Some in the City were sceptical that a blue-chip such as BP or Shell would
take an interest, bearing in mind the relatively small size of the
Mozambique stake, and thought a buyer was most likely to be Asian.
Tokyo Gas and Korea Gas Corp, and Chinese oil companies including CNOOC and
Sinopec, have in recent years been snapping up stakes in LNG projects from
which they buy gas.
“Far East buyers look likely for what we see as a prized LNG position in East
Africa,” said Stuart Joyner, analyst at Investec.
Cove spurted up 12¼ to a record high of 124¾p, prompting gossips to consider
which other explorers could be ripe for a takeover. Africa-focused Afren
has recently been the focus of rumour-mongering, with suggestions that a
blue-chip explorer could make a tilt. Despite some late selling, Afren
gushed up 6 to 105.4p. Ophir Energy claimed pole position, though,
soaring 20.3 to 318.8p.
Cove’s excitement aside, it was a muted day as a French debt auction
disappointed investors and stronger-than-expected American employment data
failed to lift traders’ spirits.
The FTSE 100 dropped 44.19 points to 5,624.26 and the FTSE 250 sank
129.13 points to 10,144.64.
A broad-based sell-off saw mining, financial, retail and defensive shares fall
out of favour. Vedanta Resources suffered the sharpest fall, sliding
54½ to 985½p. Not far behind was interdealer broker, ICAP,
which dropped 15.8 to 329.1p as mid-cap peer, Tullett Prebon – up 0.6
to 271.8p – pointed to the unsettled trading environment.
Having disappointed the market earlier in the week with its Christmas trading
update, Next fell another 42p to £26.14, although Investec said the
chain was “performing well in choppy waters” and it continued to “believe
that it will emerge as a long-term winner”.
Housebuilders, property companies and building materials groups had a mixed
day, with a clutch of analysts pronouncing on the sector’s prospects. One of
the top flight’s newest entrants, CRH, dipped 43p to £12.42 as
Credit Suisse cut the Irish building materials group from “neutral” to
“underperform”.
“We retain serious concerns about the pattern of construction volumes in
Europe in 2012, which we think will be compounded by CRH’s limited ability
to cover continued cost inflation,” said analysts.
They were more sanguine on Wolseley – 14p higher at £21.41 – on which
they maintained an “outperform” rating, citing its pricing power and high
exposure to the private sector, as opposed to government-funded
construction. JP Morgan Cazenove turned bullish on Wolseley, upping its
rating to “overweight”. “While we believe the relative strength of US
markets is already relatively well appreciated, we see the potential for
on-going positive earnings surprise,” said analysts.
Among the real estate groups, Land Securities gained 8 to 636½p and British
Land put on 3.6 to 468.1p after both were upgraded to “equal-weight”
from “underweight” by Morgan Stanley.
Mid-cap Great Portland Estates added 4½ to 329p and housebuilder Persimmon
edged up 0.8 to 473p ahead of a trading update next week.
But IT services company, Logica, lost 4.35 to 65.95p as Bank of
America-Merrill Lynch cut its rating to “neutral” from “buy”. That was in
contrast to ARM Holdings, which jumped 15½ to 610p as UBS put a
short-term “buy” on the microchip designer in anticipation of potential
announcements from Broadcom and Samsung that may prove positive for ARM.
Further down the market, Eruma, an Aim-traded provider of
counter-terrorism and intruder prevention products, rose 0.63 – 5.9pc – to
11¼p after its lighting division won a further contract with a police
authority worth over £325,000.
No medals for SN in medical device Games
Olympics fever is already gripping scribblers at Citigroup. With London
gearing up for this summer’s games, medical technology analysts were handing
out medals to companies they think fulfil the Olympic motto of “swifter,
higher, stronger”.
But there was no prize for Smith Nephew, with analysts arguing that the
maker of artificial hips and knees is “limping towards the finish line”.
“Smith Nephew scores poorly on our medal criteria,” said Citi,
due to factors such as “inferior sales growth” and exposure to the US
medical device tax.
“We are concerned that the orthopaedic industry will face continued challenges
in 2012 through slower volume growth, increasing price pressure and limited
opportunity for mix growth,” the broker added.
Smith Nephew fell 20 to 606p.