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Fortum optimistic about Uniper deal; includes up to EUR 1.5bn cancellation fee (translated)
The Finnish energy company Fortum [HEL:FORTUM] is optimistic the deal to acquire German energy group Uniper [ETR:UN01] will go ahead, according to Arvopaperi.
The Finnish-language piece cited comments by Fortum Chief Executive Pekka Lundmark made during a television programme. Lundmark is optimistic that talks with Uniper's management will be constructive, it added.
If E.On [ETR:EOAN] decides not to sell its Uniper shares to Fortum, the Finnish group is entitled to a large cancellation fee, basic amount is approximately EUR 750m, the article noted.
In addition, the fee includes a variable amount, depending on Uniper's share price. The maximum amount of the fee can be around EUR 1.5bn.
Fortum announced its plans to acquire a 47% stake in Uniper form E.On last month at EUR 22 per share.
Dow +0.07% S&P +0.10% Nasdaq +0.10% Russell -0.01%
US Market closed higher. With the third quarter earnings season nearly in the books, investors continued to chew on the prospect of tax reform. The House is expected to vote on its version of a tax reform bill this Thursday, but, even if the bill passes, the lower chamber still has some work to do in order to reconcile its version with the version that the Senate unveiled last week. utilities sector was the best-performing group on Monday, finishing with a gain of 1.2%, followed from a distance by the consumer staples (+0.6%), materials (+0.5%), and consumer discretionary (+0.3%) groups. In total, seven of the eleven sectors settled in positive territory. GE -7,2%, after the company cut its divided by half and dialed back its profit forecast for 2018. The dividend cut was expected by many and was deemed necessary by new CEO John Flannery in order to restructure the 125-year-old industrial giant. Following Monday's decline, GE shares are down 39.8% year to date. MAT+20.7% following weekend reports that rival Hasbr has made a bid to acquire the company; Hasbro shares also moved higher, adding 5.9%. US After Hours LUNA +15%, TEUM / MARK +11%, FENG +6%, SWCH -7%, following earnings/guidance, BWLD +28% on potential bid. Asian equity markets opened today’s trading session mixed. Australia’s equity market has declined by over 0.9%. In Japan, large bank Mizuho Financial has declined on the session, as the company reported better than expected Q2 results and affirmed its FY forecast. Later today, mega banks Mitsubishi UFJ and Sumitomo Mitsui are due to issue their financial reports. Hang Seng Financials index has traded little changed. China Oct M2 money supply and new yuan loans data, which were released on Monday, missed market expectations. Property shares in Hong Kong have traded generally lower. Sunac China has declined by more than 5%. In Oct, China’s Home Sales Value declined by over 3%, which was the largest y/y drop in over 2 years. Shares of Samsonite have traded higher by over 3% in Hong Kong following the company’s Q3 results and the overall Hang Seng Consumer Goods index has gained over 0.7%. China Retail Sales in Oct rose at the slowest pace since Jan, while Industrial Production growth slowed to 6.2% y/y (from 6.6% prior)
Nikkei Uncg Hang Seng -0.06% CSI -0.75% Shanghai -0.59% Shenzen -0.97%
Eur$ 1.1673 CNH 6.6484 CNY 6.6426 JPY 113.64 GBP 1.3101 CHF 0.9967 RUB 59.4819 WTI$ 56.52 -0.42%
S&P -0.10% EuroStoxx unchg FTSE +0.03% Dax -0.03% FTSE +0.03% SMI +0.04%
Macro :
- U.S. Oct. Budget Deficit at $63.2b; Est. $59b
- Goldman Says Volatility Implies S&P 500 Drop Over Next Two Weeks
- S&P 500 May Rise to 2,850 Next Year on Earnings: Deutsche Bank
Keep an eye on :
- ACS SM : ACS Nine Month Net Income EU603 Mln
- ADL GY : Adler Real Estate Nine Month Rental Income EU130.5 Mln
- ADL GY : Acquires 700 apartments under construction in Berlin for total of up to €120M
- AIR FP : Bombardier Is Said Near $1.1b C Series Deal With EgyptAir, Jet Airways Says Discussing Buying 75 More Boeing 737s: Reuters
