Markets
Europe
The FTSE-100 finished yesterday's session 1.19% higher at 6,021.09, whilst the FTSE AIM All-Share index closed 0.65% higher at 713.89. In continental Europe, markets ended in the green, led by a rally in banking stocks. Additionally, a sharp jump in oil prices led to gains in energy stocks. France’s CAC 40 and Germany’s DAX gained 1.0% and 0.8%, respectively.
Wall Street
Wall Street ended in the red as the possibility of the UK’s exit from the European Union (EU) overpowered the improvement in oil prices. The S&P 500 fell 0.3%, with the healthcare sector losing the most. Markets closed 1.2% lower for the week.
Asia
Equities are trading higher as polls suggest a tilt in favour of Britain remaining in the EU ahead of the vote on 23 June. The Nikkei 225 advanced 2.3% as a weaker yen boosted export-driven stocks. The Hang Seng was trading 1.1% up at 7:00 am.
Oil
On Friday, Brent oil prices expanded 4.2% to US$49.17 per barrel, while WTI prices rose 3.8% to US$47.98 per barrel.
Headlines
UK house prices increase in June
As per property tracking website Rightmove, house prices in the UK rose 0.8% m-o-m to £310,471 in June, following a 0.4% rise in the previous month. On a y-o-y basis, prices surged 5.5% in June after a 7.8% rise in May. However, prices fell 0.2% in London on impact from a new property tax regime and the upcoming EU vote.
Bushveld Minerals (LON:BMN, 2.02p) - Speculative Buy
Bushveld Minerals, a diversified mineral development company with a portfolio of vanadium, iron ore, tin and coal assets in Africa, announced today results of a pilot scale metallurgical testwork and plant design at its Groenfontein tin deposit in Limpopo Province, South Africa. The goal of the testwork study was to assess tin recovery on a plant scale, determine potential concentrate grades and fine tune plant flow-sheet design parameters based on a 500kg bulk sample. The salient results of the testwork include achieving a commercial concentrate grade of 74.59% SnO2 and recovery of over 70% using gravity concentration. These results will be incorporated into an updated business model focusing on smaller-scale, near surface high-grade tin targets.
Our view: The above test results follow on from the 2014 scoping study and Bushveld’s revised development plan focusing on the high-grade tin zones of the Groenfontein and Zaaiplaats deposits and proposed processing through simple gravity separation. We are encouraged with the recovery rates and concentrate grades achieved and look forward to the completion of the flowsheet design and mine-planning studies to determine detailed mine capex and opex estimates. As such, we maintain a Speculative Buy rating on the stock.
Beaufort Securities acts as a corporate broker to Bushveld Minerals plc
UBM (LON:UBM, 571.0p) - Buy
On Friday, UBM completed the sale of its PR Newswire business to Cision, a business controlled by GTCR Canyon Holdings. The net cash proceeds from the transaction, after adjustments for transaction expenses, debt-like items, tax and a £10m contribution to UBM’s pension scheme, totalled £490m. UBM would return £245m of the proceeds to shareholders by means of a special dividend, with an associated 8 for 9 consolidation of UBM’s ordinary shares, as approved by shareholders. The special dividend of 55.3p per share to be paid on 8th July 2016 to shareholders on the register at 24th June 2016, with the shares trading ex-dividend from 27th June 2016. The associated share consolidation would take effect on 27 June 2016, following which UBM’s issued share capital would have 393,757,812 ordinary shares worth 11.25 pence each.
Our view: UBM’s disposal of PR Newswire bodes well with the Events First strategy. Proceeds from the sale would allow UBM to return capital to shareholders and invest in high-quality, accretive, bolt-on acquisitions for further growth opportunities. Earlier this month, UBM agreed to divest its electronic media portfolio to an affiliate of Arrow Electronics, Inc. The move would enhance its portfolio of events and other marketing services. In addition, UBM acquired Content Marketing Institute, which has further strengthened its position in the US events industry. Content marketing is an exciting sector, which complements UBM’s presence in technology. Recently, UBM released a trading update stating its performance was in line with expectations for the year to date (18 May). Large events such as Game Developers’ Conference, MAGICVegas, Enterprise Connect, MD&M West and Hotelex/FineFoods continue to drive performance. The company witnessed further progress by integrating the Events First strategy with its new customer relationship management (CRM) platform; savings from procurement remain on target. The integration of the recently acquired Business Journals, Inc. is underway. Considering these developments, we maintain a Buy rating on UBM.