MARKET REPORT: Vodafone shares slip towards nine-year low, as poor figures from SA division spook investors
Vodafone shares slipped towards a nine-year low, as poor figures from its South African division spooked investors the day before its latest trading update.
Vodacom, which is Vodafone’s South African subsidiary, said a slower-than-expected economic recovery in the country was to blame for the decline in sales.
Amid political pressure to cut prices on its data packages, Vodacom’s revenue slipped 1.3 per cent in South Africa over the last three months of 2018 to around £960m.
Chief executive Shameel Joosub said that though the business had introduced a number of promotional deals, fewer customers than hoped had taken them up.
The results came at an awkward time for Vodacom’s London-listed parent company Vodafone, which is set to release its own update today on trading over the last three months of 2018.
Shares slid 3.5 per cent, or 5.22p, to 144p, and renewed fears surfaced over whether Vodafone might have to cut its popular dividend.
Jordan Hiscott, chief trader at Ayondo Markets, said: ‘The jewel in the crown for Vodafone is its dividend, currently a generous 9 per cent – a figure many investors will look on with delight.’
But this may always be cut, he reminded investors. Hiscott added: ‘With the FTSE heavyweight down an astounding 31 per cent on a 52-week basis, clearly the company finds itself in an embattled position, having taken on huge amounts of debt.’
Vodafone’s sinking shares pulled the FTSE 100 down 0.35 per cent, or 23.93 points, to 6818.95.
A strong set of numbers from wealth manager St James’s Place helped to mitigate losses on the blue-chip index. Choppy markets, prompted by investors’ concerns over Brexit and the global economy, have knocked several similar firms in recent weeks, pushing down the value of the money they hold for clients as investments have under-performed. But St James’s managed to hold steady, seeing its funds under management climb 5 per cent to £95.6bn over 2018.
Clients invested £10.3 billion more than they withdrew over the year, up 8 per cent from the year before. Shares climbed 2.2 per cent, or 20.6p, to 962p.
Investment firm Brooks Macdonald had less success, as it revealed its own funds under management had slumped 4.5 per cent over the last six months of 2018 to £11.9 billion. Shares edged down 3.5 per cent, or 60p, to 1670p.
But the same market volatility worked to CMC Markets’ favour. The online trading firm said the three months to December 31 had been much better than the previous three months, as its clients increased their activity as they attempted to make money from the fluctuating markets. As its peer IG Group conceded on Wednesday, new European rules designed to protect inexperienced traders would push down revenue for the year. But shares still climbed 2.8 per cent, or 3.2p, to 117.6p.
Brownfield housebuilder Inland Homes slipped 3 per cent, or 1.7p, to 54.8p as it agreed to increase its lending. It has taken out a £65m debt facility with HSBC, to replace the £20m it previously had with Barclays.
It also said that numbers of houses sold would be lower than the previous year, due to the timing of occupations on large apartment complexes.
Larger peer Countryside Properties also dipped, despite announcing sales were up 18 per cent to 1094 homes in the three months to December. The average number of people making a reservation per building development each week – a key metric for the industry – dipped as Countryside warned of an uncertain political backdrop. Shares fell 2.8 per cent, or 9p, to 318p.
A second profit warning in three months caused private jet servicing company Gama Aviation to plummet 22.6 per cent, or 26p, to 89p.