Yesterday's trading: Tumbling LSE dents Furse halo
As far as many brokers in the City are concerned, Clara Furse has certainly led a charmed life.
Geoff Foster, Daily Mail
The chief executive of the London Stock Exchange received plaudits for fending off hostile American, German, Australian, French and Arab bidders during a raging three year bull market.
Investors were delighted to see the shares soar above £19, but sceptics have always said that there has never been a worthwhile strategic plan going forward for Europe's premier exchange.
Furse and her board have always appeared to be reactive, rather than proactive. The £1.1bn purchase of mini Euro exchange Borsa Italiana to fend off Nasdaq certainly left analysts underwhelmed and, at the time, smacked of desperation.
Everything was hunky-dory for Clara & Co while the bull market raged and trading volumes were huge, but since the credit crunch hit home last August, business has slumped dramatically and Furse's halo has slipped along with the share price.
The LSE yesterday closed a further 68½p down at a year's low of 958½p on growing concern about its exposure to competition from start-up exchanges and the global downturn.
Broker Morgan Stanley remains underweight and downgraded its target price to 945p. It said recent meetings with rival exchanges CHI-X, set up by electronic broker Instinet, and Turquoise, backed by nine investment banks, reinforced its view that risks exist to pricing.
CHI-X already regularly achieves 10pc market share in trading of targeted London-listed stocks and Turquoise's start-up, planned for August or September, will exert further competitive pressures which the LSE management will have to address. Simon
Brickles' PLUS Markets (unchanged at 12½p) is also proving a force to be reckoned with.
Nasdaq was free to bid again for the LSE in February after having its 1243p a share bid rejected last year. Boss Bob Greifeld is still apparently keen on tying up a deal and rumours have been rife that an £11 a share offer could be just around the corner. Borse Dubai still sits on 20.6% of the LSE, while Qatar Investment Authority owns 15.1%.
A resilient Footsie just about kept its head above 6,000 despite absolute chaos in the battered bank sector. It dropped 75 points after mortgage bank Bradford & Bingley (21¼p down at 67p) sent shivers throughout the City.
B&B confirmed chief executive Steven Crawshaw's abrupt departure, warned that it has tumbled to a loss for the first four months of the year, said it has had to reprise its rescue rights issue at 55p a share, while opening the door to US private equity group Texas Pacific take a 23% stake. Bear closing left the close 45.9 points lower at 6,0007.6.
Wall Street also suffered from the financial frighteners such as the sacking of US bank Wachovia's chief executive Ken Thompson and Washington Mutual's boss Kerry Killinger. The index plummeted 173.6 in early dealings on fears that there will soon be yet more damaging developments in the credit crisis.
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Ready to say cheerio to the Footsie next week, housebuilder Persimmon crumbled 14¼p more to 467¼p. Taylor Wimpey shed a further 2½p to 82½p, while Barratt Developments dived 15p further to 167½p amid continuing rights issue speculation. Barratt bought rival Wilson Bowden for £2bn in April 2007 and has a market value of £579m. Say no more.
British Energy closed 14p higher to 748p on revived talk of an 885p a share cash bid from Spanish energy company Iberdrola. Higher metal prices left Rio Tinto 115p better at 6170p and BHP Billiton 34p dearer at 1948p.
Imperial Energy topped the FTSE 250 with a leap of 60p to 1040p. Buyers piled in on hearing about a significant oil discovery in the Kiev Eganskoye field, West Siberia.
Broker ABN Amro said the significance of the discovery should not be underestimated, and underlines the potential of Imperial's acreage post the recent successful rights issue.
Ramco Energy added 2½p at 32½p following the formation of a new subsidiary, SeaEnergy Renewables, to exploit the global opportunities for large scale offshore wind farm development.
Investment bank and stockbroker Blue Oar edged up ¼p to 13¼p after acquiring agency stockbroker Astaire, formed in 1960, for £1.67m comprising £1.5m cash on completion and 1.3m BO shares at 13p a share. Astaire has significant business connections in Singapore and Malaysia.
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