Market Report: Traders shrug off broker's warning on Pru break-up

Those who have been hankering for a break-up of the Pru may want to think again. Some may argue a series of disposals is the way forward for Prudential, while its boss, Tidjane Thiam, is believed to be supportive of the idea if it can increase value for shareholders, but Nomura warned yesterday that going down this path would be a big mistake.

After running the numbers through his calculator, the broker's analyst, Nick Holmes, declared that in the current market the sum of the insurer's parts came to a mere 492p a share, roughly a third lower than its share price.

The reason behind this premium, he claimed, was that the market's "exaggerated" view of its Asian operations – seen as Prudential's major attraction considering the economic woes elsewhere in the world – had resulted in "an over-valuation" of its businesses in this country as well as the US.

Just to stick the knife in, the analyst kept his "reduce" recommendation and cut his price target to 700p from 715p as he warned that growth from the US was slowing considerably.

Traders were unruffled by his negativity, saying he is renowned for being bearish on Prudential which still managed to push up 7p to 667p. However, it was dragging behind a number of peers including Legal & General – Mr Holmes' top pick – and Aviva, which advanced 2.3p to 112.1p and 9.6p to 324.95p.

The FTSE 100 managed to rally early in the session thanks to relief after both Italy and Spain managed to get bond auctions away successfully.

Yet with the latest developments from the eurozone cheering the City for once, it was the turn of the US to disappoint.

In the wake of fresh data which showed the number of Americans claiming unemployment over the week had increased ahead of expectations, investors pounced on the excuse to bank profits and the benchmark index closed 8.4 points lower at 5,662.42.

The main weight on the Footsie was Tesco which shed a remarkable 16 per cent. The world's third-largest retailer plummeted 61.55p to 323.45p after a profits warning, setting a new, 21-month low.

Its fellow blue-chip supermarkets followed it down, although not quite to the same extent, with Sainsbury's and Morrisons – both of whom have released their festive numbers – declining 16.2p to 285.9p and 18.1p to 285.9p respectively.

Another in the red was Royal Dutch Shell on fears ahead of its full-year results next month. The oil giant slipped 49.5p to 2,278p amid rumours it has been trying to downplay analysts' hopes, while a profits warning from US rival Chevron did not help matters.

Royal Bank of Scotland's decision to axe 3,500 jobs may not have been welcomed by its employees, but dealers were glad to get some clarity over the bank's future direction as it powered up 1.21p to 23p.

Meanwhile, Centrica (down 3.3p to 280.5p) and SSE (down 1p to 1,263p) were on the slide as both followed rival EDF Energy in cutting energy prices, with the former slashing electricity costs while the latter reduced the price of gas.

A wave of negative broker comment hit BSkyB as the satellite broadcaster was pegged back 10.5p to 697.5p.

Investec, UBS and Citigroup all decided to remove their "buy" advice at the same time, as the latter even mulled over whether the group could end up losing the lucrative rights to Premier League football matches to Al-Jazeera.

The scenario was one of 12 "potential surprises" for the media sector in 2012 that analysts from UBS were speculating about, although they admitted that the chance of this particular one happening was "low-to-medium".

They said the same about another rather wild idea on their list – that Downton Abbey-broadcaster ITV (down 0.7p to 73.05p) could merge with a broadband company.

The numerous short positions in Ocado were being heavily squeezed. The under-pressure online grocer spurted up 33.45 per cent to 74p on the FTSE 250 thanks to some decent Christmas figures, although its share price has still lost nearly three-quarters in less than a year.

Down on Aim, DEO Petroleum was grabbing some attention amid vague rumours of stake building.

The North Sea oil firm – which has seen huge volumes traded this week, totalling almost all of its free float – climbed 19.32 per cent to 26.25p as it was also buoyed by finalising the combination of two blocks in the North Sea.

A number of tales were being linked with Africa-focused explorer – and a favourite with the punters – Bowleven's move up of 6.25p to 79.5p, including vague speculation over a potential announcement and the recent revival of bid hopes, although none particularly impressed.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
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

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test
Tour de France 2015: Twins Simon and Adam Yates have a mountain to climb during Tour of duty

Twins have a mountain to climb during Tour of duty

Yates brothers will target the steepest sections in bid to win a stage in France
John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy