Market report: Has RBS really turned itself around?

It’s been a long, hard slog but Royal Bank of Scotland might just have turned itself around. That’s the view of Morgan Stanley, which has upgraded RBS to “overweight” for the first time since the bank’s controversial bailout six years ago.

Some might suggest it is strange timing, when China’s stock market crash is shaking the foundations of global financial markets.

But Chris Manners, an analyst at the heavyweight broker, said many investors did not appreciate the potential earnings power a slimmer RBS could have a few years down the road.

He admits that wider market fears, including mounting concerns about China, could prevent it from offloading non-core assets such as Williams & Glyn to shore up the balance sheet, but is confident of a fit and healthy RBS from 2018.

“As the final layers are peeled away, a slimmed down UK/Irish retail and commercial bank with top three position in its key markets should start to emerge by 2018,” Mr Manners said.

RBS, up 2.9p at 324.1p, was among the few risers, with trading screens once again awash with red.

After Tuesday’s mini-rally, the FTSE 100 was back in familiar territory, down 102.14 points or 1.7 per cent at 5,979.2, on the back of more volatility in Shanghai.

Citigroup analysts put the brakes on a mining recovery with gloomy predictions for the beleaguered sector and a spate of downgrades. Among the losers were Fresnillo, down 45p to 594.5p, Randgold Resources, down 184p at 3,817p, and Glencore, down 5.4p to 138.9p.

Half-year results from APR Energy, down 3.75p at a record low close of 76.63p, underlined the temporary power provider’s troubles.

The company swung to a loss of $64.5m after bailing on projects in conflict-torn Yemen and Libya.

Shares in HSS Hire plummeted 50p or 39 per cent to 79p after a fresh profit warning from the struggling tool hire firm.

Fastjet, part-owned by easyJet founder Sir Stelios Haji-Ioannou, edged 2.5p higher to 96.5p as the AIM-listed African airline bought its first plane, having been leasing aircraft since its inception three years ago.