(GS) Orange : Upgraded to Conviction Buy Neutral

Price squeeze easing, self-help just starting; up to CL Buy

* Source of opportunity
Iliad’s mobile launch in 2012 has driven Orange France’s EBITDA -19% and
Orange shares to de-rate by 25%. We argue that the pain is largely over: ARPU
pressure seems to have stabilised and we believe it has created a cost-cutting
culture at Orange. Labour cost flexibility remains limited, but we model Orange
delivering c.50% of the non-labour efficiencies achieved by BT and TEF after
similar profit slumps. This drives French/group EBITDA growth in 2015 and a
3% group EBITDA CAGR for 2014-18E (vs. -2% for 2011-14E). With growth
returning, a discount valuation and our assumption of a 60% probability of
French consolidation, we upgrade to Buy and add to our Conviction List.

* Catalyst
We expect consensus upgrades to drive a re-rating. In this report, we show
how two of the sector’s most impressive efficiency programmes – at BT and
TEF – have followed intense profit declines. In our base case, Orange maintains
the non-labour efficiency gains run-rate it has achieved over the last 18 months
for the next 3-4 years. This drives our 2015/16E EBITDA +4%/+8% vs. companycompiled
consensus. In a bull case, if Orange could achieve 60% of BT’s
savings, the implied share price upside would be 57% on our estimates. We
see French consolidation as likely over the next two years given that all French
operators would benefit and the French authorities are supportive. However,
the benefits to Orange would be partly offset by the loss of wholesale revenues.

*Valuation
We raise our estimates mainly to reflect French top-line stabilisation and
cost cutting. Our new ROIC-based 12-month target price is €21.1 (from
€14.0; 43% upside). Orange trades on 11% 2016E FCF yield, a 25% discount
to the sector. At our target price, its 2017E FCF yield and EV/NOPAT would
be 7% below and in line with the sector, respectively, reflecting Orange’s
similar growth outlook. It would trade at a c.10% discount to large-cap peers
Vodafone and DT on 2016 EV/NOPAT reflecting its lower revenue growth.

Key risks
Poor cost-cutting execution, competition, French consolidation delays.

>>> Apax Partners makes recommended offer of NOK 16 per share for Evry

Apax Partners makes recommended offer of NOK 16 per share for Evry

EVRY ASA ("EVRY" or the "Company") has entered into a transaction agreement (the "Transaction Agreement") with Lyngen Bidco AS (the "Offeror"), a company indirectly owned by private equity funds advised by Apax Partners LLP (the "Apax Funds"), pursuant to which the Offeror will put forward a recommended voluntary cash offer at a price of NOK 16.00 (EUR 1.82) per share (the "Offer Price") for all of the issued and outstanding shares of EVRY (the "Offer"). This is according to a stock exchange announcement.

Posten Norge AS and Telenor Business Partner Invest AS, together representing 70.24% of the EVRY shares, have, on certain conditions, undertaken to accept the Offer for their shares in the Company. Folketrygdfondet, representing 3.15% of the EVRY shares have also, on certain conditions, undertaken to accept the Offer for its shares in the Company.

The Offer Price represents a premium of 31% to the closing price on 26 August 2014, the last trading day prior to the announcement by EVRY of its structured process to explore strategic opportunities, and a premium of 44% and 53% respectively to the volume weighted average share prices in the three and six month periods ending on 26 August 2014. The Offer values the total share capital of EVRY at approximately NOK 4.27bn (EUR 486m) (excluding treasury stock).

The Board of Directors of EVRY (the "Board") has unanimously decided to recommend to the Company's shareholders to accept the Offer. In addition, members of the Board and the Executive Management Team who hold shares directly or through investment companies have undertaken to accept the Offer in respect of the shares they hold.

The Offer is the result of the structured process to explore various strategic opportunities initiated by the Board and announced in a stock exchange release on 27 August 2014. After careful consideration of available alternatives and interests received, the Board believes that the Offer provides the best solution to the Company and its shareholders.

Strategic rationale

Apax is one of the world's leading private equity firms. It operates globally and has more than 30 years of investment experience. Apax has advised funds that total over EUR30 billion in aggregate. Funds advised by Apax invest in companies across four global sectors of Consumer, Healthcare, Services and Technology & Telecommunications. These funds provide long-term equity financing to build and strengthen world-class companies.

