>>> Europe : Brokers Upgrades & Downgrades - 15th of September 2021

>>> Up
* Bakkavor Raised to Buy at HSBC; PT 150 pence
* Compass Raised to Buy at HSBC; PT 1,700 pence
* DBV Tech Raised to Buy at SocGen; PT 12 euros
* DBV Tech ADRs Raised to Buy at SocGen
* DSM Raised to Buy at ING; PT 206.80 euros
* Outokumpu Raised to Buy at Deutsche Bank; PT 7.50 euros
* Pandora Raised to Sector Perform at RBC; PT 930 kroner
* Remedy Entertainment Raised to Buy at Inderes; PT 50 euros
* SSAB Raised to Buy at Deutsche Bank; PT 60 kronor

>>> Down
* Bonheur Cut to Hold at SEB Equities; PT 321 kroner
* Itamar Medical ADRs Cut to Neutral at Alliance Global Partners
* JTC PLC Cut to Sector Perform at RBC; PT 830 pence
* Orsted Cut to Underperform at Jefferies; PT 780 kroner
* Sodexo Cut to Hold at HSBC; PT 80 euros
* Verbund Cut to Equal-Weight at Barclays; PT 98 euros

>>> Initiation
* Auto Trader Re-Initiated Buy at Liberum; PT 815 pence
* Corp Acciona Energias Renovables Rated New Outperform at RBC
* Flutter Rated New Overweight at Wells Fargo; PT 18,100 pence
* Moneysupermarket Re-Initiated Hold at Liberum; PT 260 pence
* Property Franchise Rated New Buy at Canaccord; PT 435 pence
* Rentokil Rated New Buy at William O'Neil
* Rightmove Re-Initiated Buy at Liberum; PT 820 pence

>>> Call
* German Property Weighed Down by Political Uncertainty: Berenberg
* Orsted Cut to Underperform by Jefferies on Capex Inflation Risk
* Pandora Upgraded at RBC on ‘Impressive’ New Mid-Term Targets
* Rightmove, Auto Trader Are Liberum Picks Among Online Platforms

WSJ : Fintech Startup Pagaya Nears $9 Billion SPAC Deal

Fintech Startup Pagaya Nears $9 Billion SPAC Deal
Pagaya would combine with the SPAC EJF Acquisition and uses artificial intelligence to improve lending and other financial processes

Pagaya Technologies Ltd. is close to an agreement to go public through a merger with a special-purpose acquisition company that would value the financial-technology startup at about $9 billion, said people familiar with the matter.

Based in New York and Tel Aviv, Pagaya operates an artificial-intelligence network to make financial transactions like lending more efficient and give more people the ability to borrow. Banks and other financial-services providers use its platform, which analyzes troves of data to help partners serve more customers. Pagaya is nearing a deal to combine with SPAC EJF Acquisition Corp. , the people said. The merger could be announced as soon as this week.

Pagaya is led by co-founder and Chief Executive Gal Krubiner and works with companies in markets like consumer loans, auto finance, credit cards and real estate. Its sales grew to roughly $95 million in the second quarter, and the company hopes to expand into mortgages and insurance products, the people said.

Founded in 2016, Pagaya would join a number of startups in the sector in going public and raising large sums of cash with investors excited about how software can disrupt finance. Shares of AI-lending firm Upstart Holdings Inc. are up some 560% in 2021, giving the company a market value of about $20 billion, according to FactSet, after it went public through a traditional initial public offering late last year.

Trading app eToro Group Ltd., personal-finance firm SoFi Technologies Inc. and digital mortgage lender Better Holdco Inc. have all unveiled SPAC deals valuing each of the companies at about $7 billion or more in 2021.

Backed by investors including Singapore sovereign-wealth fund GIC Pte. Ltd., former American Express Co. CEO Harvey Golub and the venture capital arm of insurer Aflac Inc., Pagaya is expected to raise about $200 million in a private investment in public equity, or PIPE, associated with its SPAC deal, the people said.

The EJF Acquisition SPAC is backed by the investment firm EJF Capital LLC and has about $290 million on hand, though SPAC investors could pull their money out before a deal goes through.

