But analysts are already worried that Barclays is paying far too much, and overestimating the growth it can wring from Zaragozano.
Meanwhile, Britain’s life assurance companies have reported generally downbeat first-quarter business figures. These are a measure of how many new policies have been written; with stock markets continuing to flounder for much of the first quarter, it was not many. Only Friends Provident managed to generate growth, and only then by buying a subsidiary of Royal & Sun Alliance, which is getting out of life assurance. The stagnation is another reminder to investors that life assurers with good overseas divisions, espcially in growth markets like Asia and eastern Europe, have the best prospects. That’s Legal and General and Prudential. It’s also worth pointing out that in theory, life assurers’ shares should recover sharply in the event of a good market recovery.
Shell posted a very strong set of first-quarter figures late last week, but analysts fear it is all downhill from here as oil prices weaken in the wake of the Iraq war. We think Shell shares are still worth having, as its financial strength is beyond dispute and it pays a good (and safe) dividend.
easyJet, the no-frills airline, announced a disappointing set of interim results this week. It lost £48.5m during the first six months of its financial year. This was expected, but more worrying was the fact that it has little idea how much it might make across the full year. The company also warned that yields, a measure of the average fare paid, are on a downward trend as it cuts fares to fill planes. Analysts worry that easyJet will struggle to find passengers for the dozens of new planes it plans to acquire over the next few years. The share price doesn’t reflect this risk and is still too high.
Laura Ashley, another struggling brand, sacked its chief executive K C Ng after a further year of disappointing performance. He is being replaced by two other Malaysians, Ainum Mohd-Saaid and Rebecca Navaderum. One is a lawyer and the other an accountant, although Ms Mohd-Saaid, Malaysia’s first female attorney general, does have some retail experience. Both are business associates of Khoo Kay Peng, the Malaysian tycoon who is Laura Ashley’s biggest shareholder. Many fear this is a ‘jobs for the girls’ exercise that will do little to revive the once-iconic retailer’s fortunes.