UK Stockmarket 2009 and beyond

Jonbvn

sabretoothtigger wrote: »

Has this thread become so esoteric, that you now only use images to communicate?:cool:

tonygee_3

cloud_dog wrote: »

Tony, would be interested in your thoughts re RDSB sell. Is your action linked to the possible negative action re PRU, or is it more in line with your day trading activity???

Thanks

RDSB has been trading £16.50-£17.50 recently,so at the top end for me.
Ive made a few % + recent DIV so am happy to let go for 'better' opportunities.
My current strategy,whilst FTSE rangebound,is to buy SOLID/LARGE DIV shares.If/when they make a few % I SELL,if they fall I HOLD,collect DIVS and wait till they come good.

Also bought AV.,RESULTS out later this week and DIV approaching may boost shareprice shorterm

Will be worth watching PRU,for further weakness(sub £5)later

sabretoothtigger

Jonbvn wrote: »

Has this thread become so esoteric, that you now only use images to communicate?:cool:

I usually type too much if anything. Seems like Tony chose a good place to sell on any recent purchase, nicely done because I didnt anticipate a turn around exactly apart from that 5th feb low

Another chart showing perhaps hesitation not far off





This looks a bit like the FTSE itself actually, Im still waiting for it to seriously go down or least hit its head on the ceiling and take a breather





USD seems to have resumed its uptrend strongly today which in theory should be negative for equity prices.
Sterling has entered a death spiral recently and at most been sideways before plunging even further, the net result is its worth is below $1.50 again.

Its a loss of about 11% in a month. If you noticed a new thread about gold being posted daily recently, this would be why I guess. Kinda similar to Feb last year actually



PRU going even more into the far east makes me seriously think it could prove worth buying over Standard Life or RSA which are both good dividend stocks about to go ex I think. I like that strategy Tony, I did similar in June and July and it was a good way to be involved while the market appeared weak

If I was going to buy an entire sector right now I guess that would be it. How about resolution (contains FP I think)

Prudential To Buy AIG's Asian Operations For $35.5B(Adds detail and analyst and CEO comment.)

By Vladimir Guevarra
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--U.K. insurer Prudential PLC (PRU.LN) Monday said it would pay $35.5 billion to buy American International Group Inc.'s (AIG) Asian life-insurance business, in a deal that would make Prudential an Asian insurance giant and will allow AIG to pay back a chunk of its massive debt to the U.S. government.


The deal, which requires Prudential to launch one of the biggest rights issues in the U.K., caused Prudential's stock to fall as investors worried over a possible dilution of their shares in the company and questioned whether Prudential is overpaying for AIA.
At 1430 GMT, Prudential shares were down 69 pence, or 11%, at 534 pence, even though the company also reported good full-year earnings and a recovery from losses in 2008.
Prudential said AIG will receive a total of $35.5 billion, comprising of $25 billion in cash and $10.5 billion in new Prudential shares and other securities.


After completing the deal in the third quarter, Prudential intends to have a dual primary listing in the U.K. and in Hong Kong.
The cash component of the purchase will be financed through an underwritten rights issue, raising $20 billion (GBP13.4 billion), and through the issuance of $5 billion of senior debt.


This rights issue is about the same size as Prudential's market capitalization, and is just a shade below the record GBP13.5 billion rights issued in November by Lloyds Banking Group PLC (LYG), which is now 41%-owned by the government after receiving state aid during the financial crisis.


Credit Suisse, HSBC and J.P. Morgan Cazenove, as global coordinators and joint bookrunners, will underwrite the Prudential rights issue in full and have committed to provide the senior debt underwriting.
The new shares to be issued to AIG means that AIG will own around 11% of Prudential once the transaction is completed.
Prudential posted a 2009 net profit of GBP1.245 billion on a European Embedded Value basis, reversing the previous year's GBP1.34 billion net loss, helped by a strong contribution from the U.S. business and gains on investments.
On an IFRS basis, the insurer had net profit of GBP676 million, up from a GBP396 million net loss, also helped by increased premiums and investment gains.


Its capital position was strengthened, with capital surplus at GBP3.4 billion, more than double the GBP1.5 billion it had in 2008. It also raised its full-year dividend by 5% to 19.85 pence a share.
Prudential Chief Executive Officer Tidjane Thiam said the purchase "is hugely exciting and a one-off opportunity to transform the group."


"We believe that the combination of Prudential and AIA will create a unique life insurance business with a common set of customer-focused values and heritage," Thiam said.


In 2009, Prudential's Asian business accounted for 44% of new business profit. This will rise to 60% with AIA onboard.
Prudential said the combination will make it the top life insurer in Hong Kong, Singapore, Malaysia, Indonesia, Vietnam, Thailand and the Philippines in terms of new business sales.
It will also have a stronger business China and India.
Apart from those countries, AIA is also present in South Korea, Australia, Taiwan, New Zealand, Macau and Brunei.
Its Web site shows that Prudential Corp. Asia is also in those markets except Australia, New Zealand, Macau and Brunei. Prudential's Asian operations also cover Japan and United Arab Emirates but AIA doesn't.
In its financial year ended November, AIA had operating profit after tax of $1.44 billion.
Panmure Gordon analyst Barrie Cornes downgraded Prudential to a buy from hold rating and cut the target price to 656 pence a share from 732 pence.


Apart from the issue of shares being diluted, Cornes noted some discrepancy in valuations. He estimates the price being paid for AIA indicates a multiple of 1.5 to 1.7 times AIA's embedded value, more expensive than the 1.15 multiple at which Prudential itself was trading.


