Market Musings 25/3/2012

It’s been a quiet few days as the results season here draws to a close. Let’s revisit the things that have been grabbing my attention.

 

(Disclaimer: I am a shareholder in BP plc) To start off with the energy space, there was a good bit of news around BP which reflected the continued evolution of its portfolio of assets. Bloomberg reported that it is in talks aimed at boosting production at Iraq’s Kirkuk field, while Contrarian Investor picked up on a Sunday Times story that the energy giant is teeing up £2bn of asset disposals in the North Sea. Elsewhere in the sector, in the latest escalation of Argentina’s belligerent stance towards the Falkland Islands , the government is now threatening to blacklist oil companies with an interest in the region.

 

(Disclaimer: I am a shareholder in Datalex plc and Independent News & Media plc) Turning to the TMT space, I was intrigued to see Datalex’s share price surge 29% – admittedly, on low volumes and it has been weak of late – on Thursday. The travel software group reports full-year numbers on Tuesday and it’ll be interesting to see if there’s anything in the stock exchange release to warrant such an abnormal share price move. Elsewhere, I decided to increase my Independent News & Media shareholding, as I hinted I would, post the company’s FY results last week. In terms of Ireland’s other listed media group, UTV, I was interested to read that it is open to offers for its television division, which comprises the ITV franchise for Northern Ireland. To me it seems that the most probable endgame for the UTV television business lies either in it being subsumed by ITV plc or by being bought out by Irish station TV3.

 

(Disclaimer: I am a shareholder in AIB plc and Bank of Ireland plc) In the financial sector, there was a lot of controversy around AIB’s announcement that it is to withdraw free banking services from the majority of its current account holders. While I won’t win any friends for saying this, I understand why the bank has taken this decision. Allied Irish saw its net interest income almost halve between 2008 and 2010 and its 2011 results, due for release next Friday, will almost certainly show a continuation of this trend (AIB’s NIM fell by41% in H1 2011, or by 25% if you adjust for the ELG). Given this backdrop, it is inevitable that management would seek ways to boost non interest income. Moreover, if profitability continues to deteriorate, the bank will be in no position to start growing its loanbook again. Speaking of AIB’s upcoming results on Friday, the main things I’ll be looking out for in the release are: (i) deposit trends; (ii) net interest margin progression; (iii) progress on deleveraging; and (iv) impairment guidance.

 

Switching to Bank of Ireland, John McElligott did up a cracking blog on it which you can read here. Elsewhere, Cormac  Leech picked up on interesting comments from the BOE’s Financial Policy Committee – does the fifth last paragraph of this suggest that rights issues for some UK banks are on the way?