>>> Generali suitor Intesa Sanpaolo has Italian government support - reports (tr

Generali suitor Intesa Sanpaolo has Italian government support - reports (translated)

Intesa Sanpaolo [BIT:ISP], has the support of the Italian government in its bid for Italian insurer Assicurazioni Generali [BIT:GASI], Italian-language daily, Il Messaggero reported.
The report cited ministerial sources close to the government who said that the government supported the operation as they believed it would forestall a possible takeover bid by Axa [EPA:CS] , the French insurer.
The item cited the sources as saying that the government support had less to do with defending the Italian nature as Generali, as in creating a major retail savings group for the country. The item said that it would be unwise for such a major national asset to fall under the control of the French company.
The report further noted, however, that the government is worried about Intesa teaming up with German insurer Allianz [ETR:ALV] on the bid, as it is not in favour of Generali selling its French and German assets.
The item cited Axa CEO, Thomas Buberl, as declaring that the French group had no interest in making a large acquisition.
An unsourced item in Italian language daily La Stampa claimed that Pedersoli and McKinsey were advising Intesa in addition to UBS.
Another unsourced item in La Stampa claimed that Allianz was interested in Generali's assets in France, Spain, Switzerland and eastern Europe but was less interested in Generali's German operations.
As previously reported, Intesa could make a mixed share and cash offer for 60% of Generali, with the cash component being EUR 3bn and the share component EUR 12bn.
The Il Messaggero article appeared in print; page 19.
The La Stamp articles appeared in print; pages 6-7

>>> What to look at today - 26th of January 2017

Dow +0.78% S&P +0.80% Nasdaq +0.99% Russell +0.97%
US Market Closed higher setting new records. Financials +1.7%, followed by industrials (+1.0%) and technology (+1.1%) with the latter benefiting from a 1.5% increase in the PHLX Semiconductor. Energy (+0.6%) underperformed its cyclical peers, as crude oil finished 0.7% lower at $52.76/bbl. On the countercyclical side, real estate (-0.6%), telecom services (-0.2%), and utilities (unch) all finished in the red, while health care (+0.9%) bucked the trend. US After Hours EBAY +9%, NOW +6.5%, XLNX +3% higher on earnings/guidance... MAT -11%, MCK -6% (weighing on PBM names), FFIV -5%, LVS -4% (hitting Macau peers), QCOM -4% lower following earnings/guidance. ASian Markets are following US move and trading highers.

