Aberdeen slips on fears of a dividend cut

Fears of a dividend cut pulled Aberdeen Asset Management to a five-month low.

The shares extended a loss that began on Monday when Martin Gilbert, Aberdeen’s chief executive, said asset managers were facing higher capital requirements so there were “no promises” that he would keep next year’s payout flat at 19.5p a share.

“I think we’ll be able to maintain the dividend. I would say I’m less positive than I was, say, 12 months ago on that,” he said on a post-results conference call.

Barclays, repeating an “underweight” rating, told clients that absent an earnings recovery next year Aberdeen should cut its dividend by 20 per cent to rebuild capital. Merrill Lynch, meanwhile, downgraded Aberdeen from “buy” to “neutral”.

Investors have been turning more cautious on emerging markets in the wake of the US elections, suggesting an industry-wide improvement in fund flows is likely to stall, Merrill argued.

And while Aberdeen’s weak performance this year means it is not particularly vulnerable to a rush of outflows, it is exposed to a delayed recovery and higher costs stemming from sterling’s devaluation, it said.

Aberdeen closed 2.5 per cent lower at 267.8p while sector peer Ashmore faded 2.7 per cent to 277p, having been cut to “sell” by Citigroup the day before.

Energy stocks and miners led the wider market lower, pulling the FTSE 100 down 0.4 per cent, or 27.47 points, to 6,772.00.

A stronger dollar meant Antofagasta lost 3.9 per cent to 700p and BHP Billiton faded 3 per cent to £13.34, while pre-Opec jitters meant BP slid 2.1 per cent to 442.6p.

Housebuilders and big-ticket retailers rallied on Bank of England data for October showing a 6 per cent gain in mortgage approvals.

Barratt Developments was up 2.3 per cent to 476.1p and Persimmon took on 2 per cent to £17.24 while Dixons Carphone rose 1.8 per cent to 335.4p.

Countrywide lost 2.9 per cent to 169.1p ahead of its likely relegation from the FTSE 250 as part of the quarterly index review, due to be announced after the close on Wednesday.

Ferrexpo, up 2.8 per cent to 136.3p, was among the stocks likely to win promotion.

Barclays was top performer among the banks, up 1.1 per cent to 214.3p, after Credit Suisse rated it the sector’s only buy.

Setting a 260p target, Credit Suisse said: “Barclays offers the highest re-rating potential among UK banks, in our view, with visibility on the prospects for group return on tangible equity to exceed cost of equity improving each quarter.”

ITV led the FTSE 100 risers, up 2.7 per cent to 171.2p, on word that company management was in New York for an investor roadshow.

SSP hit a record high, up 8.5 per cent to 371p, after the transport café owner’s full-year results beat expectations.