MARKET STEP: AA & # 39; s & # 39; secret & # 39; breakdown for half of the price agreements makes stock prices in reverse order
Breakdown aid AA has refueled after brokers have issued a report about the company, criticizing a hidden cheap policy that could cannibalize its revenues & # 39 ;.
Last month it appeared that AA offered a secret half-price breakdown insurance to drivers within a radius of 30 kilometers around their home.
The company did not advertise this policy at all, but reported it to existing AA members when they called to cancel.
Analysts at Credit Suisse noted that only 27,000 of these £ 45 policies have been closed, but this could rise because more AA's 3.3 million customers found out about the policy or tried to leave.
The skids hit: last month AA turned out to offer a secret half-price breakdown insurance to drivers within a radius of 20 miles around their home
The broker said in a study letter: "We believe that this offer represents an innovative retention strategy of the AA. & # 39;
However, if more people were to switch to the low-cost policy, it would be cannibalistic for the revenue base of personal membership & # 39 ;, the note added.
The Authority for Competition and Markets investigates loyalty penalties at UK companies, following complaints from customers who said they pay more for a stay with a service provider than for new customers.
With this investigation, Credit Suisse also said that it was not convinced that AA should continue to offer the considerably reduced service only to end customers and possibly open to everyone.
If it were to advertise all its members with the cheap policy, this could see the number of users climbing to about 115,000.
The shares in AA fell by 7.5 percent or 8.15p. Up to 100.25 p. A day after they had risen by 3 percent on the back of a positive note from the estate agent Peel Hunt. The analysts at Peel Hunt said: "In a strengthened management team, the AA faces an exciting future. & # 39;
Stock Watch – Haydale Graphene
Super-material graphene is emerging in industries ranging from fashion to electrical components, but Haydale Graphene appears to have failed.
The shares plummeted by 42.5 percent, or 10p, to 13.5p, because financing was needed to keep their heads above water. Discussions with lenders were underway, it added.
Orders were also slower than expected, so it reduced costs by £ 1 million.
Haydale materials are used for reinforced car bodies, precision printers and cutting tools.
The British blue-chip index failed to keep the previously made gains and dropped by 0.5 percent (35.34 points) to 7.105.34 points, as mining giants faded after weak economic data from China.
Copper Miner Antofagasta fell 4.9 percent, or 39.8p, to 778.2p, while growth in the Chinese producer price index – which measures the prices companies receive for their goods and services – slowed.
This sign of weakness in China depressed commodity prices, because the country is a major importer of raw materials. Fresnillo also slipped 4.7 percent, or 42p, to 861p and Glencore dipped 4.4 percent, or 14.1p, to 303.9p.
David Madden, of CMC Markets, said: & # 39; There are still concerns that China is slowing, and this is the cause of the sale of natural resources.
These concerns about demand also weighed on luxury clothing designer Burberry.
The British fashion house, which is trying to get younger consumers aside by selling limited edition £ 290 T-shirts via social media and heavily dependent on Asian buyers, was the biggest loser of the FTSE 100 because its shares dropped 4.9 percent. , or 91p, to 1773.5p.
A wealth of miners also weighed on the FTSE 250, which was under pressure from oil companies.
The price of crude Brent oil slipped below $ 70 a barrel, resulting in losses of more than 20% since the peak last month.
Traders have sent prices that led to reports that Iraq might soon add more oil to the market, under pressure from President Trump to stimulate supplies.
The American president has urged allied parties to increase their oil production, so that there is room to limit Iranian exports.
But the lower price caused the London-listed Tullow Oil to lose 6.7 percent, or 14.6p, to 203.7p.
Premier Oil came close behind, declined 6.3 percent, or 6.65p, to 99.05p, and Cairn Energy dropped 6.1 percent, or 12.6p, to 193.4p.