Market Report: Asian insurer AIA boosts Prudential

 

As Chinese GDP data boosted the Footsie, sparkling results from an Asian insurer propelled Prudential to the top of the table.

AIA, the second-largest Asia-based insurer by market value, soared in Hong Kong after a better-than-expected third-quarter update, and in turn insurance giant Prudential was the top performer in London.

The boost from AIA comes three years after the Pru’s failed bid for the group. It was fined £30m by Financial Services Authority because it failed to inform it of plans to buy AIA at the time. Prudential produced a 50p rise to 1,264p.

Traders’ interest in the insurer came as the wider outlook for the markets was reasonably optimistic. The good Chinese GDP data – the country’s economy advanced 7.8 per cent between July and September against a year earlier – helped stocks that supply to the region. The FTSE 100 rose 46.42 points to 6,622.58, up 2.08 per cent since the start of the week – having already been assisted by the government stalemate resolutions in the US.

Miners were some of the stocks that benefited from renewed confidence in Asian growth. Mexican silver digger Fresnillo jumped 36p to 988.5p.  Conversely a mixed production update from Anglo American pushed it back 21p to 1,532p – largely held back by a disappointing iron ore division.

Royal Mail began unconditional trading on Tuesday, and is now 52.3 per cent above its float price of 330p – further evidence it was underpriced. The 500-year-old post group’s shares remained one of the most actively traded stocks. Rebecca O’Keeffe, head of investment at the stockbroker Interactive Investor, said: “Royal Mail is almost certain to be included in the FTSE 100 in December, which should provide underlying support... as more institutional investors are forced to invest. So far, we have seen some significant purchases by ISA investors looking for longer-term income.”

Not many punters are betting against a continuation of this rise either. According to short-seller watcher Markit, well under 1 per cent of the shares are on loan. Markit director Alex Brog said: “There does not seem to be much appetite to bet against it. Following a float, we often see initial borrowing demand for market-making purposes so this points to less interest from short-sellers.”

Royal Mail picked up another 22.5p – smashing through the £5 mark – and closed at 502.5p.

Royal Bank of Scotland, another eventual Government stake sell-off target, got the sell treatment from analysts at Investec, who advised investors they should “never own RBS into the numbers”. Its third-quarter results are due next month. RBS lost 4.2p to 372.7p.

Analysts at JP Morgan took a look at the betting industry and decided it is time to sell bookie William Hill. They rated it underweight, down from overweight, and gave it a 400p price target as it collapsed 13.3p to 403.5p. JP Morgan’s betting boffins preferred mid-tier-listed Betfair, which is awarded  a 1,000p price target, up from 825p, and a neutral rating on shares that  collected a 23p rise to 1,025p.

Ahead of logistics specialist Stobart Group’s results next week, short interest has reached an annual high of 8.5 per  cent, according to Markit. More than 75 per cent of the shares that can be borrowed are out on loan. Stobart added 0.75p to 127.25p.

On AIM, online fashion group Asos still can’t put a foot wrong with analysts despite its huge valuation. Ahead of its results next week, scribblers at HSBC rated it overweight, a buy, and hiked their target price to 7,160p, a huge jump from their previous 4,380p. It sashayed up 61p to 5,366p.

Water treatment group Amiad Water Systems tumbled 44p to 281p after a warning that its full-year profit would be hit by project delays and a first-half slowdown in the US and India. It said that profit could be as low as $4m (£2.5m).

Breath-test technology specialist Akers Bioscience inhaled a 0.55p rise to 2.875p after it emerged late on Thursday that Henderson fund manager Rob Giles has personally bought a 6.5 per cent stake. The group is developing a test to detect early signs of lung cancer and sells alcohol testing equipment in France.

Buy

STV

Snap up shares in STV, Liberum Capital suggests. The broker said the telly group, which holds the Scottish ITV1 licence, is likely to be doing well following news that ITV’s advertising is “looking stronger”. Liberum raised their target price to 440p for shares that are 296p.

Sell

Man Group

Flog shares in Man Group, Jefferies recommends. The broker admits the hedge fund group’s assets under management have risen, but revenues are down. Jefferies says “Man’s bind” is that “the assets being lost are the highly profitable ones.” It rated it underperforming with a 70p price target for shares that are 86.9p.

Hold

Provident Financial

Hang on to Provident Financial, Peel Hunt advises. The broker thinks the door-to-door lending business’s weak consumer credit arm is offset by its credit card outfit Vanquis. Its third quarter update this week revealed overall trading “remains on track” Peel thinks, and gave it a 1,570p price target for shares that are 1,576p.

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