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MARKET REPORT: Vodafone swoop sparks telecoms sector activity

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MARKET REPORT: Vodafone swoop sparks telecoms sector activity

Investors were dialling into the telecoms sector after it emerged that Emirates Telecommunications Group had taken a 9.8 per cent stake in Vodafone, for £3.3billion.

The Abu Dhabi group said it wanted ‘to gain significant exposure to a world leader in connectivity and digital services’.

Vodafone shares rose 2.24p, or 1.9 per cent to 120.06p, and BT, where Israeli-French billionaire Patrick Drahi has an 18pc stake, nudged 0.4 per cent, or 0.65p higher to 181.25p.

Connect: Emirates Telecommunications Group, which has taken a 9.8% stake in Vodafone, said it wanted ‘to gain significant exposure to a world leader in connectivity and digital services’

It is not known exactly what Emirates Telecommunications wants, but investors expect the relationship to be a positive one.

‘The infrastructure sector has become hot property in recent years as investors have realised its role in the provision of essential services and the long-term potential for strong cash generation,’ said Russ Mould, investment director at AJ Bell.

The FTSE 100 traded 0.6 per cent, or 46.65 points, higher at 7464.8 despite a worrying update from China, where industrial output fell 2.9 per cent in April and retail sales tumbled 11.1 per cent.

This would normally set off a ripple of selling activity across the mining sector but it appeared to have the opposite effect. 

Glencore was up 3.4 per cent, or 15.65p, to 477p, Fresnillo rose 4.6 per cent, or 33.4p, to 756.8p and Antofagasta was 2.5 per cent, or 34p, higher at 1382.5p.

Analysts said commodity firms were probably boosted by wheat prices, which hit a 14-year high after India restricted exports.

Dropping down a few divisions and online retailers were in the spotlight. Fast-fashion group Boohoo dropped 2.6 per cent, or 2.14p, to 79.66p after the investment bank Credit Suisse downgraded its recommendation to ‘neutral’ from ‘outperform’ and slashed its price target to 80p from 170p.

Stock Watch – Greencoat UK Wind

Greencoat UK Wind has risen to become a giant of the renewables energy sector.

Worth £3.6billion, it is Britain’s 111th biggest listed company ranked by market capitalisation, a value that will be enhanced by its £400million purchase of 12.5 per cent of Hornsea 1, the UK’s largest wind farm.

The shares, up 18 per cent in a year, fell 1.5 per cent, or 2.3p, to 152.7p. Greencoat’s stock trades at a modest premium to net asset value, though its 5 per cent dividend yield is a real kicker for income investors.

Stubbornly high air freight rates, question marks over the opening of a US distribution centre and competition concerns prompted the downgrade.

It is almost two years since the group, which owns brands including Nasty Gal and Karen Millen, was embroiled in allegations that it sourced clothes from factories and warehouses with poor health and safety records. 

In that time the stock has dropped from over £4. Rival Asos, down 40 per cent in the year to date, felt the pinch too as it fell 1.5 per cent, or 21p, to 1425p.

Synairgen jumped 31.1 per cent, or 8.3p to 35p on the back of some in-depth analysis of data of a Covid treatment it is developing.

Its SNG001 is working very well in people with compromised respiratory systems – around a third of those people analysed in the study. This, the company reckons, provides a ‘strong rationale’ to carry on research and development work. 

Elsewhere Plus500 advanced by 4.1 per cent, or 62p, to 1573p as the online trading group said that its annual profits would come in ‘significantly’ ahead of market expectations.

In the transport sector National Express said it would not sweeten its offer for rival Stagecoach despite being gazumped by German asset manager DWS.

National Express fell 0.9 per cent, or 2.2p, to 247.6p and Stagecoach was off 0.4 per cent, or 0.4p, at 104.2p.

Miner Vast Resources rocketed 44.6 per cent, or 0.37p, to 1.2p after repaying the outstanding bonds it owed, easing fears existing investors could be diluted by the issue of new shares to repay the debt.

Net Scientific surged 21 per cent, or 14.5p, to 83.5p after what it described as ‘impressive performance evaluation results’ from a Covid antibody test being developed by its subsidiary Proaxsis.

And RWS Holdings fell 18.7 per cent, or 82.6p, to 360p after bid interest from a Hong Kong private equity group in the language services group evaporated.

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