Market Report: Help to Buy scheme props up builders

What a difference a weekend makes. On Friday housebuilder stocks were in the doghouse amid concerns of a house price bubble and news that the Bank of England could alter the Government’s Help to Buy scheme next year.

But yesterday confirmation that David Cameron will bring Help to Buy’s £12bn mortgage guarantee scheme forward by three months - to start next week - thrust the builders to the top of the table.

Investors pushed the thought of a property bubble to the back of their minds and blue chip builder Persimmon soared 25p to 1,086p. The housing stocks boom reached the mid-tier index and Bellway was the best performer there, up 53p to 1,315p. Taylor Wimpey added 3.4p to 100.4p, Redrow was 6p ahead at 233p and Barratt Developments gained 6.5p to 308.6p.

Property-watchers at Liberum Capital said: “Housebuilders benefit from a more buoyant housing market, while merchants should benefit from increased transactions – we estimate 20 per cent more mortgages, and 15 per cent more transactions.”

Liberum tipped not only the housebuilders but also the builders’ merchant and DIY retailer Travis Perkins as a buy, and it built up a 2p rise to 1,650p.

The housebuilders made up most of the risers in contrast to a sea of red across traders’ screens as US lawmakers remained at loggerheads over the American budget. Italian political instability added to concerns. The FTSE 100 tumbled 45.3 points to 6,467.36 as Chinese manufacturing data also disappointed.

David Jones, the chief market strategist at IG, said yesterday was like a “throwback to the bad old days of the financial crisis”.

He added: “In the great scheme of things the fall was nothing major – the FTSE is still just above the September lows. But more political upheaval, both in Europe and the USA, will do little for market sentiment.”

Punters had bought in to the rumour that a hedge fund was fighting for a break-up of the troubled security group G4S. Cevian Capital, the activist investor fund chaired by the former financial services minister Lord Myners, is reported to be putting pressure on G4S to split itself up. Cevian has amassed a 5.1 per cent stake in the group, and the word is it is pushing for a sale of its cash-security business to raise money for shareholders. Shares were in positive territory during the morning but lost momentum during the afternoon session and closed up 0.4p at 254.3p.

Miners relying on a strong Asian market were hit by the weaker Chinese manufacturing data. Mexican metal digger Fresnillo lost 27p to 973p and Glencore Xstrata shed 7.3p to 336.7p.

Pharmaceuticals group Shire, a perennial M&A target, was 11p healthier at 2,478p after an upbeat note from JPMorgan Cazenove. James Gordon at Cazenove upgraded Shire to overweight, and said its pipeline of new drugs and its cost-cutting plan – on which it will update at its third-quarter results later this month – would “drive performance”.

Haulier Stobart’s biomass products arm has signed a 15-year contract with Western Bioenergy to supply 150,000 tonnes of biomass fuel a year into Western’s plant in South Wales. The contract is part of Stobart’s Master Framework Agreement with Greensphere Capital, the new owner of Western. The deal failed to drive up Stobart’s shares and it stalled at 125p.

The AIM-listed travel group Travelzest continued to confound the market. The debt-laden former naturist tour operator, which is relying on its lenders to continue to trade, jumped 0.585p to 1.27p.

The falling gold price weighed on pawnbroker Albemarle & Bond and it announced an emergency £35m rights issue yesterday. The group plummeted 50.5p – or 40.4 per cent – to 74.5p.

Traders liked the look of property group Conygar Investment. They noted the recent director dealings, including chief executive Robert Ware’s purchase of 50,000 shares at 129p last month. Last week director Preston Rabl bought 250,000 shares at 128.5p. Yesterday Conygar added 4p to 133.25p.

The Indian windpower producer Mytrah Energy reported first-half earnings of $24.5m (£15.2m). It said operational capacity could almost double this year, and its shares powered ahead 7p to 89.5p.

The North Sea-focused Independent Oil and Gas listed on Aim and raised £2m. It started trading yesterday at 23.79p and the shares closed at 24p.

Buy: BANK OF GEORGIA

Snap up shares in Bank of Georgia, Peel Hunt advises. The broker claims that the bank is “a risk worth taking” and that the “perceived risks” of investing in Georgia are overstated. Shares are around 1,932p a pop and Peel Hunt gave them a target price of 2,155p.

Sell: ROYAL BANK OF SCOTLAND

Flog shares in Royal Bank of Scotland, Citi insists. The broker acknowledges the spin-off of 314 RBS branches to become Williams & Glyn’s but thinks this disposal will have negative implications for RBS’ “earnings, return profile and capital position” . It rates it a sell with a 270p price target for shares that are currently at 359.9p.

Hold: ASTRAZENECA

Panmure Gordon urges us to hang on to Astra shares with the reminder that “one swallow does not a summer make”. The broker is referring to its “small upgrade” for the pharma giant on news it has won approval for its ovarian cancer product. This “should not be seen as transformative”, however. Shares are 3,215.5p with a 3,200p price target.