FTSE live: Recovery hopes after China Evergrande shock as National Express and Stagecoach unveil merger

BHP’s London-listed shareholders will find a chunky dividend in their accounts as part of a record $10.1 billion (£8.6 billion) being paid today by the miner from 2020/21 trading.

The $2 a share, equivalent to £1.44 a share for UK investors, was declared just over a month ago after BHP reaped the benefit of soaring commodity prices to report annual underlying profits of $37.4 billion (£31.2 billion).

Fortunes have changed dramatically since then, with BHP shares down more 20% as slowing demand from steelmakers and other parts of the Chinese economy sends the price of iron ore down tumbling from its May peak to below £100 a tonne.

The dividend may one of the last many UK shareholders get from BHP after the Anglo-Australian company revealed plans last month to scrap the London and Sydney dual listing that’s existed since the company’s BHP/Billiton merger in 2001.

The primary listing will be on the Australian Stock Exchange alongside a standard listing in London, costing the company its place in the FTSE 100 index and meaning many index trackers and pension funds no longer follow the stock.

Including the half-year dividend, BHP has returned US$15 billion (£12.8 billion) to shareholders over the past year and £38 billion (£32.4 billion) for the past three years.

The FTSE 100 index is up 46.02 points to 6,949.93 in a calmer session for investors after the scare sparked on Monday by fears that Chinese property developer Evergrande might struggle to repay its mammoth debt pile.

The company, which has liabilities of just over $300 billion, faces several debt repayment deadlines this week. Evergrande’s plight ignited broader worries about the health of China’s property market, which makes up around 10% of GDP, and sent mining and Asia-focused companies sharply lower on Monday.

London-listed stocks were much firmer today, with Anglo American pulling out of its recent slump to stand 28p higher at 2,498.5p. There was also a further gain for British Airways owner IAG, having surged 11% on plans for the relaxation of US travel restrictions.

The shares added another 4% or 6.2p to 172.4p. Royal Dutch Shell shares were also 3% higher after the supermajor sold off Permian Basin assets to ConocoPhillips for $9.5billion.

Screwfix and B&Q owner Kingfisher will launch a £300 million share buyback after the pandemic DIY boom helped sales to swell above pre-Covid levels.

The FTSE 100 retail company saw pre-tax profit surge 70.6% to £677 million in the six months to July. The return of money to shareholders reflects “strong cash generation and confidence in outlook”, Kingfisher said.

It was boosted as people in lockdown made the most of time at home and undertook DIY projects. Kingfisher chief executive Thierry Garnier said: “Our industry is benefiting from new trends that we believe will be supportive over the long term.”

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Sir Brian Souter and sister Dame Ann Gloag co-founded the business in 1980 with the running of two second-hand buses. The business is now the UK’s biggest bus and coach operator, with 8,300 vehicles serving communities in England, Scotland and Wales.

Stagecoach also operated the first privatised rail services in 1996 and later ran key networks including the South Western and East Midlands franchises as well as a 22 year partnership with Virgin for train services on the West Coast inter-city rail franchise.

In June, the company reported a big slide in profits as it warned it will be “some time” before demand for its services returns to pre-Covid levels.

The founders still own a quarter of the London bus operator through family shareholdings, but revealed plans in April to reduce this to 5% over the next ten years.

Sir Brian said at the time: “We remain significant long-term shareholders in Stagecoach and remain supportive of the company’s strategy and management team.”

The founders will see their shares rolled into National Express if the all-share bid from the coach operator gets the go ahead.

Concerns over the solvency of Chinese property developer Evergrande sent London’s FTSE 100 index more than 2% lower at one point on Monday, before the top flight finished a more respectable 0.9% down at 6,903.91.

The calmer trend, which was helped in afternoon trading by plans in the US to open borders to vaccinated passengers from Europe, is set to continue at the open in London today.

CMC Markets is forecasting the FTSE 100 index will open 45 points higher at 6,949.

Wall Street markets, meanwhile, slipped to a two-month low last night, not helped by jitters ahead of the latest two-day meeting of the Federal Reserve getting underway later today.

CMC’s chief markets analyst Michael Hewson said: “The topic of tapering is likely to feature highly, along with speculation of where Fed members see the likely timing of future rate rises, by way of their dot plots.

“The bigger question given the risks emanating from events in China is whether the Fed adopts a less hawkish stance tomorrow in order to buy itself some time until the situation becomes clearer.”

Coach operator National Express and bus company Stagecoach have confirmed they are in talks about a potential merger.

Stagecoach said there were significant operational efficiencies from a tie-up, such as National Express utilising its depot network to run and maintain coach operations.

The Perth-based company’s shareholders will receive 0.36 new National Express ordinary shares for each share, giving them about 25% of the combined group.

Stagecoach said the terms represent an 18% premium on their respective closing prices.

It added: “The boards of Stagecoach and National Express believe that the potential combination would be a strategically compelling proposition with the potential to realise significant growth and cost synergies, as well as delivering strong value creation for both sets of shareholders.”