TheChek News Flow

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Macro :

- Crispin Odey Steps Down From Running His Firm to Focus on Funds

- UK Mulls Cutting Quarantine to Five Days: Telegraph

- Big VIX Options Trades Target Lower Volatility Into December

Keep an eye on :

- ADKO AV : Addiko 3Q Profit After Tax Beats Estimates

- AH NA : Ahold Delhaize Raises FY Adj. EPS Outlook,Announces EU1B Buyback

- ALFEN NA : Alfen 3Q Adjusted Ebitda EU7.5M

- APAM NA : Aperam 3Q Ebitda Beats Estimates

- CS FP : AXA Says Second Wave Unlikely to Spur Higher Coronavirus Costs

- BARC LN : FCA Asks Barclays to Repay Interest on Some Sold Malta Loans: FT

- BMW GY : BMW 3Q Ebit Misses Estimates

- BPOST BB : Bpost Sees FY Adj Ebit At Least EU270M, Saw EU240.0M to EU270.0M

- BNR GY : Brenntag 3Q Operating Gross Profit EU690.6M

- BCHN SW : Burckhardt 1H Ebit CHF26.0M

- CLNX SM : Cellnex 9M Adjusted Ebitda EU838M

- CNHI IM : Class 8 Truck North American Orders Rise 82% YoY in October

- COOR SS : Coor 3Q Adjusted Ebita SEK140.0M

- CCL LN : Cruise-Line Group Extends Voluntary Suspension Through December

- ACA FP : Credit Agricole Beats Forecasts on Lower Provision, Bond Boost

- ELG GY : Elmos Semiconductor SE 3Q Revenue Beats Estimates

- FEEG LN : Ferguson Is Said to Begin Sale of U.K. Plumbing Unit Wolseley

- FRA GY : Fraport 3Q Revenue EU406.9M

- HNR1 GY : Hannover Re Expects Group Net Income to Exceed EUR800M in 2020, Hannover Re Sees FY Net Income Above EU800M

- KRN GY : Krones Prelim 3Q Ebitda Beats Estimates; Sees FY Revenue ~EU3.3b

- MOWI NO : Mowi 3Q Net Income Beats Estimates

- MUL LN : Mike Ashley’s Frasers Ups Mulberry Group Stake to Close to 30%

- NG/ LN : National Grid Issues Alert on U.K. Power Supply for Wed.: Times

- NOVOB DC : Novo Nordisk Buys 7.01m B Shrs From Novo Holdings for DKK2.91b

- ORP FP : Orpea SA Sees FY Revenue Above EU3.90B, Est. EU3.93B

- RNO FP : Fugitive Auto Executive Ghosn Settles Scores In New French Book

- SGO FP : Saint-Gobain Cancels 9 Million Treasury Shares

- SCTS SS : Scandi Standard 3Q Adjusted Operating Profit Beats Estimates

- SWECB SS : Sweco 3Q Operating Profit Beats Estimates

- SLHN SW : Swiss Life 9M Net Fee And Commission Income CHF1.40B

- TEP FP : Teleperformance Boosts FY Like-for-like Sales Forecast

- 8TRA GY : Class 8 Truck North American Orders Rise 82% YoY in October

- VCT FP : Vicat 9M Like-for-like Sales +2.1%

- RF FP : Wendel SE Net Asset Value Per Share EU145.30

- VNA GY : Vonovia Pledges Climate Neutrality, Sees Profit Rise in 2021

- VONN SW : Vontobel Total Client Assets CHF294.1B

- VONN SW : Vontobel Client Inflows Accelerate on Rising Investment Demand

- VOW3 GY : German E-Car Aid Applications Hit Record High, Bild Reports

- ZAL GY : Zalando 3Q Adjusted Ebit Beats Estimates

- ZAL GY : Zalando Swung to 3Q Net Profit on Sales Gain; Raises 2020 Guidance

Europe’s Arianespace struggles for relevance in SpaceX era

Delay to Ariane 6 rocket adds to satellite launcher’s challenges in an upended market

For decades the Ariane rocket has been a symbol of European technological prowess — proof that the EU plays a vital role in the space race even if it may lack the glamour of the US and Russia’s manned missions.

Arianespace, jointly owned by Airbus and Safran, was the world’s first commercial launch company and until recently dominated the business of sending big communications satellites into geostationary orbit, 35,000km above the earth.