Apax's considerable international IT services expertise will help EVRY to accelerate its strategy to develop the strong aspects of the business, including the bank and finance solutions portfolio, scaling up its focus on industry verticals in the Nordic countries and at the same time continue to strengthen its regional footprint. The Apax Funds will support EVRY's strategy for its transformation to offer competitive next generation cloud-based IT operations and to pursue accretive M&A opportunities.

The Apax Funds will provide EVRY with financial backing, expertise and support for investments and acquisitions in accordance with EVRY's long-term strategy for profitable growth.

EVRY will remain headquartered in Norway and preserve its Nordic heritage while adding scale and state of the art technology in order to compete efficiently in an increasingly global industry. EVRY's strong brand recognition in the Nordics is a key component in the further growth of the Company.

Arve Johansen, Chairman of the Board of EVRY stated: "On the basis of an evaluation of how EVRY can improve deliveries for its customers even further and create greater value through strategic actions, the Board of Directors decided to initiate a structured process to explore various strategic opportunities, including a sale of the Company. Following this decision, the Board has completed thorough analyses and entertained discussions with a number of parties. It has been concluded that EVRY and its shareholders will benefit from the Offer from the Apax Funds. The Board believe that the Offer safeguards the interests of all of EVRY's stakeholders and are confident that the Apax Funds is a solid new owner for EVRY. The Offer delivers a considerable cash premium to our shareholders and the Board considers the Offer Price to recognize the strategic value of EVRY. The Board has therefore unanimously resolved to fully support the Offer and unanimously recommend it to the shareholders."

Salim Nathoo, Partner in the Technology & Telecommunications team at Apax, said, "EVRY is a leading Norwegian provider of IT Services with a well-established customer base, broad service offering and leading technical expertise. We fully support the vision and strategy outlined by EVRY`s management to further develop its leading competitive position and to execute on the strategy. We are excited to support EVRY`s journey to become the pan-Nordic IT Services champion."

Rohan Haldea, Partner in the Technology & Telecommunications team at Apax, added, "We are impressed by the leading position of EVRY in Norway and Sweden and look forward to working with the management team and the employees to position EVRY to deliver accelerated growth and increased competitiveness. We support EVRY's transformation plans to cement its leadership position through offering good customer service, operating competitive end-to-end solutions and investing in organic initiatives and accretive acquisitions."

Terje Mjøs, CEO EVRY commented: "Technology is a strong contributor to economic growth, creating sizeable growth opportunities for the IT industry. Apax's interest in EVRY confirms and emphasizes our growth prospects and the opportunities in our market space. I am confident that private ownership will benefit our next phase of profitable growth, and we are looking forward to accelerate and expand our strategy together with Apax to fulfil our ambitions."

Indicative timetable for the Offer

The Offeror is in the process of preparing an offer document setting out the complete terms of the Offer (the "Offer Document"). The Offer Document will be sent to EVRY's shareholders as soon as it has been reviewed and approved by Oslo Børs pursuant to Chapter 6 of the Norwegian Securities Trading Act. The Board's recommendation will be included in the Offer Document. Conditions to completion of the Offer

The Offer will not be subject to any financing or due diligence conditions. As will be further detailed and specified in the Offer Document, the completion of the Offer will be subject to the following conditions being satisfied or waived by the Offeror at its sole discretion, in whole or part:

