Market report: Monday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

It's not just the penniless that are getting clobbered by the growing global financial crisis. Ukrainian billionaires are also feeling the heat. Take, for instance, Kostyantin Zhevago, the biggest shareholder in Ferrexpo.

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Movers: Latest from the Stock Exchange

The iron-ore miner's shares fell 2½p to a record low of 115p today, having touched 100p, after Zhevago was forced to dump £144m of stock at a 30% discount to the Friday closing price.

He has sold 122.36m shares or almost 21% of the company, registered with his own vehicle Fevamotinico, to RPG Industries, the majority shareholder in Czech coal producer New World Resources, for just 83p each. The sale was handled by US investment bank JPMorgan to settle a margin call on a loan JPM made to Fevamotinico.

Zhevago, through Fevamotinico, will continue to hold a controlling stake of 51% in Ferrexpo, which produces ironore pellets for use in the making of stainless steel products.

The firm floated in London at 140p in June last year, as it rushed to take advantage of the boom in commodity prices. But its life as a listed company has been chequered. After a brief spell as a constituent of the Footsie 100, where it hit a peak of 455½p, there has not been much for shareholders to cheer. Ferrexpo says the sale has no bearing on its business, which remains 'fundamentally sound'. It holds the licences to the largest iron-ore deposits in Europe.

Meanwhile, UBS warns that the UK mining sector could drop by a further 46% before the year-end in a worst-case scenario, and that commodity prices could fall another 25%. It has cut the target price for Anglo American, down 270p at 1511p, from 4400p to 2500p, Antofagasta, off 66½p at 313¾p, from 670p to 425p and Xstrata, 323p cheaper at 1357p, from 4600p to 2700p.

However, it continues to call all three as a buy. It has dropped Aquarius Platinum, 34¾p lower at 181¾p, from buy to sell and cut its target from 650p to 225p. Kazakhmys, down 151¼p at 417¾p, has been reduced from buy to neutral with its target slashed from 1800p to 550p, along with Lonmin, 126p flatter at 1575p, (3300p to 1800p) and Vedanta Resources, 115p down at 904p, (2500p to 1000p). Lonmin, Kazakhmys and Antofagasta are also included on the short-term sell list.

Merrill Lynch has downgraded three miners, reflecting a softening of commodity prices, and disappointing economic news from China. It has cut Antofagasta from neutral to underperform along with Kazakhmys while Lonmin is reduced from buy to underperform. Dealers say Merrill's move could be the first in a series of downgrades by brokers, indicating that the commodities bubble may have burst.

Elsewhere, more misery was being heaped on investors as the global economic and banking crisis worsened. The banks, with the miners, again bore the brunt of the sell-off. The FTSE 100 index tumbled 391.1 points to close at 4589.2, its lowest since October 2004. Not a single blue-chip showed a rise on the day. There was talk this afternoon of an emergency cut in US interest rates, but it failed to materialise. The Dow slumped 302.8 to 10,022.6, having briefly dropped below 10,000 for the first time since October 2004.

In London, HBOS slid 39.7p to 160.8p, reflecting concern about events over the weekend when Fortis' Belgian operations were bought by Crédit Agricole, and Germany's Hypo Real Estate was teetering on the edge. Royal Bank of Scotland fell 38.1p to 148.1p. Barclays was down 54p at 314p and Lloyds TSB lost 31¼p at 259p.

The pub chain operators came under fresh selling pressure. Mitchells & Butlers fell 23¼p to 187p while Enterprise Inns shed 19¾p to 149¼p, Punch Taverns 10½p to 141¼p and JD Wetherspoon 26p to 225¾p. Broker Blue Oar says there are fears large lines of stock may have to be placed by the cash-strapped chains.

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Tomorrow's agenda

Analysts have been queuing up to predict disappointing third-quarter profits from recruitment firm Michael Page, out tomorrow. UBS downgraded its recommendation to "sell" and predicted a significant deterioration in growth, from about 15% in the second quarter to 6.5%. Broker Chevreux cut its forecasts for 2009 by 8%, forecasting a pre-tax fall of 10% for the year. Page rejected a £1.3bn takeover from Adecco in September. Shareholders may now think that was foolish.

A Trading statement from northern Foods will highlight how Marks & Spencer's wellpublicised troubles are affecting its suppliers. M&S is the ready-meals maker's biggest customer by far, representing a quarter of its total sales. So last Thursday's M&S figures, showing the year-on-year fall in food sales accelerated to 5.9% from 4.5% will not have come as a surprise. How much will the M&S attempt to cut food prices hit northern?

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