May 23, 2019 / 1:26 PM / 5 months ago

BUZZ-Royal Mail shares hit record low as renationalisation risk takes its toll

** Royal Mail shares hit record low of 198.25p, down 9.2%, taking this week’s losses to 15%

** A trader says Wednesday’s results were “pretty mediocre” and points to high levels of short positions

** “Had the figures been better then there may have been short covering, but as they weren’t that good there has been no buying back from the short sellers but no interest from potential buyers either,” he says

** Royal Mail shares reversing course after Wednesday’s 5% gain on results with traders blaming political uncertainty too

** “There is a very slight risk that with Theresa May in turmoil that a (Jeremy) Corbyn government is more likely and he would nationalise businesses like Royal Mail” - trader

** Facing the threat of renationalisation from the opposition Labour Party, Royal Mail promised on Wednesday to invest a further 1.8 bln stg in its UK postal service over five years in the hope of turning it around

** United Utilities and National Grid have both warned recently that renationalisation under a potential Jeremy Corbyn-led Labour government would hurt business

** Both utilities are down 2 and 1% respectively on Thursday

** The sharp fall in Royal Mail annual profits on Wednesday reflected weakness in UK Parcels, International & Letters (UKPIL) as a worse Letters revenue decline and cost inflation squeezed margins, say Liberum analysts

** “2024 vision - far-sighted or a blurred view?” write Investec analysts, adding they are sceptical the co can make margin gains with only 150 to 200 million pounds of cost avoidance, outside of an extremely low inflationary environment (Reporting by Helen Reid in London and Justin George Varghese in Bangalore)

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