(i) the Offer shall have been accepted by shareholders of EVRY representing (together with any shares acquired or agreed to be acquired by the Offeror other than through the Offer) more than 90 percent of the issued and outstanding share capital of EVRY,
all approvals required from regulatory authorities for completion of the Offer shall have been obtained,
there having occurred no material adverse change, as outlined in theTransaction Agreement, with respect to the Company and its subsidiaries, taken as a whole,
the written information provided by the Company to the Offeror, taken as a whole, was not materially inaccurate or materially misleading,
the Board of EVRY shall not have amended or withdrawn its recommendation of the Offer,
no intervention shall have taken place by any court or other governmental or regulatory authority which restrains or prohibits the completion of the Offer, and
there shall have been no material breach by EVRY of the Transaction Agreement.
As part of the agreement with the Offeror, the Board has entered into certain undertakings not to solicit offers from third parties. Pursuant to the terms of the Transaction Agreement, the Board may however amend or withdraw its recommendation of the Offer in the event a superior competing offer is made and is not matched by the Offeror within five days of being provided with notice thereof. The superior competing offer must include an improvement of at least 10% on the Offer Price and be made on terms that the Board considers, in aggregate to be more favourable than the terms of the Offer. The same right to withdraw in the event of a superior competing offer is afforded individually to the pre-accepting shareholders. Any such amendment or withdrawal will permit the Offeror to withdraw from the Offer. The Transaction Agreement also provides for payment of cost compensation to the Offeror equal to EUR 9m in the event the Offer should lapse e.g. following a successful superior competing offer.


Compulsory acquisition and delisting

Upon the Offeror completing the Offer, it will proceed with a mandatory offer for the remaining shares in EVRY pursuant to the provisions of the Norwegian Securities Trading Act.

As soon as possible following the acquisition of shares representing 90% or more of the shares in EVRY, the Offeror will initiate compulsory acquisition of the remaining shares in EVRY. In connection hereto, the Offeror will seek to have the EVRY shares delisted from Oslo Børs.

Recommendation from independent competent advisor

The recommendation by the Board referred to herein and which will be included in full in the Offer Document is not a formal statement made pursuant to sections 6-16 and 6-19 of the Norwegian Securities Trading Act. As the Offer will be made in understanding with the Board pursuant to the Transaction Agreement, the Company has in consultation with Oslo Børs appointed SEB to provide an independent statement on the Offer in accordance with section 6-16 (4) of the Norwegian Securities Trading Act. The statement by SEB is expected to be issued in due course upon formal launch of the Offer, and no later than one week prior to expiry of the acceptance period for the Offer.

Advisors

ABG Sundal Collier is acting as financial advisor to EVRY and has provided a fairness opinion to the Board. Schjodt is acting as legal advisor to EVRY.

Bank of America Merrill Lynch and DNB Markets are acting as financial advisors and Clifford Chance and Wiersholm are acting as legal advisors to the Offeror

>>> Saint-Gobain offers CHF 2.75bn for Sika stake; to launch Verallia sale proce

Saint-Gobain offers CHF 2.75bn for Sika stake; to launch Verallia sale process
Saint-Gobain announces the plan to acquire a controlling interest in Sika, world leader in construction chemicals. The transaction involves Saint-Gobain’s purchase of Schenker Winkler Holding AG, owner of 16.1% of Sika’s capital and 52.4% of its voting rights, for CHF 2.75bn (~EUR 2.3bn). Following the acquisition, the Saint-Gobain Group will be able to fully consolidate Sika in its accounts, leading to a positive impact on net income as from the first year. Saint-Gobain does not intend to launch an offer for Sika’s remaining shares and has full confidence in the company to continue developing the business.

Sika employs more than 16,000 people in 84 countries and reported CHF 5.142bn in sales in 2013 (~EUR 4.3bn). Over the past few years, the company has shown remarkable growth (more than 8% average annual growth between 2007 and 2013) and capacity for development in emerging countries (38% of its sales are made in emerging countries).

Sika is the world leader in construction chemicals and no. 2 worldwide for adhesives and sealants for its industrial applications. Its products and services draw on extensive technological expertise in waterproofing, soundproofing, sealing and bonding, and protecting and reinforcing structures.

Given the proximity of Sika’s activities with those of Saint-Gobain (Construction Products and Innovative Materials as well as Building Distribution), the deal is expected to generate EUR 100m in synergies as from the second year (2017), and EUR 180m per year as from 2019. The deal will create value by the fourth year.

The transaction is subject to clearance from the competent anti-trust authorities and is expected to be finalized in the second half of 2015 at the latest.

Saint-Gobain also plans to launch a competitive process for the sale of Verallia. Verallia is a world leader in glass packaging, employs around 10,000 people and has industrial plants in 13 countries. In 2013, Verallia reported sales of EUR 2.435bn (excluding Verallia North America).

