Electricite de France France Fin Min Moscovici: No decision on whether to allow company to extend muclear reactors lifespan for an additional 10 years - press
Peugeot SA France Fin Min Moscovici: Company needs an industrial partner, declines to say if gov't will participate in capital raise
US Market cimbs while debt ceiling battle continues...no agreement during the week end and no real willingness of finding one... The focus moved the Senate, where a test vote for a $1T extension beyond the 2014 mid-term election did not receive the necessary 60 votes to move forward on the debating the legislation. Despite the setbacks in both houses over the weekend, Congressional leaders on both sides remained optimistic that a deal would be struck in the coming days, even though US equity markets are likely to be skeptical - S&P500 futures opened down 0.7%...Nikkei & Hang Send closed today...China trade data released over the weekend surprisingly disappointing (6 month lows and exports registering first decline in 3 months) Susequent comments from Customs official noting the data suggests "trend of low yet stable growth", but also looking to ease concerns indicating exports are expected to stabilise in the next 2-3 months. - China September CPI inflation was hotter than expected, rising above 3% for a 7-month high. Food component especially high, up 6.1% v 4.7% prior, while non- food is comparable to prior month at 1.6%. Sept PPI is in deflation territory for 19th consecutive month.
Eur$ : 1.3563 European Fut. Indicated lower by 30bps
Keep an eye on : - BMW GY : BMW sees China sales up 20.8% in Sep - BNP FP : BNP Paribas does not rule out acquisitions but is not interested in Commerzbank - CBK GY : Commerzbank Board Disagrees on Manager Dismissal: Handelsblatt - DSY FP : Dassault Systemes Apologizes as 3Q Falls Short of Targets - EAD FP : EADS CEO Tom Enders Says A380 Demand Will Recover, EADS Says Cannot Be Satisfied With A380 Sales Numbers - FCC SM : Santander, BBVA, Bankia, Popular, Sabadell, Caixabank have agreed to restructuring of FCC debt, El Confidencial - GALP PL : Galp Raised Net Entitlement Output, Processed More Crude in 3Q - INVP LN : Investec to Sell Offshore Unit to Salamanca for les than £10b Sunday Telegraph - KPN NA : KPN, America Movil Continue to Disagree on Valuation: Telegraaf - MT NA : Buy ArcelorMittal, See 75% Upside in Next 12-Mo., SocGen Says - UG FP : Peugeot Family Split on Capital Increase Participation: Tribune - SAND SS : Sandvik CEO Sees ‘More Positive Development’ in Europe, DI Says - SHP LN : Buy Shire, UBS Says; Expects a 3Q 10% Beat - VPOS NO : Hexagon Bids NOK28/Shr for Veripos; 22% Premium to Last Trade
BNP Paribas does not rule out acquisitions but is not interested in Commerzbank BNP Paribas does not rule out limited acquisitions but is not interested in acquiring Germany’s Commerzbank, the German-language daily Sueddeutsche Zeitung reported.
Baudouin Prot, Chairman of BNP Paribas' Board of Directors, told the paper that he would not rule out small acquisitions but added that he is not looking to buy a bank. Commerzbank is not on the agenda, Prot told the paper.
