If any industry ought to be having an easy time of it at the moment, it's probably fund management. The main index of the London market has almost doubled in value in three years, multi-year highs are hit almost daily and retail investors are piling back into equities.
Fittingly, on a day when the FTSE 250 broke through 10,000 for the first time in its history, the fund manager Amvescap reported forecast-busting first-quarter results, sending the shares into orbit. Analysts had been expecting pre-tax profits of about $120m (£67m) for the Anglo-American manager, which operates the AIM and Invesco fund brands. Instead the company delivered pre-tax profits of $171.7m, a whopping 43 per cent ahead of expectations. The shares closed 50p better at 624p.
Much of the growth in UK equities has come from corporate activity speculation in the second tier of the market. The FTSE 250 was trading below 4,000 in March 2003, and in hitting 10,000 it has not only grown by 150 per cent in just over three years, it has also significantly outperformed the more illustrious FTSE 100. A late bout of profit-taking meant the FTSE 250 was unable to hold on to the high water mark as it closed 30.7 higher at 9,997.6, while the FTSE 100 was 17.7 better at 6104.3.
Other fund managers were well bid yesterday on the back of Amvescap's bumper numbers, with Schroders closing 12p better at 1,173p and Man Group 28p firmer at 2,610p. Even if some bears feel the market is getting a little ahead of itself, many traders feel that a collapse in the post-dot.com boom is not likely and new funds will continue to support valuations.
Elsewhere in the FTSE 100, Centrica was in focus again on the back of reports that the Government will not intervene should the Russian gas giant Gazprom bid for the UK's largest supplier. Gazprom has confirmed that Centrica remains on its "watch list', sending the shares 5p better to close at 307.25p.
The household goods manufacturer Reckitt Benckiser was well bid before first-quarter numbers due today as traders speculated that results would be ahead of forecasts and the share buy-back programme would accelerate. The shares closed 43p better at 2,049p.
The casino operator London Clubs International was again in the corporate activity spotlight as traders speculated that its gambling rival Ladbrokes is poised for a 155p-per-share takeover bid. The stories have done the rounds in the past but traders remain convinced the sector will see some action in the near future, particularly in light of the deregulation of the gambling industry in the UK. Shares in London Clubs improved 9.5p to 124p on significant volume of 3.7 million shares, well ahead of the daily average of 680,000. Ladbrokes traded 4.25p firmer at the close at 431.75p.
In the smaller caps, outstanding results from Metal-Tech, the Israeli mining and oil industry by-products recycling group listed on AIM, propelled the shares 27.5p better to 233.5p, less than a year after listing at just under 130p. Revenue for the last year was $125m, a 113 per cent increase, while pre-tax profits rose by 283 per cent to $26.9m.
The minnow Glencar, 0.12p weaker at 13.25p, is thought to be on the verge of announcing results from final test drilling at its Yanfolila project in Mali, which some traders believe could turn out to be one of the largest gold finds in recent African history. The company has already said the mine shows high gold grades of 55.19 grams per ton and bulls believe that good results coming out today or tomorrow could transform the share price.
Voller Energy Group, another company involved in the commercial development of fuel cell technology, pleased investors with an upbeat progress statement. The shares surged 13p to 66p. The broker Dawney Day published a bullish note on the stock, saying the current share price is "divorced from reality".
Smaller oil stock followers will be on the lookout for Baltic Oil Terminals, due to start trading on AIM today. The company is raising £23m via an institutional placing through the broker Arden Partners at 140p per share. The issue was twice subscribed and the listing will value the company at £60m.
Sticking with oversubscribed issues, another fuel cell group to star in recent weeks has been ITM Power. The company confirmed yesterday that it is in talks to raise new funds and brokers reported strong demand for the shares, even as the price fell 11.5p to 321p. The fundraising is expected to be at around 270p with the issue expected to be several times subscribed.
Finally, proving that it's not all plain sailing in the world of metal trading, shares in Wogen tanked by 46p to 132p. The company said it is experiencing difficult trading conditions.Reuse content