With Angelique Ruzicka.
Global markets rallied in the euphoria following Barack Obama’s resounding victory in the US presidential election. But they plunged again after the world faced up to the reality of the economic crisis. Asian and European shares plummeted, eradicating any gains made before and after Americans went to the polls on 4 November. The day after Obama’s win, the FTSE sank 4.27% while Germany’s Dax fell 4.31% and the French Cac lost 4.22%.
It was back to reality for the insurance industry too. RSA announced its results last Thursday and, like Aviva the week before, it moved to reassure the market that all was well with its investments and that what it had invested in was low risk (see story, above).
George Culmer, RSA’s finance director, said: “We have deliberately pursued a low-risk, high-quality investment strategy. No one is immune but, given the nature of our investment, we are in a great position to ride this out.”
Shareholders don’t seem convinced, however, and the company’s shares tumbled 5.93% to 136.4p.
It wasn’t the only listed insurer whose stocks plunged.
Aviva’s shares dropped by 8.38% to 385.5p, while Pru slumped by 18.7% to 319.5p. Hiscox and Amlin had the only substantial increases this week, with shares rising 13.23% and 11.58% respectively.
Stocks in the banking sector were volatile too. The ongoing tussle for HBOS is not doing the Scottish bank or Lloyds TSB any favours. Lloyds TSB has been trying to take over HBOS but has hit a few hurdles, not least an attempt by two of Scotland's most prominent bankers, Sir Peter Burt and Sir George Mathewson, to keep the bank independent. While HBOS shareholders are not taking the options provided by Burt and Mathewson too seriously, they are listening to other potential offers. It is understood that Bank of China may make an offer.
Things were less volatile in the AIM camp this week. THB Group reported a small drop in share price. Its shares dipped 0.85% to 58.5p per share. Meanwhile, Lancashire Holdings and Omega Insurance Holdings both enjoyed small rises. Their shares rose by 1.46% and 2.15% respectively.