>>> Abertis/Atlantia: Spanish Ministry of Energy still reluctant to grant approv

Abertis/Atlantia: Spanish Ministry of Energy still reluctant to grant approval - report (translated)
26 JAN 2018
The Spanish government has reduced its pressure on the takeover bid by Italian infrastructure group Atlantia [BIT:ATL] on its Spanish counterpart Abertis [BME:ABE], but the Ministry of Energy is still reluctant to give its approval, Expansion reported.
According to the paper, the Council of Ministers will approve Atlantia’s offer today Friday (26 January) at the proposal of the Ministry of Public Works, the report said, citing sources close to the government.
Minister of Economy, Luis De Guindos, who has defended the government’s neutrality said yesterday in Davos that the transaction is unlikely to get stuck in court. De Guindos is convinced that the two ministries will not take the market regulator to court over their different approaches to the Abertis takeover bids.
De Guindos went on to say that the CNMV is doing its job and suggested the controversy is over since both Atlantia and counter bidder Hochtief [FRA:HOT] (German unit of Spanish infrastructure group ACS [BME:ACS]) have requested authorisations.
Other ministries such as the Ministry of Employment will give their views on the transaction today, the Spanish-language paper added.

>>> GKN directors think pension deficit could be closer to GBP 400m than GBP 1.1

GKN directors think pension deficit could be closer to GBP 400m than GBP 1.1bn - report
26 JAN 2018
GKN [LON:GKN] directors believe the FTSE-100 engineering company’s pension deficit could be closer to GBP 400m (EUR 456m) than the previously suggested figure of GBP 1.1bn, The Times reported. The newspaper cited comments attributed to GKN’s finance director Jos Sclater at a meeting with investors on Tuesday.
GKN is currently the subject of a GBP 7.4bn hostile takeover bid from rival engineering group Melrose [LON:MRO], and GKN’s pension deficit has been mentioned in previous reports as a potentially complicating factor for the bidder.
It is understood that Sclater argued that GKN pension scheme trustees’ claim that the pension deficit is GBP 1.1bn was calculated on the basis of gilt yields remaining unchanged, the item said. Gilt yields are a measure of income from government bonds, a typical investment for pension funds.
GKN board members have in private been saying that they anticipate rising gilt yields due to forecasts that interest rates will rise, the article continued. Sclater is believed to have predicted that gilt yields would rise by 1.75% if there was no uncertainty as to GKN’s future ownership, which would reduce the deficit to GBP 400m, according to the report.
As previously reported, GKN Group Pension Scheme’s trustee said on 16 January that the schemes had an aggregate deficit on a gilts flat basis of GBP 1.1bn and an aggregate deficit on a solvency basis of GBP 1.9bn.
The pension trustees warned last week that the deficit should be a priority if GKN is acquired or broken up.
Separately, the report said Sclater’s comment raises the question of GKN to trustees of the company’s two pension schemes, both of which are chaired by former GKN executives.
GKN’s former general counsel Rufus Ogilvie Smals chairs one of the schemes, the item said, adding that Smals has acted as a consultant to GKN on antitrust and compliance matters. The other GKN pension fund is chaired by Michael Fairbrother, who was formerly GKN’s financial controller, according to the newspaper. The item noted a trend for chairmen of large pension funds to be independent of the fund’s sponsoring company.
Sclater is believed to have mentioned a “strong relationship” with the trustees, the article continued.
The report went on to quote a GKN spokesperson who said the group does not recognise the numbers cited from Sclater’s meeting with investors.
The trustee chairmen did not respond when asked for comment, the article added.
GKN’s share price closed 1.7p down at 432.9p in London on Thursday, 25 January, giving the company a market capitalisation of GBP 7.43bn.

>>> Europe : Brokers Upgrades & DOwngrades 26th of January 2018

>>> Up
* Atresmedia Upgraded to Buy at Natixis
* CRH Upgraded to Neutral at Exane
* First Quantum Minerals Raised to Outperform at National Bank
* Lundin Mining Upgraded to Outperform at National Bank; PT C$11
* M6 Upgraded to Buy at Liberum
* National Grid Up to Neutral at Goldman; Risks Seen Priced In
* Somfy Upgraded to Buy at SocGen; PT 95 Euros

