FTSE wobbles but Vodafone rallies on Abu Dhabi share raid

The UK stock market begins the week with more volatile trading sparked by a slide in Chinese retail sales, but the FTSE 100 recovers from an early fall as Vodafone rises after a UAE telecoms giant buys a 9.8% stake.

The UK stock market began the week with more volatile trading, with the FTSE 100 recovering from an early fall to stand 0.2% up at 7,437.

This followed the blue-chip index shedding 0.6%, or 47 points, to 7,371 in the first half-hour of trading. This was in response to Chinese retail sales sliding 11% year-on-year in April, missing analyst estimates and marking the biggest drop since March 2020.

Industrial production from the world’s second-largest economy also disappointed, falling for the first time in two years while the urban unemployment rate worsened to 6.1% in April from 5.8% in March, hitting the highest reading since pandemic highs in February 2020.

China’s National Bureau of Statistics blamed the ‘increasingly grim and complex international environment and greater shock of the pandemic at home’ for the disappointing numbers.

Victoria Scholar, head of investment at Interactive Investor, said: ‘China’s draconian approach to its latest Covid-19 outbreak has really started to weigh heavily on its economy, a critical engine of growth around the world.

Vodafone (VOD) was the FTSE’s early leader, jumping 3.1%, or 3p, to 121p after Etisalat, the United Arab Emirates telecoms giant which recently rebranded ‘E&’, splashed £3.3bn ($4.4bn) on a 9.8% stake to gain ‘exposure to a world leader in connectivity and digital services’.

Although the company stressed it was ‘not seeking to exert control or influence’, E& joins the register months after activist investor Cevian took a stake. It has pushed for an overhaul of the board and for chief executive Nick Read to boost shareholder returns by cutting unprofitable businesses and enlarging more profitable countries through mergers.

Last week the Financial Times reported Vodafone was back in talks to buy Three, the smallest of the UK’s four main mobile operators. It is due to publish its annual results tomorrow.

Enders analyst Karen Egan told the Sunday Times: ‘However at pains they are to insist they are supportive, it’s yet another sizable shareholder lining up to pressure Read to deliver.’

Aerospace engineer Rolls-Royce (RR) shed 2.9% to 81p followed by consumer credit scoring group Experian (EXPN), down 2.5% at £26.28, and Royal Mail (RMG) losing 2.4% to reach 329p.

The mid-cap FTSE 250 also turned around from an early 0.7% drop to trade 54 points, or 0.3% higher at 19,976. High-street baker Greggs (GRG), an early faller, down 2.3% at £21.20, was a talking point after. It said while sales had risen 27.4% in the first 19 weeks of the year and full-year plans remain on track, it warned about rising input costs. Shares in the group have lost more than a third of their value since they hit a December peak.

Private equity perky

Private equity investment trusts remained in favour with Abrdn Private Equity Opportunities (APEO ) rising 2.7% to 421.9p to narrow its wide 35% discount after releasing its net asset value per share of 704.3p for 31 March, down 0.3% in the month. HgCapital Trust (HGT ), which issued a well-received first quarter update last week, gained 2.8% to 401p.

HydrogenOne Capital Growth (HGEN ) added 1.7% to 95.6p on a 2% discount after it agreed to invest £5m (€6m) alongside Foresight funds in a £10m (€12m) funding round by HH2E, a German company helping to decarbonise the country’s industry with green hydrogen power. Both Foresight and HGEN have right to a board seat at HH2E.

JPMorgan China Growth & Income (JCGI ) slipped 2.7% to 329.7p on the weak Chinese retail sales figures, with Schroder Asian Total Return (ATR ) down 2.9% at 407.6p.

Home (HOME ), the real estate investment trust providing accommodation for the homeless, dropped 2.8% to 118.6p after launching a £150m share placing at 115p, a 5.7% discount to Friday’s closing price and a 4.7% premium to the net asset value at the end of February.  


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