Market Report: Decline in fund sales undermines Amvescap

Click to follow
The Independent Online

With stock markets on both sides of the Atlantic bathed in red yesterday, it was no surprise that fund managers such as Amvescap saw their own share prices come under pressure. But Amvescap's fall of 12.5p to 316.5p was more severe than most, as investors fretted that it is continuing to lose market share in the US.

With stock markets on both sides of the Atlantic bathed in red yesterday, it was no surprise that fund managers such as Amvescap saw their own share prices come under pressure. But Amvescap's fall of 12.5p to 316.5p was more severe than most, as investors fretted that it is continuing to lose market share in the US.

The word on Wall Street yesterday was that the company's AIM business in the US has failed to attract the amount of new private investor money to its funds that management had been banking on. Cazenove yesterday became the latest UK broker to shave its estimates for Amvescap's first quarter results on 26 April.

Falling stock markets reduce the value of the funds under management at asset managers such as Amvescap, and hence the percentage cut it takes in fees. Its FTSE 100 peer, Schroders, also saw its shares fall yesterday, by 20p to 720p, and even Man Group, a hedge-fund manager, was off 47p at 1,343p.

IBM's profits warning in the US had knocked already fragile confidence in the outlook for corporate earnings and the global economy. The FTSE 100 skidded 53.8 points lower to 4,891.6, its worst level since January. The sell-off was heavy and widespread. Only 13 blue-chip stocks ended the day in positive territory.

In particular, it was a day of metal bashing. Mining stocks led the way down,as investors succumbed to the sporadic panic that speculators who have pushed commodities prices to new records in recent days will shortly withdraw their money. Worst hit was the copper specialist Antofagasta, tumbling 50p to 1,150p. The company has just come out bottom in an analysis of compliance with corporate governance best practice by FTSE. Corus, the steel maker, was the worst blue-chip performer, off 2.25p at 50.5p; BHP Billiton, one of the most diversified miners, fell 18p to 656p; and, outside the FTSE 100, Vedanta Resources, which is mining in India, dipped 31p to 417p.

For the second session in a row, the best performances came from heavyweight drug stocks. A closely watched court battle between Eli Lilly, a US pharmaceuticals giant, and copycat drug makers hoping to launch a generic version of Lilly's schizophrenia pill, Zyprexa, went in favour of Lilly. The generics firms had launched an audacious challenge to one of the most usually watertight types of patents on branded drugs, so there was relief across the industry. Navid Malik, a drugs analyst at Collins Stewart, said: "It sends a warning shot across the bow of generics companies who believe that intellectual property within the drugs sector is becoming an easy target." GlaxoSmithKline rose 12p to 1,265p, while AstraZeneca was 43p stronger at 2,284p.

George Wimpey's management held a dinner for analysts on Thursday where the mood ­ while not exactly negative ­ was noticeably more downbeat than on previous soirées. All the major house builders were sold off when word got out, although Wimpey's shares fell only a modest 12.5p to 413.5p. Westbury suffered the worst subsidence, slipping 21p at 427p; Bellway fell 30.5p to 815p; and Persimmon was 23.5p lower at 720p. Taylor Woodrow was down 11.25p to 291.5p after Citigroup abandoned its "buy" recommendation.

Real Good Food, which manufactures cakes and sandwiches, rose 2.5p to 151p after being tipped by Investors Chronicle. And Delcam, a supplier of computer-aided design software to the tooling industry, jumped 12.5p to 247.5p after positive comment on its new products and widening international distribution arrangements.

Shares in Vectura rose 4.5p to 92p. The company announced one of the European biotech sector's biggest-ever licensing deals on Wednesday, selling rights to its lung disease drug to Novartis of Switzerland. Vectura could get up to £100m in payments depending on progress of the experimental inhaled drug but, on the day, its market value rose by even less than the £8m upfront payment from Novartis. Vectura's house broker, Nomura, put out an aggrieved note yesterday, telling clients not to miss this opportunity to buy Vectura shares and promising further licensing deals in the pipeline.

The stream of new natural resources companies coming to the AIM continues. Cardinal Resources, which has stakes in two oil-producing fields in Ukraine, raised £10.6m to upgrade its existing wells with Western technology. Its shares were placed at 32p apiece, and closed at 34.5p. Also trading for the first time was Churchill Mining, which is looking for manganese (used in the making of steel) in Western Australia. Its shares were nudged up from to 2.12p at the mid-price after a placing that raised £1m at 2p.

Comments