Property stocks, Hunting and Hays

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“Markets on Thursday were flashing red with losses seen across the UK, Europe and parts of Asia amid renewed concerns about the relationship between the US and China. The FTSE 100 traded 0.6% lower at 7,515 with miners, telecoms and media stocks among the worst performing blue chips,” says Russ Mould, Investment Director at AJ Bell.

Property stocks

“Downgrades from investment bank Morgan Stanley are sparking big falls across the European property sector. Shopping mall investor Intu Properties is one of the biggest victims, extending its losses to nearly 40% year-to-date.

“Property is often perceived as a safe haven but clearly not all property stocks are created equal, and while retail-facing vehicles like Intu and its one-time suitor Hammerson are in the doldrums, warehouse landlord Segro has managed a double digit gain in 2018 as it continues to benefit from the shift to shopping online.”

Hunting

“First half results from oil services firm Hunting reflect the improved industry backdrop created by rising commodity prices.

“The restoration of the dividend is a key marker of its rehabilitation, as is a swing from a loss this time last year to a healthy pre-tax profit.

“The North American market is the driving force behind the improved numbers. Boosted by shale activity, there is very strong US demand for Hunting’s perforating gun, a device used to penetrate oil and gas wells in preparation for production.

“The company is responding to this demand by ramping its capacity to manufacture this product as well as investing in technology to deliver an enhanced version.

“Outside the US the picture is much less rosy, with management cautious on the outlook as many of its non-US businesses remain loss making.

“A more sustainable recovery for the business would require these parts of the group to return to profit too.”

HAYS

“The fact that recruitment company Hays’ domestic growth is significantly lagging its operations in other parts of the world would suggest the UK economy really is stuck in the mud. Its full year results show 2% net fee growth in the UK and Ireland which is substantially behind the double digit growth seen in places like Australia, Germany and the Americas.

“Hays insists that UK markets remain stable and it has every right to be upbeat given how the business benefits from having diverse operations geographically. One laggard among a group of superior growers is certainly no reason for Hays’ management to worry. Yet it does paint a gloomier picture with regards to the health of the UK recruitment sector.

“If one of the country’s biggest staffing agencies is seeing limited growth, you can assume that many corporates are either being reluctant to hire ahead of Brexit and/or workers aren’t feeling confident enough to move jobs. Greater growth in temporary jobs rather than permanent placements goes to show how employers want flexibility with their staffing numbers.

“For now, Hays’ shareholders are unlikely to be too concerned, given how the company has just raised the dividend by 18%, plus declared yet another special dividend on top.”

These articles are for information purposes only and are not a personal recommendation or advice.