F&C Asset Management has emerged as one of the most short-sold companies listed on the stock market, with more than 10% of its shares in the hands of investors betting its price will fall further, The Telegraph reports.
The situation is unusual, because F&C has been put up for sale by Friends Provident, which owns 52% of the asset manager. There is market speculation that there could soon be a bid for F&C, which is currently capitalised at £707m.
The financial services sector is being widely shorted by investors who expect rising defaults by customers and continuing turmoil in global markets.
However, almost all of the F&C shares held by the likes of Friends Provident, investment firm Dawnay, Day, with 26%, and Dutch financial services group Eureko, which has 11%, are being shorted. This amounts to around 10pc of the equity. A City source said: “This is highly unusual. It would have taken considerable effort to pull off.”
BRITAIN IS FACING the risk of renewed turmoil in the financial markets, the new deputy governor of the Bank of England warned yesterday, according to The Independent.
Professor Charlie Bean, the deputy governor for monetary policy and a former chief economist at the Bank, raised the prospect of a slowing global economy triggering a new round of problems with corporate loans and said that the impact of the credit squeeze could be greater than Bank projections.
He told members of the Commons Treasury Select Committee that Britain faced "major conflicting risks" threatening the Government's inflation target from the problems of a slowing economy and rising commodity prices.
THE EUROPEAN CENTRAL Bank is expected to raise interest rates across the 15-nation eurozone at lunchtime today despite mounting political opposition and increasing signs of a contracting economy, The Guardian reports.
Analysts believe the ECB, in a state of "heightened alert" over surging inflation since last month, will raise borrowing costs from 4% to 4.25% - the first jump since June last year. Inflation in the eurozone hit a record high of 4% last month - double the ECB's target.
Financial markets are now expecting the ECB to increase rates at least twice more after today, putting them close to 5%, to avert a wage-price spiral in the face of surging energy and food prices.IFAonline
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