But the latest delay to its €4bn next-generation Ariane 6, announced last week, has underlined the group’s vulnerability as it struggles to keep pace with disruptive forces unleashed by Elon Musk’s SpaceX in a drastically changed market.

Jan Wörner, director-general of the European Space Agency, is now hoping EU member states will stump up another €230m to put Ariane 6 on the launch pad by spring 2022, almost two years later than planned.

The rocket, along with the smaller Vega-C version, is Europe’s answer to Mr Musk’s pioneering, reusable Falcon 9, which has sent prices plunging in the $5bn-a-year satellite launch market.

Although single-use, it will be more than 40 per cent cheaper than its predecessor the Ariane 5, which has been one of the world’s most reliable rockets.

According to Arianespace chief executive Stéphane Israël, it will be able to carry up to 70 small 150kg satellites, and serve not just government customers but the booming private market for “mega-constellations” delivering internet access from low-earth orbit.

The problem is, it will still be substantially more costly than the Falcon models. And the longer the delay, the wider the price gap is likely to be.

A longer wait will also make it harder for Arianespace to hold its own in a market changing at great speed. Bank of America estimates that the global space industry will grow from roughly $400bn in 2019 to $1.4tn by 2030. 

This is prompting new private sector rivals to emerge, including Jeff Bezos’s Blue Origin rocket company. Meanwhile, old adversaries such as United Launch Alliance — a joint venture of Lockheed Martin and Boeing — are expanding beyond traditional government services to the commercial market.

“When Arianespace, ESA and the national space agencies set out to develop Ariane 6 [in 2014] they underestimated how competitive the commercial space launch market would be by 2020,” said Caleb Henry, analyst at Quilty Analytics, a space industry research group.

Ever since SpaceX’s Falcon 9 took off a decade ago, life has been getting tougher for Arianespace. According to a report for Nasa in 2018, the average launch cost of $18,500 per kg between 1970 and 2000 was cut by a factor of seven with the Falcon 9.

Arianespace lost its crown as the world’s leading commercial launch provider to SpaceX’s lower-priced launches in 2017, when the US company sent more commercial satellites into orbit, according to France’s national auditor, the Cour des Comptes. This year, SpaceX is also expected to beat Arianespace in terms of the value of contracts won for future launches.

At the same time, the commercial market in which it has operated for 40 years, and where it generates two-thirds of its €1bn annual income, has shifted. For more than a decade, Ariane was responsible for launching the majority of the 20 to 30 annual launches of big communications satellites into geostationary orbit. But demand tumbled to fewer than 10 in 2018 and industry experts expect that a brief resurgence this year, the result of a one-off auction of broadcast spectrum, will fade fairly quickly.

“We are seeing fewer broadcast satellites being launched. If you watch Netflix you are no longer a customer of a broadcast provider. You are the customer of someone who gives you internet services and there are bold ambitions to have some of this internet in the sky done at low earth orbit,” said Rainer Horn, managing partner of SpaceTec Partners, which has advised the European Commission on space policy.

“What was a strength in previous decades has become less easy to manage,” said Pacôme Revillon, chief executive of Euroconsult, a space industry consultancy.

Instead, the focus is shifting to smaller satellites, which cost far less to launch. Euroconsult estimates that an average of 990 satellites of all sizes will be launched every year for the next decade, more than four times the volume of the previous one. Most will be small satellites of less than 500kg.

Arianespace was unable to exploit that market fully until September when it carried out its first “ride-sharing ” launch with a Vega rocket. But costs are still higher than SpaceX, which can offer customers frequent low-priced space on rockets already being deployed for Mr Musk’s own mega-constellation, Starlink. 

If Europe wants to maintain independent access to space it will have to stoke government and institutional demand, according to Mr Israël. That is how SpaceX has succeeded, he argues, with its government contracts priced almost twice as high as those in the commercial market.

“We are now facing a launcher which is highly supported by institutional demand, which allows [it] to come to market at cut prices,” Mr Israël said. “The question is, how will Europe organise itself?”

Europe’s space industry is pushing for Brussels to launch its own mega-constellation to provide what could be crucial internet services to industry.

