>>> What to look at today - 14th of October 2019


Boris Johnson’s attempt to secure a Brexit deal ran into trouble after the European Union warned the talks were still a long way from a breakthrough and the British prime minister’s political allies distanced themselves from his plans. The pound fell.
After a weekend of intensive negotiations in Brussels, the EU’s chief Brexit negotiator, Michel Barnier, told a meeting of envoys on Sunday that the U.K.’s proposals for breaking the deadlock over the Irish border lacked detail and risked leaving the single market vulnerable to fraud, officials said. The unionist party that backs Johnson’s minority Conservative government in London also raised concerns.

Nikkei Close Hang Seng +0.89% CSI +1.08% Shanghai +1.10% Shenzen +1.20%

Eur$ 1.1033 CNH 7.0576 CNY 7.0558 JPY 108.28 GBP 1.2606

S&P +0.11% EuroStoxx -0.30% Dax -0.24%


Macro :
- Blackstone Held Talks With Citadel About Buying Stake: DJ
- U.S.-China Trade Deal: JPM Sees Stocks Upside, BofA Watches Yuan
- WeWork Is Said to Weigh Bailout That Hands Control to SoftBank

Keep an eye on :
- AA/ LN : AA Plc Starts Search for New Chairman: Sky (Earlier)
- AIR FP : Merkel Says Germany and France Should Deepen Relationship
- ASC LN : Asos Cut to Sell at Shore Capital
- DAI GY : Daimler CEO Accused of ‘Piecemeal Tactics’ by Minister: BamS
- DBK GY : Deutsche Bank Seeks to Sell Stake in LSE-Backed Turquoise: FN
- DBV FP : DBV Technologies Holder Baker Bros. Boosts Stake to 24%
- DGE LN : Ex-Diageo Boss Walsh Takes Stake in Brockmans: Times (Earlier)
- DSV DC : DSV Panalpina Plans Staff Cuts in Basel, SamW Reports
- GEDI IM : De Benedetti Offers to Buy Stake in GEDI From CIR, Ansa Reports
- IBE SM : Avangrid, PPL Had Talks on Possible Merger, Financial Times Says
- IMPN SW : Veraison and Parmino Holding End Talks With Implenia
- LAND LN : Land Sec. Close to Selling GBP650m Property Portfolio: Times
- MOWI NO : Mowi: 10 Licenses in Newfoundland, Canada, Suspended Temporarily
- NOKIA FH : Germany May Allow Huawei to Supply Equipment for 5G Network: HB
- NOVOB DC : Novo Nordisk Unit Targets Medical Marijuana for Growth: Borsen
- NYR BB : Nyrstar Shareholders to Seek $1.7 Billion From Trafigura
- UG FP : PSA CEO Tavares Warns Against Asian Competition, No-Deal Brexit
- RNO FP : Renault Hired Egon Zehnder, Emeric Lepoutre to Find CEO: Echos
- ROG SW : Roche’s Pemphix Study Met Primary Endpoint at Week 52
- SRCG SW : Liberty Global to Support Sunrise Rights Offering Up to CHF500m
- FP FP : Total to Buy 37.4% in Adani Gas to Expand India Gas Presence
- FP FP : Total CEO Says Worried About Safety of Oil Assets
- VOW GY : VW Faces Tough Decisions in Lineup Overhaul, CEO Tells SZ
- VOW GY : CATL, VWCO Team Up on Electrification of Trucks
- VOW GY : Volkswagen Is Said to Consider Options for Lamborghini
- VOW GY : Auto News Europe: VW Group denies plans for Lamborghini sale or stock listing
- NoVN SW : U.S. Mulling Tariffs on Swiss Pharmaceutical Products: NZZ
- SRCG SW : Sunrise Wins Glass Lewis Backing for UPC Takeover
- SRCG LN : Sunrise Welcomes Glass Lewis Support on Proposed UPC Deal

FT : Hunter Biden quits Chinese firm after Trump attacks

Hunter Biden quits Chinese firm after Trump attacks
Son of Democratic candidate breaks silence after president urged China to investigate

Hunter Biden said he is stepping down from the board of BHR, a Chinese private equity firm, and will not work for foreign-owned companies if his father, one of the top Democratic 2020 candidates, is elected president.

Mr Biden’s lawyer, George Mesires, said in a statement on Sunday that his client, the son of former US vice-president Joe Biden, would “readily comply with any and all guidelines or standards a President Biden may issue to address purported conflicts of interest, or the appearance of such conflicts, including any restrictions related to overseas business interests”.

Mr Mesires added: “In any event, Hunter will agree not to serve on boards of, or work on behalf of, foreign owned companies.”

The statement marked the first public comments from Hunter Biden since he found himself in the middle of a scandal that has led to an impeachment inquiry against President Donald Trump.

That inquiry has centred on Mr Trump’s July 25 phone call with his Ukrainian counterpart, Volodymyr Zelensky. A White House memorandum released last month showed that during the call, Mr Trump asked Mr Zelensky to investigate Joe and Hunter Biden, among other matters.

