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(Alliance News) - Equities in London made a slow start to the week on Monday, with the FTSE 100 taking its cue from Asia and drifting lower as Chinese economic growth slowed, while an agreed takeover bid for Playtech helped the FTSE 250 start higher.
US stocks ended last week strongly, posting solid gains, but Asian markets didn't carry this momentum through on Monday.
"The main [European] indices have taken the lead from Asia rather than the US in early exchanges, reiterating the fact that sentiment remains finely balanced given the wider concerns, and with the premier index squarely in the firing line of any weakening of global economic growth," Interactive Investor analyst Richard Hunter commented.
After a swift coronavirus bounce back, recovery in the world's second-biggest economy is losing steam, with gross domestic product growth coming in at 4.9% on-year, said China's National Bureau of Statistics, citing an "unstable and uneven" domestic rebound.
Chinese GDP growth undershot expectations of a 5.2% hike, according to consensus cited by FXStreet. It followed a 7.9% expansion in the second quarter.
The FTSE 100 index was down 3.93 points, or 0.1%, at 7,230.10 early Monday. The mid-cap FTSE 250 index was up just 3.26 points at 22,987.50. The AIM All-Share index was up 1.17 points, or 0.1%, at 1,230.27.
The Cboe UK 100 index was down 0.1% at 717.01. The Cboe 250 was flat at 20,749.52, and the Cboe Small Companies was flat at 15,588.34.
In mainland Europe, the CAC 40 in Paris was down 0.7% while the DAX 40 in Frankfurt was 0.4% lower early Monday.
The Nikkei 225 index in Tokyo ended 0.2% lower on Monday. In China, the Shanghai Composite closed 0.1% lower, while the Hang Seng index in Hong Kong was down 0.4% in late trade. The S&P/ASX 200 in Sydney outperformed, closing up 0.3%.
"Prospects of slower global growth and more persistent high inflation remain at the forefront of investors' minds. The global economic outlook remains uncertain, with risks predominantly related to the pandemic impact on demand/supply mismatches in goods and labour markets, and policy responses from governments and central banks," analysts at Lloyds commented.
"The moderation in risk sentiment has boosted the US dollar. Treasury yields have continued to move higher as market expectations of higher US policy rates gradually gather steam."
The pound was quoted at USD1.3739 early Monday in London, fading from USD1.3780 at the London equity market close on Friday, but up from an intraday low of USD1.3718. The euro stood at USD1.1583, down from USD1.1603. Against the yen, the dollar was trading at JPY114.40, up from JPY114.17.
In London, shares in Playtech jumped 57% in early trade to 675.75 pence, valuing the gambling software firm at GBP2.06 billion.
The Playtech board has recommended a GBP2.1 billion takeover offer from Australia's Aristocrat Leisure, which manufactures gambling machines and casino management systems and also publishes mobile games.
Aristocrat's offer is a 58% premium to Playtech's closing price of 429.2p on Friday. The offer values Playtech's equity at GBP2.1 billion. On an enterprise basis, meaning including debt, it values the FTSE 250 company at GBP2.7 billion.
The bid is "intended to be recommended unanimously by the board of Playtech".
Playtech Chair Brian Mattingley commented: "In recent years, Playtech has successfully repositioned its world-leading gambling technology and operations, expanding in strategically important regulated markets and driving major online B2B revenue growth. Whilst the business has made significant progress, most notably in the Americas, Aristocrat's proposal provides an attractive opportunity for shareholders to accelerate Playtech's longer-term value."
In late September, Playtech agreed to sell Finalto, its financial trading division, to investment vehicle and shareholder Gopher Investments for an enterprise value of USD250 million.
Sydney-listed Aristocrat has a market value of AUD29.24 billion, about GBP15.76 billion. It is a constituent of the ASX 20 index.
THG shares were up 7.6%. The Manchester-based online retail platform is looking to rebuild investor confidence, after a disastrous capital markets day early last week resulted in a 34% share price slide and left analysts and investors with more questions than answers.
Founder & CEO Matthew Moulding, "in furtherance of good corporate governance", plans to give up his golden share. The special share allows Moulding to veto any takeover bid for three years. It has been unpopular with investors and prevents THG from joining the FTSE 100 or FTSE 250 despite a market capitalisation of more than GBP3.50 billion.
"This cancellation will facilitate the group's application to step-up to the premium segment of the Main Market of the London Stock Exchange in 2022," THG explained. "A premium listing will permit THG to gain UK FTSE indexation."
Citing City sources, Sky News had reported on Sunday that THG, which trades as The Hut Group, was to announce plans to remove the special share rights.
Moulding added on Monday: "After the anniversary of our 2020 listing we feel that the time is right to make this next step and apply to the premium segment in 2022, thereby continuing the development of THG as we endeavour to deliver our strategy for the benefit of our shareholders, key stakeholders and employees."
Polymetal shares were 0.6% higher. The FTSE 100-listed gold miner announced first concentrate production from its Nezhda asset in Russia.
Nezhda first produced gold and silver concentrate on Saturday, two weeks ahead of the target date of November 1.
"The concentrator now enters a ramp-up period, and is expected to reach its nameplate capacity and full design recovery by April 2022," Polymetal said.
This year, it expects to produce 30,000 gold equivalent ounces at Nezhda, before an average of 180,000 between 2022 and 2024.
Elsewhere in London, CentralNic was one of the standout AIM performers in early dealings, rising 13%.
The London-based domain name registry and registrar services firm said earnings rose in the first nine months of 2020.
"The company's organic growth has further accelerated during the nine months to 30 September 2021, resulting in organic growth of 29% against the same period in the prior year," CentralNic said.
Revenue in the nine-month period amounted to USD280 million, up 66% yearly, while adjusted earnings before interest, tax, depreciation and amortisation were 45% higher at USD32 million.
"CentralNic's growth rally has further accelerated during the third quarter of the year with year-to-date organic growth now reaching a record 29%. The company expects to trade comfortably at or above the upper end of market expectations for the year for both revenue and adjusted Ebitda. We are particularly pleased that the accelerated growth is now also starting to translate into higher profits," CEO Ben Crawford said.
Analyst expectations for annual revenue range between USD348.6 million to USD355.3 million, while adjusted Ebitda forecasts stand between USD41.1 million and USD42.0 million.
Brent oil was quoted at USD85.55 a barrel early Monday, improved from USD84.73 late Friday. Gold stood at USD1,764.73 an ounce, down from USD1,773.75.
By Eric Cunha; ericcunha@alliancenews.com
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