James Forsyth James Forsyth

Royal Mail shares surge in early trading

Royal Mail shares are currently trading at 421p, 91p above its 330p opening price. This morning, the shares hit 456p before falling back slightly.

This increase of more than a third in value and the fact that the share offer was so oversubscribed has led to lots of claims this morning that Royal Mail was undervalued. But it is worth remembering that when the government announced it was going to privatise Royal Mail, there was lots of chatter about how the government would struggle to get it away. It was argued that it was foolhardy to sell it into a strike by postal workers.

On its current price, the Royal Mail will enter the FTSE 100. But as Vince Cable said on Today, there’ll be a lot of volatility in the price in the first few weeks o trading and we’ll have to wait a month or two to know where the price will settle down.

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