Source Sueddeutsche Zeitung
UP
*ALCATEL-LUCENT RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS *ANGLO AMERICAN RAISED TO BUY VS HOLD AT SOCGEN *ARCELORMITTAL RAISED TO OUTPERFORM VS NEUTRAL AT MACQUARIE *GULF KEYSTONE RAISED TO BUY VS NEUTRAL AT GOLDMAN *JOHNSON MATTHEY RAISED TO OVERWEIGHT AT JPMORGAN *Neste Oil Raised to Buy from Hold at Nordea *NOKIA RAISED TO EQUALWEIGHT VS UNDERWEIGHT AT BARCLAYS *TRAVIS PERKINS RAISED TO TOP PICK VS OUTPERFORM AT RBC
Down
*BUNZL CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN *CHEMRING CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN *CRODA CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN *DELHAIZE CUT TO UNDERPERFORM VS HOLD AT JEFFERIES *EDP RENOVAVEIS CUT TO HOLD VS BUY AT BERENBERG *ENSCO CUT TO HOLD VS BUY AT SOCGEN *ERAMET CUT TO SELL VS BUY AT SOCGEN *ERICSSON CUT TO UNDERWEIGHT VS EQUALWEIGHT AT BARCLAYS *GLENCORE CUT TO HOLD AT LIBERUM *INFINEON CUT TO NEUTRAL VS BUY AT BOFAML *QIAGEN CUT FROM UBS’S MOST PREFERRED LIST *PORTUGAL TELECOM CUT TO UNDERWEIGHT VS BUY AT SANTANDER *RBS CUT TO UNDERPERFORM AT BOFAML *SOCO CUT TO NEUTRAL VS BUY AT BOFAML
PT Changes
*ARCELORMITTAL PT RAISED TO EU18 VS EU11.5 AT SOCGEN, STAYS BUY
Initiation
*AMEC RATED NEW NEUTRAL AT MACQUARIE, PT 1,111P *CNH INDUSTRIAL RATED NEW SELL AT BERENBERG, PT $9.3 *GLANBIA RATED NEW OVERWEIGHT AT BARCLAYS, PT EU11.25 *HUNTING RATED NEW OUTPERFORM AT MACQUARIE, PT 874P *SALZGITTER RAISED TO HOLD VS SELL AT SOCGEN *WOOD GROUP RATED NEW OUTPERFORM AT MACQUARIE, PT 860P
Country Sector Stock Call
*AB FOODS ADDED TO THE UBS’S EUROPEAN KEY CALL LIST *ARCELORMITTAL ADDED TO SOCGEN PREMIUM LIST *LLOYDS REMOVED FROM BOFA’S EUROPE 1 LIST *ROCKHOPPER ADDED TO CONVICTION BUY LIST AT GOLDMAN *SHIRE, S&N ADDED TO UBS’S MOST PREFERRED LIST *VALEO REMOVED FROM SOCGEN PREMIUM LIST *WILLIAM DEMANT ADDED TO UBS’S LEAST PREFERRED LIST
Dassault Systemes Apologizes as 3Q Falls Short of Targets
3Q rev. up 4% ex currencies falls short of targeted growth of 8%-9%, co. says in a statement. * 3Q non-IRS EPS EU0.88, op. margin 31.6% * Co. cites transaction delays caused by lengthening of capex decisions and a shift to rental activity * Co. will reduce its 4Q rev. target because of these two factors and currency weakness in emerging economies * 4Q rev. may be as low as EU565M, which would represent growth of about 5% ex currencies * 4Q non-IFRS EPS target may be EU0.97 and non-IFRS op. margin about 34%, co. says * Co. to give new guidance on Oct. 24.
KPN, America Movil Continue to Disagree on Valuation: Telegraaf
KPN, America Movil disagree on how to value future KPN revenues as takeover talks continue, De Telegraaf reports, citing unidentified people familiar with the matter. * KPN seeks EU3/shr offer, points to Dutch mkt share recovery * America Movil sticks to EU2.40/shr and repeatedly delayed talks and threatened to walk away * NOTE Oct. 2: KPN Shareholders Approve Sale of German Unit to Telefonica
Asian Market Update: US equity futures slump amid continued Washington stalemate; China trade data disappoints while CPI rises above expectations
***Observations/Insights*** - Less than 100 hours to go to the possibility of the first ever US default and still no progress in Washington. Talks between the White House and the House of Reps fell apart on Saturday after the President elected to push for a more long-term extension on the debt ceiling, dreading another political confrontation during the holiday shopping season. The focus moved the Senate, where a test vote for a $1T extension beyond the 2014 mid-term election did not receive the necessary 60 votes to move forward on the debating the legislation. Despite the setbacks in both houses over the weekend, Congressional leaders on both sides remained optimistic that a deal would be struck in the coming days, even though US equity markets are likely to be skeptical - S&P500 futures opened down 0.7%. - China trade data released over the weekend surprisingly disappointing - terms of trade at 6 month lows and exports registering first decline in 3 months. Susequent comments from Customs official noting the data suggests "trend of low yet stable growth", but also looking to ease concerns indicating exports are expected to stabilise in the next 2-3 months. - China September CPI inflation was hotter than expected, rising above 3% for a 7-month high. Food component especially high, up 6.1% v 4.7% prior, while non-food is comparable to prior month at 1.6%. Sept PPI is in deflation territory for 19th consecutive month. - Singapore Q3 advanced GDP fell less than expected and prior quarters were revised higher; Singapore central bank (MAS) maintained its policy of modest, gradual appreciation of SGD with no change to slope and center, briefly boosting SGD. - Japan and Hong Kong markets closed for holiday.