The UK government is already following the mega-constellation route in a bid to boost its space industry. This month it will become the biggest shareholder in OneWeb, the original mega-constellation rescued from bankruptcy in a deal with India’s Bharti Global telecoms group.

OneWeb is Arianespace’s biggest customer, with a contract worth more than $1bn to put 650 of its first-generation satellites into orbit by the end of 2023. But it might not be able to rely on winning the contract for the second generation if its launch costs remain high.

“It could be a Japanese company next launching 300 sats for OneWeb,” said Mr Henry.

So the pressure is on for new European projects that will help to enhance the commercial offer. European governments and institutions, unlike those in the US, do not generate enough volume to keep the bloc’s rocket production competitive with the new entrants, according to Mr Israël. 

“To develop non-institutional business, it is mandatory to rely on a . . . strong institutional business: this is the condition for a level playing field on the commercial market,” he said.

The relatively limited number of European launches is also why Europe did not opt for a reusable rocket in 2014, according to Mr Wörner. If there were, for example 10 launches a year, he said, the industrial system might only need to produce one launcher a year for European needs. That would render the production business unviable, he said. 

“The industrial situation may have to be reorganised and that could take years,” says Mr Wörner. “In 2014, the decision was to go fast as possible.”

That doesn’t mean reorganisation is impossible. ESA and the industrial partners behind Arianespace are already looking to the next generation, and reusable rockets are on the cards. 

But it will mean Europe’s system of allocating production work according to member states’ financial contributions will have to be re-examined, according to several industry executives. Ariane rockets involve an industrial network of more than 600 companies in 13 countries 

“These are complexities that Mr Musk doesn't have as a vertically integrated player,” said Mr Horn. “He is selling the rockets, renting the spaceport, and producing most parts himself. He organises the logistics. There is less workshare and less dependency.”

ESA and Europe’s space industry have begun discussions on how work could be reorganised to eliminate some of the complexities, according to several people with knowledge of the subject. “We need to create the same conditions to propose competitive prices,” said one.

For now, however, the focus is the new rocket.

“The priority is to make Ariane 6 a success,” said Mr Israël. “It is to make Ariane 6 fly.”

Washington has sold Taipei weapons worth $4.8bn in the past fortnight

The US has approved the sale of four sophisticated drones to Taiwan, which will help Taipei to spot Chinese preparations for an attack.

The sale of the drones is the final aspect of a weapons package worth nearly $4.8bn. US defence experts said the deal was vital if Taiwan was to deter an invasion or counter a blockade by the vastly more powerful People’s Liberation Army.

The MQ-9B Sea Guardian unmanned aerial vehicles are the maritime surveillance variant of the Reaper drone the US Air Force has used in Iraq and Afghanistan for more than a decade.

They will be equipped with control systems and a range of radar, imaging and targeting systems that will cost $600m, the Pentagon’s Defense Security Cooperation Agency said.

The drone sale approval follows notifications to Congress of a number of weapons sales since October 21: Harpoon coastal defence missiles worth $2.37bn; HIMARS mobile artillery rocket systems worth $436m; SLAM-ER air-launched land attack missiles worth $1bn; and reconnaissance equipment for F-16 fighters with a price tag of $367m.

The Pentagon’s announcement of the drone deal on the day of the presidential election underscores the political and military support Taiwan has received from the Trump administration — the strongest since Washington switched diplomatic ties from Taipei to Beijing in 1979.

China claims Taiwan as its territory and threatens to attack it if Taipei refuses unification indefinitely. Taiwanese military experts said the drone sale would make Beijing particularly angry because the UAVs, once armed, could become offensive systems, for example to target Chinese naval ships on their way to Taiwan.

Taiwan’s defence ministry said on Monday that eight Chinese military aircraft had flown incursions into Taiwan’s air defence buffer zone, the biggest in weeks.

However, since the S-400 air defence systems China has received from Russia over the past two years can cover all of Taiwan if deployed at the coast, the drones were unlikely to survive in a battle scenario, the experts said. They will be used instead to detect PLA preparations for a potential attack.

“Adding the SeaGuardian platform will provide Taiwan with substantial new maritime surveillance capabilities,” said Rupert Hammond-Chambers, president of the US-Taiwan business council, a lobby group. 

“This is a crucial mission for the Taiwan navy, particularly given the PLA’s aggressive incursions in regional waters and in the Taiwan Strait. We can expect Taiwan to further expand this capability in the coming years.”