Nikkei +1.81% Hang Seng +1.30 CSI +0.34% Shanghai +0.26%

Eur$ 1.0744 CNH 6.8291 CNY 6.8806 JPY 113.68 GBP 1.2643 CHF 0.9989 RUB 59.50 WTI$ 53.13 +0.72%

S&P +0.19% EuroStoxx +0.27% FTSE +0.21% DAX +0.38% SMI +0.72%

Macro :
- Trump Moves to Act on Border Wall, Crack Down on Immigration

Keep an eye on :
- ATLN VX : *JOHNSON & JOHNSON TO BUY ACTELION FOR $30B WITH SPIN-OUT OF NEW
- AIR FP : Germany Plans to Tax Airbus on Dubious Eurofighter Payments: SDZ
- BMPS IM : Paschi Says It Issued State-Guaranteed Bonds for Total EU7b
- CSGN VX : Credit Suisse Said to Consider Dublin Expansion as Brexit Nears
- ATE FP : Alten 4Q Rev. Jumps 13%; Co. Forecasts Organic Growth in 2017
- EDF FP : France’s RTE Says Power Supply Margin Was Thinnest Today
- ERICB SS : Ericsson 4Q Net Sales Beat Highest Est.; Adjusted Profit Beats
- G IM : Generali Owns 3.376% of Intesa Sanpaolo: Italy Stock Regulator
- G IM : Generali’s Minali to Step Down as CFO; Board Names Luigi Lubelli
- GAS SM : Gas Natural to Bid for Mexico Contracts: El Economista
- NDA NO : Nordea CEO Sees No Need to Change Bank’s Dividend Policy
- PLT IM : Parmalat 2016 Ebitda EU459.2m, Sees Uncertanties in LatAm
- SKY LN : Sky PLC Says It’s Not Renewing Content Deal With Discovery
- SCRG SW : Switzerland’s Sunrise Said to Weigh Towers Sale to Boost Growth
- SLIGR NA : Sligro 2016 Ebitda Drops, Sees Pick Up Market Sectors in 2017
- SOI FP : Soitec 3Q Rev. EU63.1M; Confirms FY Ebitda Margin Goal
- STM FP : STMicroelectronics Sees Momentum Continuing As 2017 Starts
- TELE@ SS : Tele2 4Q Net Sales Beats Est. as Dutch Subscribers top 1m
- TOD IM : Tod’s 2016 Total Sales EU1b; Est. EU1.01b, Tod’s 2% Revenue Miss in 4Q Offset by Patent Box Tax Accord: RBC
- UNA NA : Unilever 4Q Underlying Sales Growth Misses; Core EPS in Line
- WOL AV : Wolford Revises Full-Year Guidance on Revenue Decline of 8%

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

>>> Up
*ABB Raised to Buy at Nordea Securities, PT SEK230
*Archer Raised to Hold at Nordea Securities, PT NOK16.50
*Colruyt Raised to Hold at Bank Degroof Petercam, PT EU48
*Deutsche Boerse Raised to Overweight at Morgan Stanley
*Generali Raised to Hold at Deutsche Bank
*HAVAS SA Raised to Outperform at Main First Bank AG, PT EU10
*Hargreaves Lansdown Raised to Equal-Weight at Morgan Stanley
*IMI Raised to Outperform at Credit Suisse
*JCDecaux Raised to Neutral at Main First Bank AG, PT EU30
*Just Eat Raised to Outperform at Macquarie, PT 610p
*LSE Raised to Overweight at Morgan Stanley, PT 3280p
*Scout24 Raised to Outperform at Macquarie, PT EU37.89
*Segro Raised to Buy at Citi, PT 542p

>>> Down
*AB Foods Cut to Underperform at Exane, PT 2200p
*Bankia Cut to Underperform at BofAML
*CaixaBank Cut to Underperform at BofAML, PT EU2.90
*DKSH Cut to Hold at Kepler Cheuvreux, PT CHF79
*Essentra Cut to Hold at Jefferies, PT 450p
*H&M Cut to Reduce at HSBC, PT SEK200
*Intesa Cut to Neutral at Hammer Partners SA, PT EU2.50
*Intesa Cut to Hold at HSBC, PT EU2.44
*Kvaerner Cut to Hold at Pareto Securities, PT NOK13
*Lagardere Cut to Neutral at Main First Bank AG, PT EU27
*Marine Harvest Cut to Hold at SEB Equities, PT NOK145
*Metsa Board Cut to Hold at DNB Markets, PT EU7
*Proximus Cut to Hold at ING, PT EU30
*Publicis Cut to Underperform at Main First Bank AG, PT EU60
*Rotork Cut to Neutral at Credit Suisse
*Schroders Cut to Equal-Weight at Morgan Stanley, PT 3120p

>>> PT Change


>>> Initiation
*Aviva Rated New Hold at SocGen, PT 500p
*Enagas Rated New Buy at Jefferies, PT EU27
*esure Group Rated New Outperform at Credit Suisse
*RSA Rated New Outperform at Credit Suisse
*Schaeffler Rated New Equal-Weight at Morgan Stanley, PT EU15.50
*Schindler Rated New Hold at Baader-Helvea, PT CHF188
*St James's Place Rated New Buy at SocGen, PT 1250p
*Umicore Rated New Underweight at Barclays, PT EU45

>>> Call

>>> Asian Update

Asia Mid-Session Market Update: China industrial profits slow; New Zealand CPI rises to 2-year high and inside RBNZ target range

