Daily Telegraph
Blue-chips tumble 10pc as recession bites
Investors in the benchmark FTSE 100 index could be forgiven for being slightly perplexed by Anthony’s Bolton’s pronouncements in early March.
Last Updated: 5:28PM BST 10 Apr 2009
EXTRACTS
Fears are mounting that pension deficits are getting worse and those companies with large pension schemes could be forced by trustees to top them up. Some companies may not have the spare capital to do this, so they could be forced to cut dividends further.
BT, which it is estimated by UBS to have a pre-tax pension deficit of around £4.6bn, has fallen 40pc to 81p.
Dan Stillit, analyst at UBS, believes the company could have to cut its dividend to zero and carry out a rights issue to help the company fund pension top-ups while it tries to rejuvenate its ailing Global Services division.
With the oil price recovering to around $50 a barrel, it may come as a surprise that Royal Dutch Shell and BP were among some of the FTSE 100’s worst performers. Royal Dutch Shell lost 18pc to £14.14 and BP retreated 15pc to 446p. In part, this is because this City is worried about slowing production and that they, too, may be forced to cut their dividends. BP has already signalled it will freeze its dividend.
Meanwhile, concerns over companies’ huge debt piles and possible covenant breaches have continued to weigh on several blue-chip stocks, such as property groups.
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