Man Group was a faller in a flat London market on Monday on concerns that its earnings might disappoint.
A downgrade to “neutral” from HSBC sent shares in the hedge fund manager down 1.7 per cent to 137½p.
The broker was worried about a weak outlook for Man’s guaranteed products, which lock clients in for seven years.
Guaranteed products generate gross sales of about $1bn a year for Man, compared with $5bn before the collapse of Lehman Brothers in 2008.
Because of anger among retail investors who lost money on Lehman “mini-bonds”, distributors were less willing to push products that promise capital protection, HSBC said.
Sales were unlikely to recover and assets under management would shrink as the guaranteed investments matured, said HSBC.
The products provided more than twice the group average profit margin, so a modest decline in assets under management could have a disproportionately high impact on earnings, the broker said. HSBC estimated that, for every further $1bn decline in guaranteed product assets under management, group earnings would fall 10 per cent.
Miners dragged on the wider market after Chinese export data trailed forecasts. The FTSE 100 ended 5.26 points higher at 5,892.75 as Vedanta Resources slipped 3.7 per cent to £13.69, Anglo American lost 0.7 per cent to £25.75 and Rio Tinto was down 1.7 per cent to £34.51.
Wm Morrison led the blue-chip rises, up 2.3 per cent to 301½p, as the supermarket group hosted an investor trip to Hertfordshire to see one of its 12 upgraded stores.
B&Q owner Kingfisherrose 1.6 per cent to 286¾p before full-year results next week. Credit Suisse was positive, predicting that the results would “demonstrate the ongoing benefit of internal self-help and market share gains, despite a challenging environment”.
An upgrade to “buy” from SocGen lifted Amec 1.3 per cent to £11.64. A £400m share buyback announced by the engineer last month was part of a “value-
enhancing transformation being implemented by the company through astute balance sheet management”, it said. “Not only is this transformation not yet fully priced in, but there is more to come, in our view.”
Misys slid 3.8 per cent to 328p after Swiss peer Temenos abandoned talks about an all-share merger. Temenos’s decision to walk away left two known predators for Misys. Vista Equity Partners has a Takeover Panel deadline of Monday to make a full bid while a CVC and ValueAct consortium has until April 2.
“Competitive tension is lessening and so the potential for a price of circa 400p is receding,” said Merchant Securities. It speculated that Vista was an unlikely bidder and might instead be “taking a look under the hood of a competitor”.
Premier Farnell fell 2.6 per cent to 210½p ahead of full-year results due on Thursday. Collins Stewart downgraded the electronics distributor to “hold” on valuation grounds, while UBS advised selling based on worsening UK and European markets.
A reheat of talk that 3i could be taken private by management helped the buy-out group rise 1.4 per cent to 196½p.
Cobham rose 4.8 per cent to 220½p. The aerospace and defence contractor withdrew its bid for Thrane & Thrane after the Danish maker of radio and satellite communications equipment rejected a £273m offer.
Centaminrose 4.4 per cent to 85p after the gold miner said it had resolved a one-week strike over pay at its flagship mine in Egypt.
Housebuilders edged up as analysts welcomed the launch of the government’s NewBuy scheme, which indemnifies loans on new properties for the first 9 per cent of losses.
“This scheme will underpin demand for the new housebuilders for the next few years and might generate a little inflation,” said Liberum Securities. Its preferred stocks in the sector were Barratt Developments, up 1.4 per cent to 141¾p, and Taylor Wimpey, ahead 1.2 per cent to 50p.
Computacenter bounced 11.3 per cent to 410p on a reassuring trading update.
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