***US Session Highlights***
- Dow Jones Industrial opens above 20K for first time
- Vix drifts back towards 2014 low
- (CN) China Banking Regulator (CBRC): China commercial banking sector end-2016 bad loans at CNY1.51T; ratio at 1.74%
- (US) MBA MORTGAGE APPLICATIONS W/E JAN 20TH: 4.0% V 0.8% PRIOR
- (UK) PM May: Confirms will set out Brexit plans in White Paper

***US markets on close: Dow +0.8%, S&P500 +0.8%, Nasdaq +1.0%***
- Best Sector in S&P500: Financials
- Worst Sector in S&P500: Utilities
- Biggest gainers: STX +14.0%, ROK +7.7%, HBAN +5.8%, HBI +5.3%, WDC +5.3%
- Biggest losers: TXT -5.4%, CA -5.0%, STT -3.4%, DISCA -3.2%, NEM -3.0%
- At the close: VIX 10.8 (-0.3pts); Treasuries: 2-yr 1.24% (+2bps), 10-yr 2.52% (+5bps), 30-yr 3.11% (+5bps)

***US movers afterhours***
- URI: Reports Q4 $2.67 v $2.30e, R$1.52B v $1.50Be; +8.7% afterhours
- EBAY: Reports Q4 $0.54 v $0.54e, R$2.40B v $2.41Be- Guides Q1 $0.46-0.48 v $0.52e; R$2.17-2.21B v $2.23Be; +8.6% afterhours
- TER: Reports Q4 $0.32 v $0.21e, R$380M v $345Me; raises dividend 17% to $0.07 (indicated yield 1.03%); +8.3% afterhours
- NOW: Reports Q4 $0.24 v $0.23e, R$391.7M v $379Me; +6.0% afterhours
- WGL: AltaGas Ltd. to acquire WGL Holdings in C$8.4B transaction for US$88.25/shr; +3.4% afterhours
- CTXS: Reports Q4 $1.61 v $1.50e, R$908M v $899Me; authorizes $500M increase to share repurchase (3% of market cap); -4.1% afterhours
- LVS: Reports Q4 $0.62 v $0.65e, R$3.08B v $3.15Be; -4.2% afterhours
- MCK: Reports Q3 $3.03 v $2.95e, R$50.1B v $50.7Be; -5.9% afterhours
- MAT: Reports Q4 $0.52 v $0.71e, R$1.83B v $1.98Be; Total net sales (cc) -8% y/y; Gross margins -320bps to 47.0% v 50.2% y/y; -10.7% afterhours

***Asia Key economic data:***
- (CN) CHINA DEC INDUSTRIAL PROFITS Y/Y: 2.3% V 14.5% PRIOR; YTD (2016): 8.5% V 9.4% PRIOR
- (NZ) NEW ZEALAND Q4 CPI Q/Q: 0.4% V 0.3%E; Y/Y: 1.3% (2-year high) V 1.2%E
- (JP) JAPAN DEC PPI SERVICES Y/Y: 0.4% V 0.3%E
- (PH) PHILIPPINES Q4 GDP Q/Q: 1.7% V 1.9%E; Y/Y: 6.6% V 6.6%E ; 2016 6.8%

***Asia Session Notable Observations, Speakers and Press***
China:
- (CN) PBOC's recent operations show a Neutral stance on policy - Chinese press
- (CN) PBoC deputy gov Yi Gang: China does not meet currency manipulator criteria - SCMP
- (CN) China Premier Li: economic openness serves everyone better, at home and abroad

Japan:
- (JP) Japan PM Abe: to finalize details of US-Japan summit
- (JP) Japan PM Abe adviser Honda: Sees merit in compiling a ¥5T extra budget
- (JP) BOJ officials suggest there is no cause for concern over losses on its JGB holdings since rates are back above zero - Nikkei
- (JP) Japan govt said to consider its first cut to pension payments in 3 years - Japan press

