StanChart boosted by news of more job cuts

Standard Chartered matched an eighth straight gain for the London market on Friday as confidence grew that the bank can avoid a cash call.

\n

Workers at Standard Chartered First Bank walk in the lobby of the bank's headquarters in Seoul in this June 27, 2011 file photo. Standard Chartered strongly rejected the portrayal of its handling of Iran-related transactions by New York's top bank regulator, which branded the British bank a "rogue institution". The New York State Department of Financial Services (DFS) has threatened to strip Standard Chartered of its state banking license, saying the British bank hid $250 billion in transactions tied to Iran, in violation of U.S. law. REUTERS/Jo Yong-Hak/Files (SOUTH KOREA - Tags: BUSINESS)

\n

The continued rally in commodities and news of more job cuts helped lift StanChart by 5.1 per cent to 786.7p.

\n

The bank’s shares have bounced 26 per cent since hitting a post-credit crunch low in late September.

\n

StanChart has already done enough to de-risk its loan book for a crisis, which is the measure that really matters to regulators, Sanford Bernstein argued.

\n

It advised investors to ignore risk-weighted bank capital ratios, saying they tend to be a poor indicator of balance sheet stress.

\n

“At the end of the day, historical data show that banks end up losing 2-3 per cent of tangible equity in a crisis, so if you stuff them with twice that amount, as regulators, you should be safe,” said the broker.

\n

Any cash raised by StanChart from here “will be purely excess in two years’ time”, it added.

\n

Miners and oil producers underpinned the wider market as the FTSE 100 added 0.7 per cent, or 41.34 points, to 6,416.16. For the week, the FTSE was up 4.7 per cent, its biggest weekly advance since 2011.

\n

FTSE’s large-cap mining index has jumped 30 per cent from a one-decade low after rising in each of the last nine sessions.

\n

Friday’s assistance came from Glencore, which gained 7 per cent to 129.1p after it cut zinc production.

\n

Vedanta Resources took on 12.2 per cent to 594.5p as zinc’s rally combined with a positive second-quarter production report, which lowered debt guidance and eased fears that the Indian group might breach covenants.

\n

Zinc and oil account for nearly 70 per cent of 2016 operating earnings for Vedanta, which is currently trying to refinance $2bn of its $8bn net debt pile, said Deutsche Bank.

\n

Platinum miner Lonmin gained 16.2 per cent to 41.3p on optimism it can complete a rescue share sale, which dealers said might be pulled forward to tap revived market demand. Lonmin has said it will set out a plan in November to fix its balance sheet.

\n

Electrocomponents was squeezed 13.4 per cent higher to 124.9p on a retread of gossip that the electronic parts distributor was open to offers from trade buyers and private equity.

\n

Sector peer Premier Farnell, which has been under pressure to seek a merger after it was targeted by activist fund GO Investment Partners, gained 3 per cent to 111p.

\n

Sports Direct lost 6.6 per cent to 690p on a Morgan Stanley downgrade.

\n

“We continue to like the Sports Direct story in the UK and remain open-minded on its overseas expansion. However, we no longer view the international business as a free option with the shares up nearly 20 per cent in the last six months,” said Morgan Stanley.

\n

Online advertising companies fell after Adgorithms, an ad space trader, warned four months after its Aim flotation that tighter industry standards meant both demand and supply had dried up.

\n

Adgorithms was down 61.1 per cent to 45p, XLMedia fell 12.6 per cent to 65p and Matomy slipped 5.8 per cent to 115p.

\n

 

\n

The post StanChart boosted by news of more job cuts appeared first on The Zimbabwe Mail.