Wednesday paper round-up: Prudential, Food prices, BAE Systems

Date: Wednesday 03 Mar 2010

Prudential has lost a fifth of its stock market value in just two days as Britain’s biggest insurer battles to convince UK investors to pay up for its $35.5bn Asian expansion.

Amid frenetic trading yesterday, shares in the Pru slumped a further 8% after dropping more than 12% on Monday, when it confirmed its plan to buy AIA from American International Group (AIG). Some traders speculated that the Pru’s tumbling share price left it vulnerable as a potential takeover target itself, arguing that Tidjane Thiam, the chief executive, had inadvertently “put it in play”, the Times reports.

Britain's largest companies handed over more than half their gross profits to the Government in taxes last year prompting FTSE 100 finance directors to warn that the burden was damaging investment and job creation. The One Hundred Group, whose members represent household names like Marks and Spencer, HSBC and BP and employ almost 6% of the UK workforce, has calculated that the Government took 56.6% of their gross profits in taxes last year, up from 48.6%in 2008, the Telegraph reports.

Up to 1,000 UK workers will lose their jobs at AstraZeneca as the pharmaceutical company ceases research into cures for several large disease areas. Employees at the company were told yesterday that its research and development site at Charnwood in Leicestershire, which employs 1,200 people, and a smaller facility in Cambridge, will close. Some of the workers will move to Alderley Park in Cheshire, AstraZeneca’s largest UK R&D site, the Times reports.

Food price inflation fell to a record low last month as the cost of fresh groceries dropped for the first time since 2006, according to new figures from the British Retail Consortium. In figures to be published today, overall shop price inflation fell from 2.3% to 1.7% in February, driven down by the drop in food price inflation from 2.9%to 1.3%— the lowest rate of inflation since 2006, the Times reports.

Michel Barnier, the new European commissioner for the internal market, is on course for a bruising showdown with hedge funds and private equity firms, leading City figures are warning. Key players in both sectors said that Mr Barnier, who was in London yesterday for talks with the City and the Chancellor of the Exchequer, had signalled an unwillingness to compromise over plans to regulate hedge funds and private equity more aggressively, despite their threats to leave Britain, the Independent reports.

Meanwhile, hedge funds are raising their bets against the euro amid growing fears of a regulatory backlash against their trading positions on the specific sovereign debt of Greece and other weak eurozone economies.
Many of the world’s biggest hedge funds have become increasingly concerned about fierce criticism by European politicians that their country bets have heightened the crisis of confidence in some markets, the FT reports.

Anti-arms campaigners have succeeded in halting the Serious Fraud Office's (SFO) plan to settle a bribery investigation into BAE Systems. The High Court granted an injunction which prohibits the SFO from "taking any further steps in its prosecution of BAE Systems" until the court decides whether or not to grant permission to Campaign Against Arms Trade (CAAT) and Corner House to apply for a judicial review of the plea bargain struck last month. The court will decide by March 20 whether or not to grant permission for the review, the Telegraph reports.

Financial regulators are planning to scrutinise the profits investment banks make from client trading to ensure that “casino” activities are not being concealed as customer business. The authorities fear that banks will try to avoid the crackdown on high-risk proprietary trading, where banks gamble with their own money, by hiding it within the market making functions offered as general client service, the Telegraph reports.

Sterling remained under intense pressure amid continuing concerns over a hung Parliament which could derail plans to dig the country out of its current fiscal hole. The pound remained broadly flat against the dollar after plunging by 4 cents on Monday to a ten-month low, but stayed below the key rate of $1.50. Analysts warned that it could tumble further in the coming weeks, the Times reports.

Ferrari, known for its high-performance red sports cars, formally joined the car industry’s move toward electrification when it unveiled its first hybrid car, a “concept” model painted bright green. Ferrari said that the technology of its HY-KERS experimental vehicle, based on the regenerative braking system developed for its Formula One cars, could reduce its cars’ emissions by 35%, the FT reports.

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