Expro Higher Bid, More Disclosure Short Sales

123jump.com Staff
13 Jun, 2008
New York City

UK stocks closed nearly unchanged. The regulatory agency FSA tightened the lending standards for short selling and increased the disclosure requirements for short sellers. The recent market volatility in the rights issue of several banks was exploited by short sellers to their advantage. Candover Partners and Goldman Sachs revised their offer for Expro International. The new offer at 1,615 pence per share values the deep oil well testing company at 1.8 billion pounds.

[R]2:00PM New York, 7:00PM London - UK introduces new disclosures regime for short selling.[/R]

Stocks in London gained led by financial stocks after FSA reported that it will introduce a new disclosure regime next week. Crude oil prices weakness helped broader market but indexes closed near the yesterday’s level.

Market sentiment

In London trading FTSE 100 rose 0.21% or 12.3 at 5,802.80.

Of the 102 FTSE 100 stocks 60 gained and 42 declined. HBOS led advancers in the index shares with a rise of 13.69% after the introduction of the new rules by the Financial Services Agency.

FSA introduces new disclosure regime

The U.K’s Financial Services Agency reported today on its website that it is introducing provisions in the Code of Market Conduct, effective Friday 20 June 2008 that will require “the disclosure of significant short positions in stocks admitted to trading on prescribed markets that are undertaking rights issues”.

FSA considers a significant short position as 0.25% of the issued shares achieved through short selling or by any instruments giving rise to an equivalent economic interest. Positions exceeding this threshold will have to be disclosed by means of a Regulatory Information Service by 3.30 pm the following business day.

According to the FSA, the threshold disclosure may be revised higher depending on how the market responds to the provision.

The FSA is also considering “whether it might be necessary to take further measures in this area” such as restricting the lending of stock of securities in rights issues for the purposes of enabling short selling and restricting short sellers from covering their positions by acquiring the rights to the newly issued shares.

FSA noted in its press release, “In current market conditions, there is increased potential for market abuse through short selling during rights issues. As a result, there has been severe volatility in the shares of companies conducting rights issues.”

Expro receives higher offer from Candover

Candover Partners and Goldman Sachs revised their bid for oil field deep drilling testing company Expro International to 1,615 pence per share or 1.8 billion pounds. Expro has already accepted an offer that values the company at 1.7 billion pounds or 1,550 pence per share from Halliburton Company.

Halliburton has till June 20 to revise its offer and is likely to increase it above 16 pounds. Expro stock rose 3% or 48 pence to 1,663 pence on 1.7 million shares trading volume.

House prices in England and Wales fall by 0.6% in May

Academetrics reported on its website today that according to the FT/Academetrics House Price Index, house prices in England and Wales increased by 0.6% in May from the previous month and rose 2.7% from a year earlier.

The average house price was £228,824 in the review period.

Gainers & Losers

HBOS led advancers in the FTSE 100 index shares with a rise of 13.7% followed by rises in Alliance & Leicester of 10.88%, in Persimmon of 10.40%, in Carphone Warehouse of 6.05%, and Wolseley. Retailers gained as well. Kingfisher advanced 4.04%.

Cairn Energy led decliners in the FTSE 100 index shares with a drop of 4.15% followed by losses in Tullow Oil of 3.59%, in Kazakhmys of 2.94%, Eurasian Natural of 2.87%, and London Stock Exchange of 2.44%.

Commodity stocks fell after crude oil prices declined 0.3% to $136.32 a barrel. Xstrata shed 1.70%, BP edged down 1.51% and Vedanta fell 1.31%.

BG Group discovers new oil in Brazil

BG reported on its website today that it has made a new oil discovery in the Santos Basin, offshore Brazil, within the BM-S-9 concession area. The company said this is the second discovery within the concession area where the company holds 30% share along with Petrobras and Repsol YPF Brasil S.A.