Banks worry the operator is a centre of risk for stock exchanges around Europe

A series of technology glitches at stock exchange group Euronext is feeding concerns that its efforts to build a central role in the region’s capital markets could intensify risks around a single point of failure.

On Monday, trading in warrants across Euronext’s network halted for an hour, just two weeks after a chaotic day disrupted trading across equities, exchange traded funds, derivatives and other markets.

The group already runs the main exchanges in Paris, Amsterdam, Brussels, Dublin and Lisbon. It plans to add Oslo Bors in the next few weeks, and to plug in Borsa Italiana if it succeeds in buying it from the London Stock Exchange Group. Adding the Milan market would mean around a quarter of all equities in Europe trading on one platform.

That €4.3bn Italian deal could make Euronext “the backbone of the Capital Markets Union in Europe”, said its chief executive, Stéphane Boujnah, referring to the project to unify the EU’s asset markets.

But Monday’s outage was a sharp reminder of the perils of this approach.

“Once again investors have found themselves unable to trade because of a technical disruption,” said April Day, head of equities at Afme, a lobby group that represents banks and investors. “The increasing consolidation of exchange operators puts the market at unnecessary risk as it increases exposure to a single technology failure.”

The glitches last month prevented trading across Euronext’s stock exchanges for three hours and ended with the abandonment of the crucial end-of-day auction. Only Oslo, which runs on a different technology system, escaped the mess.

Watchdogs in France, Portugal and the Netherlands told the Financial Times they have contacted Euronext about the failures. The Portuguese regulator said it had also contacted the pan-European markets regulator, Esma. The Irish regulator, the central bank, declined to comment.

The failure of Euronext’s systems to flip from standard daytime trading into the closing auction, a 10-minute wind-down after the market officially closes, was particularly damaging.

Investors increasingly rely on this period to shift large blocks of shares without disturbing prices on the open market. This also ensures the price they receive is very close to the final price of the day, which is used to value portfolios and calculate indices.

Last year French regulator AMF found that 41 per cent of all daily trading volumes of CAC 40 stocks happened during the closing auction on Euronext Paris.

When Euronext’s markets failed to switch over, some big orders were dumped into the open market. Algorithms reacted, sending prices in stocks like LVMH, KPN, Royal Dutch Shell and Euronext itself, in wildly different directions, at a time when the market should have been closed.

“It felt like I was watching fireworks with all the flashing,” said an equities trader at one investment bank, as the screens turned from red to green, and vice versa.

Some stocks swung more than 10 per cent, triggering trading halts. Traders reported some deals going through an hour after the market closed. Euronext was forced to cancel all trades that occurred after 5.30pm, reprice the closing level of its indices, send out a record of the final prices and work through issues with its clearing houses. Bank traders and executives were angry at being left in the dark for hours on the fate of their positions.

Two days later, the exchange said it had mislabelled some of the buy and sell orders sent to the clearing houses, which were intended to clear up the mess.

Euronext apologised and blamed third-party software. “It was a technical issue . . . and was not related to a cyber attack or a problem in [our] proprietary code,” it said.

The exchange added it had invested significantly in its technology, particularly since 2018. “The risk of outages and technical failures is always present at any large exchange group, but we have taken actions to ensure that a similar issue does not happen at Euronext going forward,” the company said.

The problems reflect a dilemma for financial markets: are the cost efficiencies of relying on one set of core technology worth it? Or does that leave large chunks of the market too vulnerable to shocks?

“Running on a single platform means that members and traders have to connect to fewer systems and interfaces,” Euronext said. Moving Borsa Italiana on to its Optiq system will save Euronext €60m a year after the third year of ownership, Euronext has forecast.

Running exchanges on separate platforms may prevent widespread disruption “but you double up on costs, which defeats the point of consolidation”, notes Steve Grob, former head of strategy at Fidessa, a trading technology group.

Ms Day called for a common market practice by which trading can move to alternative venues when outages occur.

For now, that is not working. Venues such as Cboe Europe, Turquoise or Aquis Exchange did not pick up the slack when Euronext faltered.

“In Europe, when the traditional primary market closes, all other trading seemingly stops as well,” said Richard Worrell, head of Emea equity trading at Janus Henderson. “We need to address this failure,” he said