>>> Europe : Brokers Upgrades & Downgrades - 25th of October 201

>>> Up
* Air Liquide Upgraded to Add at AlphaValue
* Axfood Upgraded to Hold at Kepler Cheuvreux; PT 160 Kronor
* BBVA Upgraded to Buy at Citi; PT Set to 5.75 Euros
* Dassault Aviation Upgraded at Berenberg on Business Jet Outlook
* Fortum Upgraded to Buy at SEB Equities; PT 22 Euros
* Fresnillo Upgraded to Buy at BTG; PT 12.36 pounds
* Hawesko Upgraded to Buy at DZ Bank; PT 52 Euros
* KWS Saat Upgraded to Buy at DZ Bank; PT 330 Euros
* Novozymes Raised to Buy at SEB Equities; Price Target 350 Kroner
* Ponsse Upgraded to Buy at Carnegie; Price Target 31.30 Euros
* Rolls-Royce Upgraded to Buy at Oddo BHF; PT 11.20 Pounds
* Sartorius Upgraded to Outperform at MainFirst; PT 145 Euros
* Segro Upgraded to Add at AlphaValue
* Spie Upgraded to Hold at HSBC; PT 14 Euros
* Wartsila Upgraded to Buy at Carnegie; PT 15 Euros

>>> Down
* Orion Downgraded to Reduce at Inderes; PT 32 Euros
* Rio Tinto Downgraded to Hold at SocGen; PT 38.30 Pounds
* STMicroelectronics ADRs Downgraded to Underperform at Baird
* Telia Downgraded to Underweight at Barclays; PT 38 Kronor
* Valeo Downgraded to Neutral at MainFirst; PT 35 Euros

>>> Initiation
* Axel Springer Rated New Hold at GSC Research; PT 62 Euros
* *PHILIPS NAMED A NEW S-T CATALYST BUY AT DEUTSCHE BANK (EARLIER)

>>> Call

>>> Asian Update

Asia Market Update: China banks start to cut mortgage rates; China steps sup support of private and public companies


General Trend:
- Equities markets plunge lower tracking volatile New York session
- Asian chipmakers generally track declines in the US
- South Korean chipmaker Hynix declines over 4%, sees slowing DRAM price growth
- Panasonic rises over 1%, Tesla gained following its earnings report
- Australia’s AMP Ltd declines over 17%, issued quarterly update on wealth management unit
- Qantas declines over 3% after quarterly sales report
- Iron Ore miner Fortescue drops over 5%, Q1 shipments declined
- Data breach weighs on shares of Cathay Pacific
- South Korea Q3 GDP misses ests with Nov rate decision in focus
- China said to have made its first coordinated move since 2017 to lower mortgage rates in some Tier 1 cities, sparking talk that rates have peaked
- Canon Inc is expected to report earnings after the Tokyo close
- US companies expected to report earnings on Thursday (including afterhours) include Alphabet, Altria, Amazon, Bristol-Myers, CME Group, Celgene, Chipotle, Comcast, ConocoPhillips, First Solar, Intel, International Paper, KKR, Mattel, Merck, Sherwin-Williams, Snap and Western Digital
- ECB is due to hold its policy meeting later today

***Headlines/Economic Data***
Japan
-Nikkei 225 opened -1.9%
- (JP) Japan FSA considering capping crypo leverage trading – Nikkei
- (JP) Bank of Japan (BOJ) Deputy Gov Wakatabe: Taking strong steps to burst bubble could push economy into serious recession; still talks on feasibility of tightening monetary policy as a preemptive step against rise in asset prices
- (JP) Japan Investors Weekly Net Buying of Foreign Bonds: ¥8.1B v +¥1.02T prior; Foreign Buying of Japan Stocks: +¥76.5T v +¥52.4B prior
- (JP) JAPAN SEPT SERVICES PPI Y/Y: 1.2% V 1.2%E
- Sharp, 6753.JP Reports prelim H1 Net ¥40B v ¥36B guidance, Op ¥46.5B v ¥46.0B guidance; Cuts Rev forecast to ¥1.13T v ¥1.30T prior [-9% in early trade]
-(JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.10% 2-yr JGBs, avg yield -0.117% v -0.1120% prior, bid to cover 5.31x v 4.37x prior

