Equities Update: Prudential, Hochschild…

The Pru trying to make the best of a bad situation

Mark Crouch, Market Analyst at investment platform eToro, said: “The unravelling of Prudential’s share price will have been tough to stomach for investors. The last eighteen months have seen the insurer’s shares fall by more than half, currently lumbering at a twelve-year low.

“Inflationary pressures and higher interest rates have acted as a constant drag throughout that period. Yet it is Prudential’s heavy exposure to Asia, where consumer demand has been severely shaken post-pandemic, that is the primary reason behind the insurer’s dismal performance.

“Prudential’s half year earnings however do offer shareholders some positive reassurance. Operating profits for the first half were up 9%, and new business profit, while not increasing, remains consistent. However, Prudential’s recent commencement of a $2bn share buyback programme has, for the moment, had little effect.

“Ultimately the Pru will require a swift and significant turnaround in the Asian and specifically the Chinese economy to recover. However, with growing concerns looming over China’s property sector, it’s uncertain whether or not that recovery is close at hand.”

Hochschild cashing in on gold rally

Adam Vettese, Market Analyst at investment platform eToro, says: “Hochschild are currently enjoying the perfect storm with gold prices at record highs and all the while optimising production at their sites, which is seeing costs per ounce come down at the same time. This has seen revenue come in a sizeable 25% higher than last year and a swing to a $69m profit from a $66m loss in the same period last year, which is quite the turnaround.

“It is really now a case of making hay while the sun shines and Hochschild has maintained its production guidance for the year. Gold has held near its highs due to incoming bets on rate cuts in the US as well as safe haven demand caused by increasing tension in the Middle East.

“The share price has basically doubled since the start of the year, which will have already put plenty of smiles on investors faces, but added to that the board will consider capital returns depending on the full year results early next year.”