Market Report: Zimbabwe threat puts Aquarius in a nosedive
Does Aquarius Platinum have a future in Zimbabwe?
The digger was knocked back to its lowest for more than three years yesterday after attempts to comply with controversial new ownership rules were rejected by the country's government, sparking fears it may be booted out.
Foreign miners operating in Zimbabwe are being forced to abide by a recent controversial law demanding 51 per cent must be owned by Zimbabweans. With more than a fifth of Aquarius' output coming from the country, the news that plans to meet the regulations submitted by its joint venture Mimosa Holdings had been turned down prompted the group to plummet 10.1p, or 6.91 per cent, to 136p.
The development put the Square Mile into a panic over the possiblity of the group's assets being confiscated, with Liberum Capital's Dominic O'Kane saying a "clear and present danger of expropriation now exists", although he did add "seizure of Mimosa represents a worse-case scenario".
Meanwhile, Seymour Pierce's Asa Bridle – who helpfully pointed out the tie-up has been "the stand out operation for Aquarius in recent times" – warned the "speed and potential severity of this latest action by the Government is alarming".
As if to rub salt into the wounds, Mr O'Kane pointed out that the rejecton was likely to be "hugely bullish for the platinum price" and therefore give the group's rivals a major boost, as Lonmin was lifted 20p to 1,085p.
Overall, it was yet another flat session as the FTSE 100 finished 2.76 points worse off at 5,935.13 with some caution over the effects of the recent rally in oil prices, which stayed strong yesterday.
Lloyds was in last place, sliding 0.85p to 35.73p after revealing a £3.5bn loss for 2011. At the opposite end, hopes it could be about to simplify its rather complicated structure continued to help Vedanta Resources, which advanced 65p to 1,500p, a new six-and-a-half-month high.
Reports earlier in the week claimed the miner's Sterlite and Sesa Goa units – both of whom are listed separately – may merge, and yesterday the former announced its bigwigs were meeting over the weekend to discuss restructuring proposals.
Unilever was deep in the red after the Marmite-maker's arch-rival, Procter & Gamble (P&G), announced late on Thursday it was aiming to make $10bn (£6.3bn) in cost savings over four years.
This prompted fears that the world's largest consumer goods company would use the money to increase its promotional activity, while ING's Marco Gulpers warned P&G's plans meant it "could make another leap forward... just as Unilever was about to catch up."
The group ended up 40p worse off at 2,050p, while peer Reckitt Benckiser retreated 79p to 3,421p, with disappointing industry sales data also knocking the duo. In addition, Reckitt was hit by Goldman Sachs removing its "buy" rating following the Cillit Bang-maker's recent rally.
Investors were switching ITV on amid hopes they could be in line for a windfall. The Downton Abbey-broadcaster climbed 2.3p to 80.1p after Credit Suisse's Omar Sheikh said that if it didn't choose to make acquisitions, there was "scope to enhance earnings with a share buyback".
There was another big move up for Capita at the end of a storming week, with the outsourcer's rise of 29.5p to 747.5p meaning it has added nearly 16 per cent over the last three sessions.
Still, some were scratching their heads over the move, noting that although Deutsche Bank raised its price target to 658p following Thursday's final results, the broker also said its "fundamental view remains that returns in UK outsourcing ... are being pressured".
Down on the FTSE 250, Ophir Energy shot up 51p to 426p to take the top spot. The explorer was initially boosted by JPMorgan saying it had one of "the most interesting drilling campaigns in 2012" as well as Norway's Statoil making a big major gas find off the coast of Tanzania, where Ophir also operates.
However, the big move came after early rumours that Cove Energy could receive a rival bid proved on the money, as Thailand's PTT Exploration announced it was offering 220p-a-share for the AIM-listed explorer, trumping a 195p-a-pop approach from Royal Dutch Shell (down 12p to 2,353p) earlier in the week.
With speculation there could be other potential aggressors, the market clearly believed this wasn't the end of it as Cove jumped up 40.25p to 235p amid optimism a bid battle will develop. It also prompted talk once again over which of the groups could be next for an approach, with Ophir and Afren (6.3p to 146p) among the Africa-focused explorers in focus.
Back on AIM, Connemara Mining rocketed up 28.89 per cent to 14.5p after the zinc digger unveiled a strong update from its exploration programme in Limerick.
FTSE 100 Risers
Man Group 134.4p (up 5.4p, 4.19 per cent)
The world's largest listed hedge fund advances ahead of its nine-month results next week as Deutsche Bank and JPMorgan Cazenove raise their target prices.
Hammerson 400.1p (up 14.4p, 3.73 per cent)
Developer finishes high up the top-tier index's leaderboard after announcing it will dispose of its office portfolio, with a sale expected to raise around £500m.
FTSE 100 Fallers
Carnival 1,872p (down 25p, 1.32 per cent)
The world's largest cruise company extends its losing streak to a fourth session on fears over fuel as oil prices continue their recent strength.
BAE Systems 316.9p (down 2.3p, 0.72 per cent)
Defence contractor finishes in the red despite the decision by analysts at Investec to upgrade their recommendation to "buy" from "hold".
FTSE 250 Risers
Berendsen 500p (up 38p, 8.23 per cent)
Textile services company spurts up after its full-year results manage to beat expectations while it says it will manage to improve on its performance in 2012.
Bodycote 400p (up 10.7p, 2.75 per cent)
Engineering group continues to rise in the wake of its final figures on Thursday as both Panmure Gordon and Citigroup increase their target prices.
FTSE 250 Fallers
Hays 84.1p (down 3.2p, 3.67 per cent)
Recruitment firm – which announced its first-half figures earlier in the week – retreats after Citigroup downgrades its rating to "sell" from "neutral".
Lancashire 772p (down 18p, 2.28 per cent)
Insurer suffers from a double blow as both Deutsche Bank and UBS remove their "buy" recommendations following its final results on Thursday.
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