The $200 million PIPE is expected to come from funds managed by EJF Capital and investment vehicles affiliated with the firm, the people said. EJF is known for investing in the financial-services sector and was co-founded by Emanuel “Manny” Friedman, who is expected to join Pagaya’s board of directors, they said.

A SPAC is a shell company that raises money and trades on a stock exchange with the sole intent of merging with a private company to take it public. The private firm, often a startup, then gets the SPAC’s place in the stock market. SPAC deals have become faster alternatives to traditional IPOs for many companies, in part because they allow them to make business projections while going public. Those aren’t allowed in IPOs.

More than 200 SPAC deals have been announced this year that collectively value companies at a record of about $530 billion, Dealogic data show.

Still, shares of many companies that merged with SPACs have fallen in recent months with some startups missing their financial targets or hitting business snags, making it harder to complete deals and slowing the creation of new SPACs.

FT : Macau casino stocks shed $14bn as government seeks greater oversight

Macau casino stocks shed $14bn as government seeks greater oversight
Operators suffer as authorities in world’s biggest gambling hub review law and licences

The Macau government’s drive to increase oversight of casinos wiped $14.7bn off the market value of listed gambling operators, as analysts warned that stringent regulations could squeeze margins already strained by the Covid-19 pandemic.

The shares of Sands China and Wynn Macau tumbled more than 24 per cent on Wednesday while rival Galaxy Entertainment fell more than 16 per cent in Hong Kong trading. MGM China, Melco International and SJM Holdings each shed between 15 and 18 per cent.

The price falls came as the Chinese territory opened a 45-day public consultation on revising its gaming law, which is expected to step up scrutiny of operators in the world’s biggest gambling hub. Casino groups’ 20-year concessions to operate in Macau are set to expire next year.

The authorities’ move to tighten control of casinos is also proceeding as Beijing embarks on a broad campaign to reshape the country’s business, political and cultural landscape in a bid to stamp out inequality and promote “cultural prosperity”.

Chinese regulators have imposed stringent conditions on the country’s biggest companies in the tech, online education and video gaming sectors, and authorities have targeted social behaviours perceived as harmful.


A draft version of the gambling law indicated that the government planned to add its own representatives to the boards of casinos that hold concessions in Macau, the only jurisdiction in China where they are legal.

The law is also expected to cover the number and duration of concessions for casino operators, giving authorities substantial leverage over the Chinese territory’s largest employer and main driver of economic growth.

Casino operators have also been weakened substantially by the pandemic, which throttled the vital flow of mainland Chinese tourists to the city.

Gross gambling revenues are down about 80 per cent from pre-pandemic levels, according to figures published by Macau’s Gaming Inspection and Coordination Bureau.

JPMorgan downgraded all six Macau casino operator to underweight or neutral on Wednesday on concerns of the increased government scrutiny. The stocks were all previously rated as overweight.

“We think this announcement would have already planted a seed of doubt in investors’ minds, which is probably enough to de-rate these names until clarity emerges on key points,” JPMorgan analyst DS Kim wrote in a note.

But some analysts remained sanguine on the potential impact of the law consultation. George Choi at Citi acknowledged that markets might take a dim view of the latest announcement, but maintained that “all the suggested revisions [of the law] are there to enhance long-term sustainable growth”.

>>> US After Hours Summary: Quiet after hours; SKIL +5.4% trades higher on earni

After Hours Summary: Quiet after hours; SKIL +5.4% trades higher on earnings/guidance; REGN +1.8% higher on govt contract; YUMC -3.6% falls on COVID impact in China

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: SKIL +5.4%

Companies trading higher in after hours in reaction to news: TRTX +3.6% (increases dividend), AFG +2.8% (declares a special dividend of $4.00/sh), REGN +1.8% (awarded $2.9 bln Army contract; also receives US Gov't agreement to purchase 1.4 mln additional doses of REGEN-COV), SYNH +0.9% (acquires StudyKIK), YOU +0.4% (announces strategic partnership with Tappit)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: IRNT -7.1%

