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LONDON BRIEFING: Stocks seen lower; Aviva buys AIG's UK protection arm

25th Sep 2023 07:43

(Alliance News) - Stocks in London were set to open lower on Monday as investors eyed fresh concerns for the already fragile Chinese property sector.

Shares in embattled Chinese property developer Evergrande plummeted Monday following the announcement that it would be unable to carry out a restructuring plan intended to guarantee its survival.

The company's shares collapsed more than 25% in Hong Kong by the break, trading at around HKD0.42 per share, underscoring market concerns as China's property sector faces an unprecedented crisis.

On Sunday evening, Evergrande announced that it was unable to issue new debt as its subsidiary, Hengda Real Estate Group, "is being investigated".

Evergrande's enormous debt has contributed to the country's deepening property market crisis, raising fears of a global spillover.

In early UK corporate news, Entain said that its online net gaming revenue has been softer than anticipated during the third quarter and Aviva announced it has acquired American International Group's UK protection business for GBP460 million.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: called down 20.81 points, or 0.3%, at 7,663.10

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Hang Seng: down 1.6% at 17,760.95

Nikkei 225: closed up 0.9% at 32,678.62

S&P/ASX 200: closed up 0.1% at 7,076.50

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DJIA: closed down 106.58 points, 0.3%, at 33,963.84

S&P 500: closed down 0.2% at 4,320.06

Nasdaq Composite: closed down 0.1% at 13,211.81

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EUR: lower at USD1.0646 (USD1.0664)

GBP: lower at USD1.2238 (USD1.2267)

USD: higher at JPY148.36 (JPY148.22)

Gold: lower at USD1,921.05 per ounce (USD1,927.93)

(Brent): flat at USD92.31 a barrel (USD92.32)

(changes since previous London equities close)

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ECONOMICS

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Monday's key economic events still to come:

10:00 CEST Germany Ifo business climate index

09:00 CEST Spain PPI

11:00 BST UK CBI distributive trades survey

08:30 EDT US Chicago Fed national activity index

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Russia launched a major aerial attack on southern Ukraine overnight, the Ukrainian military said Monday, hitting Odesa port and destroying grain stores. Russia "attacked the south of the country again", the Defence Forces of the South of Ukraine said on the messaging platform Telegram. Since July when Moscow pulled out of a UN-brokered deal allowing safe grain shipments via the Black Sea, Russia has ramped up attacks on Ukraine's grain-exporting infrastructure in the southern Odesa and Mykolaiv regions.

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BROKER RATING CHANGES

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Jefferies raises AstraZeneca to 'buy' (hold) - price target 13,000 (10,500) pence

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RBC raises Derwent London to 'sector perform' (underperform) - price target 2,100 pence

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JPMorgan raises Close Brothers to 'neutral' (underweight) - price target 940 pence

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COMPANIES - FTSE 100

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GSK announced that the Japanese Ministry of Health, Labour & Welfare has approved Arexvy, a vaccine for the prevention of respiratory syncytial virus, for adults 60 years of age and above. This is the first time an RSV vaccine for older adults has been approved in Japan, the pharmaceutical company said. The approval has been granted based on data from the pivotal AReSVi-006 phase III vaccine efficacy trial.

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Entain said that its online net gaming revenue has been softer than anticipated during the third quarter of the year amid slower-than-expected growth in Australia and Italy, regulatory headwinds and adverse sporting results impacting margins. As a result, online NGR is expected to be up by a high single-digit percentage in the third quarter and up by a low double-digit percentage in the year as a whole. The sports betting, gaming and interactive entertainment reiterated its expectation for full-year earnings before interest, tax, depreciation and amortisation to be within the range of GBP1.0 billion and GBP1.05 billion, however.

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CRH confirmed its primary listing has now transferred to the New York Stock Exchange following approval from the Irish High Court. The company's shares on the London Stock Exchange now move to a standard listing from a standard listing. Separately, the company announced that it has entered into agreements with Merrill Lynch International and BofA Securities to repurchase up to USD1 billion of its shares on the LSE and/or in the US. This is USD1 billion tranche is the third stage of a wider USD3 billion buyback announced back in March.

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Aviva announced the acquisition of AIG Life from Corebridge Financial, a subsidiary of American International Group, for GBP460 million. The insurer said AIG Life UK provides a full suite of individual and group protection products, with 1.3 million individual protection customers and 1.4 million group protection members. "This acquisition brings significant strategic and financial benefits to Aviva. It strengthens our prospects in the highly attractive UK protection market and continues our progress in repositioning the group towards capital-light growth," said Chief Executive Amanda Blanc.

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COMPANIES - FTSE 250

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Pantheon International announced that it intends to begin a tender offer, which will be conducted as a reverse auction, for up to GBP150 million in value. Price levels for the tender offer range from 280 pence to 315p and it will close on October 17. Pantheon explained that it believes the tender offer represents an effective way for the company to invest in its own portfolio "at scale".

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OTHER COMPANIES

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Alphawave IP Group reported it had swung to a pretax loss in the first half of 2023 but nonetheless kept its full-year outlook unchanged as it predicted increased profitability in the second half of the year. The company swung to a pretax loss of USD11.2 million in the first half of 2023 from a profit of USD22.2 million the year prior. The loss came as Alphawave's cost of sales surged to USD104.7 million from just USD1.8 million and its research & development costs climbed to USD35.5 million from USD25.2 million. More positively, the company's interim revenue jumped to USD187.2 million from USD57.1 million thanks, in part, to the contribution of OpenFive. Looking forward, Alphawave reiterated its full-year outlook which sees revenue between USD340 million and USD360 million and adjusted earnings before interest, tax, depreciation and amortisation of around USD87 million.

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Boku announced that its Malaysian entity, Boku Network Services MY, has received authorisation from Bank Negara Malaysia to operate as a non-bank merchant acquirer. The approval follows continued investment by the company in the Malaysian market over many years, the mobile payment solution provider said. Boku MY's authorisation will permit Malaysian merchants to access the wider Boku payments network covering over 200 payment methods around the world.

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By Heather Rydings, Alliance News senior economics reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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