MARKET REPORT: Manchester-based technology firm Nanoco tipped for big things

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Many small cap technology firms on AIM have come and gone, usually achieving little for investors during their time on the junior market. Nevertheless, it still remains the perfect place for quality techno companies wanting to develop themselves and grow.

Manchester-based Nanoco, which was spun out of research pursued at Manchester University, has a strong shareholder base which includes Henderson Global (15.9 per cent) and entrepreneur Richard Griffiths (13.5 per cent) and is being tipped for greater things in 2015.

Buyers chased the stock higher initially before they closed a penny off at 120p after LG, the South Korean electronics giant, sneaked out news after-hours’ on Monday that it will unveil a new line of 4K Ultra HD TVs, three weeks ahead of its debut at the Consumer Electronics Show in Las Vegas.

Besides having four times as many pixels as today’s HDTVs, LG said its new TVs use something called ‘quantum dot’ technology which will offer a wider colour palette and improved colour saturation than conventional LCD (Liquid Crystal Display) TVs.

Excellent news for Nanoco, which is the world leader in the development and manufacture of cadmium-free quantum dots for use in the production of lighting and ultra-thin TVs. It revealed in September that Dow Electronics had started production of the world’s first large scale, cadmium-free quantum dot manufacturing plant.

Production is expected to begin in the first half of 2015 and the quantum dots will be marketed by Dow under the brand name TREVISTA Quantum Dots.

Broker Cannacord Genuity had suggested that the first customer would be either Samsung or LG and put a target price of 275p on the stock. Rival broker Liberum Capital is now confident that LG will be using Nanoco’s quantum dot technology manufactured by Dow Electronics for its quantum dot TVs.

With an expected 25 per cent royalty rate on the sale of quantum dots, these TVs are expected to result in a strong revenue trajectory for Nanoco from the second-half of 2015. It also expects Samsung to launch quantum dot TVs next year using Nanoco’s technology. Its target price is 260p.

Many equity dealers didn’t know whether they were on foot or horseback as blue chip stocks fluctuated wildly throughout another tense session. After falling almost 9 per cent in six trading days, the Footsie was surely oversold. But was it?

It was soon trading a further 38 points off in early exchanges as the Russian rouble was dragged down further after the Russian Central Bank increased interest rates from 10.5 per cent to 17 per cent overnight. A depressed oil price, which collapsed to below the $60 per barrel support level to $59.61, also exacerbated the gloomy trend. Then, with barely a buyer in sight, along came the US Secretary of State John Kerry to provide a lifeline.

His comments that Russia had made constructive moves towards possibly reducing tensions in Ukraine gave the London market a much-needed fillip. As the rouble and the oil price rallied sharply, the volatile Footsie bounced back to close 149.11 points higher at 6331.83.

The latest Bank of America Merrill Lynch Fund Manager Survey said that global investors are keeping faith with equities while raising cash as markets enter the volatile year-end period. Some 60pc of managers expect the global economy to strengthen over the next year and are more confident that corporate earnings will rise.

A squeezing of some large short positions helped Tullow Oil recover 22.6p to 381.4p and Royal Dutch Shell 93.5p to 2036.5p. 

The beleaguered sector was given a boost by news that Repsol is acquiring Talisman Energy in a £5bn-plus deal. Bottling group Coca-Cola was sold down to 1175p and closed 11p off at 1221p amid fears that the collapse of the Russian rouble will lead to a 1998 type currency crisis that could spread to other emerging markets. 

Luxury fashion group Burberry touched 1557p and closed 4p cheaper at 1590p for a similar reason. Emerging market funds were flat with Baring Emerging Europe Closed Fund 18.75p off at 455p and Blackrock Emerging Europe 7p down at 182p.

Highly speculative Afren, operator of Block 1101 onshore Madagascar, gushed 3.04p to 35.93p after announcing the completion of its drilling and coring operations and the discovery of oil in two boreholes drilled on the block.

Gulf Keystone rose 8p to 57.75p after taking steps towards increasing production from its operations in the Kurdistan Region of Iraq.

It has installed links between the Shaikan-7, -8 and -10 wells and its existing production facilities PF -1 and PF -2, enabling first oil to flow to the facilities this month. Total production of between 23,000 and 25,000 gross barrels of oil a day will rise to 40,000 a day.