TD Waterhouse customers speculate on UK house builders

Angus Rigby, Chief Executive Officer, TD Waterhouse comments: "This week's trading activity from our customers shows some positive investor sentiment, with 25% more buy trades than sells. UK House builders Barratt Developments and Taylor Wimpey are new entrants in the top ten buys, as our customers reacted to falling prices and bought up the discounted shares through the week.

"As the credit crunch takes its toll on mortgage lenders and first time buyers, house builders are also feeling the effects following concerns that we could see the worst downturn since the housing slump of the early 1990s.

"Last week, York based Persimmon, one of the UK's biggest house builders, announced a halt on the building of new sites until conditions improved, while back in February, Barratt Developments was at the centre of speculation that it would have to tap investors for cash to help reduce its £1.73bn of debt. Although the rumours were refuted, the share price was negatively affected and similarly rival firm Taylor Wimpey has also suffered in recent weeks. As the country's largest house builder by volume, shares in the company fell by more than 10 per cent last week, driven by the less-than-confident statement about cautious trading in 2008.

"However, the appearance of both stocks in this week's top ten buys indicates that our customers are confident that at these reduced prices, house builders could still turn the corner and offer some good value over the longer term.

"Elsewhere the RBS rights issue announcement, which propelled the stock to the top of our trade tables last week, has been followed by news from HBOS which confirmed on Tuesday that it too was looking to raise around £4bn from shareholders in preparation for ‘more challenging times ahead'. The UK's biggest mortgage lender also announced that it is to write £2.8bn off the value of investments linked to the US sub-prime mortgage market.

"HBOS will offer two ordinary shares for every five existing shares at 45% less than the closing price of 495.75p on Monday. Rumours surrounding this rights issue started a few days ago, prompting our trading customers to again move quickly before the official announcement came. Consequently, HBOS tops our top ten buys this week.

"With both RBS and HBOS requiring shareholder approval before they can go ahead, and more rumours that Barclays and Bradford & Bingley could be planning rights issues of their own, this looks to be a busy summer for shareholders and our customers."