This announcement is the next logical step after the divestment of the North American business that was finalized in April 2014. A formal bidding process will be launched based on second-half earnings – which will represent a clear improvement on the first half – with the aim of reaching an agreement with a buyer before summer 2015, once the relevant works councils have been consulted.

Pierre-André de Chalendar, Chairman and Chief Executive Officer of Saint-Gobain, said:
“The two transactions – the plan for which we are announcing today – will accelerate the Group’s strategic refocus on the design, production and distribution of innovative, high-performance solutions for habitat and industry. The transactions meet the objectives we announced in November 2013 to raise the growth potential and reduce the capital intensity of our businesses, increase our presence in emerging countries and in the US, and expand our range of differentiated products supported by strong brands. We are looking forward to working with Sika to enhance the growth potential of this excellent business.”

(BFW) The ‘Pain Is Largely Over’ for Orange, Goldman Says

The ‘Pain Is Largely Over’ for Orange, Goldman Says
2014-12-08 07:33:00.270 GMT


By Sam Chambers
Dec. 8 (Bloomberg) -- The drop in Orange’s earnings has
created a cost-cutting culture, with similar situations
producing large savings at BT and Telefonica, Goldman says.
* Goldman: ARPU is stabilizing and consensus upgrades are
likely to see shrs re-rate upward
* Sees 60% chance of French telco consolidation over next
2 years
* Upgrades stock to conviction buy from neutral, raises PT
by 51% to EU21.1 (43% upside)
* Upgrades stock to conviction buy from neutral, raises PT
by 51% to EU21.1 (43% upside)</li></ul>
* NOTE: On Friday, Orange shrs closed at their highest level
since June 2011; stock trades at 24% discount to other Stoxx
600 telcos on 12m forward EV/Ebitda
* Goldman also removes Iliad from its conviction buy list
(keeps at buy)
* Says co. still offers attractive exposure to potential
consolidation in France; now sees better investment
opportunities elsewhere in the sector
* Says co. still offers attractive exposure to potential
consolidation in France; now sees better investment
opportunities elsewhere in the sector</li></ul>


For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Sam Chambers in London at +44-20-7673-2021 or
schambers7@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net

>>> What to look at today (& this Week end) - 7th of December 2014

After a 9% rally last week, Shanghai Composite has picked up more ground to fresh 42-month highs, Shanghai is up another 2.8% clearly above the 3K points,China trade figures were mixed - November surplus hit a record high, but imports fell y/y for the first time in 3 months. Iron ore imports were particularly soft at 67.4M tons v 79.4M prior. Export growth was also unimpressive, as shipments to US slowed to 2.6% from 10.9% and exports to Japan continued to contract y/y. China Customs noted that exports growth would continue to face pressure for 2014-end to early 2015.cabinet officials are expected to hold the annual Central Economic Work Conference, with the findings likely lowering 2015 GDP target closer to 7.0% from 7.5% in 2014. Concurrently, CICC stated that 2014 and 2013 output may actually be revised higher after revised census estimates. In the property space, consultancy CBRE recommended another PBoC rate cut to support the sector, while a local press report speculated the govt could further adjust property policy to boost demand...Japan Q3 Final GDP was a disappointment to Abenomics, just as the ruling party heads to the polls next Sunday. Despite expectations of improvement from prelim figures, the Final prints were actually worse than initially estimated. Corporate Capex was again the culprit, contracting -0.4% vs -0.2% preliminary estimate and +0.9% consensus...Nikkei +0.08%...Hang Seng +0.44%...Shanghai +2.8%

Eur$ 1.2284 S&P -0.04% EuroStoxx -0.12% Dax -0.09% SMI +0.03%

Macro :
- Weak Macroeconomic Conditions in European Banks in ‘15: Moody’s
- China Nov. Exports Rise 4.7% Y/Y; Est. 8.0% Rise
- Gabon’s Outlook to Negative From Stable by Fitch
- Saudi Arabia Outlook to Stable From Postive by S&P
- Oman Outlook to Negative From Stable by S&P
- Ireland Raised to A From A- by S&P
- BOE Says Banks May Need to Change Structure to Fit Bail-In Plan
- MS Cuts 2015 Brent crude oil forecast from $98/bbl to $70/bbl

