11 December 2009
Is there still growth potential for UK Equities ?Is there still growth potential for UK Equities?
UK share prices reached a 14-month high during November, but investor sentiment was knocked towards the end of the month by the news of Dubai's effort to delay its debt payments.
Overall, the FTSE 100 index rose by 2.9% during November, bringing the UK stockmarket's rally from its 3 March lows to 48%.Merger and acquisition activity continued to court publicity during the month. Kraft maintained its hostile bid for confectioner Cadbury, amid speculation that Nestle, Ferrero and Hershey might enter the fray. Meanwhile, British Airways announced an agreed merger with Spanish airline Iberia. According to a survey conducted by Ernst & Young, more than one-third of global businesses will actively seek merger or acquisition targets over the next 12 months.
UK retailers experienced their strongest sales growth for October since 2002, according to the British Retail Consortium (BRC). Sales were driven by demand for Halloween costumes, clothing and furniture. The BRC hailed the figures, but warned that higher VAT and increasing unemployment could dampen sales growth in 2010.
Nevertheless, amid signs of rising consumer confidence, UK retailers appear less inclined to offer major discounts before Christmas. Marks & Spencer reported a "good start" to the third quarter, while Next increased its forecast for the Christmas trading period. Sainsbury, the UK's third-largest supermarket, announced stronger-than-expected growth in first-half profits, boosted by savings generated from self-service checkouts and a larger range of own-brand food.
Consumer electronics retailer DSG International, which owns PC World and Curry's, announced first-half losses that were less severe than those sustained during the same period in 2008. Sales growth was lifted by improving consumer confidence and refurbished stores. Elsewhere increased first-half profits and sales prompted Carphone Warehouse Group to raise its full-year earnings forecast.
Within the financial sector, hedge-fund manager Man Group announced stronger-than-expected first-half profits, boosted by revenue from performance and management charges. HSBC reported "significantly" higher third-quarter profits compared with the same period a year ago. ICAP, the world's leading broker of deals between banks, reported a drop in first-half net income as investment in new ventures affected profits. Meanwhile, asset manager Gartmore announced plans to raise more than £400m through an IPO.
BT Group raised its target for full-year cashflow and announced plans to increase its dividend by approximately 5%. However, the company's chief financial officer cautioned that the UK economy is not "over the worst" of the recession, warning that "there's still more to come".
