TheChek News Flow

The UK Competitive Telecommunications Association (UKCTA), said other companies should be allowed to lay their own cables in BT ducts and use their own equipment to control BT cables, saying it would improve service and encourage innovation.

The group, which includes firms such as Sky (SKYB.L) , EE (ORAN.PA)(DTEGn.DE), TalkTalk (TALK.L) , Virgin Media (LBTYA.O) and Vodafone (VOD.L), also said many consumers did not know who was responsible for the network when services were disrupted.

BT's network business Openreach, which manages the national telecoms network, continues to dominate the business end of the market, 30 years after the company was privatised.

A BT spokesman said in a statement that forcing Openreach to open up access to BT ducts would increase costs and that the company was voluntarily publishing its service performance to reflect its commitment to improving service.

"The UK has a vibrant wholesale business connectivity market, with strong competition and innovation amongst a large number of providers," he said.

Ofcom said its work “goes hand-in-hand with promoting competition".

"The UK already has the most competitive broadband market of any major European country," a spokesperson said.

"Our job is to ensure that customers benefit not only from innovation, but also from good quality of service and a fair deal.”

That seems to be the song luxury brands are singing these days. With the Chinese market cooling and Europe in the doldrums, the U.S. is looking more like the luxury El Dorado it used to be. Simply scanning the third-quarter, or nine-month, results of leading luxury brands is proof of the market’s buoyancy: Saint Laurent’s North American sales leaped 47 percent in the third quarter; Moncler’s were up 32 percent; Brunello Cucinelli’s rose 16 percent; Hermès’ jumped 16.9 percent at constant exchange, and Gucci’s increased 8 percent at its own stores.

The data are unequivocal: In the third quarter, the U.S. notched 3.5 percent growth in gross domestic product, demonstrating broad-based improvement across the economy.

The most recent study by Bain & Co. and Fondazione Altagamma, the Italian luxury goods association, confirmed the Americas as a key growth driver, accounting for 32 percent of a global market for personal luxury goods estimated at 223 billion euros, or $277.8 billion at current exchange. It was the best-performing region year-to-date, up 3 percent, followed by Europe and Japan, each logging 2 percent growth, putting mature markets back playing their key roles in a global industry.

The Asia-Pacific area is expected to post 1 percent growth, impacted by extraordinary circumstances and a negative currency effect. China posted a negative performance — down 2 percent — for the first time in recent history, impacted by the government clampdown on luxury spending and the evolution of shopping patterns.

Bain also noted that the lion’s share of luxury shopping by Americans is done locally, in contrast to the Chinese, who spend more than three times abroad what they spend at home. And the U.S. could become an even more important shopping destination for Chinese tourists following last week’s agreement between President Obama and Chinese President Xi Jinping to increase the number of tourist visas for Chinese visitors. The issue had been a priority for years for American retailers, who long envied the busloads of Chinese shoppers who flooded stores in London and Paris.

“I think the key point to understanding why U.S. luxury sales are developing the way they are is the consumer feel-good factor,” said Luca Solca, managing director at Exane BNP Paribas. “This has been supported for a couple of years by rebounding real estate prices.”

Solca explained that homeowners feel richer, making them feel freer to spend.

“Parallel to rebounding house prices, stock market appreciation has also been supporting feel-good,” he adds. “In Asia and in China, you have growth moderation, asset price declines — both in property and stocks. This obviously damages feel-good and consumer sentiment.”

According to data compiled by MasterCard SpendingPulse and disclosed at the recent WWD CEO Summit, luxury excluding jewelry generated the largest increase in U.S. sales in September 2014, growing 8.9 percent over the same month a year ago. Electronics and appliances grew 8.7 percent and lodging was up 6 percent. The weakest performances within the sectors were department stores, down 2.7 percent, while automotive was up 1.6 percent and grocery up 1.8 percent.

Spending on luxury accessories and apparel closely echoed stock market fluctuations over the past year, rising 3.8 percent in September. Their high-water mark in the past year was a 10.2 percent increase in May, and their poorest performance was a 2.4 percent decline in February.