Korea
-Kospi opened -2.4%
- (KR) SOUTH KOREA Q3 PRELIM GDP Q/Q: 0.6% V 0.8%E; Y/Y: 2.0% V 2.3%E
-Hynix, 000660.KR Reports Q3 (KRW) Net 4.7T v 4.6Te; Op 6.47T v 6.3Te; Rev 11.4T v 11.8Te
- (KR) South Korea Finance Minister comments after weaker than expected Q3 GDP data: Achieving 2.9% GDP growth may not be easy
-(KR) Bank of Korea (BoK): Held meeting today to discuss US stock market decline, domestic economic fundamentals are stable
- Hyundai Motor, 005380.KR Reports Q3 (KRW) Net 306B v 939B y/y; Op 289B v 1.2T y/y; Rev 24.4T v 2.2T y/y [ -10%]
China/Hong Kong
-Hang Seng opened -1.9%, Shanghai Composite -2.4%
-(CN) Bank in multiple China cities including Beijing, Guangzhou, Hangzhou, and Foshan have all cut mortgage lending rates, the first coordinated move since 2017 - Chinese press
- (CN) China should cut stamp duty for loss making stock investors - Chinese Press
-(CN) China has been quietly reducing production of rare earth in H2, seen as a move to drive up prices
- 1810.HK Guides shipments of smartphones to exceed 100M units by the end of Oct
- (CN) China Guangzhou said to seek investments in 20 state-backed companies - Chinese Press
- 293.HK Cathay Pacific discovered unauthorized access to some passenger data that could affect ~9.4M passengers
- (CN) Two China funds, CM Fengqing Flexible Allocation Fund and E Fund Ruihui Flexible Fund, both sold all holdings totaling $4.0B in bonds and stocks during Q3 without giving an explanation - US financial press
- (CN) China PBOC sets Yuan Reference Rate: 6.9409 v 6.9357 prior
- (CN) China PBoC Open Market Operation (OMO): To inject CNY100B in 7-day reverse repos v CNY150B prior: Net: CNY100B injection v CNY150B prior
- (CN) China said to be tightening scrutiny of offshore investment using state assets - China Daily
- (CN) China Banking and Insurance Regulator (CBIRC): Will support insurers' investment in listed companies
- (CN) China President Xi: Looking for ways to support small companies - Xinhua

Australia/New Zealand
-ASX 200 opened -1.4%
- QAN.AU Reports Q1 (A$) Rev 4.41B v 4.19B y/y
- (NZ) New Zealand Sept Trade Balance (NZ$): -1.56B v -1.37Be; 12-mnth YTD: -5.19B v -5.02Be
- AMP.AU Completes portfolio review: To spin off NZ wealth management unit via IPO next year; to sell ANZ wealth protection and mature businesses to Resolution Life for A$3.3B
- FMG.AU Reports Q1 Iron Ore shipped 40.2Mt, -9% y/y; Production 51.9Mt, +14% y/y
- (AU) Fitch affirms Australia sovereign rating at AAA; outlook Stable

Other Asia
- (TW) Taiwan Cabinet Spokesperson: Major Taiwan Govt funds are ready to defend the stock market if needed

North America
- US equity markets ended lower: Dow -2.4%, S&P500 -3.1%, Nasdaq -4.4%, Russell 2000 -3.8%
- (US) Fed's Brainard (voter, dove) no comments on monetary policy in speech

Europe
- (UK) Certain technology companies said to have met with the UK government in London to seek assurances about the impact of a no-deal Brexit on jobs and investment - UK Press
- (UK) PM May meeting to the 1922 committee of Conservative MPs (back benchers): PM gave several examples of what concessions EU had made to Britain