***Economic Data*** - (CN) CHINA SEPT TRADE BALANCE: $15.2B V $26.3BE (6-month low); Exports Y/Y: -0.3% v 5.5%e (first fall in 3 months); Imports Y/Y: +7.4% v 7.0%e - (CN) CHINA SEPT CONSUMER PRICE INDEX (CPI) M/M: 0.8% V 0.1% PRIOR; Y/Y: 3.1% V 2.8%E (7-month high) - (CN) CHINA SEPT PRODUCER PRICE INDEX (PPI) Y/Y: -1.3% V -1.4%E - (AU) AUSTRALIA AUG CREDIT CARD BALANCES: A$48.9B V A$49.2B PRIOR; CREDIT CARD PURCHASES: A$21.8B V A$23.0B PRIOR - (AU) AUSTRALIA AUG HOME LOANS M/M: -3.9% V -2.5%E (first decline in 7 months and biggest decline in early 2011); INVESTMENT LENDING: 0.0% V 2.9% PRIOR - (NZ) NEW ZEALAND REINZ SEPT HOUSE PRICE INDEX: 3,778 V 3,746 PRIOR: M/M: +0.8% v 2.1% PRIOR; HOUSE SALES Y/Y: 19.0% V 8.5% PRIOR - (NZ) NEW ZEALAND SEPT PERFORMANCE SERVICES INDEX: 55.6 V 53.3 PRIOR - (SG) SINGAPORE Q3 ADVANCED GDP Q/Q: -1.0% V -4.0%E; Y/Y: 5.1% V 3.8%E
***Fixed Income/Commodities/Currencies*** - (CN) PBoC sets yuan mid point at 6.1406 v 6.1458 prior setting (record high setting for Yuan) - (SG) Singapore Central Bank (MAS) maintains policy of modest, gradual appreciation of SGD with no change to slope, center - (KR) South Korea sells 5-yr govt Bonds; avg yield 3.135% - USD/KRW: (KR) South Korea Central Bank (BOK) signs a 3-yr currency swap with UAE for up to $5.4B - financial press - SLV: iShares Silver Trust ETF daily holdings fall to 10,505 (lowest since Sept 18th) from 10,565 - update as of 10/11 - GLD: SPDR Gold Trust ETF daily holdings fall by 5.4tonnes to 891.0 tonnes (lowest since Feb 2009) - update as of Oct 11th
- USD is modestly lower on the heels of the logjam in Washington, falling across the board against the majors with the exception of the Aussie dollar which is notably shaken by the disappointing China trade data. AUD/USD opened down by over 30pips at $0.9430 before regaining some ground toward $0.9450. EUR and GBP are up about 0.2% against the greenback, rising over 20 and 30pips above $1.3560 and $1.5980 respectively. USD/JPY and USD/CHF down about 0.25% or about 30pips, falling below ¥98.30 and CHF0.91 handle. Spot gold opened up over $5 to trade above $1,278/oz before retreating to unchanged levels around $1,272.
***Speakers/Political/In the Papers*** - (CN) China National Energy Administration (NEA): China Sept power consumption rises to 444.8B kwh, +10.4% y/y - (CN) Former World Bank chief economist Justin Lin: China 2013 GDP likely to maintain 7.5-8% without hard landing - financial press - (CN) China Customs official: Trade for the 9-month period suggests "trend of low yet stable growth" - press - (AU) Bill Shorten elected as Australia's new Labor Party leader - (KR) Private think tank Korea Economic Research Institute (KERI): Sees 2014 GDP at 3.4% vs 3.9% official govt forecast - Korean press
- (DE) Germany Fin Min Schaeuble: Expects new govt to be finalized by mid-November; SPD has insisted on new €8.50/hr minimum wage agreement as a condition for a coalition govt - financial press - (IE) Ireland PM Kenny: Ireland is on track to exit its international bail-out program in December - press - (EU) ECB's Mersch (Luxembourg): ECB to request that large banks introduce an additional equity capital buffer when it conducts its asset quality review of the euro zone's largest banks in 2014 - German press - (PT) Portugal Fin Min Albuquerque: May try to tap an existing debt security as early as this year - press - (GR) Greece govt has proposed that international lenders allow it to roll over €4.4B in outstanding bonds to help cover the funding shortfall in 2014 - Greek press
***Equities*** Market Snapshot (as of 03:30 GMT): - Nikkei225 closed, S&P/ASX -0.4%, Kospi -0.1%, Shanghai Composite +0.4%, Hang Seng closed, Dec S&P500 -0.7% at 1,686, Dec gold +0.2% at $1,270, Nov crude oil -0.1% at $101.85/brl
US markets: - AAPL: May be preparing for a cheaper model of iMac in 2014 - tech blog citing KGI Securities analyst - COST: Said to have recalled some chicken products in California due to Salmonella - financial press - SBUX: CEO: Sees strong momentum in China markets - Nikkei News interview
