Market Report: Standard Chartered soars despite the hangover

STANDARD Chartered, the banking group subjected to a steady flow of takeover rumours, was one of the few to survive the stock market hangover.

The shares surged 97p to a 1,316p peak as the rest of the market adjusted to life after Wednesday's record-breaking performance.

In heavy trading the FT-SE 100 index fell 5.1 points to 3,470 and the supporting FT-SE 250 index 43.4 to 4,105.4.

Standard's display was, in part, due to the inevitable takeover speculation. But Cazenove, the stockbroker, made a significant contribution, urging clients to switch to Standard from HSBC, down 8p to 968p.

Both groups have drawn strength from the advance achieved by the Hong Kong stock market. Standard has climbed from 576p; HSBC from 490p.

In the year ended December, Standard, under a new management team, is expected to produce profits up from pounds 202m to pounds 400m. Another strong advance is forecast for this year.

But the group has not been without its worries. It has been dragged into the Bombay securities scandal and its record displays the scars of its colonial past.

The bank raised cash through a preference placing but many believe a rights issue cannot be far below the surface. The strength of the shares offers an ideal opportunity to tap the market.

And takeover bids? Lloyds Bank failed in 1986 when the so- called White Squires rushed to Standard's support. Significantly Lloyds, up 2p to 646p, has held on to a 4.62 per cent stake. If it does not harbour bid intentions it may be tempted to cash in.

With the market still catching its breath after Wednesday's heroics the downbeat comments by Kenneth Clarke, the Chancellor of the Exchequer, and the failure of the Bundesbank to reduce interest rates ensured a more subdued atmosphere.

Profits were often snatched and many shares that experienced exaggerated mark-ups on Wednesday lost some of their exuberance.

Turnover again topped 1 billion shares, lifting the volume this year to more than 13 billion.

Guinness, following its deal with LVMH, was another of the stocks to ignore the retreat. The shares, weak lately, jumped 49p to 521p. And the generators turned on the power, responding to growing hopes that they will avoid Monopolies and Mergers Commission inquiries.

But some think the larger of the two, National Power, could yet be caught up in an investigation. Its shares rose 19.5p to 496p and PowerGen 18p to 575p.

British Aerospace rose 8p to 424p; it has won a pounds 200m contract to supply 18 Sea Harriers to the Navy.

BOC, the gases group, ended 33p higher at 699p following its restructuring. Bass fell 16p to 592p, after a flat trading statement. Kingfisher tumbled 37p to 678p as it confirmed margins were being squeezed.

BAA, the airports group, fell 25p to 1,031p on reports of tighter controls. It is due to start talks with the Government over prices later this year.

Drug shares were weaker, ahead of today's keenly awaited trading statement from Zeneca, down 16p to 808p. Glaxo Holdings, hit by a Kleinwort Benson downgrading, fell 20p to 661p. Kleinwort is thought to have cut from pounds 1.9bn to pounds 1.83bn and from pounds 2.12bn to pounds 1.9bn.

Hanson attracted buy and sell recommendations. Societe Generale Strauss Turnbull was bearish, saying under-performance would continue. Greig Middleton believes the shares, on a dividend rating, should be 400p. Hanson fell 3p to 278p.

Astec (BSR), the electrical group, fell 3p to 83.5p following the sale of 2.3 million shares at 85.5p by a director, Neal Stewart. Kewill Systems, a computer company, rose 24p to 246p as a German group sold 900,000 shares, cutting its stake to 7.5 per cent.

Greenalls Group, the pub chain, lost 14p to 485p, with SG Warburg saying take profits, but Barratt Developments, the builder, continued to reflect analyst briefings, gaining 13p to 273p.

RTZ was a strong market, improving 31.5p to 876.5p. But Waverley Mining gave ground to profit-takers, falling 3.5p to 45.5p. Bakyrchik Gold slipped 7p to 370p. Minproc Holdings placed 700,000 shares, reducing its stake to 20.7 per cent.

Vodafone eased 5p to 590p. Barclays de Zoete Wedd has lifted next year's forecast from pounds 395m to pounds 410m. A rumoured downgrading, thought to be by Kleinwort, left BT 1p lower at 468p.

Lucas Industries rose 2p to 210p. Thirty fund managers were said to be meeting the group at the offices of the stockbroker James Capel. Airtours, believed to be about to start a round of briefings, slipped 4p to 562p following an encouraging trading statement at its shareholders' meeting.

Spring Ram Corporation advanced 9p to 76p as it duly produced its rights issue.

The FT-SE 100 index closed 5.1 points down at 3,470 and the FT- SE 250 index 43.4 at 4,105.4. Turnover was 1,107.7 million shares from 46,220 deals. The account ends on 28 January with settlement on 7 February. Government stocks were easier.

Shares of Aberdeen Trust, the fund manager, climbed 2.5p to an 85.5p peak as the US banking group, Corestates Financial, paid 82p a share for a 14.5 per cent stake held by Merchant Navy Officers Pension Fund. Abtrust hopes Corestates' pounds 10m investment will open opportunities to manage US money. The Americans have a record of taking minority stakes and do not plan a bid.

Klearfold, one of the US operations that opted for a London share presence, is thought to be planning to adopt a higher profile, which is likely to be signalled by the arrival of a new broker. Since its 1986 flotation Klearfold, making display packaging, has had an erratic record. Profits of dollars 1.6m were achieved in 1992 and dollars 3m is likely last year. Some look for dollars 5m this year.

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