***Levels as of 01:30ET***
- Hang Seng -2.1%; Shanghai Composite -1.7%; Kospi -2.2%; Nikkei225 -3.4%; ASX 200 -2.8%
- Equity Futures: S&P500 +0.3%; Nasdaq100 +0.5%, Dax -0.7%; FTSE100 -0.8%
- EUR 1.1380-1.1476; JPY 111.82-112.25 ; AUD 0.7056-0.7085;NZD 0.6502-0.6530
- Dec Gold +0.7% at $1,239/oz; Dec Crude Oil -1.1%at $66.11/brl; Dec Copper -0.5% at $2.73/lb

>>> US After Hours Summary: KN +18%, TSLA +11.5%, XLNX +11%, MLNX / FF


After Hours Summary: KN +18%, TSLA +11.5%, XLNX +11%, MLNX / FFIV +6%, F +4% are higher, while AMD -22%, ALGN -21%, EFX -11% are lower following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: KN +18.4%, TSLA +11.5%, XLNX +11.2%, ECHO +9.3% (light volume), CVRR +8.8%, MLNX +6.2%, FFIV +5.8%, ELY +4.6%, F +4.4%, PS +3.6%, CTXS +2.9% (also authorizes $750 million increase to share repurchase program), ABX +2.6%, NOW +2.5%, MSFT +1.9%, SAVE +1.9% (light volume), V +1.7%, WHR +1.7%, DLB +1.5%, LVS +1%, VALE +1%

Companies trading higher in after hours in reaction to news: NDLS +11.3% (rebounding from today's 25% drop following earnings/offering news), RNST +4.7% (ticking higher; increases quarterly cash dividend to $0.21 per share from $0.20 per share; authorizes $50 mln share common stock repurchase program), PTI +3.4% (after closing 28% lower on the day after pricing offering), MRVL +3.1% (Starboard increases active stake and releases presentation given at Capitalize for Kids Investors Conference), DXC +1% (continued volatility on well above-average volumes amid rumors of the exit of a member of co's management; co subsequently made a statement affirming guidance at high end of prior), TWLO +1% (names Khozema Shipchandler as CFO; note stock closed 8% lower on the day)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: AMD -21.8%, ALGN -20.9%, EFX -10.7%, CURO -6% (light volume), PTC -5.4%, ORLY -3.3%, TRN -2.9% (light volume), GG -1.8%

Companies trading lower in after hours in reaction to news: ELGX -11.5% (commences a registered underwritten public offering of $20mln worth of common stock), GNC -4.4% (still checking; scheduled to report earnings Oct 31), NVDA -3.2% (following AMD earnings/guidance), NOG -2.6% (continued weakness - down 16% on the week), AAP -0.8% (following ORLY earnings/guidance)

>>> US Close Dow -2.41% S&P -3.09% Nasdaq -4.43% Russell -3.79%

Closing Market Summary: S&P 500 Wipes Yearly Gains in Ugly Finish

Stocks took another beating on Wednesday, with losses accelerating into the closing bell. The S&P 500 lost 3.1%, completely wiping out its gains for the year. The Dow Jones Industrial Average also fell into the red for the year, dropping 608 points, or 2.4%, and the Nasdaq Composite lost 4.4%.

There was little room to hide on Wednesday, as the communication services (-4.9%) and information technology (-4.4%) sectors led eight of the 11 S&P groups significantly lower. The only three sectors to advance were the defensive-oriented consumer staples (+0.5%), real estate (+1.1%), and utilities (+2.3%) groups.

Stocks initially opened flat, but soon began ticking lower before doing a nose dive in the late afternoon.

AT&T (T 30.36, -2.66, -8.1%) and Texas Instruments (TXN 92.01, -8.24, -8.2%) weighed on their respective communication services and information technology sectors with disappointing earnings reports on Wednesday. Telecom giant AT&T missed earnings expectations, citing its recent acquisitions and accounting changes. Likewise, chipmaker Texas Instruments reported below-consensus revenue and issued a Q4 earnings warning, acknowledging that demand has slowed for its products across most markets.

