Desire Petroleum shares were the most traded by retail traders at TD Waterhouse in the week up to 19 October, with predictions being made of how the government’s spending review will impact companies.
The share dealing account provider said customers embarked on a ‘trading frenzy’ with trading volumes of the top ten stocks brought and sold increasing by almost half.
Trading and customer services director, Darren Hepworth said: “Trading of resources stocks drove the surge, accounting for 52% and 68% of the top ten buys and sells respectively”.
The price of Desire Petroleum shares dropped 35 per cent at the end of last week on news that an exploration well had not discovered any hydrocarbons, Hepworth said.
Trading focused on range of other oil explorers listed on the London Stock Exchange, with Max Petroleum entering seventh place in the buys list and Gulf Keystone Petroleum placing eighth on the buys and sixth on the sells list.
TD Waterhouse said ahead of the comprehensive spending review the surge in trading volumes also included activity around banking stocks. Barclays was the most brought stock overall, with Lloyds and Royal Bank of Scotland featuring in the buys and sells top ten.
Looking ahead to the impact of the public spending cuts following the chancellor’s announcements on 20 October, Nick Raynor at the Share Centre said some major construction firms could benefit from the government investment in the transport sector.
Raynor, an investment adviser at the stock brokers, said Balfour Beatty, Serco, Amec, Carillion and Hill & Smith were potential beneficiaries of government commitments to make capital investments in the transport infrastructure.
He said: “The stock market has produced a muted reaction to the cuts so far and we actually saw more movement yesterday after the defence cuts were announced.
“Also, an important factor to take into consideration is the increase in VAT that is due to be implemented at the beginning of 2011. The 20% increase will affect retailers across the board and ultimately our pockets. Lower spending equals lower revenues and lower profits, retailers in general have been warning over future earnings and are cautious looking ahead.”
Raynor added that companies operating in the education sector, and involved in offshore wind energy and energy efficiency could be positively affected by Wednesday’s announcements that the schools budget would be protected and funding would go ahead for Department for Energy and Climate Change programmes.
© Fair Investment Company Ltd