Joe Biden has long been seen as a favourite among Democrats vying to take on Mr Trump in next year’s US presidential election. Hunter Biden took up a lucrative board position with Burisma Holdings, a Ukrainian energy company, in 2014, when his father was still vice-president in the Obama administration.

Mr Trump has alleged that Joe Biden applied improper pressure on the Ukrainian government in 2016 to fire a top prosecutor who, the president claimed erroneously, had opened an investigation into Burisma in order to help his son. Mr Biden’s calls were part of a wider effort involving US officials in Kiev, Western allies and international groups, including the IMF and the World Bank, to crack down on corruption in the country.

Hunter Biden left Burisma’s board earlier this year. Mr Mesires said on Sunday: “Despite extensive scrutiny, at no time has any law enforcement agency, either domestic or foreign, alleged that Hunter engaged in wrongdoing at any point during his five-year term.”

The younger Mr Biden has also been scrutinised for his unpaid board position with BHR. Mr Mesires said on Sunday that Mr Biden intended to resign from the role by the end of the month.

Mr Trump and his personal lawyer, Rudy Giuliani, have made a range of unsubstantiated allegations against Hunter Biden in recent weeks.

After Mr Mesires’s statement was published on Sunday, Mr Trump said on Twitter: “Where’s Hunter? He has totally disappeared! Now looks like he has raided and scammed even more countries!”

FT : Revolut looks to raise $1.5bn to expand worldwide

Revolut looks to raise $1.5bn to expand worldwide
UK banking start-up seeks funding from equity sale and loan issue

UK fintech company Revolut is seeking to raise as much as $1.5bn in additional financing as the payments and banking start-up prepares for an ambitious global expansion.

The group has hired US investment bank JPMorgan to raise $500m in new equity from investors and arrange a concurrent $1bn convertible loan, according to a person familiar with the plans. Sky News was first to report the potential deal.

Revolut and JPMorgan declined to comment.

In its five-year existence, London-based Revolut has attracted almost 8m customers, starting with an app-based account and prepaid debit card before expanding into business services and stock trading.

It recently announced a partnership with payments company Visa to open in 24 new countries including Canada, Japan, Singapore and the US, which will take its total footprint to 55 jurisdictions.

Earlier this month chief operating officer Richard Davies said Revolut aimed to raise about $500m before the end of the year to help it “double down on that growth” and was in “early stages of active conversations” with potential investors.

The planned $1bn loan would convert into shares in the event that the company received a US banking licence, Sky News said.

Revolut secured a eurozone licence last year and, if completed, the new debt and equity package will mean it has raised more than $2bn in funding since its launch in 2015.

Despite its rapid growth and popularity with young spenders, the company is yet to make a profit. It recently reported a pre-tax loss of £33m for 2018 — double that of the prior year — even as revenue more than quadrupled to £58m from £13m.

Revolut, which employs about1,300 people, has been on a hiring spree in recent months to bring in more executives with banking experience to help improve its customer service and compliance systems following complaints.

It is also expected soon to unveil City of London veteran Martin Gilbert as its new chairman following the appointment of ex-Goldman Sachs executive Michael Sherwood as a board member.

FT : Luxury hotel group Rocco Forte readies for big expansion

Luxury hotel group Rocco Forte readies for big expansion
British company’s founder wants 25-30 properties spread around Europe within 3-5 years

Luxury hotel group Rocco Forte, which owns Brown’s in London and the Hotel de Russie in Rome, is preparing its biggest expansion yet in a sign of the resilience of the luxury market against an economic slowdown.

Rocco Forte, who founded the hotel group in 1996, said he wanted 25 to 30 properties spread around major European cities within three to five years, compared with its current 14.

Most of the new properties will be in Italy, where supply is low due to the complexity of doing business.

Sir Rocco, the son of the Scottish-Italian businessman Charles Forte, whose company owned brands such as Little Chef and Travelodge, plans to open four hotels in Italy next year and one in China.

The company is also moving into long-term rental accommodation in an attempt to take advantage of a growing market for travellers looking for more independence than a traditional hotel allows.

It plans to open more apartments to add to the first “Rocco Forte House” in Rome, which opened this year.

“You can’t call it Airbnb as it’s a certain different level,” said Sir Rocco. “There is a bit of a trend in that direction and there’s no reason for us not to take advantage of it.”

The hotel market was hit hard by the 2008 financial crisis as both businesses and consumers reined in spending. But the luxury end of the market proved more buoyant, attracting attention from international hotel companies.

In 2015, Marriott bought the higher end chain Starwood resorts, while in February this year InterContinental Hotels Group bought the luxury resort spa company Six Senses

Sir Rocco said his customers wanted “a high level of travel and experience and they are not too bothered about how much they spend”.

Robin Rossmann, managing director of the industry research firm STR, said demand was “good and growing” in the luxury market but supply was not coming in fast enough to satisfy it. “These properties are one of a kind and you can’t just build another one,” said Mr Rossman.

