Financial services regain favour with retail investors

Angus Rigby, Chief Executive Officer, TD Waterhouse comments: "It seems TD Waterhouse customers were looking to seize opportunities to make a profit this week as the number of sells marginally overtook the number of buys.

"Once again, our customers traded heavily in financial services shares this week, spurred on perhaps by the words of Chairman of the US Federal Reserve Ben Bernanke, who in his first televised interview in 20 years claimed that the first ‘green shoots' of economic recovery have begun to sprout in the US. It has been widely predicted that America could be the first to recover and Bernank went on to suggest that the US recession could end sometime this year.

"The positive comments buoyed the global markets and the FTSE 100 has enjoyed a good week. The financial services sector in particular claimed 90% of our top ten trades this week, with the banks alone representing 69% of that figure.

"Bank trades have been led by Barclays and we have seen 25% more sales in the banking giant than there were buys as customers looked to capitalise on its recent 20% rise in share price. This surge followed the bank's confirmation that it is in talks to sell its iShares fund management business. However, its application to join the Government's Asset Protection Scheme - already strained by the presence of an anti-dilution clause inserted by its Middle Eastern investors - is now reaching breaking point as the bank curbs accusations of tax avoidance.

"HSBC, whose shareholders will be voting on its record £12.5 billion rights issue today, also experienced a slight rise in share price after recent volatility, causing it to make another appearance into the top ten buys and sells tables this week. The shareholder vote is expected to be merely a formality and if approval is gained as expected, the nil paid shares, which are priced at 254p, will be released on Friday, 20th March (shares listed on markets outside the UK will have different release dates).

"Another rare entrant in the tables this week has been US bank Citigroup. Our customers have shown that they are looking at the US as well as the UK for potential gains. After recording record lows, news that the bank has had profitable months in January and February may explain the returned confidence of some investors. Indeed, Citigroup shares jumped 22.7% to close at $3.08 on Wednesday, proving that many of our customers had made a good call.

"While banks have had a relatively good week, fears for the insurance industry have been heightened following the latest US Government bailout of AIG. Companies this side of the pond continue a charm offensive to dampen concerns that the industry will be the next victim of the economic downturn. However, it seems our customers opinions remain divided as trades in insurance companies make up 21% of this week's top ten buys against almost 20% of sells, registering little difference between the two.

"Meanwhile, Prudential, which is due to release preliminary results today, has been reassuring investors that it delivered good sales performances during 2008 with a 5% increase in new business. Legal & General, however, continues to fend off rumours it will be forced to tap shareholders for cash amid speculation it is in talks with the FSA over its corporate bond portfolio."