MasterCard’s projection for holiday spending calls for a 5.4 percent uptick in luxury, excluding jewelry, which is expected to post a 7.4 percent gain. This compares to the 3.5 percent increase expected in total U.S. retail sales, excluding automotive.

“The U.S. macroeconomic climate is better than the European one, and the stock market performance has helped over the last few years,” said Helen Brand, a director in the equity research team at Barclays in London.

Brand also sees upside growth potential, noting, “There is a lower penetration of European luxury companies in the U.S. compared with Europe. For Richemont last year, the U.S. represented 15 percent of overall sales, while for Swatch, the U.S. was 8 percent of sales. The watch industry in particular is the least penetrated in the U.S. market, and Rolex remains a big Swiss watch name there.”

Brand noted that jewelry remains a “key category” in the U.S. market, something that has helped Richemont in the past.

As for future drivers of luxury in the U.S., Brand named two in particular: Brazil and online.

“For Brazilians, who have heavy import duties in their country, the U.S. remains the most accessible market for high-value products. Online, U.S. department stores are the leaders. If brands want to access pockets of wealth in the U.S., they don’t have to build brick-and-mortar stores, they just have to have a better online presence.”

She pointed to Richemont’s Web sites for Cartier and Montblanc in the U.S., which launched last year, and to Net-a-porter.com’s headquarters in New York and distribution center in New Jersey. “And if there is anyone in a position to take advantage of digital, it’s Burberry — they are the digital leaders. The company has also recently refurbished its stores in Chicago and San Francisco,” Brand said.

Burberry has said the U.S. is a market with a lot of opportunity. “This market is unique in that it’s defined by a shopper who is nearly 90 percent domestic, and in many cases, will experience a brand for the first time through digital or wholesale channels,” according to a spokesman. Burberry, however, speaks to an even broader audience in the U.S. “Our strategy to invest in key flagship locations, such as the newly opened one on Rodeo Drive, allows us to engage with both the domestic and traveling luxury consumer in some of the top global cities for luxury shopping.” Recent U.S. store openings include Oakbrook, Ill.; San Francisco; Washington; Chicago, the Beverly Center in Los Angeles, the Miami Design District and one in New York’s SoHo that’s set for the summer.

Jean-François Palus, group managing director at Kering, called the luxury market in the U.S. “very sound” and dynamic, underscored by local consumption and tourists flows, with a significant increase in Chinese inflows offsetting dips in Japanese and Brazilian tourists.

“We have opportunities particularly for our leather goods business and even more for our hard luxury business,” Palus said, highlighting the resilience of the watch business in the U.S., and an underpenetration by Kering’s watch and jewelry brands, which include Boucheron, Pomellato, Dodo, Qeelin, Girard-Perregaux and JeanRichard.

“Even a brand like Gucci has some capacity to open some new stores, or to relocate other stores,” he added. “A significant proportion of openings will still be in the U.S. next year. The U.S. market is the number-one market for luxury in the world. It attracts most of our attention.”

In the third quarter, luxury sales at Kering gained 12 percent in North America, versus 7 percent in Japan, 5 percent in Western Europe and 3 percent in Asia-Pacific.

Ralph Toledano, president of fashion at Puig, agreed the American market shows more promise than other regions, and has historically been very receptive to European brands and sensitive to newness and quality.

“When you come with real fashion, people buy it,” he said. “It’s important for us to have a very segmented price offer to address the needs of people who want to access the brand. But you still have room for very high quality and very high-end products in America — much, much more than in Europe.”

He noted that America is a crucial market for Nina Ricci, Carolina Herrera and Jean Paul Gaultier, now concentrated on couture.

Gucci chief executive officer Patrizio di Marco pointed out during the opening of the brand’s revamped flagship in Beverly Hills that the U.S. was the first overseas market the brand entered after it was founded 60 years ago. In his view, America has always been a great market for luxury. “Sometimes we tend to overemphasize the latest phenomenon, say 20 years ago it was Japan, five years ago China, before that Russia…so depending upon the date, I would say the fashion of the moment is the States,” he said. “For the past 15 years, there has been a constant luxury market within the U.S., especially now because a number of factors — the economy moving forward, the population being so young, the rise of so-called minorities with higher disposable income.”

