Tuesday share tips: Aberdeen Asset Management, StanChart

16th Jun 2015 15:07

Aberdeen Asset Management´s decision to raise 100m pounds via the sale of preference shares is unsettling. Six weeks ago it said it would spend that same amount buying back ordinary shares. In goes one sum of money and out comes another? It´s not that simple. First, one must ask if something at the firm has changed during that time frame? Secondly, the company said it needs the monies to seed new investments, then why buy back shares in the first place? Thirdly, the preference instruments will only be sold to Mitsubishi UFJ. What about the rest of investors? Fourth, the new instruments will come ahead of the ordinary ones in the dividend pecking order.Admittedly, the company stands to make some savings on its dividend pay-outs over the coming years through the above transaction. However, Aberdeen wants to prove it is more than just a play on emerging market equity funds. If it is serious, then "small-scale fiddling with the capital structure should be off the agenda," writes the Financial Times´s Lex column.In a well-timed move, just days after the arrival of Standard Chartered´s new chief, Bill Winters, a leaked e-mail revealed he saw a need to bolster the bank´s capital position. The Asia-focused lender´s exposure to distressed businesses, especially those with links to the commodity space, is simply too large. A research note from Jefferies, the broker, shows that to reach its boss´s target of between 11% to 12% for tier 1 capital StanChart will need to raise $8bn in fresh funds and probably almost halve its dividend from 80 cents per share over each of the next three years to 42 cents.Furthermore, by 2017 its loan book will need to shrink by 3% from last year´s level, instead of growing by another 6% as per market forecasts. "Avoid, it is still hard to justify a purchase, given the overhang from any rights issue," writes The Times Tempus.