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A light is seen as London introduces a project of new bicycle paths in support of a greener city, in London, England, on August 14, 2020.
Dominika Zarzycka/Zuma Press
Shares in fund manager M&G slumped in London trade on Thursday, after Deutsche Bank downgraded the stock to hold from buy.
M&G MNG, -2.55% shares fell over 5%, even as the bank acknowledged the fund manager’s first-half results were a positive surprise.
“Costs were lower than expected in the first half, but ultimately we think revenue pressures will prove the stronger force. Likewise, we now believe that the capital generation target can only be achieved through another reinsurance deal, which may merely accelerate value rather than adding to it, and could at that stage prompt a re-basing of the dividend,” said analysts led by Oliver Steel.
The analysts say they struggle to find a justification to buy the shares apart from the fact that it has a 10% dividend yield — but that dividend will have to be cut if there is another annuity reinsurance deal.
The stock also is trading without rights to its next dividend payment.
The broader FTSE 100 UKX, -1.42% struggled as well, shedding 1.5% as global markets reacted negatively to the minutes from the last Federal Reserve meeting, in which it coupled a downbeat U.S. economic outlook with taking one potential remedy, yield curve control, off the table.
Another faller was U.K.-listed Chilean copper miner Antofagasta ANTO, -5.39%, which fell after reporting its first-half profit slumped, and said production would be at the low end of its targeted range for the year.
The best FTSE 100 performer was Ocado Group OCDO, +1.67%, the supermarket delivery firm, which gained 1.9% and has surged 78% this year.
