A light at the end of the pandemic tunnel? Rolls-Royce doubles in a week


There has simply been no stopping action from Rolls-Royce Holdings of late, with the FTSE 100-listed company set to double its fortunes this week, amid hopes the aviation industry has gone through the worst of the pandemic.

Rolls-Royce RR,
+ 7,44%
Stocks jumped another 18% on Friday, the fifth consecutive day of gains, and its third session of double-digit gains in that time frame. The FTSE 100 UKX,
+ 0,73%
rose 0.7% to 6,018.63 and is set to post a weekly gain of almost 2%.The week generated a 100% gain for Rolls-Royce, although it remains down 66% on the year due to the severe blow the aviation industry has suffered from the COVID-19 pandemic. Shares received a boost earlier in the week on learning that the company had secured a £ 1 billion ($ 1.3 billion) convertible bond offer and a contract to power a gas-fired power plant in India.

Shares fell on October 1 after the ailing engineer announced he would seek £ 5bn through a rights issue and debt to shore up his finances. The company has offered to generate £ 2bn through a 10-for-three rights issue.

Painful as it may be for shareholders, the plan “sets up Rolls-Royce to sufficiently navigate an uncertain recovery and removes any lingering concerns about liquidity (and even solvency),” said a team of analysts from Berenberg, led by Andrew Gollan, in a note to clients on Friday.

Joshua Mahony, senior market analyst at IG, in a note to clients, said there was a “clear desire to hunt for bargains as traders start to see the light at the end of the tunnel,” even amid concern over rising COVID-19 cases could force another lockdown in the UK.

“With Trump speculating that we’ll see a vaccine in the coming month, and the aviation stimulus package seemingly the only thing both sides of Congress can agree on, the recent resurgence in travel stocks represents a blow. on the possibility that the sector has seen the worst, ”said Mahony.

Elsewhere, shares of British Land BLND,
+ 3,37%
jumped 6% after the real estate trust reinstated its dividend, and Land Securities LAND,
+ 3,08%
climbed 4% after it said it collected £ 68million ($ 88million) in rent due on September 29 within five days.

The London Stock Exchange UK: LSE has agreed to sell its entire shareholding in the parent company of Borsa Italia to Euronext FR: ENX, in a transaction valued at 4.33 billion euros (5.09 billions of dollars). LSE shares rose 0.8%, while Euronext shares rose 0.9%.

Data showed the UK economy grew only 2.1% in August, disappointing growth forecasts of 4.6% and the slowest monthly gain since the first coronavirus lockdowns.


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