Allyson Stewart-Allen, international marketing expert and ceo at the business consultancy International Marketing Partners, cited a strong appetite for luxury in the U.S., especially of the personalized variety. She said customers are increasingly looking to make special purchases. “They want to be apart from the crowd, to say ‘I spec’d this, it’s mine’ — even if it’s a Birkin bag,” she said.

In addition, Stewart-Allen noted luxury stores are becoming ever more elaborate, bigger and more luxurious, with brands trying to make a statement. As for online, she said it’s an easier sell for luxury goods companies compared to high-street firms because customers know what they’re getting with luxury. “You know what these brands stand for, you know about the quality, so you have no qualms about buying from them.”

Tourists, added Stewart-Allen, will tend to seek out the sort of stores in America they cannot find elsewhere, or where they know the goods are cheaper. “Tory Burch, Coach and Michael Kors are all cheaper in America so tourists will tend to [take advantage of] the prices.”

She said the luxury proposition from brands selling in the U.S. will be about exclusivity. “Something the customer knows is hard to get, something worn by the royals or a famous celebrity or a Monaco-based magnate.”

Meanwhile, the world next door — Canada — also offers enticing growth prospects, with Nordstrom and Saks Fifth Avenue among a multitude of retailers set to plant their flags north of the border.

According to Ledbury Research, citing WealthInsight data, Canada’s number of high-net-worth individuals is expected to grow by 9 percent until the end of 2018, reaching 473,426 by the end of the year. Their combined wealth will increase by 22 percent to $2.1 trillion by then.

“The reality is that Canada is a new market for luxury,” Kering’s Palus said. “We plan to really push our business in Canada.”

Anglo American behind $100m platinum fund

James Wilson, Mining correspondentAuthor alerts

Anglo American is investing $100m in companies that use platinum and associated metals to try to spark more demand for commodities that are crucial to the financial health of the mining group.

The plans are akin to venture capital investments by the world’s largest platinum producer with hopes that small companies and start-ups will develop technologies based on little-known metals such as ruthenium and iridium as well as platinum.

Anglo’s attempts to accelerate the investments come as platinum miners are struggling to restructure their operations in the face of weak demand with prices flat over the past five years, even amid a period of labour unrest.

Anglo is trying to sell a cluster of its older South African mines while it and the other two largest producers were this year hit by a five-month strike that halted most output.

Platinum is used mainly in jewellery and in vehicle catalytic converters but recent market weakness has intensified efforts by platinum producers to try to foment demand.

Anglo and other leading producers last week launched an industry promotional body to try to increase interest in the precious metal as an investment. Other so-called “platinum group metals” have wide industrial applications.

“We think there is a need to continue to encourage the development of high-tech applications,” said Andrew Hinkly, executive head of marketing at Anglo American Platinum, the miner’s South Africa-listed subsidiary. “The companies we invest in are those which will create demand for our metals.”

The direct investments are part of a shift of marketing strategy by the miner, which last year ended a two-decade-old marketing agreement with Johnson Matthey, the refiner and distributor of platinum.

A revised supply deal eliminated discounts given by Amplats on platinum sales in return for Johnson Matthey’s marketing services.

Mr Hinkly said Amplats had not been seeing the market develop as much as it had hoped. “We thought we could do better ourselves,” he said.

Amplats has so far invested almost $29m in six companies. It is targeting minority investments for about three years and says the carrying value of its investments up to now is almost $44m, in line with a targeted return of at least 30 per cent.

Among the companies to have received investments is Ballard, a US-listed fuel cell producer, which is testing fuel cell home generators in South Africa.

Anglo’s fund has also invested in Primus Power, a US battery maker that uses PGMs such as iridium and ruthenium.

Water treatment, medical devices and electronics are other areas where Anglo expects to invest.

Platinum accounted for about one-sixth of Anglo’s revenues and about 11 per cent of underlying earnings last year.

The production is part of Anglo’s significant presence in South Africa, which some investors and analyst think is one of the political risks weighing on the company.

