Continuing worries about the Chinese economy - this time weak inflation and producer price figures - have sent stock markets lower once more.
The FTSE 100 is currently down 38.18 points at 6304.10, but fund management group Hargreaves Lansdown is bucking the trend after first quarter results showed strong growth in client numbers. Its shares are up 92p at £13.75 and topping the risers in the leading index.
The company reported net inflows of £1.43bn, up 47% year on year. Total assets fell from £55.2bn to £54.7bn but this is a better performance than some rivals and compares favourably with the recent declines in stock markets on Chinese concerns and US rate rise concerns. Chief executive Ian Gorham said:
We are particularly pleased with the reported trading data for the first quarter of the financial year given lower stock markets and weakness in investor confidence during the period....These stock market falls meant that despite record new business in the quarter, overall assets under administration fell by £0.5bn.
Looking ahead, early indications suggest considerable interest in next year’s Lloyds share sale...
As ever future stock market levels and investor confidence will have a significant part to play during the remainder of our financial year. However, we remain confident of growing the business further to the benefit of our clients and shareholders.
Numis analyst James Hamilton said:
We expect substantial industry growth due to the increase in self investment and the shift from defined benefit pensions to defined contribution pensions. We also expect auto-enrolment to significantly increase the proportion of the population with money to manage most of which will have to be done through self-invest platforms like Hargreaves due to the scale of these pension assets.
Furthermore real industry growth (around 3% per annum) can be expected from market movements. Hargreaves Lansdown dominates a growth industry and its market position does not seem to have been negatively impacted by the RDR changes...The group’s scale benefits are substantial and unmatched providing it with by far the highest operating margin and the buying power to provide the cheapest fund prices in the market.
At Shore Capital, Paul McGinnis said:
We are huge admirers of the Hargreaves Lansdown business model and can see conceivable scenarios that would value the company at over 1500p. However, our central valuation case, based on 25 times our June 2017 earnings per share forecast is currently 1155p means we currently retain a hold recommendation.
Elsewhere, the concerns about a slowdown in China have left a number of commodity companies lower, with BHP Billiton down 7p at 1155.5p and Anglo American 4.2p lower at 675p.
Luxury goods group Burberry has also been hit by the Chinese concerns, down 19p at £14.11.
But with gold edging up on its attractions as a haven in stormy markets, Randgold Resources has risen 57p to £44.68 and Mexican precious metals miner Fresnillo is up 8p at 742p.
Intertek is up 48p at £25.60 after the testing company agreed to buy US peer Professional Services Industries for $330m.