>>> Down
* Acerinox Downgraded to Underweight at JPMorgan; PT 12 Euros
* Aryzta Downgraded to Sell at SocGen; PT 26 Francs
* Aryzta Downgraded to Hold at Kepler Cheuvreux; PT 30 Francs
* Aryzta Cut to Hold at Mirabaud Securities; PT 33.50 Francs
* Aryzta Downgraded to Hold at Berenberg
* Barry Callebaut Cut to Hold at Kepler Cheuvreux; PT 2,000 Francs
* Lampe Cuts Daimler to Hold; Competition Launches More New Models
* GDS Holdings ADRs Cut to Underperform at Credit Suisse
* Interpublic Downgraded to Underperform at BofAML
* LafargeHolcim Downgraded to Underperform at Exane
* Leonteq Downgraded to Sell at UBS; Price Target 52 Francs
* Repsol Downgraded to Market Perform at BBVA; PT 16.60 Euros
* Salzgitter Downgraded to Underweight at JPMorgan; PT 42 Euros
* Sucampo Downgraded to Neutral at Nomura Instinet; PT $18
* Whirlpool Downgraded to Sector Weight at Keybanc
* WPP Downgraded to Underperform at BofAML
* Yoox Net-A-Porter Downgraded to Hold at Deutsche Bank
* Yoox Net-A-Porter Downgraded to Sector Perform at RBC
* Zumtobel Downgraded to Underweight at JPMorgan; PT 8 Euros

>>> Initiation
* ABN Amro GDRs Rated New Hold at Jefferies; PT 26.80 Euros
* Euronext Resumed at JPMorgan With Neutral; PT 57 Euros
* Metro AG Rated New Hold at Berenberg; PT 19.10 Euros
* Pennon Rated New Neutral at Goldman; PT 7.49 Pounds
* Severn Trent Rated New Sell at Goldman; PT 18.81 Pounds
* Vonovia Rated New Neutral at Oddo BHF; PT 44 Euros

>>> Call

>>> Asian Update

Asia Market Update: Cautious trading ahead of Advance Q4 GDP data out of the UK and US


***Headlines/Economic Data***
General Trend:
- Japan Finance Min Aso declines to address US officials comments related to currencies
- Japan Core CPI holds steady in Dec
- US dollar (USD) trades with a generally weaker tone in Asia: PBoC continues to fix yuan at multi-year high
- PBoC skipped open market operation (OMO) for second straight session; cited relatively high liquidity level in banking system

Australia/New Zealand
- ASX 200 closed for holiday

China/Hong Kong
- Hang Seng opened +0.6%, Shanghai Composite -0.4%
- Hang Seng Information Technology Index +1.8%, Property/Construction +1.5%, Financials +1.2%; Energy -1.8%
- Leshi Internet [300104.CN]: Trades limit down (-10%) for 3rd straight session
- (CN) China Dec Industrial Profits Y/Y: 10.8% v 14.9% prior: 2017 industrial profits CNY7.52T, +21% y/y (fastest growth since 2012)
- (CN) PBOC SETS YUAN REFERENCE RATE AT 6.3436 V 6.3724 PRIOR (strongest CNY fix since Nov 5th, 2015)
- (CN) PBoC: Skips OMO (2nd straight session) vs skipped prior; Net drain CNY270B v CNY120B drain prior; Weekly Net drain CNY320B v CNY590B injection w/w
- (CN) Previously announced PBoC targeted RRR cut* has limited impact on liquidity; PBoC to withdraw liquidity in open market operations (OMOs); PBoC may adjust OMO for deleveraging. – Xinhua (**Reminder: The targeted RRR cut that was announced last September, became effective on Jan 25th)
- (CN) 'Window' not open yet for PBoC benchmark rate hike (in line with prior comments) - China Securities Journal
- (CN) China NDRC: To crack down on irregularities in oil refining sector: Will focus on violations such as illegal crude oil purchases and processing.
- (CN) China Finance Ministry (MOF): To swap CNY1.73T in existing local government debt by Aug
- (CN) China NDRC: To allow banks to create private-equity funds to conduct market-based debt for equity swaps
- (CN) China Finance Ministry Researcher Liu Shangxi: Sees next major source of China government debt is pension deficit.

South Korea
- Kospi opened -0.1%
- Hyundai Mobis [012330.KR]: Down over 8% (reported unexpected Q4 net loss)
- Hyundai Motor [005380.KR] Has declined by over 4% (reported Q4 earnings on Thursday)
- E-Mart [139480.KR]: +12.5% (Affinity and BRV to invest over KRW1T in E-Mart Online)
- South Korea Unification Ministry: North Korea may stage 'threatening' military parade on Thursday, Feb 8th anniversary - South Korean Press
- South Korea and the US are planning to hold second meeting on Free Trade Agreement (FTA) revision Jan 31-Feb 1st, expected to continue to focus on modifications and amendments
- South Korea Trade Ministry comments on recently announced US tariffs on washing machines: To prepare steps to increase local demand for washers

