With the UK government deciding against a retail offering of Lloyds shares to the British public, there are nonetheless a wealth of tradable opportunities available to those wanting a slice of the bank on the stock market. We’re here to help you weed these out and capitalise on them; whether you’re a long term investor or a short-term trader, there are a range of options available to you today.
New Chancellor, New Direction
Phillip Hammond, the new Chancellor of the Exchequer, has cancelled his predecessor’s attempted apology for the taxpayer having to bail out the banks in 2008. George Osborne had planned to sell the Treasury’s remaining 9% bailout stake in Lloyds to private investors at prevailing market price with a 5% discount as a sweetener. Many of the several hundred thousand potential investors that expressed interest in purchasing these discounted shares are understandably upset.
But they needn’t be. Not when the market is offering the same shares at an even greater 40% discount!
Lloyds shares are currently trading marginally above the 50p mark, well below the predetermined 73p breakeven mark set out by Mr. Osborne as the minimum for a private sale. It begs the question: If you’d been waiting for much of this Summer, hoping for price to return to breakeven, just to get your 5% discount, why not capitalise on the potential 40% upside available to you today at current market prices?
Looking to the Future
Hammond’s new plan to gradually dispose of the remaining 6.5 billion Lloyds shares in the market comes from a preference to deliver a full reprivatisation under the radar, rather than making a song and dance with a retail offering while markets get to grips with Brexit. What does this mean?
It means that a measured and orderly sell down of shares back onto the market will take place, fully reprivatizing the bank within 12 months. Finally. There may be some overhang as a steady flow of Lloyds shares rejoin the market, potentially pressuring the share price. The silver lining to this, however, is that it will only stand to improve liquidity of the shares over the next year. The government may start by selling shares around their lows, but this also allows you to buy around the lows in order to benefit from a greater potential upside should the share price rally.
So, it’s time to act, but what will your next course of action be? Buy or sell?
In the next section, we look at City analysts’ recommendations for the future performance of Lloyds shares over the next 12 months and our own Accendo analysts provide their technical analysis.