Markets press ahead despite Brexit talks set-back, and Countryside looking to sell housebuilding arm after shareholder pressure

“UK equity markets held firm despite new fears that Brexit trade negotiations are stalling again after France, Spain, Italy, Belgium, the Netherlands and Denmark expressed concerns that the European Commission is giving away too many concessions, thereby dampening hopes of an imminent agreement," says Russ Mould, Investment Director at AJ Bell.

“The pound advanced 0.2% against the euro at €1.1052 and up by 0.3% against the US dollar at €1.3403, which is somewhat surprising under the circumstances.

“Investors may soon be giving more serious thought to the prospect of no deal this year, and then potentially another round of negotiations in 2021 where the UK could be in a weaker bargaining position.

“This would be a complete turnaround of events given how so many people thought we were on the cusp of striking a deal, thereby ending the year on a more positive note alongside the vaccine news.

“On the markets, the FTSE 100 followed the classic ‘value in fashion’ playbook with industrials, cyclicals and miners as the top performers. Financials would normally fall into the same group, but the sector bucked the trend with a negative performance.”

Housebuilders

“You say jump and I say how high. A day after major shareholder Browning West pressed Countryside Properties to replace chair David Howell and sell or separate its housebuilding arm to focus on its Partnerships regeneration business and both are effectively announced alongside full year results.

“Howell has announced his decision to step down in 2021 and the company has appointed Rothschild & Co to handle the prospective divorce of its two units.

“You can see the logic in a strategy of becoming a pure regeneration play, given it is a leading operator in this market and has the experience to make public/private partnerships work. Whereas in housebuilding it lacks the scale of some of its peer group.

“And while some rivals have returned to the dividend list, this looks further off at Countryside and even when pay-outs return it sounds like the company may prioritise putting cash into growing the Partnerships business.

“The housebuilding division also faces headaches associated with a CMA probe into the sale of leasehold homes.

“A company whose future very much remains in building houses is affordable specialist MJ Gleeson.

“A trading update shows its homes have got just a little less affordable with average selling prices up 9%. Gleeson’s focus tilts it heavily towards first-time buyers. The company also has a South of England focused strategic land operation which progresses land through the planning system.

“The whole group seems to be firing on all cylinders and this is driving a better than expected performance.”

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