Stock market crisis: how contractors are faring

Shares in most major contracting groups listed on the UK stock exchange bounced back this morning after yesterday’s turmoil on the markets.

With the United States on a bank holiday on Monday, many investors yesterday started panicking over the prospects of a possible recession in the world’s biggest economy rippling out across the globe.

Analysts had been fretting over this for some time and only last week Citigroup downgraded its rating on Balfour Beatty but the UK’s biggest contracting group was among those feeling some upside this morning.

Shares in Carillion, Galliford Try, Kier and Morgan Sindall also all rose during this morning’s trading.

Not all the contractors benefited.

Shares in Costain - already at their lowest level for five years – were static and ground engineers group Keller, which has more exposure to the US than any other major contracting group, was still being marked down by investors.

Connaught also continued to dip despite analysts at stockbrokers KBC Peel Hunt upgrading its rating on the social housing contractor from ‘hold’ to ‘add’ only yesterday.

Connaught only relatively recently moved up to the main exchange from the junior Alternative Investment Market, where another contractor in ISG was failing to feel any upside from this morning’s bounce-back.

ISG owns regional contractors, including Pearce, Totty and Jackson Building but the group’s core business, certainly as far as jittery traders are concerned, remains its commercial fit-out operation, Interiors.

In addition to being undermined by what damage a US recession could do to the UK, the stock market here has also been bushwhacked by signs that commercial development work is drying up.

With big property portfolios unable to raise funds, this could be potentially damaging to both Interiors and Morgan Sindall’s Overbury operation.