- ALO FP : Alstom 1H Adjusted Ebit Climbs 16%; 1H Orders Fall 49%
- AMUN FP : Added to MSCI Woeld
- AMZN US : Amazon To Adapt ’Lord of the Rings’ Novels for Television
- AAL LN : Anglo American Blocked En+ Director Hire in Lead-Up to IPO: FT
- ATCOB SS : Atlas Copco Confirms Outlook at CMD in Stockholm
- BCP PL : BCP Nine Month Net Income EU133.3 Mln
- BBVA SM : BBVA, Cerberus Are Said to Advance Real Estate Talks: Expansion
- GBF GY : Bilfinger Raises 2017 Forecast for Organic Output Volume
- DRI GY : Drillisch AG Confirms 2017 Forecasts / Added to MSCI World
- HEI GY : HeidelbergCement sells half of its Georgian business
- HEN3 GY : Henkel Raises EPS Forecast as Profit Misses Estimates
- IFX GY : Infineon Fourth Quarter Total Segment Profit Meets Estimates
- ITP FP : Interparfums Sees 2018 Sales Rising 5%, With Stable Margins
- KGF LN : Kingfisher May Cut Hundreds of Jobs in France, Unions Say: AFP
- KN FP : Natixis Restates Quarterly Series to Reflect Reporting Changes
- PBR US : Petrobras Cuts 2017 Capex Est. to $16b From $17b: CFO
- RWE GY : RWE Trading Unit 9-Month Adj. Ebitda Swings to Profit
- SZG GY : Salzgitter’s Strip Steel Unit 9-Month Pretax Returns to Profit
- LNSX GY : Sixt Leasing Confirms FY Forecast, Says 9-Month Profit Fell
- TIT IM : Telecom Italia CEO Says No Finance Plan for Network: Sole
- TLX SM : KKR Exercises Call Option on 15.2% Stake in Telxius for EU484.5m
- TSCO LN : Man Group Reports New 8.45% Passive Stake in Tesco Corp.
- TRI FP : Trigano FY Net Jumps 42%; Co. Says Market Growth to Continue
- UTDI GY : United Internet Third Quarter Ebitda Beats Highest Estimate
- VIV FP : Vivendi Upgraded to Overweight at JPMorgan; PT 40 Euros
- VOW3 GY : Daniel Weissland to Head Volkswagen Group Canada
>>> Up
* A2A Upgraded to Outperform at MedioBanca; PT 1.61 Euros
* Brenntag Upgraded to Outperform at MainFirst; PT 60 Euros
* CaixaBank Upgraded to Outperform at Credit Suisse; PT 4.40 Euros
* CompuGroup Upgraded to Buy at Commerzbank; PT 62 Euros
* Deutsche Bank Upgraded to Buy at HSBC; PT 18 Euros
* Royal Mail Raised to Outperform at Bernstein; PT 4.50 Pounds
* Talanx Upgraded to Buy at Oddo BHF; PT 38.50 Euros
* Talanx Upgraded to Buy at HSBC; PT 37 Euros
* Tecnicas Reunidas Raised to Equal-weight at Morgan Stanley
* Vivendi Upgraded to Overweight at JPMorgan; PT 40 Euros
* Wihlborgs Upgraded to Hold at Kepler Cheuvreux; PT 210 Kronor
* Ypsomed Raised to Buy at Bank Vontobel; Price Target 240 Francs
>>> Down
* Arkema Downgraded to Hold at Kepler Cheuvreux; PT 106 Euros
* Axiare Downgraded to Hold at SocGen; PT 19 Euros
* Draegerwerk Downgraded to Sell at DZ Bank; PT 60 Euros
* Draegerwerk Cut to Reduce at Kepler Cheuvreux; PT 70 Euros
* Geox Downgraded to Underperform at MedioBanca; PT 2.29 Euros
* Hannover Re Downgraded to Hold at HSBC; Price Target 115 Euros
* Innogy Downgraded to Neutral at Goldman
* Intertek Downgraded to Hold at Kepler Cheuvreux; PT 51.90 Pounds
* Leonardo Downgraded to Hold at Kepler Cheuvreux; PT 12 Euros
* Kappahl Downgraded to Sell at SEB Equities; PT 45 Kronor
* Munich Re Cut to Hold at Jefferies; Price Target 200 Euros
* Next Downgraded to Sell at Goldman
* Royal Caribbean Downgraded to Hold at Berenberg
* Trigano Downgraded to Hold at SocGen; Price Target 147.60 Euros
>>> Initiation
* Bertrandt Initiated at Berenberg With Hold; PT 89 Euros
>>> Call
Hours Summary: LUNA +15%, TEUM / MARK +11%, FENG +6%, SWCH -7%, following earnings/guidance, BWLD +28% on potential bid
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: LUNA +14.6%, TEUM +11.1%, MARK +11%, FENG +6.1%, WOW +6%, (light volume), FSNN +3.3%, BGNE +3.2%, OREX +2.3%, DHT +0.8%
