Agency shares dive in wake of Russian crisis

Agency share prices plunged this week in the wake of the Russian economic crisis and fears of a global recession.

Agency share prices plunged this week in the wake of the Russian

economic crisis and fears of a global recession.



Abbott Mead Vickers plc, WPP Group and Saatchi & Saatchi all suffered

losses after the political crisis in Russia added to investors’ fears

over ongoing problems in several Asian economies.



AMV’s share price sank to a 1998 low of 218.5p on Tuesday, prompting

fears this may make it easier for BBDO to increase its stake in AMV.



Steve Waring, a partner at the accountancy firm, Willott Kingston Smith,

said AMV’s share price drop could make the agency more vulnerable to

BBDO.



’Abbott Mead’s shares were sailing at quite a high price with a high

price/earnings ratio,’ he said. ’This will make them more attractive,

but BBDO must be suffering itself.’



AMV’s shares rallied by 6p during trading on Wednesday morning.



Michael Baulk, the chief executive of AMV, said: ’You have to separate

the trading of a company from any buffeting that the stock market is

doing.



We are trading well at the moment and the current nervousness in the

market is unrelated to the way the company is performing.’



Other agencies were also keen to downplay the effects of the fall. ’I

don’t think this has much significance at all,’ Martin Sorrell, the

chief executive of WPP, said.



WPP’s share price stood at 327p as Campaign went to press on Wednesday,

33 per cent lower than its 1998 high of 488p.



Saatchis was trading at 101.5p by close of trading on Tuesday, just 1p

higher than its lowest price in 1998. Shares in Aegis and Tempus were

also down. Other media companies to sustain losses included News Corp,

which saw its share price fall 35p on Tuesday to 355.5p, close to its

1998 low of 333p.



Analysts said the fall in agency shares was unsurprising as it was in

line with the rest of the market.



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