Market report: Capco rocked by Deutsche Bank's Earls Court alert

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Deutsche Bank today issued a stark warning about a “major shock” to London’s homes market, shaking the foundations of Capital & Counties.

The broker said the Earls Court developer will be the biggest casualty of a crash, which it predicts will stem from recent stamp duty hikes on buy-to-let properties, causing landlords to hold back on new purchases.

“We think this has the potential to create a major shock to the market,” Deutsche’s Oliver Reiff warned.

The analyst predicts there will be “some selling” and “too much supply” in the prime residential market.

Reiff expects prices for flats at Earls Court to fall by 20% over the next three years, including a 10% slump in 2017, which could wipe 65% off the overall value of the development.

Around 40% of Capco’s property value is at Earls Court, with the remaining 60% at Covent Garden.

Reiff repeated his Sell rating and slashed his target price for Capco by 50p to 260p, causing the shares to dive 5.7p to 325.1p and taking this year’s slump to 26%.

London-listed stocks were back in familiar territory today as the FTSE 100 fell 35.19 points to 5931.61, with central banks warning of the impact of a potential Brexit on the global economy.

Gold producer Randgold Resources, a safe haven amid the carnage, glistened 255p, or 4%, higher at 6865p, as did silver miner Fresnillo, up 44.29p at 1256.29p.

BP, 1.65p better off at 361.15p, avoided being dragged into the red as Citigroup upgraded the oil major to Buy with a 410p target price.

Betting fans might be having a flutter on the Euros, but Investec urged stock-market punters to dump William Hill shares, which dropped 12.5p, or 4.3%, to 280.8p.

The bank cut its profit forecasts by 15% and 18% for this year and next, concerned by the impact of “automatic self-exclusion”, where gamblers set limits and are blocked for at least six months if they go past the limit. 

Struggling Restaurant Group dived by 22.8p, or 7%, to 319.1p as the Frankie & Benny’s owner traded without the right to the next dividend, leaving investors little reason to buy the shares.

Elsewhere, tiddler Blinkx improved 0.55p to 19.8p as it changed name to RhythmOne, an digital advertising subsidiary it launched last year, in a bid to distance itself from a torrid recent past.

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June 16, 2016 |
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