Australia / New Zealand:
- (NZ) BNZ: Today's Q4 CPI data key for RBNZ policy decision - press
- (NZ) New Zealand July-Nov operating balance was a deficit of NZ$768M v deficit NZ$1.7B forecast in HYEFU - NZ press

***Asian Equity Indices/Futures (00:30ET)***
- Nikkei +1.5%, Hang Seng +1.3%, Shanghai Composite +0.1%, ASX200 closed, Kospi +1.0%
- Equity Futures: S&P500 +0.1%; Nasdaq +0.3%; Dax +0.4%; FTSE100 +0.1%

***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.0745-1.0765; JPY 113.05-113.45; AUD 0.7565-0.7585; NZD 0.7250-0.7310
- Feb Gold flat at $1,198/oz; Mar Crude Oil +0.8% at $53.19/brl; Mar Copper -0.2% at $2.71/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 5.0 tonnes to 799.1 tonnes; 3rd straight decline; Lowest since Mar 16th, 2016
- (CN) PBOC to inject combined CNY60B in 14-day and 28-day reverse repos v CNY30B prior
- (JP) Japan investors sold net ¥539B in foreign bonds v bought ¥335B in prior week; Foreign investors sold net ¥376B in Japan stocks v bought ¥239B in prior week
- (NZ) New Zealand Finance Ministry sells NZ$150M in 20-yr bonds; bid-to-cover 3.63x

***Asia equities / Notables / movers by sector***
- Consumer discretionary: 1928.HK Sands China -1.1% (Q4 result); 2866.HK China Shipping Container +1.2% (profit alert); 538.HK Ajisen China Holdings Ltd -1.0% (profit alert); 000625.CN Chongqing Changan Automobile Co Ltd +1.0% (guidance)
- Financials: 2628.HK China Life Insurance +1.2% (profit warning); 000166.CN Shenwan Hongyuan Group +1.1% (guidance); 601211.CN Guotai Junan International +0.7% (guidance)
- Industrials: 000928.CN Sinosteel Engineering & Technology Co +5.3% (guidance); 000270.KR Kia Motors Corporation +0.9%, 005380.KR Hyundai Motor Co +0.4% (Q4 result); 1138.HK China Shipping Development Co -2.1% (profit alert); 1919.HK China Cosco Holdings Co -0.3% (guidance); 2238.HK Guangzhou Automobile Group +2.6% (profit alert); 005380.KR Hyundai Motor Co +0.7% (Q4 result)
- Technology: 00660.KR Hynix Semiconductor +2.9% (Q4 result); 6502.JP Toshiba Corporation +1.3% (may sell stake to multiple buyers)
- Materials: 1108.HK Luoyang Glass +1.2% (profit alert); 323.HK Maanshan Iron & Steel -0.4% (FY16 prelim result); 005490.KR Posco +4.1% (FY16 result)
- Energy: 1171.HK Yanzhou Coal Mining Co +0.7% (profit alert); 857.HK Petro China +1.1% (profit warning); 1088.HK China Shenhua +2.1% (profit alert)
- Telecom: 762.HK China Unicom +3.4% (profit warning)

>>> US After Hours Summary: EBAY +9%, NOW +6.5%, XLNX +3% higher on e


After Hours Summary: EBAY +9%, NOW +6.5%, XLNX +3% higher on earnings/guidance... MAT -11%, MCK -6% (weighing on PBM names), FFIV -5%, LVS -4% (hitting Macau peers), QCOM -4% lower following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: EBAY +8.6%, URI +8.1% (will acquire NES for ~$965 mln in cash; expected to be immediately accretive to EPS/FCF generation for full year 2017), TER +8.1% (also quarterly dividend increased 17% to $0.07 beginning 1Q17), QSII +7.4%, NOW +6.5%, MEOH +5.4%, XLNX +3.2%, BGG +2.1%, VRTX +1.5%, EGHT +1.2%, EWBC +0.8%, RLI +0.5%, CSFL +0.5%, UMPQ +0.4%, T +0.3%, WDC +0.2%

