21/10/13 Market Movements

Markets closed up, 31.62 points at 6,654.2 today.



Stock Prices

Stock Movement Detail
Rio Tinto Moved further within 5% of TSP Current price =3245p, TSP = 3400p
Persimmon Moved further within 5% of TSP Current price = 1250p, TSP = 1300p
Royal Bank of Scotland Moved further through TSP Current price = 353.10p, TSP = Current price


Bounced off its low today following a profit warning  issued last week .  Anite has lowered its expectations for the full year as they mentioned that the first-half profit shortfall compared to last year will not be fully recovered in the second half.  The anticipated pick-up in trading didn’t happen as expected.  Anite do believe that the second half for Handset Testing will be materially improved on the first half and they expect to exit the year on a strong underlying run rate.  However the revenue decline, in addition to the increase in fixed costs following the Propsim acquisition in January, means that it is likely that the Handset Testing business that Anite own will be around break-even for the first half of the year.  For that reason the OCM in-house view was to sell the holding.

Rio Tinto
Considering the amount mining stocks have fallen in recent times, they have been trading on low P/Es compared to their history.  Chinese slowdown has affected demand but recent positive growth data from China last week has proven to
provide support for the stock. Iron ore represents more than two-third of RIO’s earnings and the company continues to benefit from strength in iron ore prices. Recent broker views also highlight confidence in the stock.

The group released a strong set of results in August however, the shares are beginning to look  like they are reaching full value.

RBS announced on 2 August disappointing first half profits. Whilst the pre-tax profit was nearly £1.4bn, compared to a loss of £1.7bn in the same period last year.  It also named Ross McEwan as group chief executive to succeed Stephen Hester who is stepping down. Ross McEqan is tasked with completing the banks restructuring program.  In addition, the bank’s core tier one capital ratio, a measure of the amount of money it needs to set aside to absorb potential losses for depositors and shareholders improved to 11.1%.

However, many brokers have reviewed/downgraded their price targets.

RBS fell to 353p today (through our target sale price of 360p) as it was announced that the government is moving closer to breaking up the bank in to a  “bad” and “good” structure.  In addition, Ross McEwan may have to declare a loss on the first set of results.   The break up will result in a significant change in RBS.