*** Somerfield’s bidder under fire
*** All-time highs for the mid-cap index
*** Making a mockery of investing...the spending power of the Chinese tourist...learning from Japan...and more.. -------------------
– Retailer Somerfield could be in for a tough couple of days. Iceland’s Baugur, part of a consortium bidding for the supermarket, now has five employees, including its chief executive, facing some 40 charges of fraud and accounting rule breaches. The investigation into the Iceland group now threatens to scupper the £1.1bn bid for Somerfield.
– Tell you who may be making the most of Baugur’s woes. Property tycoons Ian and Richard Livingstone have also bid for Somerfield, although their bid has up to now fallen short of the Baugur-consortium’s proposal. This may be the perfect opportunity for them to get back in the race. The Baugur consortium consists of another property mogul Robert Tchenguiz, private equity group Apax and investment bank Barclays Capital. Somerfield traded 1% down on Friday at 193p.
– Meantime the blue chip index kicked off the second half of the year with a new three-year high. With oil groups BP, Shell and BG Group handing some 16 points to the index, it closed 48 points up, or 0.9%, to trade at 5,161 before the weekend. The FTSE 250 gained 1%, to close at 7,446 – a new all-time record for the index. What next then for the indices?
– “My best guess would be that the markets will see some sideways trading, absorbing what is likely to be a proportion of profit warnings in the next few months. And once they’ve come to terms with those it will be slightly more obvious what the outlook for next year is,” Carr Sheppards Crosthswaite’s Andrew Bell said.
– O2 closed as the top blue chip loser on Friday – down 2%. The group had traded 8% up in the last seven trading days as investors warmed to bid rumours. Both France Telecom and Deutsche Telekom, as well as a number of private equity groups are said to be eyeing up the mobile firm.
– Yet just how much truth is there behind the rumours? It seems that neither France Telecom nor Deutsche Telekom really have the time...or the money...to be bidding for O2 at the moment. And even a private equity group will battle to snap up the outfit.
– And British Airways has said that its 2004 operating profit has risen to £556m from £540m. Pre-tax profits are also up to £513m, nearly £100m more than in 2004 – although the group has benefited from new accounting standards. The group’s shares traded 1% down before the weekend.
------------------ Investment Advice? More Like Infantalized Noise-Making– You may have thought that Pimco's Bill Gross juggled 'a number of balls' in issuing monthly market-moving commentary while still managing a multi-billion dollar bond fund, says MoneyWeek's Tim Price. But he has nothing on Jim Cramer, president of hedge fund Cramer Berkowitz: his presence in the financial media is evidently no barrier to 'issuing stock tips the way a busted fire hydrant issues water'. This kind of behaviour tends to make a mockery of investing, says Tim.
Chinese Socks... and Tourists– Growing 'swarms' of Chinese travellers are changing the face of tourism worldwide, says Eric J. Fry in The Daily Reckoning. It's not only their sheer numbers...it's also their spending power. Who will benefit most from this surge in Chinese tourists? More than likely hotel and leisure groups that are situated throughout the Pacific Rim, like the Orient Express Hotels...or even Shangri-La Asia Ltd.
From Bubble to Bubble:– By condoning the 'greatest equity bubble since the late 1920s, the Fed has been snared in a low real interest rate trap', says Morgan Stanley economist Stephen Roach. As a result, it has now locked itself in to a serial bubble-blowing strategy. It claims to have learnt the tough lessons of Japan...but the bigger the bubble and its associated imbalances get, the less likely we are to see a 'benign endgame'.
Published in Stock markets
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by
Heather D'Alton
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