Anglo’s attempts to sell some South African mines – at Union and at Rustenburg – are set to come under further scrutiny at presentations for investors next month.

Mark Cutifani, chief executive, has warned that a sale or spin-off is likely to take until next year.

Brewer taking on Latin rival with beer deal

SAB Miller says Brazil represents 42pc of beer sales in South America

The FTSE 100 beer giant has agreed a tie-up with Grupo Petropolis, Brazil’s second biggest brewer, to sell “premium” beer brands in the lucrative South American market from next year.

SABMiller, a major bottler of Coca-Cola products, is also shortly expected to announce a new deal in Africa. Analysts have been speculating over a tie-up with another soft drinks bottling company on the continent, with several naming Coca-Cola Sabco as a likely target.

SABMiller has been busy working on a number of offensives in the last few months, defying speculation in the autumn that it could potentially become the latest victim of AB InBev, the world’s biggest brewer.

Speculation that AB InBev could make a play for SABMiller intensified in September after it emerged that the latter had made an approach to buy Heineken, only to be rebuffed. Talk of an AB InBev move on SABMiller has since died down.

AB InBev’s Brazilian arm, AmBev, currently dominates the lucrative Brazilian market with a 63pc share, but SABMiller is hoping to win over middle class consumers with premium brands. The first such brand – expected to be Miller Genuine Draft – will launch next year, according to Karl Lippert, SABMiller’s vice president for Latin America.

He said: “The nicest thing about the Brazilian market is female participation in the beer category is the best in all of Latin America. As a consequence of that Brazil represents 42pc of all beer sales on the entire continent.”

CGN Power to Raise Up to US$3.16 Billion in Hong Kong IPO

China’s Largest Nuclear Plant Operator to Become First Listed Pure Nuclear Play in Hong Kong

CGN Power Co. is planning to sell 8.83 billion shares in an indicative price range of HK$2.43-HK$2.78 each Monday, when it will start taking orders from investors, people familiar with the situation said Sunday. It is unclear immediately the valuation of the firm in term of forecast earnings.

At the US$3.16 billion size, the IPO would be Hong Kong’s biggest since Chinese lender China Everbright Bank ’s US$3.2 billion IPO in December 2013 and it would be also the first pure nuclear plant operator to list anywhere in the world since British Energy Group, since delisted, went public in London in 1996, according to Dealogic.

State-owned CGN Power, which is scheduled to list on the Hong Kong Stock Exchange on Dec. 10, declined to comment.

Because of its uniqueness, the offering has already attracted about 40% of the offering from 18 cornerstone investors, who will buy and hold the shares for a certain of period once the firm has listed, one of the people said.

GIC Pte Ltd., Singapore’s sovereign-wealth fund, hedge fund Och-Ziff Capital Management Group LLC., and Hong Kong electricity firm CLP Holdings Ltd are among the cornerstone investors, other people familiar with the situation said earlier.

Investors expect CGN will benefit from Beijing’s power policy that encourages building more nuclear plants, which lead to less pollution, to reduce its reliance on coal, which makes up around 70% of its total power capacity.

The company currently operates 11 nuclear power generating units mainly in China’s southern Guangdong province, where the power grid is the company’s top customer. It plans to use proceeds from the IPO to build more power plants and to buy a stake in a nuclear power station owned by its parent, CGNPC.

China International Capital Corp., Bank of America Merrill Lynch and ABC International Holdings Ltd., the investment banking arm of Agricultural Bank of China Ltd. are the lead banks handling the deal.

Cover story: Most U.S. states-which "represent one of the most secure areas of the global bond market, typically benefiting from low debt levels relative to the size of their economies"-are healthier than they were a few years ago; 15 states have a triple-A rating from Moody's, and only two-Illinois and New Jersey-have a rating below double A; North Dakota, Wyoming, Utah, Nebraska, Iowa, and Alaska top the list in a ranking of general obligation bonds. 

Features: Positive on INTC: Chip maker's shares are 7% cheaper than the S&P 500 index, relative to projected earnings for the next four quarters, and shrinking losses in its mobile-chip division will eventually uncover earnings power in the rest of the company that is currently hidden; stock offers a 2.7% yield and could have a 30% upside; A look at picks and pans from the Sohn London Investment Conference (Long: Accor, Z, Gazprom, Masonite International, Kruk, Piaggio; Short: Superb Summit International, BID). 

