MARKET REPORT: More hiccups are on the way for Hikma Pharmaceuticals

Citigroup stopped the rot at Hikma Pharmaceuticals when yesterday morning it advised clients that the 14pc fall in the share price from recent highs on the political unrest in Tunisia and Egypt and fears that it would spread to neighbouring countries was overdone.

The stock rallied 30.5p to 835p but King Abdullah of Jordan's decision to remove his government as a consequence of the continued uncertainty in the Middle East and North Africa (MENA) region could easily upset the apple cart.

Analyst Dr Paul Cuddon at Peel Hunt downgraded Hikma to sell from hold and has a target price of 720p. He sees news that Marouf Al Bakhit has been given a mandate to implement 'genuine political reform' as a threat to the dominant position Hikma has established in Jordan, the gateway to the MENA market.

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Hikma has close ties with the government through its chairman, who recently acted as health minister, and any change is a big threat to its position.

Hikma is currently charged zero tax on exports, which provides significant advantages with regards to pricing in the US and across MENA. A more democratic government may open up the market to more competition in an effort to reduce prices and improve access. Tax rates could rise to as much as 27pc, more than double the current 13pc charge on profits generated from MENA. Disruption to the government is also likely to have a knock-on effect over the wider launch of Hikma's global product portfiolio.

Largely because of its name, Centamin Egypt's share price has been at the mercy of the political situation in Egypt and has collapsed from an early January level of 175p to a recent low of 130p. Analysts are quick to point out that the fall has been overdone because the unrest has taken place hundreds of miles away from the operations at its flagship project Sukari.

The shares yesterday rallied to touch 151.7p before closing 10.6p better at 146.9p after Centamin reassured investors by saying the safety of its employees or its day-to-day operation at Sukari has not been affected. An investor and analysts visit to the site this week goes ahead as planned.

Centamin also reported record quarterly gold production of 53,189 ounces at the Sukari mine and production has averaged over 20,000 ounces per month in November and December.

Strong manufacturing data from both the eurozone and the US gave a big lift to global stockmarkets as political tensions in Egypt eased. The Footsie climbed 94.88 points to 5,957.82 and the FTSE 250 137 points to 11,608.5. Wall Street traded more than 100 points higher with good figures from drugs giant Pfizer adding to the bullish mood.

Reflecting strong metal prices, silver miner Fresnillo jumped 88p to 1383p, while Kazakhmys advanced 72p to 1578p and Antofagasta 66p to 1472p. Yield considerations and firmer market conditions helped insurer Legal & General rise 5.2p to 116.2p.

Continuing concern about possible effects of the government spending cuts dragged defence group BAE Systems 8.4p lower to

Tesco, 0.3p dearer at 403.1p, may have had a cold Christmas trading period, but it has still maintained its 30.5pc share of the grocery market, according to Kantar Worldpanel. Broker Charles Stanley upgraded to buy, saying its international and retailing services will take over as the drivers of earnings growth. The core UK food retailing business will act as a 'cash cow' to fund growth in these areas.

Tesco Bank, with 6.5m customer accounts across its insurance, savings, loans and credit card products, has the best potential amongst its retailing services activities. It is the intention to launch a mortgage product in the first half of the current year with a current account following in the second half.

Tesco's property portfolio was valued at a staggering £34.6bn in February 2010 and Stanley expects that to be raised further with full-year 2011 figures.
Synergy Health, the provider of specialist outsourced support services to health related markets, advanced 9.5p to 893p. It is on track to meet expectations for the full year following improved third-quarter trading.

Electronic equipment minnow Active Energy improved 0.62p to 5.75p after securing new contracts.

The largest is with the National Measurement Office on behalf of the National Physical Laboratory, which develops and maintains the UK primary measurement standards. Active Energy will supply five VoltageMaster units, which will help the National Physical Laboratory reduce energy consumption and CO2 emissions.

Wallpaper and fabric maker Walker Greenbank jumped 4p to 57p after saying it expects full-year profits to beat market expectations.

Positive momentum continued into December and January despite the wintry weather. Management says it will increase the final dividend by at least 30pc.

Seymour Pierce lifted its current year pre-tax profit forecast to £4.9m from £4.6m and to £5.3m from £5.1m for next year. Its price target is 65p.