Rocco Forte’s revenues for the year to April 30 were £219m, up 6 per cent on 2018. Earnings before interest, tax, depreciation and amortisation were £34.6m, only a 0.5 per cent increase on a year earlier, due to expansion costs.

Accounts released on Friday for rival group The Dorchester warned of a downturn in trading performance due to boycotts earlier in the year. The boycotts were part of a campaign against new laws by the Sultan of Brunei, who owns the hotels, that would have made gay and extramarital sex punishable by stoning to death.

Sir Rocco said the Hotel de Russie had “certainly” seen an increase in bookings as a result of the boycotts but that The Dorchester hotels “deserved some support”.

>>> Barron’s Weekend Summary: Cover story reports on the global rally in fixed-i

Barron’s Weekend Summary: Cover story reports on the global rally in fixed-income markets; ITW, JNJ, NUE, PNR, GWW are"dividend aristocrats"

* Cover story: A global rally in fixed-income markets has resulted in near-record low yields on Treasuries and other debt securities in the U.S. It also has produced $15T of negative-yielding debt globally—a development that most longtime bond investors thought would never happen, and which is creating new challenges for bond investors, who are seeking for yield in a low-rate world.

* Tech Trader: Positive on ATVI, TTWO: As a new video game cycle gets under way, with SNE planning to launch a PlayStation 5 and MSFT set to unveil a new console in time for the 2020 holidays, Activision and Take-Two should do well despite new streaming services from GOOGL and AAPL—they own most of their own content, while rival EA relies on licensed sports properties that require substantial royalty payments.

* Trader: Cautious on BBBY: The retailer’s move to hire TGT chief merchandising officer Mark Tritton to oversee a turnaround is good news, and he could fix one of the chain’s biggest problems—a lack of distinctive products—but shares don’t look like a bargain after rising on the news; Cautious on GE: The company’s announcement it would substantially cut financial leverage by changing pension plans didn’t move the stock, partly because inscrutable accounting issues make assessing corporate pensions difficult.

* Profile: Steve Shigekawa, manager of the Neuberger Berman Real Estate fund, says demand for cloud computing will require more data centers, a boon to the real estate industry; the fund typically only holds about 40 stocks, and he seeks high-quality companies with low debt, diverse property portfolios, and experienced management teams (top 10 holdings: AMT, EQR, EQIX, ESS, CCI, PSA, PLD, ELS, SBAC, CONE).

* Interviews: 1) Lester Ross, head of WilmerHale’s Beijing law office, talks about advising companies on investment, trade, and regulatory matters in China; Ross says “Companies are manufacturing in China for China, but reducing reliance on China for manufacturing for export—and there is also increasing concern over the personal safety of executives and the security of communications”; 2) David Giroux, manager of the $35B T. Rowe Price Capital Appreciation fund, has beaten rivals during the past 10 years, returning 11.5% a year on average with a mist of stocks and bonds, though he hasn’t matched the total return of the S&P 500 index during that time (picks: AEP, GE, FISV, PKI, FTV).

* Features: 1) Optimism around recent high-level trade talks between the U.S. and China might have been misplaced: Not only did the “minideal” not address the thorniest issues at the heart of the dispute, but the conflict between the world’s superpowers widened in ways that could pose fresh challenges to U.S. companies and their shareholders; 2) “The money managers who run university and college endowments may be the smart money, but this year they are barely getting passing grades—the median U.S. college or university endowment returned just under five percent in fiscal 2019, lagging behind both the stock market and a diversified portfolio of stocks and bonds over the same period”; 3) + K: Under chief executive Steven Cahillane, a former KO executive who took over two years ago, the food giant has started to show signs of improvement through cost-cutting and innovation such as rolling out existing products in smaller packages, part of an effort to revive growth; 4) European bankers are realizing that negative rates are here for the long haul, a problem in a region where about 60% of the industry’s revenue comes from net interest income, and the loudest protests are coming from the country with the most troubled banking system—Germany; 5) Positive on ITW, JNJ, NUE, PNR, GWW: Companies are members of what Barron’s calls the “Dividend Aristocrats,” having increased their dividend for at least 25 straight years, and the chances of more increases appear solid, even in a slowing economy or worse.

* European Trader: Cautious on Whitbread: The British company, which owns the Premier Inn, Beefeater, Table Table, and Fayre brands and is the UK’s largest hotel operator, will face some pain before investors can expect to see solid growth again, and the shares look fully valued.

* Emerging Markets: Mexico could be the winner in the U.S.-China trade war, though president Andres Manuel Lopez Obrador isn’t capitalizing on recent market momentum despite catching tailwinds during the past few months.

* Commodities: At about a penny a gallon in many places, water might be difficult to think of as a good investment, but stocks and exchange-traded funds related to it—including AWK, XYL, DHR, and PHO—have rallied nicely this year.

* Streetwise: Investors seeking shelter from falling earnings estimates next year could look to REITS—as group, they are fully priced relative to funds from operations, a measure of profitability, but falling interest rates flatter the dividend payments, and make capital for expansion cheap.