Texas Instruments' earnings warning weighed on chipmakers, as investors expressed concerns over a potential economic slowdown that could be prolonged if macro issues, like a trade war with China, worsen. STMicroelectronics (STM 13.69, -2.18) also fell, losing 13.7%, after lowering its guidance, and the Philadelphia Semiconductor Index dropped 6.6% -- now down 16.1% for the month.

However, Dow component Boeing (BA 354.65, +4.60, +1.3%) reported better-than-expected top and bottom lines and raised its earnings guidance, giving futures and the Dow a boost in early action. The defense company's upbeat report, however, was construed as company-specific news, as the Dow and industrials sector (-3.4%) quickly rolled over. Boeing closed a ways off its high (+4.2%).

Disappointing New Home Sales for September (553,000 actual vs 625,000 consensus) helped accelerate losses in the morning, and selling steepened after the Fed indicated in its Fed Beige Book for September that manufacturing prices continued to rise, attributed to tariffs. On a positive note, the Fed reported that economic activity grew at a modest to moderate pace.

Separately, Treasuries ended Wednesday on a higher note again, as the increase in demand for the "risk-free" assets continued to push yields down from recent multi-year highs. The Fed-sensitive 2-yr yield closed two basis points lower at 2.86%, and the benchmark 10-yr yield closed four basis points lower at 3.12%.

In politics, police intercepted bombs mailed to high-profile Democrats, including former President Barack Obama and former presidential candidate Hillary Clinton, as well as CNN.

Reviewing Wednesday's economic data, which included the weekly Mortgage Applications Index, the FHFA Housing Price Index for August, and New Home Sales for September:
  • New home sales declined 5.5% month-over-month in September to a seasonally adjusted annual rate of 553,000 (consensus 625,000). That was the weakest pace since December 2016 and it followed on the heels of a sharp downward revision for August to 585,000 (from 629,000).
    • The key takeaway from the report is that it underscores how demand is being impacted by rising mortgage rates. Median and average home prices were both down year-over-year, yet that didn't seem to provide much of a lift for new home sales.
  • FHFA Housing Price Index for August increased 0.3%, lower than the revised 0.4% increase in July (from 0.2%).
  • The weekly Mortgage Applications Index rose 4.9%.

>>>NordLB gets takeover offer from Commerzbank - report (translated)

NordLB gets takeover offer from Commerzbank - report (translated)
24 OCT 2018
NordLB, the German regional bank, has attracted a bid from the listed German bank Commerzbank [ETR:CBK], Handelsblatt reported.
The German-language article, without identifying sources, said Commerzbank has submitted a non-binding offer to take over NordLB.
The report said a possible takeover by Commerzbank would be a third scenario for the future of NordLB, besides two that have already been discussed: an entry by financial investors and a merger with another German regional bank, Helaba.
Hannover-based NordLB is said to need fresh capital of up to EUR 3.5bn, the report noted. Its majority owner, the German state of Niedersachsen, has stated its readiness to accept new capital into the bank under certain conditions, and numerous parties have expressed interest, according to the article.
The report cited its sources as saying that six potential bidders have been picked and are currently examining NordLB's books. It said these are thought to be Commerzbank, Helaba, and four financial investors that supposedly include Cerberus and Apollo.
Handelsblatt learned that the interested parties have until 28 November to put forward binding bids.
The report added that in parallel with this process, NordLB is thought to be considering whether to sell off its nonperforming shipping loans. According to the report, interest in such a deal has come from the investment firms Cerberus, Apollo and Socrates.
While Niedersachsen presently holds a stake of almost 60% in NordLB, local savings banks (Sparkassen) have 35% while the state of Sachsen-Anhalt has almost 6%.
Should Commerzbank be the successful suitor, the article said, it is thought possible that the existing owners will exit. In the event of a deal with Helaba, the present shareholders are expected to remain, eventually holding minority control in a merged entity, the report added.