Companies trading lower in after hours in reaction to news: AVTX -16.4% (stock offering), HUT -10.8% (stock offering), PMTS -9.6% (files for $150 mln stock offering; also files for offering by selling shareholders), AGIL -3.8% (stock offering), YUMC -3.6% (provides business update: Delta variant significantly impacted restaurant industry), LYV -2.1% (launches $450 mln stock offering), VCYT -0.7% (new NCCN guidelines recommend Decipher Prostate RP genomic classifier to guide treatment following radical prostatectomy), AIR -0.1% (signs distribution agreement with Arkwin Industries)

>>> US Close Dow -0.84% S&P -0.57% Nasdaq -0.45% Russell -1.38%

Closing Stock Market Summary

The major indices opened Tuesday's session with modest gains following a better-than-feared Consumer Price Index report (CPI) for August, but the rest of the session saw a steady and broad-based decline as growth concerns persisted.

The S&P 500 decreased 0.6% but found some support close to its 50-day moving average (4429). The Nasdaq Composite declined 0.5%, the Dow Jones Industrial Average declined 0.8%, and the Russell 2000 declined 1.4%. 

Specifying the data, total CPI increased 0.3% m/m (Briefing.com consensus +0.4%) while core CPI, which excludes food and energy, increased just 0.1% m/m (Briefing.com consensus +0.3%). The year-over-year increases remained elevated but moderated versus July.

At first glance, the market reasoned that the data was simply corroborating the Fed's view on transitory inflation pressures. The backdrop of economic/political issues, coupled with negative price momentum in the market, however, spun the report into a reflection of slower economic growth.

All 11 S&P 500 sectors closed lower, with the cyclical energy (-1.6%), financials (-1.4%), industrials (-1.2%), and materials (-1.2%) sectors losing at least 1.0%. The information technology (-0.1%) and health care (-0.1%) sectors outperformed on a relative basis with 0.1% declines. 

Many travel stocks struggled amid news of a COVID-related lockdown in a Chinese province and an observation from American Express (AXP 159.51, -1.94, -1.2%) that corporate spend on travel isn't showing signs of increasing in a meaningful way. 

Furthermore, Apple (AAPL 148.12, -1.43, -1.0%) didn't wow investors with its product event. Oracle (ORCL 86.39, -2.50, -2.8%) provided underwhelming earnings news. Comcast (CMCSA 55.59, -4.38, -7.3%) said net adds in its cable business are seeing a slowdown since the tail end of August. PNC (PNC 188.35, -6.11, -3.1%) said net interest income is a looking a bit soft.

The 2s-10s spread in the Treasury market compressed by five basis points, which acted as a headwind for PNC and the bank stocks. The 10-yr yield settled lower by five basis points to 1.28% after touching 1.35% prior to the CPI report, while the 2-yr yield was unchanged at 0.21%. The U.S. Dollar Index was little changed at 92.66.

It would be remiss to not mention that WTI crude futures ($70.46/bbl, unch) staved off selling interest as the IEA increased its global oil demand outlook for 2022. In addition, Microsoft (MSFT 299.79, +2.80, +0.9%) rose about 1.0% after its price target was raised to $331 from $305 at Morgan Stanley. 

Reviewing Tuesday's economic data:

  • Total CPI increased 0.3% month-over-month (consensus +0.4%) while core CPI, which excludes food and energy, was up a tame 0.1% (consensus +0.3%). That left total CPI up 5.3% year-over-year, versus 5.4% in July, and core CPI up 4.0% versus 4.3% in July.
    • The key takeaway from the report is that the better-than-feared numbers have tempered some of the angst about rising inflation pressures and will presumably provide the Fed some cover to wait and watch the data a little longer before making any formal tapering announcement.
  • The NFIB Small Business Optimism Index increased to 100.1 in August from 99.7 in July,

Looking ahead, investors will receive Industrial Production and Capacity Utilization for August, the Empire State Manufacturing Survey for September, Import and Export Prices for August, and the weekly MBA Mortgage Applications Index on Wednesday. 

  • S&P 500 +18.3% YTD
  • Nasdaq Composite +16.7% YTD
  • Dow Jones Industrial Average +13.0% YTD
  • Russell 2000 +11.9% YTD