British American Tobacco shares jump after US shelves tough regulations
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Shares in British American Tobacco have surged this morning after US regulators shelved plans to force tobacco firms to slash the amount of nicotine in cigarettes.
The proposal was unveiled by the US Department of Health and Human Services two years ago, but was put on hold yesterday, according to a regulatory document.
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The plan would have been highly likely to cut tobacco sales sharply, and so comes as a major boost to tobacco firms.
British American Tobacco had risen 5.99 per cent by 9am on the London Stock Exchange, hitting 3,032p.
“This is clearly good news for the tobacco industry: effectively the nicotine standard is no longer on the ‘to-do’ list,” said Nico von Stackelberg, an analyst at broker Liberum.
However, he said: “We want to caution that the Food and Drug Administration (FDA) spokesperson Michael Felberbaum said that the FDA will not stop working on it.”
The FDA earlier this year lauded its plans, saying they “would have significant public health benefits for youth, young adults, and adults, as well as potentially vast economic benefits”.
But Felberbaum yesterday said that the FDA’s decision to shelve the policy does not mean it does not consider it a priority, opening the door to a possible ban in the future.
Read more: Are big tobacco’s dreams going up in smoke?
Michael Hewson, chief market analyst at trading platform CMC Markets, said: “US officials also appear to be temporarily pulling back from plans to ban flavoured vaping products”.
This could be another boost to firms like British American Tobacco, which have expanded rapidly into the vaping – or e-cigarette – sector.
(Image credit: Getty)