Still, Cornes also noted that Asian assets trade at even higher multiples.
"The new combined group would become the undoubted leader in the region. But in the short term, we believe that the valuation and execution risks are very real," Cornes said.


Analysts from Keefe, Bruyette & Woods said the deal is "potentially a lovely combination."
"Given that a combination of AIA and Prudential's Asian operations would dominate the agency distribution channels–-we believe door-to-door selling is the best way to tap the Asian "cash under the bed" savings stock--in the faster growing Asian regions, we believe that they would have a competitive advantage," KBW said.
KBW has an outperform rating and target price of 880 pence on the stock.
In a briefing, Thiam said that some Asian insurers are trading at multiples higher than the one derived from the AIA bid, with Ping An Insurance (Group) Co. of China Ltd. trading at 2.63 times its embedded value and Chine Life Insurance Co Ltd trading at 3.22 times.


Thiam said Prudential can have cost savings of around $340 million per year from buying AIA.
Thiam said the purchase of AIA could produce "significant revenue synergies which can increase the new business profit on a net basis by something like $700 million per annum."


"This is primarily about combining two great brands and two great franchises in the most attractive region of the world," Thiam said.


He indicated that job cuts from combing the two companies may be limited.
"AIA tends to be strong where we're not strong, and we tend to be strong where they're not strong," he said.
"If you take for instance, Thailand or the Philippines, they're dominant and we're much smaller. If you take Indonesia and Vietnam, we're really dominant and they're much smaller. So you don't get that much of an overlap between the two footprints. We only have three markets--Malaysia, Hong Kong and Singapore - where the two companies have comparable sizes," he said.
Thiam said it would be hard to put up another acquisition of the scale of AIA, which was worth $35.5 billion. "I cannot foresee another transaction of this scale for a while," he said.


Prudential's offer is a coup for AIG, which had been planning to raise roughly $15 billion through an initial public offering for part of AIA. AIG is under pressure to start repaying the U.S. government, its 80% owner after the extension of up to $182 billion in financial support at the height of the financial crisis in 2008. AIG has drawn about $130 billion of the total.
Prudential PLC doesn't have any links to U.S. insurer Prudential Financial Inc.

tonygee_3

There was rumour they were also after LGEN,which has been a drag on shareprice.
My IOG is being takenover by SLE(at a 25% premium)dont know much about SLE but seem to be picking up assets cheaply,will prob let it ride,see how it goes
2 others Ive owned in past,SPI& E2V both hit 36p today(deteriorating conditions)Generally Smallcaps being deserted

tonygee_3

sabretoothtigger wrote: »

This looks a bit like the FTSE itself actually, Im still waiting for it to seriously go down or least hit its head on the ceiling and take a breather

/QUOTE]

Dont think FTSE will plummet,more 'drift' sideways,a series of ups and downs with good/bad news over the next few years.Hence my change in stratedgy.

turbobob

ETF's denominated in dollars (but traded in pounds) are mostly going skywards today. Some like FXC have been up as much as 5% which is a lot for a non leveraged index fund. An odd thing was that even the equivalent normal and inverse ("short") S&P 500 funds from DB X-trackers were both going strongly in the same direction (UP!).

tradetime

SPX 1115 being tested as expected, time to sit back and watch, all short term positions closed.
Sterling under considerable pressure today, which is helping anyone who took positions in PM's and likely mining stocks I'd imagine, will be interessting to see just how much of an assault Sterling faces, just a temporary blip or something more sustained?

tradetime

Market didn't seem to like that Prudential deal, what do you guys here think of it? I see it seems to interest you STT.

sabretoothtigger

Looks a bit like lloyds swallowing hbos which was actually bigger then it. Im not surprised they dont like it, looks expensive and Ive no idea if AIA is a good business but I presume it has good prospects.


Its been underwritten so I guess its a done deal. Weak share price till June then see how the dust has settled I guess


Roughly speaking, PRU share price today at 530 rests on some support but I dont think its attractive there because we have weakness below so short term at least it'd be risky.
60% of 650p that it was at is 390 and the july low was 350. I think it'll start to strengthen between 450 and 400, thats when it'd be an attractive investment I think

The Prudential cash call is underwritten by Credit Suisse, HSBC and JP Morgan Cazenove, who are also acting as bookrunners.
The rights issue is expected to be completed in June, and it is a "reasonable assumption" that the new shares will be offered at a discount of about 40 percent, Thiam said.
He said AIA's price tag is equivalent to 1.69 times its embedded value, an insurance sector valuation measure which includes the present value of future profits. He said this compared with a typical multiple of 1.7 to 1.8 for Asian insurers outside China.
Prudential's own shares currently value it at around one times embedded value, but its Asian business alone is closer to 1.7 times, Thiam said.

http://finance.yahoo.com/news/Prudential-to-buy-AIG-Asia-rb-2546514124.html?x=0&.v=8



Sterling weakness is probably related to dollar strength. Can USD index push past 81 to 82 onwards or not, it keeps falling back but the fact we are once again knocking on the door to further rises seems to confirm sterling will continue down.
Sterling had a bit of bounce but too early to say about any strength, apparently its more to do with bonds.

For a year Ive been expecting inflation to pick up around now, not sure when the next figures are out but I guess that would not help the case

tradetime

Part of the problems for Sterling is related to the narrowing of the gap between the Tories and Labour and the possible risk of a hung parliament in the next election. There is also a natural propensity to look at the financial mess the UK is in. Sterling has had a decent run in the last few months but is still down some 30% in value since early 2008. I think you will find it is also getting hit against the Euro.

Re the PRU, I think I read something about possible regulatory issues in Asia, for a firm this size, but can't find where I read it now. Nothing definitive or solid, but something to consider.