Main topics of the day on European markets: decline in Chinese stock index, the sale of shares in Centrica, the correction of the shares of the British developers



Leading stock indexes of Europe on Thursday move in different directions on the background of the weakening of trade activity in the absence of traders from the United States and Japan, where there are national holidays.

By 14:10 GMT the pan-European Stoxx Europe 600 rose by 0.1% compared to the level of yesterday’s closing. British FTSE-100 index is currently trading nearly unchanged, Germany’s DAX rose 0.2%, France’s CAC 40 rose 0.6%.

Among the affected securities were the shares of companies providing utility services. Capitalisation of British energy company Centrica fell by 16.5% after reports that from late June through October, she lost 823 thousand clients. During this period, Centrica, which owns the company British Gas, implemented a decision to increase the standard price of electricity by 12.5%. Centrica said its annual profit per share will be significantly below forecasts.

Shares of European producers of basic materials also came under pressure, which is associated with a sharp drop in the Chinese stock market. The Shanghai Composite index on Thursday fell by 2.3% against the background of sales of shares of the technological sector consumer noncyclical companies and enterprises health.

Better look of the market shares of the British house-building companies are in demand of investors after yesterday’s fall. Negative dynamics of actions before were caused by the UK government on the introduction of new measures to support first home buyers.

British Finance Minister Philip Hammond, speaking Wednesday with the traditional autumn address to Parliament, announced the government’s intention to allocate 44 billion pounds over five years to support the housing market. The measures – the abolition of the state duty for those who buy housing for the first time, if its cost does not exceed 300 thousand pounds. The savings for consumers in this case will amount to 5 thousand pounds. In London and other cities with high real estate prices, the stamp duty will be levied 300 thousand pounds in the case of the first purchase property worth 500 thousand pounds. Previously tax was levied on all purchases of residential property worth more than 125 thousand pounds.

According to experts, non-governmental organizations, the Office of budget responsibility (Office for Budget Responsibility, OBR), imposed by the government measures will lead to higher housing prices by about 0.3%, and the largest increase will be in 2018. Thus, the first beneficiaries of the new program will be current homeowners, while buyers of apartments will face another price increase.

According to the company, of Halifax, in the first half of the average price of the first purchased by the British flats and houses reached a historic high 207,7 thousand pounds. The price increase raises concerns about the intensification of the crisis in the property market in the UK, given that the median annual income of British workers employed full time, is only 28.6 thousand pounds.

In addition, as Bloomberg reports, the British authorities intend to introduce a tax on capital gains for non-residents acquiring commercial properties in the country. With some exceptions, this tax would be calculated depending on the income from the sale of commercial real estate. Earlier it was levied only on owners. As expected, the new tax system purchases commercial property in the UK will be introduced by 2019, and this will significantly reduce the attractiveness of the UK market for foreigners. At the moment, international investors dominate the London property market. According to Colliers, their share among other customers reaches 75%.

After yesterday’s sharp fall in UK shares of real estate companies on Thursday increased in the correction. Paper Barratt Developments and Taylor Wimpey rose more than 1%.

Today published preliminary data on indexes of business activity in the manufacturing sector and the service sector in the Eurozone in November provided some support for the shares of leading companies. According to the company Markit, the Manufacturing PMI index rose to 60.0% vs 58.5% in October, while Services PMI rose to 56.2% vs 55.0% in the previous month.

Prepared using materials from CNBC and The Financial Times.




Main topics of the day on European markets: decline in Chinese stock index, the sale of shares in Centrica, the correction of the shares of the British developers 23.11.2017

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