Japan
- Nikkei 225 opened +0.4%; closed -0.2%
- Rakuten [4755.JP] Gained over 3% (announced online grocery delivery service with Wal-Mart)
- Komatsu [6301.JP] Gained over 1.5% on session (Caterpillar reported earnings on Thursday)
- Fujitsu [6702.JP]: +1.3% (confirmed talks regarding mobile phone business)
- Isetan [3099.JP]: +1% (May report results later today)
- Fanuc [6954.JP]: Flat (May report earnings today)
- Shin-Etsu Chemical [4063.JP]: Flat (May report earnings later today)
- Koito Mfg Co [7276.JP]: +1.7%, May report earnings today
- JAPAN DEC NATIONAL CPI Y/Y: 1.0% V 1.1%E; EX-FRESH FOOD (CORE) Y/Y: 0.9% V 0.9%E
- Japan Jan Tokyo CPI Y/Y: 1.3% v 1.1%e; Ex-Fresh Food (Core) Y/Y: 0.7% v 0.8%e
- BoJ released Minutes of Dec 20-21 Policy Meeting: Most Members (Price momentum is being maintained; Appropriate to continue 'powerful' monetary easing); Some Members (Said must continue to look at both positive and negative effects of current policy, including effects on financial system) ; One Member (Said functioning of financial intermediation had not been impaired yet, but bank profits show effects of low rates on strength of financial institutions had been accumulating; Said BoJ should keep policy steady now, but might need to consider adjusting level of interest rates when economy, prices were expected to continue improving)
- Japan Fin Min Aso: Reiterates G7 agreement is to avoid targeting FX for the sake of competitiveness; won't comment on other countries' remarks on FX
- Former Japan FX Official Sakakibara ('Mr Yen'): Expects USD/JPY to trade toward ¥100 by end of 2018; USD/JPY at ¥100 or ¥105 not a major problem; BoJ Gov Kuroda may start talking about an exit in 2-3 years

Other Asia
- (SG) Singapore Dec Industrial Production M/M: -2.0% v +2.4%e; Y/Y: -3.9% v +0.8%e
- (TH) Thailand Central Bank Gov Veerathai: To be more 'stringent' in monitoring Baht (THB); prepared to add more measures if Baht moves are 'unusual'

North America
- US equity markets ended mostly higher: Dow +0.5%, S&P500 +0.1%, Nasdaq -0.1%, Russell 2000 +0.1%
- S&P500 Utilities +1.5%, Health Care +0.8%; Energy -0.8%
- Intel [INTC]: Gained over 3% afterhours: Reports Q4 $1.08 v $0.86e, Rev $17.1B v $16.3Be; Raises FY18 capex plan materially; raises quarterly dividend by 10% to $0.30 from $0.2725 (2.65% yield); Guides Q1 EPS ~$0.65-0.75 v $0.73e, Rev $14.5-15.5B v $15.1Be
- Starbucks [SBUX]: Down over 4% afterhours: Reports Q1 $0.65 v $0.57e, Rev $6.07B v $6.14Be; Affirms FY18 global comp sales growth +3-5% (prior +3-5%); to open 2,300 new stores (prior 2,300)
- (US) Pres Trump: the Dollar will strengthen as the economy does; ultimately I want to see a strong dollar; Mnuchin comments this week were out of context - CNBC interview excerpts
- (US) President Trump said to have 'ordered' special investigator Mueller fired in June 2017 – NY Times
Looking Ahead: US Dec Durable Goods and Q4 US Advance GDP due for release; Canada Dec CPI
-Corporate earnings are expected out of companies including AbbVie, Air Products, Colgate, Honeywell, Lear, Moog, PolyOne, Rockwell Collins

Europe
- (EU) ECB sources: ECB council divided about next move as the rise of the Euro complicates the forecasts; Some want to remove the easing bias in March; others prefer June for next policy adjustment; Others are more hesitant and want to fully reassess at the next meeting – press
- (ES) Spain govt reportedly intends to move forward with plan to block separatist Puigdemont candidacy for regional Catalan president - press
- (IE) Ireland Central Bank: Raises 2018 GDP growth forecast to 4.4% v 3.9% prior; raises 2017 GDP growth forecast to 7.0% v 4.9% prior; economy is not overheating at present; Brexit risks may have moved slightly in a benign way.
Looking Ahead: Euro Zone Dec M3 Money Supply and Private Sector Loans, along with UK Q4 Advance GDP due for release

***Levels as of 01:00ET***
- Hang Seng +1.4%; Shanghai Composite +0.3%; Kospi +0.3%
- Equity Futures: S&P500 +0.2%; Nasdaq100 +0.3%, Dax +0.2%; FTSE100 +0.1%
- EUR 1.2370-1.2434 ; JPY 109.34-109.77; AUD 0.8005-0.8058 ;NZD 0.7292-0.7345
- Feb Gold +0.3% at $1,351/oz; Feb Crude Oil -0.2% at $65.36/brl; Mar Copper +0.3% at $3.212/lb

WSJ : Should You Buy Bitcoin With Your Credit Card?

