made its Aim debut and raised £4m. It produced a 27.5p gain to 154.5p on its first day.

Europa Oil and Gas said it has started seismic operations on its 15 per cent-owned licences offshore from Ireland a year ahead of schedule and it jetted 0.25p to 10.5p.


Snap up shares in Supergroup, Canaccord Genuity suggests. The broker thinks the fashion retailer is a “great British success story”, its third-quarter update in September should show strong growth and at “any moment European acquisitions could provide additional growth dynamics”. Canaccord rates the shares a buy with a 1100p price target. They are now at 942.5p.

Sell: G4S

Flog shares in G4S, HSBC insists. The broker, along with investors, is concerned about the Serious Fraud Office investigation in to the security specialist relating to billing practices for government contracts. It thinks the “broader risk of a contract embargo and/or margin cuts has now been amplified”, and rates the shares underweight with a 205p price target, down from 210p. They are now at 207.5p.

Gold: Capital & Regional

Hang on to property group Capital & Regional, Peel Hunt suggests. The broker thinks that its sell-off yesterday of two shopping centres could increase dividends for shareholders but the sale of other assets may not be as straightforward, so it rates the shares a hold for now with a 35p price target. They are at that level.

Arts and Entertainment
One of the installations in the Reiner Ruthenbeck exhibition at the Serpentine Gallery
artCritics rally to defend Reiner Ruthenbeck's 'Overturned Furniture'
John Cleese is promoting his new book
A-list actresses such as Deepika Padukone get paid a tenth of what their male counterparts make per film
The Black Friday Vines that will destroy your faith in humanity

Arts and Entertainment
The cast of Downton Abbey in the 2014 Christmas special
Robbie Rogers: US former Leeds United footballer, 25, announced he was gay in February 2013, shortly after he left Elland Road. Rogers 'retired' after writing on his blog: 'I'm a soccer player, I'm Christian, and I'm gay.' Has since signed with Los Angeles Galaxy.
peopleUS footballer said he had hoped Michael Sam and Jason Collins coming out might have helped
ebooksNow available in paperback
Arts and Entertainment
Johnny Depp no longer cares if people criticise his movie flops
Arts and Entertainment
All in a day's work: the players in the forthcoming 'Posh People: Inside Tatler'
TVGrace Dent thinks we should learn to 'hug a Hooray Henry', because poshness is an accident of birth
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)

Presents unwrapped, turkey gobbled... it's time to relax

Arts and Entertainment
Convicted art fraudster John Myatt

The two-year-old said she cut off her fringe because it was getting in her eyes
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Austen Lloyd: Company Secretary

Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...

Citifocus Ltd: German Speaking Client Specialist

£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...

Citifocus Ltd: Performance & Risk Oversight

£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...

h2 Recruit Ltd: Sales Director - SaaS (SME/Channel) - £140,000 OTE

£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game