Market Report: Anglo lose ground as broker moots break-up

Anglo American was in focus as a leading broker mooted the prospect of a break-up of the mining giant's international and South African businesses last night.

Bank of America Merrill Lynch said that since listing in London, Anglo has tried various ways of diluting its exposure to South Africa, where the mining industry's contribution to GDP has been declining relative to other commodity-rich countries.

In the past, this has taken the form of acquisitions, with bosses building heft in other industrial products as they tried to achieve a better valuation for the group. However, this has "proved a route to underperformance", according to the broker, whose analysts said a break up may provide a better basis for a re-rating.

"We envisage splitting Anglo American Plc into two London-listed vehicles, for example," Merrill said, putting an estimated enterprise value of about $34bn on the international business and of about $30bn on the South African arm. "We believe this idea, to split Anglo into two separate vehicles, would remove this overhang from the non-South African assets," the broker added as Anglo fell back, easing by 37p to 2,385p.

The stock moved lower with the wider sector, which was under pressure following some disappointing data on Chinese copper imports and a weaker than expected report on India's industrial output. As a result, Kazakhmys lost 31p to 1,057p, taking the wooden spoon on the FTSE 100, while Rio Tinto lost 70p to 3,102.5p and BHP Billiton closed down 27.5p at 1,825p. Antofagasta, the Chilean copper producer which was upgraded to "buy" from "hold" by Citigroup at the end of last week, bucked the trend, adding 16p to 902p.



overall, the FTSE 100 rose by 34.1 points to close at 5,167 amid low volumes, while the FTSE 250 added 28.4 points, to 9,774.16. BP dominated the upside, rallying by more than 9 per cent or 34.15p to 398.95p as traders bought in on weekend reports of prospective asset sales.

The stock was also buoyed by a renewal of bid talk, with speculators reheating theories of interest from Chinese and US peers, and by hopes for a new spill capture system in the Gulf of Mexico. The optimism briefly drove BP's shares beyond the 400p mark for the first time since early June, with the move up coming against the backdrop of confirmation that the cost of the response to the spill had ballooned to around $3.5bn (£2.3bn).

The BP rally ensured a positive end for the FTSE 100 and lifted the mood across the wider oil and gas sector, with stocks such as Royal Dutch Shell, up 11p at 1,771p, and BG, up 1p at 1,082.5p, firming up despite some weakness in crude prices. Exploration and production stocks were also strong, with Cairn Energy swelling by 8.7p to 459.3p and Tullow Oil rising by 13p to 1,141p. On the second tier, Dana Petroleum rose by 11p to 1,421p as the market awaited further news on the Korean oil group Knoc's recent approach to the company.

Elsewhere, Inchcape was driven up by 15.9p to 286.1p after UBS issued "buy" advice, arguing that the market may be underestimating the multi-national car dealer's recovery potential. "We believe the volatility and low visibility of the recovery is at least partly mitigated by Inchcape's geographic diversity and quality brand relationships," the broker said, abandoning its "hold" view, and raising its target for the stock to 330p from 310p.

Execution Noble boosted St James's Place, the wealth manager, which rose by 3.5p to 233.6p after the broker said majority-shareholder Lloyds Banking Group was unlikely to sell out at current levels.

Execution said that while the stake had created an overhang in the stock, it did not believe that Lloyds will sell below its cost price, which is estimated to be between 250-300p, or above the current St James's share price.

"Overall, whilst any placing will take time to digest, in the longer term we would expect the placing to allow St James's Place to re-rate back to its historic premium to peers," the broker explained, repeating its "buy" view.

Further afield, Greene King stood firm at 434.8p, up 0.8p, after being named as one of Deutsche Bank's top picks in the pubs sector. The broker also recommended Enterprise Inns, which was 0.1p better off at 95.2p last night. "The past three years have been a painful but cathartic experience. It may not be over yet, but we would argue that the industry will emerge in its strongest state once the economy recovers," the broker said, commending Greene King for its strategy and strong trading momentum, and highlighting the prospective upside in Enterprise Inns.



deutsche was more cautious on Mitchells & Butlers, which was 3.3p lower at 294.8p after the broker switched its stance to "hold" from "buy". Besides the recent run of strength – Mitchells has proved the best relative performer since the beginning of 2009 – Deutsche pinned its change of heart on a variety of short term issues, including "operational gearing, possible dilution from disposals (at least until capital is redeployed) and a less certain time horizon on reinstating the dividend".

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Supporting role: at the Supreme Court, Rhodes was accompanied by a famous friend, the actor Benedict Cumberbatch
booksPianist James Rhodes on the extraordinary legal battle to stop the injunction of his memoirs
Arts and Entertainment
Jesuthasan Antonythasan as Dheepan
filmDheepan, film review
Sport
Steven Gerrard scores for Liverpool
sport
News
peopleComedian star of Ed Sullivan Show was mother to Ben Stiller
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?