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“It’s another red day for the markets with FTSE 100 falling 0.5% to 7,421 and losses seen across Asia and Europe. Emerging markets have been particularly weak and a lack of progress regarding international trade talks continues to unsettle investors,” says Russ Mould, Investment Director at AJ Bell.
Housebuilders: Berkeley / Barratt Developments
“Today’s latest results from the housebuilders will do little to settle the argument between bulls and bears over the sector.
“Bulls could point to the solid earnings still being chalked up by Berkeley and Barratt Developments and their relatively depressed valuations.
“Bears can highlight that Berkeley feels the need to complain about a ‘lack of urgency’ in its core London market and the fact Barratt’s order book is being propped up by affordable housing and joint venture developments, rather than the core private development sales which account for the bulk of its profit.
“Speculation over the future of the Help to Buy scheme, which expires in 2021, is also clouding the outlook for the sector. This is unsurprising given how helpful the initiative has been in recent years. Investors may get some clarity on this issue when the Budget is released in November.”
William Hill
“UK gambling companies are wasting no time with increasing their position in the US following a landmark development earlier this year to legalise the US sports betting market.
“William Hill’s new partnership with Eldorado Resorts makes perfect sense as a land-grab exercise. By linking with the casino group, it gets access to 13 states with a view to launching William Hill sportsbooks in a number of these states within weeks. Further down the line, it is in prime position to benefit as further states allow sports betting.
“William Hill needs the US to be a success because its UK operations continue to face increased regulatory pressures. Its London-listed rival GVC also has similar aspirations over the pond having recently made a partnership with casino group MGM Resorts.
“Fortunately for chief executive Philip Bowcock, William Hill’s US business appears to be going well. Amounts wagered in its existing US operations grew by 25% in first half of 2018 and the company insists it is able to move quickly to capitalise on new opportunities.
“The stock market clearly likes the Eldorado news as the share price is going up for once. But in the grander scheme of things, its US exposure is still small compared to overall group income.
“One fifth of the company’s market valuation has been wiped off since May amid a crackdown on fixed-odds betting terminals and disappointing UK trading.
“Mr Bowcock needs to prove to his shareholders that the business isn’t stuck in quicksand and won’t fall victim to takeover interest, as is widely speculated.”
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