Market Report: Johnson Matthey caught in VW fallout — but have the shares dropped too far?

Shares in Johnson Matthey slammed into reverse as the catalytic converter maker suffered collateral damage in the Volkswagen emissions scandal.

The German car maker is facing multiple inquiries and huge fines for cheating exhaust emissions tests, and investors decided to dump shares of Johnson Matthey, the world’s biggest manufacturer of auto-catalysts, which slumped to 2261p, 57p or 2.5% lower.

Johnson Matthey has lost more than 11% of its stock market value since last week when VW admitted to fiddling the tests of its diesel cars in the US — a market Johnson Matthey has been driving hard to crack.

But analysts reckon traders have jumped the gun. Liberum scribbler Adam Collins estimates that diesel car catalysts account for no more than 15% of Johnson Matthey’s profits, and insists that catalyst companies are not to blame for the scandal.

“The market is focusing on the diesel market risk and failing to realise that we could see a more onerous testing regime introduced for not just diesel cars but gasoline cars on a global basis,” Collins explained.

“That would ultimately drive up catalyst loadings and catalyst revenues for the coaters like Johnson Matthey.”

After yesterday’s bloodbath for stocks, there was a mini-revival from the FTSE 100 index, 48.79 points higher at 5984.63.

Miners managed to shrug off more poor manufacturing data from China, the world’s largest consumer of raw materials.

Glencore recovered 2.05p at 108.4p, Rio Tinto regained 48p at 2242p, while Anglo American picked up 16.6p to 664.7p.

Odey Asset Management upped its short position in Anglo American last Friday when the shares closed at 720p, meaning Crispin Odey’s hedge fund has cashed in on the miner’s market woes.

FTSE 250 business incubator Allied Minds, down 6p to 429.9p, continued to tumble after US hedge fund Kerrisdale tore the investment proposition apart in a 28-page report released yesterday.

“Allied Minds is … a dressed-up collection of high-risk, low-reward gambles that we believe has at least 70% downside,” said Kerrisdale, which admitted it and others are short-sellers hoping to profit from the stock’s decline.

Former AIM tech darling WANdisco dropped 22.5p, or 14%, to 145p, taking the stock’s 2015 decline to 70% as it revealed that half-year losses were little changed at $17 million.

Meanwhile, mobile business software group Globo rose 1.25p to 34.25p after agreeing to buy an unnamed rival for €14 million.