Billions of pounds were wiped off the value of North Sea oil companies yesterday as fears of a Chinese economic meltdown sent global stock markets plummeting.
Majors BP and Shell fell by 7.32% to 331.1p and 6.35% to £15.86 respectively, resulting in the market values of these two companies alone falling by about £11.3billion as London’s top-flight crashed by more than 6%, or 400 points as as contagion from China’s growth slowdown spread across the globe.
Serica Energy, which completed a cash and shares acquisition of an 18% stake in the Erskine field just a few months ago, sank more than 18% to 4.65p.
Among other North Sea firms, Premier Oil was down by nearly 14% at 88.85p, Ithaca Energy shed more than 10% to 28.25p, Total was off 8.6% at 37.665p, BG Group fell almost 7% to £9.31 and Centrica lost about 6.5% at 240.5p.
EnQuest was not as badly hit but its shares were still off nearly 2% to 25.25p.
The big sell-off in the City also impacted heavily on energy service firms, with Cape off more than 9% to £2, Hunting more than 8.5% lower at 384.2p Amec Foster Wheeler down 7.4% at 697.5p, Petrofac about 7.3% cheaper at £7.31 and Wood Group down 5% at £5.49.
Others hit hard by the biggest one-day fall in London since the financial crisis included Aberdeen firms Plexus Holdings off 7% at £1.89 and Parkmead Group down 4.6% at 80.5p.
The FTSE 100 pared back some of the losses later but still closed down by 4.7%, or 288.8 points at 5898.9, a loss of £74billion from the value of its constituent companies and equalling a 4.7% drop seen in September 2011.
Yesterday’s figures took the market into territory last seen in the dark days of the downturn. In March 2009, there was a single-day fall of 5.3% and there were even bigger falls late in 2008, including an 8.8% decline in October that year.
The Footsie saw its 10th session in a row of falls – the worst losing streak since it finished lower for 11 days in succession in 2003.
There were also falls of more than 4% on Germany’s Dax and France’s Cac 40.
Investors were reacting to the latest stock market rout in China overnight. The Shanghai composite, down heavily in recent weeks, slipped by more than 8% and has now lost all its gains for 2015 despite attempts by Beijing to arrest the slump.
Markets in Europe took it as a cue for another bout of selling before a steep opening fall of more than 6% on Wall Street markets added to the pressure.
Global markets have been rocked in recent weeks by China’s slowing economy and the depreciation of the yuan as well as plunging commodity prices and fears over the timing of the next US interest rate increase.
Meanwhile, Aberdeen Asset Management said it may top up its equity holdings.
Hugh Young, who oversees the firm’s global equity, property and fixed-income assets, said lower valuations had prompted fund managers with excess cash to consider buying shares.
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