You Gonna Be Here in 2012?

Dec 07, 2005

*** The seduction of Amvescap

*** The threat of Tropical Storm Dennis

*** How will the Olympic Games affect the UK economy...Greenspan’s growing threat...checking out Thailand...and more..          

– You gonna be here in 2012? With London pipping Paris to the post to win the Olympic Games for that year, it seems the nation is divided on whether the event will actually boost the country or not... (more on that below).

– The news was however sufficient to buoy a number of construction stocks on Wednesday: Balfour Beatty surged some 5% while building materials supplier Travis Perkins traded 2% in the black. The leisure sector also gained 3%, with caterer Compass Group adding 2%.

– Fund manager Amvescap rocketed 15% on Wednesday after rumour suggested it had received a bid from Canadian rival CI. CI is allegedly looking to buy all of Amvescap...but then dump its US and European operations while holding onto its Canadian money manager AIM Trimark.

– Will Amvescap fall for CI’s seduction? Not likely: the Anglo-US fund manager has already said it doubted CI’s offer would match its high standards. Shares still soared 52p, to trade at 395p – the top blue chip gainer for the day. Sector peer Man Group also added 5% on takeover rumours.

– The FTSE 100 made new 3-year highs on Wednesday: the index added 40 points, to close at 5,229. The FTSE 250 also shot up 1.2% - to hit new all-time highs at 7,496, while the All Share index gained 0.8%.

– And with Tropical Storm Dennis creeping up on the Gulf of Mexico and the Caribbean, and threatening to develop into a full-blown hurricane which could disrupt oil supplies, the sector traded some 7% in the black.Both BP and Shell traded 1% up. The price for Nymex crude meantime shifted above $60 a barrel, while Brent Crude traded at $58.01 per barrel by London’s close.

– And Shell also said it’s close to clinching a deal with Russia’s Gazprom...but it seems the agreement could benefit the Russians more than the Anglo-Dutch oil group. Why? Well, Shell will swap a portion of its liquefied natural gas project, situated on the Russian island of Sakhalin for a slice of Gazprom’s Siberian field – with suggestions that Shell had little choice in the matter.

– Yet things could have turned out worse for Shell: it becomes one of the first oil giants to enter the Siberian heartland. Moreover, if it’s very nice to Gazprom, the Russians could just have a couple more treats stashed away for Shell. 

The Financial Impact of the Olylmpic Games

– So London will be hosting the 2012 Olympic Games – to the delight of some, but to the despair of even more. And many are particularly worried about how the Games will affect London economically. In fact, says F&C Asset Management, it shouldn’t impact on the economy either way. The total Games budget is equal to just £1.5bn – with the UK government providing just 3% of this. Yet while the economic impact may be small, there are a number of stocks that could benefit from the news...

What Real Estate's Gonna Do

– The supply of new homes is still very low in the US, and as a result prices could continue to rise in the short-term, says Dr Steve Sjuggerud in the Investment U E-letter. Yet looking further ahead a “double-digit percentage drop in home prices (after inflation) is extremely likely”. Why? Well, for one, there’s the Greenspan Threat. Through his policies, the US economy could be facing a recession...and new home prices will have a hard time “avoiding the wrath of recession”.

The Best Bets in Asia

– Asian markets continue to look impressive for long- term investors. But what about the shorter term? China’s economy is expected to slowdown slightly from its breakneck growth...while the Fed’s continuous interest rate hikes may also serve as “headwind” for the region, we note in the latest MoneyWeek. So which countries in the region remain strong? India is still one of the best plays of the emerging markets...but it’s not a bad idea to take a closer look at Thailand.

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