Yesterday's Trading: Gamblers cash in on a crisis
As Prime Minister Gordon Brown continues to cling on to power - despite dismal European election results and further resignations - bookmaker Paddy Power was offering odds of 8/1 that he'll be de-throned between September and November of this year.
Market watcher: Round up of yesterday's trading
It neatly illustrates how the gaming industry can seemingly make money out of anything - even a political crisis.
Broker Daniel Stewart took a more forensic look at the fortunes of the betting industry yesterday in a note to clients entitled 'Gambling: Leading at Half Time'.
Analyst James Hollins said punters are likely to wager more of their hard-earned cash as the year goes on after a resilient start to 2009.
Share prices have been quick to respond and the gambling sector has outperformed the stock market by around 33% since January.
'We expect this to continue and remain bullish on the sector overall, with a recommendation that investors remain long of sports betting in particular, with an ongoing negative view of offline bingo,' he wrote.
Hollins's key 'buys' include Sportingbet and Playtech, while 888 Holdings is a 'buy', and Paddy Power and Partygaming are rated a 'hold.' 888 rose 2¼p to 109¼p and Partygaming closed 4¼p higher at 240p after agreeing to a tie-up with broadcaster Channel 5, creating 'five' bingo and casino gaming services.
Meanwhile on the FTSE 100 leaderboard, Rolls-Royce benefited from an upgrade to 'neutral' from 'sell' by Goldman Sachs analysts, lifting its shares by 6¼p to 335½p. The analysts also raised their view on Meggitt, to 'buy' from 'neutral', prompting an 3¼p rise to 166¼p in the second-line group's shares. However BAE Systems was cut to 'sell' from 'neutral', prompting a 5¼p drop to 334¼p and
Cobham lost 6p to 174p after the broker sliced its price target to 200p from 215p.
BSkyB advanced on talk that Irish sports broadcaster Setanta is close to going into administration after backers failed to stump up more cash. The company has been troubled since it lost out on the rights to broadcast more Premiership football matches to Sky - which shows 115 games a season compared with Setanta's 46 live matches a season.
BSkyB shares were 9¼p firmer at 459¼p. Elsewhere, Pennon jumped 3p to 479¾p after agreeing to buy London Recycling for £11m to expand its waste management business.
Fellow utility companies were also in demand, with Severn Trent up 10p at 1128p and United Utilities 4p firmer at 528½p.
J Sainsbury advanced 2p to 325½p, bolstered by a price target lift to 340p from 320p by analysts at Deutsche Bank.
The FTSE 100 closed the session down 33.34 points at 4,405.22, weighed down by the mining sector. Lower commodity prices knocked 87p off Anglo American, leaving it at 1770p, while Vedanta Resources was 73p off at 1595p, Xstrata was 14½p lower at 708½p and Eurasian Natural Resources shed 29p to 653½p.
The fallers were led by Lloyds, down 5.1p at 61p after raising £4.3bn from selling new shares to repay some £2.6bn to the government. Royal Bank of Scotland shares fell 1¾p to 35¼p.
Voting forms for Aviva's reattribution must be returned by August 21. More than 1m policyholders are eligible to vote - if they choose cash, they will get at least £200. The shares closed 3¾p lower at 354¼p.
Among the second liners, Intermediate Capital fell 32p to 530½p after RBS downgraded it to 'hold' from 'buy'. Analyst Stuart Duncan slashed core forecasts by 10% after last week's results. 'We are not forecasting much growth in the loan book, given prospects for repayments remains muted and the minimum levels of new investments,' he wrote in a note.
Among the smaller caps, Shaftesbury shares appeared to take a pounding as the group traded without the right to participate in the company's £149m City fundraiser. But at 316½p (down 73¾p) the stock was trading well ahead of the ex-rights price, and at a significant discount to the property firm's net asset value, last updated at 393p a share.
Arbuthnot's Sneha Shah is a big fan of the group, which owns tracts of prime real estate in London's Soho. 'We like the company due to its West End exposure and its ability to enhance shareholder value by buying property at attractive valuations,' the property analyst said.
'We expect the company to have a war chest of £203m for acquisitions through a combination of capital raised during the rights issue, cash and un-drawn debt facilities.'
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