Should You Buy Bitcoin With Your Credit Card?
Some card companies won’t allow it; Citigroup, Bank of America review their policies

Some banks and credit-card companies have begun restricting customers’ purchases of bitcoin, shutting down a popular way to buy the volatile digital currency.

This month, Capital One Financial Corp. COF -0.26% decided it would no longer let its customers use credit cards it issues when buying bitcoin or other cryptocurrencies such as Ethereum “due to the limited mainstream acceptance and the elevated risks of fraud, loss and volatility.” The bank said it would “regularly evaluate the decision as cryptocurrency markets evolve.”

The firm’s decision followed Discover Financial Services DFS +1.19% ’ move in 2015 to effectively prohibit purchases of digital currencies with its cards.

Bank of America Corp. BAC +0.12% allows bitcoin purchases with the credit cards it issues. “At this point there is nothing that would block a transaction, but we are carefully reviewing our policy,” said a bank spokeswoman.

Citigroup Inc., C +0.91% which allows bitcoin purchases with its credit cards, is also reviewing its policy, according to a person familiar with the matter. TD Bank, the U.S. unit of Toronto-Dominion Bank , TD +0.30% said that as a result of security measures some bitcoin transactions aren’t being processed.

The moves could put a crimp in an increasingly common way to buy bitcoin, which soared 1,375% last year and attracted widespread new interest from individual investors before falling about 20% so far this year. Despite bitcoin’s growing popularity, some card companies are expressing concerns about consumers using their credit cards to buy the volatile currency and about taking on exposure to those purchases.

Funding investments with credit cards isn’t usual in traditional markets. Among brokerage firms, Charles Schwab Corp. and TD Ameritrade Holding Corp. don’t allow it, and E*Trade Financial Corp. lists several funding methods it accepts on its website, but doesn’t mention credit cards.

With bitcoin, some 18% of buyers funded their purchases with a credit card, according to a survey released in December from lending marketplace LendEDU. Of those, 22% said they didn’t pay off their credit-card balance after the purchase. Nearly 90% of that group expected to eventually pay off their balance using profits from the investment, the survey found.

Funding those investments with debt only adds to the risk of investing in bitcoin. The volatile asset—bitcoin fell more than 50% between its December peak and January low—could result in card holders being underwater before their bill comes due.

Investors need to cover what often are double-digit interest rates on credit cards if they don’t pay the bill in full, in addition to fees on the bitcoin transactions. To offset those costs, borrowers need bitcoin to rise substantially in value. That can increase the chances of borrowers not paying their credit-card bills if they owe more on the asset than it is worth.

Fraud losses are also a concern for card issuers. As more cryptocurrency exchanges emerge, some card companies say there is an elevated risk of consumers purchasing bitcoin from a fraudulent exchange. Card holders typically aren’t responsible for fraudulent purchases charged to their credit card, raising the risk that card issuers could be stuck with the loss.

Card companies have also cited worries around the lack of transparency with bitcoin purchases that could subject them to legal risk around anti-money-laundering obligations. That can include concerns that the seller of the item is using the funds for illegal activities.

“There’s a host of issues,” said David Nelms, Discover’s CEO. Among others, “we don’t want to be responsible if someone buys bitcoin and it drops 50% the next day.”

But the move to crack down has raised the ire of bitcoin investors. James Kinslow of Tucson, Ariz., earlier this month was trying to buy about $100 worth of bitcoin through Coinbase, which operates one of the largest bitcoin exchanges.

Mr. Kinslow said he already had an account with Coinbase, and had previously used his Capital One credit card to buy bitcoin. This time, however, he was blocked. “I think part of the agreement is, you guys provide me with money, and I use it as I see fit,” Mr. Kinslow said.

Coinbase, which has allowed credit-card purchases since 2016, said it is looking into Capital One’s decision.

Visa Inc. and Mastercard Inc., the two largest U.S. credit-card networks, generally don’t allow card issuers to reject all purchase transactions from a certain merchant unless it is illegal or the issuers have concerns that include fraud or significant legal risk.

American Express Co. allows card users to buy bitcoin, with some restrictions. Consumers have to link their AmEx card to a specific bitcoin wallet where they can load up to $200 a day and no more than $1,000 a month.