Companies trading higher in after hours in reaction to news: BWLD +28% (WSJ reporting that Roark Capital has made a bid to buy the co for more than $150/share), TCON +17.9% (announces that positive results from a Phase 1 clinical trial of TRC102 and Fludara in patients with advanced hematologic malignancies were published in the journal Oncotarget ), CLSN +6.6% (announced the submission of its Phase I/II clinical trial protocol to the U.S. Food and Drug Administration (FDA) for GEN-1, the Company's DNA-based immunotherapy for the localized treatment of ovarian cancer), GLBS +4.9% (announced that an investor holding warrants originally issued pursuant to the February 2017 private placement has elected to exercise its right to purchase 700,000 of the Company's common shares at a price of $1.60 per share), AMRN +4.3% (Amarin's Vascepa showed reductions in potentially Atherogenic Lipid and Inflammatory Markers in Statin Treated Patients with persistent high triglycerides and chronic kidney disease), ABUS +4.2% (ticking higher after confirming LNP licensee ALNY receives accelerated assessment of patisiran from European Medicines Agency)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: MRAM -11.6%, SWCH -6.6%, DAVE -5.1%, PBR -1.6%
Companies trading lower in after hours in reaction to news: MYO -13.4% (announced the filing of registration statement relating to a proposed underwritten follow-on public offering of shares of its common stock and accompanying warrants to purchase common stock), PRQR -7.9% (to offer and sell ordinary shares in an underwritten public offering), ANTH -6.3% (filed for 28,613,474 share common stock offering by the selling stockholders ), TPRE -3.9% (commences underwritten secondary public offering of an aggregate of 15,000,000 of the common shares by holders), RPD -1.9% (indicated lower on block trade pricing), SAGE -1.8% (commences $300 mln common stock offering), QUOT -1.4% (commences $175 mln private placement of convertible senior notes due 2022), GDI -1.4% (commences 22 mln common stock offering by selling stockholders KKR), WTW -1% (intends to offer $500 mln in aggregate principal amount of senior notes due 2025 in a private offering)
Asia Mid-Session Update: Regional equities heading for a 3rd consecutive day of declines; China industrial production comes in lower
***Headlines/Economic Data***
Japan
- (JP) Bank of Japan (BOJ) Gov Kuroda: we continue to pursue powerful monetary easing to make sure that positive inflation developments are not cut short - comments in Zurich
- (JP) Japan MoF sells ¥1.8T v ¥2.2T indicated in 0.10% 5-yr bonds; avg yield -0.107%; bid-to-cover 4.19x
Korea
- (KR) North Korea will continue its pursuit of nuclear missiles in the wake of the United States' rare deployment of three aircraft carrier groups near the Korean Peninsula - letter from North Korea's top envoy to the UN Ja Song-nam to UN Secretary-General Antonio Guterres
China/Hong Kong
- (CN) CHINA OCT INDUSTRIAL PRODUCTION Y/Y: 6.2% V 6.7%E ; YTD Y/Y: 6.7% V 6.3%E
- (CN) CHINA OCT RETAIL SALES Y/Y: 10.0% V 10.5%E; YTD Y/Y: 10.3% V 10.4%E
- (CN) China Oct Foreign Direct Investment (FDI): CNY60.1B v CNY70.3B prior; YTD y/y: +1.9% v 1.6% prior
- (CN) CHINA OCT YTD URBAN FIXED ASSETS Y/Y: 7.3% V 7.3%E
- (CN) China PBoC Open Market Operations (OMO): CNY280B v CNY180B injected in 7, 14 and 63-day reverse repos prior; Net injection CNY140B v CNY150B prior
- USD/CNY (CN) PBOC sets yuan reference rate at 6.6299 v 6.6347 prior
- (CN) China National Stats Bureau (NBS): Jobless rate below 5%; CPI is at ideal level
- (CN) Former SAFE Official (fx regulator) Guan Tao: China reforms of its mechanism for determining the exchange rate should include FX market development and loosening of controls
- (CN) China State Researcher Zhu sees 2018 GDP growth of 6.5% and CPI at 3% - China Financial News (yesterday)
- (CN) China Premier Li Keqiang said to tell Japan PM Abe that both countries should boost cooperation on trade
- (HK) According to Credit Suisse analysts Macau Nov 1-12th gaming Rev +20-22% y/y v 15%e
- (CN) China 10-year bond yield trades at 4%, first time since 2014
- (HK) Macau Gaming Regulator's Chan: To continue existing regulations on junkets, have banned over 200 people entering casino this year
Australia/New Zealand
- (AU) Australia Oct NAB Business Conditions: 21 v 14 prior (record high); Confidence: 8 v 8 prior
- (AU) Australia sells A$150M v A$150M indicated in Aug 2035 indexed bonds; avg yield 0.9732%; bid-to-cover 2.93x