Keep an eye on :
- ABO BB : AB InBev Legal Chief Chalmers Sells EU6.38m of Brewer’s Stock
- ACT US : Actavis Antibiotic Gets Partial FDA Panel Backing, Tweets Show
- AV/ LN : Aviva Said Eyeing Friends Provident International Assets: FT
- BAYN GY : Bayer-Amgen’s Nexavar Didn’t Prolong Overall Survival in AML
- BBY LN : Balfour Beatty unlikely to allow JLIF due diligence on PPP portfolio, talk of full takeover bid from JLIF
- BNP FP : BNP in Dollar-Clearing Accord With Bank of America, Echos Says
- BP/ LN : Iraq Informs BP About Plans to Boost Crude Oil Production
- CPG LN : Compass Group Registers Up to 8.95m Shrs for Selling Holders
- ECONB BB : Econocom Chairman Bouchard Sells EU2.21m of Stock at EU5.52 Each
- ERF FP Eurofins Buys Boston Heart Diagnostics for at Least $140m
- FCA IM : U.S. Will ‘Take Appropriate Action’ on Chrysler, NHTSA Says
- FCA IM : Chrysler Recalls 149,150 Dodge Ram Trucks on Airbag Fault: NHTSA
- GSZ FP : GDF Suez Aims to Raise French Household Power Clients: Echos
- HAW GY : Hawesko talking to potential white knights
- HOLN VX : Cementos Argos Not Interested in Lafarge, Holcim Brazil Assets
- JAZ SM : Jazztel shareholder Alken cuts stake to 4.55%; Credit Suisse ups stake to 5.77%
- LBTYA US : Liberty Global May Sell Unitymedia KabelBW: Reuters
- LEO GY : Leoni appoints Dieter Bellé as CEO
- LHA GY : Lufthansa Board Members Reject Budget Plan, Der Spiegel Reports
- MOR GY : Morphosys Says ‘Promising’ MOR208 Data on Non-Hodgkin’s Lymphona
- MRK US : Merck in Talks to Acquire Drug Maker Cubist for More Than $7 Billion - NYT {http://nyti.ms/129ylll}
- NOVN VX : Novartis’s Tasigna Boosted Remission in Older Leukemia Patients
- NUO NA : SHV will go through with Nutreco deal regardless of shareholder opposition
- Prada (1913 HK) : Prada Drops for Sixth Day After 3Q Earnings Miss -- > -7.5%
- PTC PL : Oi Board Is Said to Approve Altice Offer for Portugal Assets
- SAF FP : Petitcolin Nominated to Replace Herteman as Safran CEO
- SAP GY : SAP CEO Says More Share Buybacks Not Ruled Out: Euro Am Sonntag, CEO expects the firm to remain independent over the long-term
- SBRY LN : J Sainsbury in sights of activist investor Crystal Amber, share raid planned
- SBD LN : QIA and Brookfield looking to persuade Songbird Estates shareholders CIC or Morgan Stanley to support takeover offer
- SKAB SS : Skanska CEO Sees Growth Opportunities in the U.S., DI Reports
- SGO FP : Saint-Gobain Bids to Buy Control of Sika for ~EU2.3b, Sika Says Doesn’t Support Change of Control to Saint-Gobain
- SGO FP : Saint-Gobain Plans to Seek Bids for Verallia Unit
- SSA LI : Sistema investors fear Bashneft dividend seizure - FT {http://on.ft.com/1FYD8D5}
- FP FP : Total to Review Brazil Investments With Crude at $70-$80: Folha
- VOW3 GY : VW Said to Buy U.S. Startup Stake to Develop Longer-Life Battery

>>> Brokers Upgrades & Downgrades - 7th of December 2014

>>> Up
*COMMERZBANK RAISED TO MARKET PERFORM AT KEEFE BRUYETTE
*LUFTHANSA RAISED TO BUY VS NEUTRAL AT NOMURA
*ORANGE RAISED TO CONVICTION BUY VS NEUTRAL AT GOLDMAN
*RANDGOLD RESOURCES RAISED TO BUY AT DEUTSCHE BANK
*URALKALI RAISED TO NEUTRAL FROM SELL AT GOLDMAN

