Market report: London revamp plans boost Derwent

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London’s office landlords have hardly been safe houses for investors this year, but the City found shelter in Derwent London on hopes its bold bets in the capital will pay off.

The FTSE 250 company, known for putting up hip tech companies in trendy digs, has endured a torrid year on the stock market, tumbling almost 30% on fears that Brexit will hit demand for offices.

Despite the concerns, it has plans to spend big in the capital, with two significant projects in the pipeline: the £485 million block on Charlotte Street in Fitzrovia, its largest-ever scheme, and the £240 million Brunel Building opposite Paddington.

Credit Suisse today called those plans “compelling” even in the midst of a downturn, and decided the shares were worth upgrading from underperform to outperform, lifting the stock 77p to 2659p.

The excitement from yesterday’s European Central Bank announcement, that it will keep buying bonds for longer to prop up the European economy, died down, but the FTSE 100 still advanced 10.11 points to 6941.66, putting it on track for its biggest weekly gain since February.

Analysts took aim at troubled outsourcer Capita after another profit warning yesterday, dragging the shares down another 20.85p or 4.3% to 464.45p.

Barclays cut its target price and argued that the company, which is mulling a sale of its share registrar business, is selling “the wrong bit”, adding: “Management credibility is on the line and investors may speculate on possible management change next year.”

The spreadbetters recovered slightly after another hammering yesterday as Germany joined the regulatory clampdown.

CMC Markets, run by former Tory party co-treasurer Peter Cruddas, is the CFD (contract for difference) market leader in Germany. The company, which improved 2.88p to 108.18p today, said it would respond to the proposals by the January deadline.

Elsewhere on the mid-cap index, paving slabs firm Marshalls dipped 14.8p to 302.2p as investors were sceptical of its ability to meet full-year forecasts, while commercial laundry group Berendsen slipped 24.5p to 815.5p after it emerged the Competition and Markets Authority is probing its cleanroom business, which makes NHS overalls.

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December 10, 2016 |
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