LONDON (ShareCast) - (ShareCast News) - The City of London is fumbling with fallback positions after its first line that Brexit should not voted into potential reality back in June failed, writes The Financial Times' Lex column.
But, the column suggests, these fallback lines were shrouded in murk.

"Access to the single market means a case-by-case negotiation, reportedly the preferred position of a group of City 'grandees,' Lex said, suggesting a gambit in the offing.

"Some areas would have to be sacrificed to protect those of greater perceived value, and it is poor tactics to reveal priorities too soon."

This was particularly so in a broad coalition such as the City.

Lex opined that UK's potential departure from the single market rendered an uneven outcome inevitable.

"Should the UK demonstrate sufficient ongoing regulatory equivalence, EU rules on markets in financial instruments only guarantee a passport to serve professional clients and counterparties, according to Lawyers Linklaters," the column said.

"For retail clients, nothign stops discrimination against non-EU rivals."

Lex added that UK's negotiating clout would also vary, depending on where its financial market pre-eminence matters to EU members.

It observed that London's deep capital markets were not all that easy to steel away to Frankfurt or Paris, attempts to do so running the risk of EU members losing access to capital.

"The UK's importance in other areas, such as wealth management, is less clear."

Lastly, the column asserted, the City could not be sure how the government would receive its demands.

While Treasury was a friend to the City, there was no such certainty about Downing St, the Foreign Office, ministries for Brexit and for trade.

Perhaps, Lex wrote, the City should copy prime minister Theresa May's example and keep its Brexit cards altogether closer to its chest.

Meantime, The Times' Tempus suggested buying Rolls-Royce's shares on weakness, observing the company's recovery would be a long-haul one.

The column noted two more bits of conflicting news for Rolls-Royce.

In one part of the Far East, Thai Airways had begun taking deliveries of the Airbus A350 for which Rolls, with its Trent XWB engines, was the exclusive provider.

In another, the column said, All Nippon Airways was complaining it could take years to mend its fleet of Boeing 787s with their Trent 1000 engines that Rolls supplies.

Tempus said that bolted together these factors encapsulated Rolls' investment conundrum.

That was whether to buy into a business supplying engines on the most important jetliners in the world, or whether to dodge an outfit that could not seem to avoid metaphorically getting its limbs stuck in its own turbines.

"Even the company's stockbroker, Morgan Stanley, admits that the argument is finely weighted," Tempus wrote.

It added that recent research indicated a base value of 780p a share, book ended by a bull case of 1075p and a bear scenario of 440p.

"The stock is trading almost slap bang in the middle (of this range)."

If investors believed in Rolls' long-term recovery potential, then the stock was surely one worth accumulating on short-term price weakness.

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