Investors will find little value in Lloyds Banking Group shares due to "limited" growth prospects, a UK equities manager has said.
After the government sold 7.8% of its stake in Lloyds Banking Group last night, Lloyds shares opened this morning at 74.5p, 5.7% below their closing price on Tuesday.
The fall came following a successful spell for the stock, with the share price still up 58% over the last year, well ahead of the wider market.
However, Allianz Global Investors' UK equities manager Simon Gergel said Lloyds looks fully valued now compared to peers such as HSBC.
He said: “The government’s placing is no reason to buy the stock. It does not change the fundamental picture – we do not see much value there. They already trade at a significant premium to book value.”
Banks with exposure to growth regions like Asia have better prospects, he said: “The growth prospects for Lloyds in the UK are limited as the economy is mature and we believe that low interest rates and high levels of consumer and government debt will restrain economic growth and the demand for further credit.”
The UK government and regulators can also affect banks without owning any equity in them, he added.
Yesterday’s sale raised £4.2bn for the Treasury, and reduced its stake to 24.9%. In total, the government has raised £7.4bn from this sale and a previous one in September.
