AIM-LISTED oil companies are increasingly vulnerable to market fluctuations and local political upheaval, according to Ernst & Young's own oil index known as the Oil & Gas Eye, reports the Scotsman .
According to E&Y, the 20 companies currently on the index have outperformed the FTSE Index by 41% since January, and their share values have leapt by 74% and have driven the value of the oil and gas sector on AIM to £6.5bn – which in turn is 16% of the entire AIM index.
That said nine of the companies which make up the index are focused purely on exploration, and that could be a problem for future share prices, according to Alec Carstairs, oil and gas partner at E&Y.
"While the potential upside may be large, the risks are high with many companies exposed to political and economic risk. Around half of all companies in the Index are weighted towards operations in Africa.
OFFICIAL HOUSE PRICE data from the Land Registry reveals today house-price inflation has slowed to its weakest pace in nine years, and provides the strongest sign yet that the market has ground to a halt, says this morning’s Times.
The figures, which cover prices at the completion stage of purchase, show that house prices rose by 0.8% in the second quarter, taking the annual rate of inflation down to 5.4%, the lowest level since September 1996.
This 0.8% rise in the second quarter came after a 0.3% rise in the first quarter and a drop of 2.7% in recorded prices in the fourth quarter of 2004.
ONE of the country's top 15 mutual lenders, the Newcastle Building Society, is likely to announce this week up to a third of its 52 branches will close, suggests the Scotsman.
The society's assets grew by only a little more than 5% in 2004 to £3.48bn, a growth rate beaten by all but one of the other top 20 building societies. Profits plunged 11% to £12m.
AND THE FUTURE of the euro could apparently be in jeopardy, according to the Times, if eurozone governments do not agree a deal to co-ordinate their tax and spending policies within the next few years.
Former Treasury adviser Tim Congdon, now chief economist at Lombard Street Research, in a new report says Europe is not on course to centralise fiscal decision-making, a precondition for monetary union success, until 20 or 30 years from now. Similarly, inflation could reach “unacceptable levels” unless the 12 member states agree to rein-in public spending.
“Doubts have to be raised whether the eurozone can survive that long,” Professor Congdon writes in a European Policy Forum report. “Unless the eurozone’s leaders are able within the next few years to enforce genuine fiscal centralisation across the 12 member states, a reasonable conjecture is that the UK fiscal arrangements will look increasingly satisfactory by comparison.”IFAonline
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