Tech Trader: Tiernan Ray says Wall Street seems more interested in dividends and stock buybacks than innovation at companies such as INTC and QCOM; Both "are relatively inexpensive for such phenomenal sets of assets, though QCOM may be the better deal at the moment" even though it can't dissuade investors from focusing on risk in countries such as China. 

Trader: Positive on SLB: Despite a lack of consensus on when falling oil prices will stabilize, company's "beaten up stock" is emerging as a good value and could have a 20% upside, while recent HAL-BHI deal offers it both short- and long-term positives; Positive on KEYS: Wall Street may be underestimating company's longer-term earnings and free-cash-flow power following its spinoff from A, and it is likely to be a major beneficiary of the Internet of Things. 

Follow-Up: Positive on JBLU: Carrier is looking for increased revenue in the right places, and even when it adds seats to planes-something consumers don't like-the distance between them will still remain the highest in the industry; Cautious on TTWO: Games such as Grand Theft Auto are immensely popular, but the company makes too few of them too far apart, leading profits to soar and then disappear; now may be the time for investors to take profits; Positive on DISH: Satellite network is benefiting from the government's latest spectrum auction; chairman Charlie Ergen could sell company's spectrum, partner with a wireless carrier, or launch his own mobile service. 

Hedge Funds: Interview with Jonathan Herbert, Founder, Camox Fund (Long on Temenos Group, Software, Montupet, Durr Group; short on Danone, UL); Interview with Christopher Wood, Chief Strategist, CLSA-Asia-Pacific Markets (Indian banks: HDFC, Indusind, ICICI; Philippines banks: Metrobank, BPI; India housing finance: HDFC, GRUH Fin; China Internet: Tencent; Philippines consumer: Universal Robina; Japanese real estate: Mitsubishi Estate, Mitsui Fudosan; Japanese drug stores: Tsuruha Holdings; Japanese trucks: Isuzu Motors). 

European Trader: Some European oilfield-services companies see M&A as their best option despite the risks, given plunging oil prices that are hitting the earnings of oil majors and causing them to shutter some projects; The pressure for more mergers in Europe may grow following the HAL-BHI deal in the U.S., as evidenced by Technip's bid for CGG. 

Asian Trader: Most of the predictions about how trading would happen on the Hong Kong-Shanghai Connect are turning out to be wrong; mainland interest in high-growth stocks can't move the needle for large caps. 

Emerging Markets: Investors can ride the momentum of Indian stocks if they watch for those with improving prospects (Positive on ICICI Bank, HDFC Bank). 

Commodities: The Arabica-coffee rally "is on thin ice," and prices are likely to ease as the year winds down. Streetwise: Goldman Sachs strategist David Kostin recommends buying stocks that trade less frequently and offer an "illiquidity risk premium," such as JNJ, PG, Berkshire Hathaway, GE, and IBM.

Square founder Jack Dorsey -- who also famously launched Twitter (TWTR, Tech30) -- told CNN that he wants to help businesses accept all forms of payments, and Apple Pay is no exception.

Apple Pay and Square have generally been viewed as competitors in the mobile payment space, but Dorsey doesn't see it that way.

"We're not building a credit card. We're not building a payment device. We're building a [cash] register, and this register accepts all these forms of payments," Dorsey told CNN in an interview.

Square plans to begin accepting Apple Pay sometime in 2015.

As it stands now, Square's hardware allows businesses to accept credit card payments via iPads and iPhones, with customers swiping their cards through a tiny square device. But the technology is not currently equipped to accept Apple Pay.

The hardware will have to be reworked to be compatible with the Apple Pay system, allowing for potentially seamless transactions from one mobile device to another.

Apple Pay is currently only operating in the United States and is accepted by a number of large retailers and restaurants, including Macy's (M) and McDonald's (MCD). It launched in October.

Square also announced Friday that it is launching its app globally. The Square Register app will is now available in multiple languages in more than 100 countries.