Economists today predicted a hefty boost to the stock market and consumer spending if Vodafone’s £84 billion sale of its stake in Verizon Wireless goes ahead as planned.
With advisers racing to thrash out a deal over the weekend, analysts were calculating the wider impact of hundreds of thousands of special dividend cheques going to Vodafone shareholders and, more significantly, the billions of dollars sloshing into investment funds.
Philip Shaw at Investec said: “The effect on the stock markets could be like QE. Investors are going to have to put that extra money somewhere. And with this Vodafone payment, we are talking about nearly a quarter of the entire stock of assets that have been bought under the QE programme.”
Justin Urquhart Stewart at Seven Investment Management said: “If Vodafone does get £84 billion, that could be just the kicker the market needs for a major rally. The amount of cash here is massive — the equivalent of two years of interest on Britain’s entire national debt.”
Meanwhile, consumer spending could also be set to rise as nearly 500,000 small shareholders with up to 5000 shares pick up huge dividend cheques.
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