Market Report: Bank on Standard Chartered, says Merrill

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The Independent Online

Standard Chartered notched up one of the best performances not just in the banking sector, but in the whole FTSE-100 yesterday, thanks to a some particularly bullish comments from Merrill Lynch. Boosting its stance on the Asia-focused bank to "buy" from "neutral", the US broker said: "We now believe the group is out-performing its domestic peers in Hong Kong and we have therefore upgraded our earnings for the company significantly." Standard Chartered shares put on 27.5p to 1,036p.

Standard Chartered notched up one of the best performances not just in the banking sector, but in the whole FTSE-100 yesterday, thanks to a some particularly bullish comments from Merrill Lynch. Boosting its stance on the Asia-focused bank to "buy" from "neutral", the US broker said: "We now believe the group is out-performing its domestic peers in Hong Kong and we have therefore upgraded our earnings for the company significantly." Standard Chartered shares put on 27.5p to 1,036p.

Merrill argues that Standard Chartered shareholders are about to benefit from upcoming trends in currency markets. It points out that the bank reports its earnings in dollars but has its principal quote and investor base in the UK, which will see it cash in should, as Merrill predicts, sterling lose ground against the dollar over the next 12 months. Meanwhile, it generates a big chunk of its earnings in Asian currencies which are structurally undervalued relative to the dollar. Any rally by them will significantly benefit Standard Chartered.

The US broker was also happy to note that uniquely among larger UK listed banks, the group has a negligible pension deficit. Elsewhere in the sector, Barclays added 6.5p to 526p, HBOS improved 14p to 819.5p, Lloyds TSB put on 5p to 456.5p and HSBC firmed 2p to 872p.

Reuters jumped 10.25p to 403.5p as Cazenove put its weight behind the stock following a presentation by the financial information giant. Cazenove upped its recommendation to "outperform" from "in line" and told its clients that there is a lot more good news to come from the group's recovery story. It assured investors that next month's first half figures from Reuters will certainly not disappoint the City.

As widely expected, Corus, up 0.5p to 43.75p, and Bunzl, steady at 536p, were demoted from the FTSE-100 following the index's latest quarterly review. Replacing the duo will be BPB, up 6p to 515.5p, and Hammerson, 17p stronger at 927p. The FTSE-100 index itself had a good day, registering a 44-point rise to 5,025 on the back of a strong performance by stocks on Wall Street.

The telecom sector was in demand and O 2, up 3.5p to 125.75p, stood out as a particularly strong performer. The most recent gossip to surround the mobile operator has been talk of a possible bid for the company by a private equity consortium. Cable & Wireless, 1.25p higher at 136.25p, was supported by Credit Suisse First Boston which upgraded its stance on the alternative carrier to "outperform" from "neutral". The Swiss broker, which slapped a 145p price target on the stock, expects positive newsflow from C&W over the next six months.

Paladin Resources jumped 4.75p to 202.25p as brokers applauded news that the explorer had sold its 15 per cent stake in Norway's Njord gas field for $90m (£49m). One broker was Investec Securities. It took the view that Paladin had secured a very impressive price for the field.

William Morrison fell 1p to 186.75p as Sir Ken Morrison's niece Susan Pritchard sold down her stake in the supermarket group to below 3 per cent. She is thought to have raised about £2m.

In the small-cap world, Crosby Capital Partners rose 1.5p to a fresh high of 54.5p on whispers that ICAP chief executive Michael Spencer may soon take a sizeable stake in the Asia-focused investment group. The company, run by former Nomura Securities executive Simon Fry, in March took a sizeable stake in IB Daiwa, a Japanese conglomerate. Since then shares in the Tokyo-listed group have nearly tripled on hopes that it is about to be broken up.

ML Laboratories, steady at 18.5p, is said to be working on the acquisition of a sizeable private company. Gossips hear that the biotech aims to secure control of a company which will complement its Innovata Biomed inhalers division in an all-share deal. ML recently appointed a new management team, led by Kieran Murphy and Ian Kent, who have the task of re-inventing the underperforming biotech.

Walker Crips Weddle Beck jumped 12.5p to 246.5p after unveiling a 54 per cent surge in full year pre-tax profits to £1.6m. The stockbroker also boasted that funds under management at its asset management division had risen to £77m from £18m during the past year. Investors can expect this figure to continue its sharp rise over the course of the next 12 months.

Finally, Scotty, unchanged at 1.75p, was last night said to have been putting the finishing touches to a £1.5m fund raising. Hoodless Brennan, which was recently appointed stock broker to the video communications group, found supporters for the share issue which it is hoped will finance the company into profitability.

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