Newspaper article The Evening Standard (London, England)

Hunt on for Value Buys as Brokers See the Light

Newspaper article The Evening Standard (London, England)

Hunt on for Value Buys as Brokers See the Light

Article excerpt


TWO brokers have effectively called the bottom of the bear market during the past 24 hours. They may not have got the timing right, but they have certainly given stock market investors something to think about.

Charles Stanley told clients yesterday that it thought the selling had been overdone and ratings were now looking historically cheap. Inf lation was expected to peak in the third quarter and be accompanied by a cut in interest rates.

Morgan Stanley is also taking a bullish view. It has gone overweight of the equity market for the first time in three months and raised its weighting by 3%, compared with a benchmark of 50%, and reduced its weighting in cash by the same amount. The American broker views this as a first step ahead of a bear market rally on the back of oversold conditions, attractive valuations and falling inflation later this year.

"But we keep some powder dry in case markets fall again in the short term," it adds.

Other traders say there is value to be had in the market-place, judging by the recent spate of takeover approaches, including buy-to-let lender Paragon Group, up 19p at 103p, today and property developer Minerva, 2p better at 122p, yesterday. Bid approaches have also been made in recent days to Alliance & Leicester , up 12 1 / 2 p at 350p, Inmarsat , 5p cheaper at 461 1 / 2 p following a breakdown in bid talks yesterday, and Imperial Energy, 1p off at 1043p.

One dealer commented: "The recent sell-off has produced value. Those companies with a clean balance sheet will be picked off, while those in debt will be bought for knockdown prices." There were few signs today of a bull market revival, with share prices in London reflecting the turnaround in futures on Wall Street overnight with further losses expected in New York this afternoon. The FTSE 100 index fell 73.3 to 5331.0.

Vodafone was the biggest loser among blue-chips falling 18.75p to 130.55p after results failed to match City expectations. …

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