Market Report: Hambro's miner shines in gold rally
Friday 26 April 2013
Peter Hambro's gold miner Petropavlovsk was glistening close to the top of the mid-tier index yesterday when the previously plummeting gold price rallied, reaching its highest in more than a week. The IMF said central banks are buying gold again and its price responded after tumbling the sharpest for 30 years last week.
Gold miners were all shining again on this news, but Petropavlovsk is hugely vulnerable to gold price fluctuations; it is fundamentally a leveraged play on the gold price, and therefore looked the best bet of all the miners. It has lost more than 30 per cent this month, and punters piled in yesterday.
The miner was once changing hands at 1,234p in 2009, and it has fallen nearly 90 per cent since then as it struggled with its debts. But the shares jumped 15p to 157.8p yesterday.
A buy note from metal experts at Canaccord Genuity also helped the price up. They think it will just pass its debt covenant tests, and they rate it a buy with a price target of 510p.
There were some day traders that were punting around rumours that Mr Hambro might even be trying to raise money to take the group private, but this chatter was dismissed by most. If a company were planning to take itself private and the shares had moved more than 10 per cent, then it would have had to make a statement. No announcement came.
Copper prices also hit a one-week high, and the day's top riser on the blue-chips was Randgold Resources, 270p better off at 5,315p. Antofagasta added 42p to 953.5p and Vedanta Resources jumped 48p to 1,228p.
Better-than-expected GDP figures – the UK may have avoided a triple-dip recession – dashed hopes of more quantitative easing, and the blue-chip index dipped in morning trade. But after a two-day rally the FTSE 100 managed to add another 10.83 points to 6,442.59 by the close yesterday.
Controversial Kazakh miner ENRC is facing a criminal investigation from the Serious Fraud Office into allegations of fraud, bribery and corruption across its Kazakh and African divisions. The weak share price earlier this month may have been a reason for the founders Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev to have teamed up with the Kazakh government, another shareholder, to consider an offer for the group. But since then the shares have shot up on news of a possible bid. They were up 8.3p to 289p yesterday.
Unilever had a "slow start to the ice-cream season", where sales of its Ben & Jerry's and Wall's brands were hit in the coldest March for more than 50 years. The brief hot spell the UK has enjoyed this week that was better news for ice-cream sellers may be about to disappear. But Unilever's weaker UK sales were offset by better figures from its emerging markets business. The consumer goods giant melted down 85p to 2,760p.
Vodafone picked up on renewed rumours of a buyout of its US joint venture Verizon Wireless. This time reports from Reuters said Verizon Communications, which owns 55 per cent of the joint venture, had hired advisers to prepare a possible $100bn (£66bn) bid. Vodafone dialled up a 3.2p rise to 196.4p.
The spirits giant and Guinness brewer Diageo launched $3.25bn in fixed rate bonds but traders were reluctant to drink deep and the company was among the biggest fallers, losing 41.5p to 1,951.5p.
The posh grocery delivery business Ocado was up for a second day – it has checked out a 10.5 per cent rise in the past two days on rumours of a tie-up with Bradford-based Morrisons. Traders have reignited rumours that Morrisons, up 1.2p to 285.2p, could be in talks to buy the online mid-tier listed group. But after the close, Ocado confirmed that its talks with Morrisons are about helping the grocer set up an online business, and do not involve it buying all or part of the delivery business.
Either way, the share price rise yesterday (up 18.3p to 168.1p) is bad news for the hedge funds that have shorted the group. It is one of the most shorted stocks listed in the UK with about 10 per cent out on loan and more than 70 per cent of all the shares that can be borrowed already loaned, according to data from Markit.
The emerging markets lender International Personal Finance said its first-quarter profit rose by nearly 50 per cent and it gathered a 49.2p rise to 529.5p.
Over on AIM, the wireless chipmaker Toumaz said the results of its wireless vital signs monitoring "digital plaster" pilot were promising. The plaster detects patients' vital signs and saves hospitals cash, and the shares were up 0.5p to 4.75p.
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