- (NZ) Reserve Bank of New Zealand (RBNZ) confirms dashboard approach to quarterly bank disclosures
US
- (US) US Treasury Sec Mnuchin: Looks forward to successful House tax vote this week; Imposes 183.4-194.9% duties on China plywood imports
***Levels as of 23:00ET***
- Nikkei +0.5%, Hang Seng -0.0%; Shanghai Composite -0.5%; ASX200 -0.9%, Kospi -0.2%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax -0.1%; FTSE100 -0.2%
- EUR 1.1676-1.1662; JPY 113.73-113.57; AUD 0.7638-0.7609;NZD 0.6903-0.6860
- Dec Gold -0.2% at $1,276/oz; Dec Crude Oil -0.2% at $56.63/brl; Dec Copper -0.3% at $3.12/lb
***Narrative***
-Asian equity markets opened today’s trading session mixed. Australia’s equity market has declined by over 0.9%. The S&P ASX 200 Materials and Energy indices have each lost over 1% on the session. Shares of Woodside Petroleum have declined by over 3%. On Monday, Shell announced that it would sell down shares in the Australian energy producer.
-Besides this, the ASX 200 Financials index has lost over 0.6%. In Japan, large bank Mizuho Financial has declined on the session, as the company reported better than expected Q2 results and affirmed its FY forecast. Later today, mega banks Mitsubishi UFJ and Sumitomo Mitsui are due to issue their financial reports. In Hong Kong, the Hang Seng Financials index has traded little changed. China Oct M2 money supply and new yuan loans data, which were released on Monday, missed market expectations.
-Property shares in Hong Kong have traded generally lower. Sunac China has declined by more than 5%. In Oct, China’s Home Sales Value declined by over 3%, which was the largest y/y drop in over 2 years.
-The Hang Seng Information Technology index has risen by over 0.6%, amid gains in shares of Tencent. In South Korea, shares of chipmaker Hynix have risen by over 0.5%. Shares of Micron rose by over 1.5% during Monday’s NY session. Toshiba has gained over 7% amid speculation that the firm could reach a settlement agreement with Western Digital.
-Japan’s Fast Retailing has traded marginally higher. The S&P 500 Consumer Discretionary sector gained 0.3% on Monday’s trading session.
-Shares of Samsonite have traded higher by over 3% in Hong Kong following the company’s Q3 results and the overall Hang Seng Consumer Goods index has gained over 0.7%. In Australia, the ASX Consumer Discretionary index has declined by over 0.8%. Shares of JB Hi-Fi (home products retailer) have declined by over 3%, while HT&E (media company) and Harvey Norman (consumer retailer) have lost over 2%.
-At the same time, the interest rate sensitive sectors are declining in Australia. The ASX 200 Utilities index has declined by over 1.4%, while the REIT index is off by more than 0.9%. Australia’s 3-year bond yield has risen by more than 4bps on the session. In Oct, Australia’s NAB business conditions index rose to a record high.
-Following the data the Aussie moved slightly higher, but has since pared some of its gains amid the release of China’s Oct data points.
-China Retail Sales in Oct rose at the slowest pace since Jan, while Industrial Production growth slowed to 6.2% y/y (from 6.6% prior). Monthly, power output growth slowed to 2.5% vs 5.3% prior. Despite the data, China’s 10-year bond yield has risen to 4%, for the first time since 2014.
-US Treasury Futures are currently little changed. However, USD/JPY volatility has hit 3-week highs. Looking ahead, the US House of Representatives may vote on its tax reform bill by as early as this Thursday, according to press reports.
-In the corporate bond market, Resolute Energy withdrew its proposed high-yield offering of $550M in 2025 notes citing broader market conditions. Recall, at the end of last week NRG Energy withdrew a $870M 2028 high-yield offering, citing a similar reason.
-In emerging market sovereigns Venezuela, which held a meeting with bondholders on Monday, had its credit rating cut to ‘SD’ from ‘CC’ at S&P on the expectation that another debt payment could be missed.
