The London Stock Exchange (FTSE) 26/03/2012 -30/03/2012

Highlights: FTSE 100 index decreased by -1.48% and reached 5768.45 points. The biggest winners were: International Power PLC (IPR) with +8.92%; Rio Tinto PLC (RIO) with 4.33% and Whitbread PLC (WTB) with +3.97%. The biggest losers: RSA Insurance Group PLC (RSA) with -7.93%; Resolution Ltd (RSL) with 6.51% and Icap PLC (IAP) with 6.20%. The turnover of London Stock Exchange was: 28,860,534,351.

The last week of March was negative for the London Stock Exchange. FTSE 100 index decreased by 1.48%; from 5872 till 5768 points (Chart 1). The biggest gainers this week were International Power PLC (IPR) with +8.92% and high 34 million turnover and Rio Tinto PLC (RIO) with +4.33%. Stocks which lost the most of their value were RSA Insurance Group PLC (RSA) with -7.93% and Resolution Ltd (RSL) with 6.51%. Weekly FTSE 100 turnover was 28.8 billion. Even though the beginning of the week promised a lot, but on Tuesday morning market changed its direction (with a top at 5941 points) and turned to downtrend. After Ben Bernankes speech on Monday, during which he stated that Fed will implement expansionary monetary policy further, the London Stock Exchange opened with a gap and reached a weekly high. Since that, index showed a constant downtrend and in the end of Thursday trading session reached the lowest monthly value 5729 points. The main reason why the market was slipping most of the week was sharp decrease in investors activity. A majority of traders waited for the Economic and Financial Affairs Council (ECOFIN) meeting and Germany decisions about the expansion of European Stability Mechanism. Also, S&P agency warned that Greece might have to restructure its debt again and sovereign crisis inflame even more together with Italy and Spain. Data from Asia spurred traders concerns too fears about the growth slowdown of China were stimulated by the information that revenue of Chinas companies decreased by 5.2% during January and February.

Chart 1: FTSE 100 index weekly chart. Source: www.google.com/finance

The best performing company in the London Stock Exchange was International Power PLC (IPR) whose stock price climbed 486.33 EUR (+8.92%) on 30 March starting from 447.03 EUR on 26 March (Chart 2). International Power plc is a holding company engaged in the generation and sale of electricity, and other closely related activities. Overall, shares of International Power PLC (IPR) have improved by impressive 17.55% since 29 February, when its value was 414.8 EUR. IPR has been increasing steadily for the whole week, showing the biggest increase of 6.16% on Thursday (29th of March). Most experts attribute the rise of share value during the week 13 to the French utility GDF Suez SA, which is ready to pay more than 7 billion Euros for the 30 percent of IPR that it does not own yet. International Power is already 70 percent owned by the French utility company.

Chart 2: IPR stock price during week 13. Source: www.google.com/finance

The weakest performer of the week was RSA Insurance Group PLC (RSA), one of the worlds leading multinational insurance groups. During the week 13 the company has lost 7.93% in share prices (Chart 3). RSA Insurance Group (RSA.L) fell 6.60 EUR, or 4.8%, to 132.32 EUR on Thursday (29 March) as dividends of 6.96 EUR were paid out and analysts at Panmure Gordon downgraded the stock from hold to sell and reduced their target price from 131.96 to 118.77 EUR. The reasons for the downgrade were lower earnings and falling dividend growth of RSA. A steady decrease in the price followed on Wednesday and throughout the rest of the week.

Chart 3: RSA stock price during week 13. Source: www.google.com/finance

Lloyds Banking Group PLC (LLOY), a group providing a range of banking and financial services, primarily in the United Kingdom, was one of the weakest performers with highest volumes (242 million), demonstrating a decrease of 5.07% this week (Chart 4). Lloyds announced a bigger than estimated full-year loss last month. This was mainly caused by an increasing number of clients unsatisfied of improperly sold payment protection insurance (PPI). PPI complaints rose by 85% to 977,510 the Financial Services Authority announced in a statement on its website. At the end of Thursdays trading session Holdings Plc (HSBA), Europes largest bank, announced about its plans to purchase Lloydss consumer and commercial-banking assets in the United Arab Emirates for 577 million and that stabilized the price of the stock.

Chart 4: LLOY share price change during week 13. Source: www.google.com/finance

To sum up, the thirteenth week was negative for London Stock Exchange and after the whole month FTSE 100 recorded a -2.41% decrease in the index value. Fears about China, U.S. and southern Europe raised ambiguity among investors and decreased activity, which led to slight, but constant decline. The following week markets will face a lot of important news: the U.K. service and manufacturing PMI; ECB press conference. On Friday very important U.S unemployment data will be announced, which usually sets a trading direction for the following week. Market Overview prepared by: Aleksandrs Goba Daivaras Anuis Juozas Rimgaila Skirmantas Paulaviius