24 June 2015

Market Comment: Greek gifts of chocolate

Markets have continued to move at the whim of the Grecian discussions over how to pay the next instalments due on its bail out repayments


With encouraging noises following some helpful concessions from the Greeks, shares managed to stage a bounce after recent lack lustre perfo rmance. In the end it will be the ink drying on an agreement that will consign this particular upsetting episode to history and that remains in the future. What has become clear is that markets much prefer the option of a deal allowing Greece to remain in the Euro, even though its ejection would probably have little impact in the near term. It seems there is a premium rating attached to the status quo being maintained.

Domestic markets meantime were able to take some heart from the agreed bid from Ferrero Rocher for domestic chocolate manufacturer Thorntons. While many of us will be familiar with both sweet brands, the reality is that, at £112 million, this particular take over deal is hardly of earth shattering proportions. The recent sale of a Northern Ireland poultry business from one Brazilian owner to another dwarfs this transaction, but then this was not a company listed on the stock market.

And if Severn Trent falls under the hammer to a North American infrastructure group, as is rumoured, this will, indeed, be of significant interest to investors, given the multi billion pounds worth of this major utility. So, as in my earlier comments, it seems markets remain in the thrall of Greek debt negotiators and corporate deal makers – hardly the most stable of environments and one capable of changing investor sentiment overnight.

On the plus side, though, we should acknowledge that we emerged from May, that most capricious of months, relatively unscathed. It is hard to determine what the failure of the Greek debt talks might do to investor confidence. There are plenty of respected observers who state that this would be the best outcome. The trouble is that markets dislike uncertainty with a passion. Roll on a resolution, which by the time you read this might already have arrived.

Brian Tora is an associate with investment managers, JM Finn & Co.


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