UK markets steady despite property suspensions

UK markets steady despite property suspensions

UK stockmarkets have moved higher in early trading with the FTSE 100 and FTSE 250 indices both up 1.5 per cent in early trading, partly driven by a rebound in property stocks.

The sector has suffered in recent days, with a number of asset managers suspending trading in their open-ended property funds including Henderson, Threadneedle, Standard Life Investments, M&G and Aviva Investors.

Aberdeen is one of the latest to alter its property offerings, as late last night it introduced a dilution adjustment on it’s Aberdeen UK Property fund and Aberdeen UK Property Feeder Unit Trust. It reduced the dealing price by 17 per cent, while also temporarily suspending trading in the funds for 24 hours from 12 noon on July 6 until 12 noon today (July 7).

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Martin Gilbert, chief executive at Aberdeen Asset Management, noted: “Reducing the share price of the fund reflects the changing market conditions over the past week or so and uncertainty around prices in the property market; sellers requiring liquidity are having to market properties at sometimes significant discounts to their recent valuations.”

Meanwhile Canada Life also joined the list of suspensions yesterday evening as it announced it would be deferring requests for withdrawals from the Canada Life Property Pension Fund; Canada Life Property Life Fund; Canada Life Property Pension Fund; Canada Life Property Life Fund; Canada Life UK Property Life Fund and Canada Life UK Property Pension Fund.

It stated: “Following last month’s vote to leave the European Union, a combination of uncertainty around the pricing of commercial property assets and the recent rise in requests to withdraw from property funds, has meant Canada Life taking the decision to immediately defer requests for withdrawals. Deferring requests to withdraw allows us to protect the interests of all investors in the property fund, including those who plan to remain invested for the medium to long term.”

But property securities have rebounded in early trading with stocks including Land Securities, Barratt Developments and British Land Company up roughly 5 per cent, while asset managers have also made gains, with Aberdeen Asset Management up 4.3 per cent and Henderson Group climbing 3.8 per cent.