>>> Down
*AIR FRANCE-KLM CUT TO REDUCE VS NEUTRAL AT NOMURA
*BANCA POP MILANO CUT TO MARKET PERFORM AT KEEFE BRUYETTE
*BANCO POPOLARE CUT TO MARKET PERFORM AT KEEFE BRUYETTE
*CREDITO EMILIANO CUT TO UNDERPERFORM AT KEEFE BRUYETTE
*DIXY CUT TO NEUTRAL VS BUY AT UBS
*E.ON CUT TO SELL VS HOLD AT BERENBERG
*EMILIA ROMAGNA CUT TO MARKET PERFORM AT KEEFE BRUYETTE
*HSBC CUT TO MARKET PERFORM VS OUTPERFORM AT KEEFE BRUYETTE
*INTESA SANPAOLO RAISED TO OUTPERFORM AT KEEFE BRUYETTE
*KBC GROEP CUT TO MARKET PERFORM VS OUTPERFORM AT KEEFE BRUYETTE
*K&S CUT TO SELL FROM NEUTRAL AT GOLDMAN
*LENTAvCUT TO NEUTRAL VS BUY AT UBS
*MAIL.RU CUT TO NEUTRAL VS BUY AT UBS
*MEDIOBANCA CUT TO MARKET PERFORM AT KEEFE BRUYETTE
*O'KEY CUT TO NEUTRAL VS BUY AT UBS
*OTP BANK CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*QIWI CUT TO NEUTRAL VS BUY AT UBS
*SOCGEN CUT TO EQUALWEIGHT VS OVERWEIGHT AT MORGAN STANLEY
*UBI BANCA CUT TO UNDERPERFORM AT KEEFE BRUYETTE
*X5, LENTA, DIXY, O'KEY CUT TO NEUTRAL VS BUY AT UBS
*YANDEX CUT TO NEUTRAL VS BUY AT UBS

>>> PT changes
*PRADA PT REDUCED 13% TO HK$40 AT JPMORGAN; KEPT AT NEUTRAL
*PRADA PT CUT BY 16% TO HK$36 AT BARCLAYS, KEPT UNDERWEIGHT

>>> Initiation
*NESTE OIL RATED NEW OVERWEIGHT AT JPMORGAN, PT EU24.3

>>> Call
>> Stock
*ORANGE RAISED TO CONVICTION BUY VS NEUTRAL AT GOLDMAN
*ILIAD REMOVED FROM GOLDMAN CONVICTION BUY LIST, REITERATES BUY
>> Sector
*EUROPEAN AIRLINES SECTOR RAISED TO BULLISH VS NEUTRAL AT NOMURA

>>> Asian Update

Asian Market Update: China trade surplus hits record high as imports contract; Japan Final GDP confirms recession


***Economic Data***
- (CN) CHINA NOV TRADE BALANCE: $54.5B V $44.0BE (record high surplus); Exports Y/Y: 4.7% v 8.0%e; Imports Y/Y: -6.7% v +3.8%e (1st decline in 3 months)
- (JP) JAPAN Q3 FINAL GDP Q/Q: -0.5% V -0.1%E; ANNUALIZED GDP: -1.9% V -0.5%E; NOMINAL GDP: -0.9% V -0.5%E; Confirms technical recession with 2nd consecutive contraction
- (JP) JAPAN OCT CURRENT ACCOUNT: ¥833B V ¥370BE; ADJ CURRENT ACCOUNT: ¥947B V ¥455BE; TRADE BALANCE: -¥767B V -¥570BE
- (JP) JAPAN NOV BANK LENDING INCL TRUSTS: 2.7% V 2.3% PRIOR (highest since May 2009); BANK LENDING EX-TRUSTS: 2.8% V 2.4%E
- (AU) AUSTRALIA NOV ANZ JOB ADS M/M: 0.7% V 0.2% PRIOR; 6th consecutive increase
- (NZ) NEW ZEALAND Q3 MANUFACTURING ACTIVITY VOLUME Q/Q: +0.4% V -0.6% PRIOR; MANUFACTURING ACTIVITY Q/Q: -1.2% (2nd consecutive decline) V -2.3% PRIOR