(TheInformation) Facebook on Hunt for Big Cybersecurity Acquisition

Facebook on Hunt for Big Cybersecurity Acquisition

In an effort to repair its tattered reputation around data protection, Facebook is stepping up efforts to acquire a major cybersecurity firm, according to four people familiar with the matter.

Facebook has approached several security firms about an acquisition, two of the people said, although neither would identify the companies as discussions are still underway. One of the people said a deal could happen by the end of the year.

The company’s push comes in the wake of a devastating security breach that affected 30 million users, an incident that added to a litany of security and privacy concerns swirling around the social media company in recent months. Facebook is betting that a splashy acquisition of a security company might serve the dual purpose of bolstering its talent in that field and delivering a much-needed public relations win. It formed a team of people inside its corporate development department to search for cybersecurity companies that might be willing to be acquired, said one of the people familiar with Facebook’s strategy. A Facebook spokeswoman declined to comment.

Facebook has made several cybersecurity acquisitions over the past few years, such as its 2014 purchase of PrivateCore, which makes secure server technology that helps protect servers from malware or unauthorized access. Facebook didn’t disclose the purchase price of the company, but PrivateCore had raised $2.3 million in venture capital funding prior to its acquisition.

In its current acquisition efforts, the company is most likely to look at software that it could wrap into its own systems, including things like analytics or tools to flag unauthorized access, people familiar with its thinking said. Companies in these categories include Demisto, JASK and Swimlane, each of which are privately held and would likely cost somewhere in the hundreds of millions of dollars. It could also look for technology that could help users keep their accounts more secure or add privacy features, the people said. Some companies in this category include ZeroFOX and SafeGuard Cyber, both of which help assess accounts for risk of attack or prevent attacks. ZeroFOX has raised more than $80 million to date and SafeGuard Cyber $14.9 million.

Facebook’s security practices have been called into question in recent months. The data breach it announced last month affected around 30 million users, exposing an extensive amount of personal information, including name, contact information, religion, and location data. Its investigation reportedly blamed the breach on spammers who were looking to profit from Facebook user data. Before that, the revelation that Cambridge Analytica siphoned the data of millions of users in an attempt to manipulate the 2016 presidential election sparked an avalanche of criticism of Facebook’s data protection policies.

An acquisition would also help Facebook hire technical expertise in cybersecurity. Facebook has been looking to hire a significant number of security personnel, with CEO Mark Zuckerberg committing to expanding teams dedicated to safety and security from 10,000 to 20,000 people this year. Cybersecurity talent is in heavy demand from many types of companies, which has created a shortage of skilled professionals. Facebook executives said one of the reasons for the PrivateCore deal was for its technical talent.

Buying a major cybersecurity firm would also serve as a tangible statement that Facebook is investing in cybersecurity, which otherwise is largely done behind the scenes, said a person who has previously been involved in Facebook’s cybersecurity acquisition discussions.

In beefing up its cybersecurity acquisition efforts, Facebook is competing with several other big tech companies that are trying to strengthen their technology and expertise, including Amazon, Google and Hewlett Packard Enterprises. Cisco has already done some big deals, including the $2.35 billion purchase of Duo Security in August. Overall, in the third quarter, there was $5 billion in total acquisition activity in cybersecurity across 38 deals, according to an analysis by Momentum Cyber, a cybersecurity advisory firm. That was up 204% over the previous quarter.

Several executives and investors who work in the cybersecurity industry expressed skepticism that even a major acquisition could solve Facebook's security vulnerabilities. Facebook’s business model makes it a major target. It collects and saves the personal data of its users and then allows outside companies to target advertising using that data. However anonymized, Facebook itself is a constant reminder to the world that troves of valuable personally identifiable information remain on its many servers scattered around the world.