Legal and General attracts short selling
Continued speculation that Legal and General will need to tap the market for additional funds in the short term has further undermined the shares today. Despite assurances from the group that it has in excess of £1.6 billion available to cover any potential shortfall, as well as news that the credit default assumption has been increased by £650 million, this has done nothing to calm market nerves. News that experienced short seller Crispin Odey is targeting the company has also increased investor nervousness.
The company is adamant that it does not require additional funding and the dividend is not at risk at this moment in time. However, with the UK stock market down around 3.3% today there are concerns that further pressure on investments will squeeze the gap between financial requirements and financial comfort. There is also a growing belief that the new regulatory guidelines, which force short sellers to reveal their positions at certain levels, are potentially backfiring amid growing investor concern.
After a period of relative calm the UK financial sector is under severe pressure again with a growing feeling that the money pumped into the sector by the UK government is having little or no impact. The future is very uncertain and many investors are ditching their shares at highly distressed prices.
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