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.2%, S&P/ASX +0.9%, Kospi -0.3%, Shanghai Composite +1.4%, Hang Seng +0.4%, Dec S&P500 -0.1% at 2,075,

***Commodities/Fixed Income***
- Feb gold +0.2% at $1,192, Jan crude oil -1.2% at $65.08/brl, Mar copper flat at $2.91/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 0.9 tonnes to 720.9 tonnes
- USD/CNY: (CN) PBoC sets yuan mid point 6.1282 v 6.1373 prior setting (strongest setting since Mar)
- (KR) South Korea sells 5-yr govt bond at average yield of 2.425%

***Market Focal Points/Key Themes/FX***
- After a 9% rally last week, Shanghai Composite has picked up more ground to fresh 42-month highs, coming within 10pts of the psychological 3,000 level. China trade figures were mixed - November surplus hit a record high, but imports fell y/y for the first time in 3 months. Iron ore imports were particularly soft at 67.4M tons v 79.4M prior. Export growth was also unimpressive, as shipments to US slowed to 2.6% from 10.9% and exports to Japan continued to contract y/y. China Customs noted that exports growth would continue to face pressure for 2014-end to early 2015.

- Separately in China, cabinet officials are expected to hold the annual Central Economic Work Conference, with the findings likely lowering 2015 GDP target closer to 7.0% from 7.5% in 2014. Concurrently, CICC stated that 2014 and 2013 output may actually be revised higher after revised census estimates. In the property space, consultancy CBRE recommended another PBoC rate cut to support the sector, while a local press report speculated the govt could further adjust property policy to boost demand.

- Japan Q3 Final GDP was a disappointment to Abenomics, just as the ruling party heads to the polls next Sunday. Despite expectations of improvement from prelim figures, the Final prints were actually worse than initially estimated. Corporate Capex was again the culprit, contracting -0.4% vs -0.2% preliminary estimate and +0.9% consensus. JPY firmed on the release, falling some 50pips from session highs below 121.40. A Nikkei survey of corporate leaders saw over 40% of respondents prefer USD/JPY in ¥100-110 range, and over 50% noting the impact of sales tax hike in April was worse than expected. The leader of opposition DPJ party said the negative impact of the weak yen can no longer be overlooked.

- Australia held its first major govt investigation into the financial sector since 1997. The financial system inquiry (FSI) determined that banks should increase their capital buffers to make the financial system "unquestionably strong on a global basis", adding the current estimate of Australia's big four banks' capital levels would be around 10.0-11.6%, while 12.2% is needed to make the top 25%. A research note from Moody's stated that recommendations are positive and would not contain any immediate ratings implications. Australia ANZ jobs data rose m/m for the 6th consecutive month, with the total 138,053 ads/week as the highest average since January last year. AUD/USD is down about 50pips from Friday close below $0.8280, resuming downward trend to multi-year lows after the China trade figures.

***Equities***
Market Snapshot (as of 03:30 GMT):
- Nikkei225 +0.2%, S&P/ASX +0.9%, Kospi -0.3%, Shanghai Composite +1.4%, Hang Seng +0.4%, Dec S&P500 -0.1% at 2,075, Feb gold +0.2% at $1,192, Jan crude oil -1.2% at $65.08/brl

US markets:
- CBST: Merck in talks to acquire Cubist for about $102/shr, valuing it at $8B - financial press

Notable movers by sector:
- Consumer Discretionary: Qantas Airways QAN.AU +14.1% (higher H1 guidance)
- Financials: China Poly Real Estate 600048.CN -0.9% (Nov sales results); Kaisa Group Holdings 1638.HK +1.3% (Nov sales results); China Poly Real Estate 600048.CN +1.3% (Nov sales results); Greentown China 3900.HK -2.3% (Nov sales results)
- Materials: Bluescope Steel BSL.AU +2.5% (reporting segment changes); Mount Gibson Iron MGX.AU -4.9% (analyst action)
- Industrials: James Hardie Industries JHX.AU +3.3% (FY15 guidance)
- Healthcare: Astellas Pharma 4503.JP +1.0% (provides update on drug); Takeda Pharmaceutical 4502.JP +0.8% (provides update on drug)