MARKET REPORT: M&G shares surge after the asset manager and insurer unveils plans for a £500m share buyback
Asset manager and insurer M&G headed towards the top of the FTSE 100 leader board after unveiling plans for a £500million share buyback.
The stock surged 15 per cent, or 26.8p, to 205.1p after the firm flagged ‘strong capital generation’ of £2.8billion over the last two years, ‘well ahead’ of targets set out after it was demerged from Asia-focused insurer Prudential (up 0.8 per cent, or 8.5p, to 1027.5p) in 2019.
M&G also noted that it had achieved its annual cost savings target of £145million one year ahead of schedule.
M&G stock surged 15% after the firm flagged ‘strong capital generation’ of £2.8bn over the last two years, ‘well ahead’ of targets set out after it was demerged from insurer Prudential
The bumper buyback came as the group’s assets under management grew 0.8 per cent in 2021 to £370billion. Profits during the year slipped to £721million from £788million in 2020.
The firm’s performance was boosted by £2billion of client money flowing into its asset management business, a significant turnaround from 2020 when it saw £6.8billion transferred out.
The results mark a positive step for the group, which since its demerger from Prudential has been trying to draw in business and improve its share price while grappling with the Covid-19 pandemic.
Tactics have included cutting fees and changing operating methods in its retail business, where money outflows have been highest.
Richard Hunter, head of markets at Interactive Investor, said the company’s cash generation should ‘underpin’ its efforts to modernise its legacy business and that it was ‘well placed for further progress’.
The results followed a decision by M&G to suspend investments in Russia last week following Vladimir Putin’s invasion of Ukraine, although the group stressed that only 0.1 per cent of its assets were exposed to the country.
M&G’s boss John Foley also said that investment in Russia had become ‘clearly unthinkable’ and that the company had marked its Russian assets down to nearly zero.
Stock Watch – Robert Walters
Recruiter Robert Walters jumped after its full-year profits more than trebled.
The group generated a record profit of £54.1million in 2021, up from £14.8million the previous year as companies competed fiercely for talent and hiked wages. The dividend for the year was also raised by nearly a third to 20.4p per share.
Demand for permanent and part-time staff had been strong as its clients became ‘increasingly confident’ about hiring after the pandemic. Shares rose 7 per cent, or 38p, to 580p.
The FTSE 100 edged up 0.07 per cent, or 4.63 points, to 6964.11, while the FTSE 250 rose 0.25 per cent, or 47.84 points, to 19217.62.
Markets were slightly becalmed after recent selling but remained wary of the war in Ukraine approaching the end of its second week.
Fears of ‘stagflation’, low economic growth coupled with rising prices, continued to unsettle investors as talk of more sanctions on Russia pushed prices of energy and other commodities higher.
Oil majors continued to climb amid the escalating cost of crude, with Shell up 3 per cent, or 59.5p, at 2039.5p and BP adding 5.1 per cent, or 18.5p, to 380p.
Mid-cap oil group Capricorn Energy also cashed in on higher oil prices, swinging to a profit of £666million in 2021 from a £120million loss the year before. The shares were down 6.5 per cent, or 13.8p, at 200.2p.
Gold miners were in focus as the metal continued to serve as a haven for investors looking to avoid market volatility.
Hochschild Mining surged 18.5 per cent, or 22.9p, to 146.5p after analysts at JP Morgan raised their target price to 210p from 200p.
Meanwhile, Fresnillo climbed 9.3 per cent, or 69p, to 808.4p after reporting a 10.9 per cent rise in full-year profits to £466million.
Mid-cap office space group IWG jumped 9.7 per cent, or 22.6p, to 255p after inking a £270million deal to merge its digital assets with flexible workspace platform The Instant Group and cash in on the growth of hybrid working.
The development came as the firm narrowed its full-year losses to £259.4million from £613.3million in 2020 as demand bounced back from the pandemic.
Estate agent Foxtons added 4.3 per cent, or 1.35p, to 32.7p after it announced plans to buy back £3million in shares using its cash resources.
Retailer Watches of Switzerland climbed 2.4 per cent, or 23p, to 972p after confirming that its business had ‘negligible exposure’ to the Russian and Ukrainian markets.