Three months after Sumitomo took a stake in Barclays, another British financial institution has welcomed a big Japanese bank on to its share register.

But the purchase by Mitsubishi UFJ of 9.9 per cent of Aberdeen Asset Management differs significantly from the earlier transaction. Unlike Barclays, which sought fresh funds to bolster its capital ratios, Aberdeen is not issuing new shares to its Asian backer. Rather, Mitsubishi is buying existing stock off current shareholders – and at 140p, a useful 11 per cent premium to Wednesday’s closing price.

Not that the willingness of a $92 billion bank to pay slightly over the odds on a £100 million holding should be overstated. But if encouragement is to be taken from the tie-up, it comes on two fronts.

First, the agreement gives Mitsubishi scope to raise its interest to 19.9 per cent, with the promise of board representation at 15 per cent or above providing a clear incentive for further purchases. The power of a big buyer waiting in the wings is a comfort at a time of intense speculation over the future of the 24.9 per cent stake in Aberdeen held by Toscafund.

The heavy losses sustained by the latter this year on positions in Washington Mutual and Taylor Wimpey, among others, suggest it is a more likely seller than buyer – albeit Toscafund declined this week’s clear opportunity to take back some of its cash.

Secondly, Mitsubishi’s stakebuilding is being accompanied by a hard commercial alliance. Through a distribution deal, Aberdeen gains access to the world’s second-biggest pension fund market: Japan has hitherto been the most conspicuous omission in an overseas push that has expanded its presence in the US, continental Europe and Asia.

Further, Japanese institutional investors are allocating an increasing proportion of their funds outside their home market, giving Aberdeen the chance to capture a fair slug of that business.

The more immediate worry must be Aberdeen’s sensitivity to financial market turmoil. July’s third-quarter trading update showed it to be faring well. Unlike most of its peers, it was still pulling in money, with inflows into equities and property offsetting outflows in fixed income.

However, notwithstanding Aberdeen’s diversification and its bias towards institutional clients – that are historically less inclined to redeem than retail investors at times of volatility – September should have provided a sterner test. It will not have helped that Tuesday’s close of the company’s financial year coincided with pronounced weakness in world stock markets. Aberdeen’s profits should be underpinned by the scope to cut costs after recent acquisitions. But at 132½p, or ten times current-year earnings, Aberdeen’s premium to its peers is enough reason to avoid.

Marks & Spencer

Sir Stuart Rose has characterised the slowdown in high street spending as consumers “dabbing on the brakes”. But what Marks & Spencer performed yesterday was the retail equivalent of an emergency stop. Capital expenditure is being slashed to £700 million this financial year and £400 million in the next: overheads are being attacked so that cost growth will slow to between 4 per cent and 5 per cent, against 7 per cent previously.

Like homeowners across the country, M&S is tightening its belt. The benefit for shareholders is that such parsimony should protect M&S’s prized payout, which provided a prospective yield of 10.7 per cent at Wednesday’s close. The retailer reassured yesterday that the dividend, which was famously raised only last November and costs an annual £400 million, is not under threat in the current financial year. This, the closing of short positions and relief that trading was not catastrophic, sent the shares up 8 per cent. Yet concerns remain.

Like-for-like sales in the second quarter were the worst for three years. Sir Stuart believes clothing sales have improved slightly but food sales were weak – down 6 per cent on a like-for-like basis, despite the effects of spiralling food price inflation. M&S is responding by cutting prices (at the expense of gross margins) but that may not be enough. Even despite its cutbacks, net debt should still sit at £3.3 billion at the end of the financial year, not far below its freehold property value.

Elsewhere, M&S’s change of tack in clothing – going back upmarket – is not without risk in a recession, while the effects of a weaker dollar and other inflationary pressures on its supply chain should start to be felt early next year.

At 227¼p, or seven times current-year earnings, the shares are their cheapest for a decade and should find support from the dividend alone. But in light of this week’s bounce, await any move back towards 200p before buying in.

NWF Group

That shares in NWF Group have doubled in seven weeks says more about how far they had fallen than any sudden change in its fortunes. All the same, yesterday’s sale by the Cheshire-based small cap of its garden centres for a better than expected £14.5 million is a welcome advance. It will cut NWF’s net debt to a more manageable £30 million. It also leaves the company focused on three niches – fuel, food, and animal feed distribution and removes the mini-conglomerate tag that has dogged it for a decade. The prospects in food are the most promising. NWF acts as a consolidator, holding extensive stocks of ambient foods so that supermarkets tie up less capital in their own supply chain. Having invested in new warehouses, NWF is in a position to gain market share. However, with no further update due until February, the shares, at 155p, or a hefty 23 times forward earnings, have run far enough. If you have profits, take them.

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