Notable movers by sector (**Note: Japan, Hong Kong market closed): - Consumer discretionary: Suning Appliance Co Ltd 002024.CN +4.2% (approved to sell online mutual funds) - Industrials: China Railway Construction Corp Ltd 601186.CN +7.4% (awarded contract); CSR Corp 601766.CN +10.0%, CNR Co Ltd 601299.CN +10.0%, China Railway Group 601390.CN +8.0%, Jinxi Axle Co Ltd 600495.CN +10.0%, Baotou Beifang Chuangye Co Ltd 600967.CN +7.6%, Gem-Year Industrial Co Ltd 601002.CN +10.0% (China-Thailand discussion of high-speed rail); Guilin Guanglu Measuring Instrument Co Ltd 002175.CN +10.0% (acquisition) - Materials: China Minmetals Rare Earth Co Ltd 000831.CN -3.8%, Inner Mongolia Baotou Steel Rare Earth 600111 -1.6% (China Minmetals provides YTD guidance); Shanghai Material Trading Co Ltd 600822.CN -9.0% (regulating warnings on accounting fraud); OZ Minerals O
CB's Mersch (Luxembourg): ECB to request that large banks introduce an additional equity capital buffer when it conducts its asset quality review of the euro zone's largest banks in 2014 - German press - Says banks need an "additional buffer that reflects their prominent significance in the European context."
Portugal Looks to Issue Bonds in Coming Months
Lisbon Explores Borrowing More Through an Existing Bond Program
WASHINGTON—Portugal is seeking to borrow more from investors in coming months as it returns to economic growth and works to wean itself off international aid, Finance Minister Maria Luis Albuquerque said Saturday.
The European countries that received bailouts from the International Monetary Fund, the European Union and the European Central Bank are sizing up investor sentiment in the debt markets, a key measure of whether they have regained a firm enough financial footing to exit the bailout programs. Ireland is the first country scheduled to regain its financial independence later this year by exiting the programs, followed by Portugal in mid-2014.
"We have to have full market access before then," Ms. Albuquerque said in her first media interview.
In her first interview since becoming Portugal's finance chief in July, Ms. Albuquerque said her government is looking into borrowing more through an existing bond program in the coming months, depending on market conditions. Lisbon could also offer to swap an existing bond for another with a longer maturity, or issue a new dollar-denominated security, she said. But Portugal isn't likely to issue a new bond before early next year, she said.
The Portuguese government is fully funded for this year, and the finance ministry calculates it has net financing needs of €10 billion for next year, she said.
Investors' views of Portugal has been improving since the country, along with many other countries in the region, returned to growth in the second quarter, driven by tourism and exports. Sentiment toward Portugal got another boost earlier this month when its lenders said the country was broadly meeting the budget targets set for as conditions for its bailout loan.
The so-called troika of lending institutions also revised its growth forecasts upward, saying it sees the Portuguese economy expanding by 0.8% in 2014, up from the previous 0.6% forecast.
"All indicators are pointing to signs of life in the economy," Ms. Albuquerque said. "Portugal this year has had its best tourist season ever."
Some investors were concerned earlier in April when Portugal's Constitutional Court struck down a series of government spending cuts designed to help the country meet the budget targets set by the terms of its €78 billion ($105.63 billion) bailout, forcing the government to scramble to find other ways to save money.
Two months later, two ministers, including the former finance minister, Vitor Gaspar, resigned amid increasing pressure to scale back the program, which has been blamed for a three-year recession and a jump in unemployment to more than 17%.
Prime Minister Pedro Passos Coelho appointed Ms. Albuquerque to the key financial post and vowed to continue implementation of the bailout program.
The next hurdle the government faces is a 2014 budget that lowers the deficit to 4% of gross domestic product from a forecast of 5.5% of GDP this year, as required by the terms of its bailout, without running afoul of the country's Constitutional Court. Ms. Albuquerque says the government is trying to impress upon the court the need lower the country's high debt levels and meet its EU commitments in order to avoid further conflict.
"It's been a learning process; we've been working to minimize the risk," she said.