-Japanese companies due to report earnings later today: include Ai Holdings, Amada, DIC Corp, Daido Metal, Dentsu, Ferrotec, Fukui Computer Holdings, Heiwa Corp, Idemitsu Kosan, Hikari Tsushin, Japan Post Bank, Japan Post Holdings, Japan Post Insurance, Kajima, Kansai Urbank Banking, Kyushu Financial Group, Mitsubishi UFJ, Nippon Paint Holdings, Okumura Corp, Open House, Otsuka Holdings, Recruit Holdings, Seiko Holdings, Showa Denko, Sumitomo Mitsui Financial, Sumitomo Realty & Development, Takamatsu Construction Group, The Dai-ichi Insurance, Yokohama Rubber, Toei, Tokyo Seimitsu; Tsubaki Nakashima and Unipres Corp.
-Japan’s Q3 preliminary GDP data is due to be released on tomorrow’s session, along with Australia’s Q3 wage price index.
***Equities notable movers***
Australia/New Zealand
- TWR.AU Reports FY17 (A$) underlying net 18M v 201M y/y; Net earned premium 256.9M v 253.8M y/y; To launch NZ$70M rights issue priced at NZ$0.42/shr; -10.5%
- SDA.AU Awarded fully managed communications contract for Nabors in South America; no terms disclosed; +7%
Japan
- 9984.JP No final agreement on investment into Uber, may not make investment if terms are not satisfactory; -0.4%
- 382.JP Weakness due to being removed from MSCI Japan Index; -12%
China/Hong Kong
- 1316.HK Added to MSCI China Index; +7%
US
- BWLD Reportedly receives >$150/shr takeover offer from Roark Capital – press; +27.9% afterhours
MSCI announced the results of the November 2017 Semi‐Annual Index Review for the MSCI Equity Indexes
- MSCI Global Standard Indexes: Sixty-six securities will be added to and 56 securities will be deleted from the MSCI ACWI Index. In the MSCI World Index, the three largest additions measured by full company market capitalization will be Amundi (France), Allied Irish Banks (Ireland) and Drillisch (Germany). The three largest additions to the MSCI Emerging Markets Index measured by full company market capitalization will be China Molybdenum Co H (China), Polyus (Russia) and Grupo Carrefour Brasil (Brazil).
- MSCI Global Small Cap Indexes: There will be 351 additions to and 270 deletions from the MSCI ACWI Small Cap Index.
- MSCI Global Investable Market Indexes: There will be 332 additions to and 241 deletions from the MSCI ACWI Investable Market Index.
- MSCI Global Value and Growth Indexes: For the MSCI ACWI Value Index, the largest additions or style changes from Growth to Value will be Oracle Corp (USA ORCL), Altria Group (USA MO) and Honeywell International (USA HON). For the MSCI ACWI Growth Index, the largest additions or style changes from Value to Growth will be Royal Bank of Canada (Canada RY), Microsoft Corp (USA MSFT) and Abbvie (USA ABBV).
- MSCI US Equity Indexes: There will be seven securities added to and four securities deleted from the MSCI US Large Cap 300 Index. The three largest additions to the MSCI US Large Cap 300 Index measured by full company market capitalization will be Lam Research Corp (LRCX), Autodesk (ADSK), and Stanley Black & Decker (SWK).
Long Pond (John Khoury) discloses updated portfolio positions in 13F filing: Notable new positions include NYRT, VNO, CXP; Closed RF, LOW, LSI
Highlights from 2017 Q3 filing as compared to 2017 Q2 filing:
- New positions in: NYRT (~11.23 mln shares), QCP (~1.08 mln), VNO (~0.84 mln), KRC (~0.82 mln), JBGS (~0.5 mln), CXP (~0.1 mln)
- Increased positions in: SRC (to ~14.99 mln shares from ~7.46 mln shares), FOR (to ~2.13 mln from ~0.66 mln), SLG (to ~2.74 mln from ~1.71 mln), H (to ~3.04 mln from ~2.66 mln), BXP (to ~0.4 mln from ~0.19 mln)
- Maintained positions in: PGRE (~14.61 mln shares), AIV (~5.93 mln)
- Closed positions in: FCE.A (from ~3.49 mln shares), RF (from ~2.39 mln), LOW (from ~0.93 mln), LSI (from ~0.3 mln)
- Decreased positions in: VER (to ~2.77 mln shares from ~19.22 mln shares), RPAI (to ~11.81 mln from ~13.28 mln), EQR (to ~1 mln from ~1.79 mln), CLGX (to ~0.23 mln from ~0.96 mln), TCO (to ~3.03 mln from ~3.46 mln), LQ (to ~1.16 mln from ~1.52 mln), MAC (to ~1.78 mln from ~2.1 mln), MSG (to ~0.32 mln from ~0.47 mln)