Companies trading higher in after hours in reaction to news: AVGR +28.5% (announces 'positive' two-year clinical data from the pivotal VISION study of the company's Lumivascular technology), MXPT +7.5% (continued strength), WTW +5.2% (Kraft Heinz and WTW shareholder Oprah Winfrey announce joint venture) WGL +3.1% (WGL Holdings to be acquired by AltaGas for $88.25/share in cash, or ~CAD$8.4 bln), FCH +2.8% (following late move higher on sale speculation), MRO +1% (light volume - files mixed securities shelf offering and maintains quarterly dividend at $0.05/share)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: MAT -10.7%, QTM -8.6%, CMPR -8.3% (very light volume - also announces intention to implement organizational changes aimed at decentralizing its operations), MCK -5.9% (also enters into agreement to acquire CoverMyMeds for approx $1.1 bln), CSII -5.2%, FFIV -5%, LVS -4.1%, CTXS -3.9% (also increases buyback $500 mln; LogMeIn stockholders approve issuance of shares of its common stock to equityholders of Citrix Systems in connection with its proposed merger with Citrix; merger is expected to be completed on January 31), QCOM -3.7%, VAR -2.9%, KNX -2.9%, MUR -2.1%, LRCX -1.6%, CMO -1.2% (light volume)

Companies trading lower in after hours in reaction to news: AGI -5.8% (announces $250 mln bought deal offering; to sell 31.45 mln common shares at $7.95/share), PULM -4.9% (following 65%+ move higher on Wednesday), ABC -3.9% (following MCK earnings/guidance and acquisition news), HAS -3.2% (following MAT earnings/guidance), ENTL -3.1% (announces a $60 mln underwritten public offering of common stock consisting of $40.0 mln of shares to be offered by the co and $20.0 mln of shares to be offered by certain existing stockholders) 

Casino / gaming names are under pressure following Las Vegas Sands (LVS) earnings/guidance: MPEL -1.6%, MGM -1.4%, WYNN -1.1%, BYD -1%

PBM managers seeing continued weakness following MCK earnings/acquisition news (group was underperforming on speculation that Trump will target PBM managers): CAH -4.4%, ESRX -0.7%, CVS -0.4%

>>> US Close Dow +0.78% S&P +0.80% Nasdaq +0.99% Russell +0.97%

Closing Market Summary: Averages Close at Record Highs; Dow Hits 20,000

Investors methodically pushed the major averages to record highs on Wednesday, with the Dow climbing past the 20k milestone along the way. All indices finished the day solidly higher, collectively signaling that the post-election rally isn't dead just yet. The S&P 500 closed up 0.8%.

The benchmark index jumped out of the gate this morning, as a handful of blue-chip companies reported positive earnings results between yesterday's close and today's open. Seagate Technology (STX 42.67, +5.23) spiked 14.0% after topping earnings and revenue estimates in addition to issuing upbeat guidance. Norfolk Southern (NSC 120.53, +3.91) also finished higher, increasing 3.4% to an all-time high after beating earnings per share estimates.

As far as Dow components, Boeing (BA 167.36, +6.81) also had an upbeat showing while United Technologies (UTX 110.96, -0.65) finished lower as the company's in-line earnings report was met with a sell-the-news response following a large fourth quarter gain.

However, the stock market didn't stop there, moving slowly but deliberately into the afternoon amid positive signals from the political front. President Trump signed two executive orders on Wednesday, one to build a physical barrier along the U.S.-Mexico border and another to strip federal grant money from states and cities that shelter illegal immigrants. And while these reports weren't unexpected, as border control was a staple of Mr. Trump's presidential campaign, they do serve as a reminder of said campaign and the pro-growth hopes attached to it.

Strong sector leadership was also an important factor in today's session as the financials (+1.7%) moved into the top spot on today's leaderboard early, building on a positive showing on Tuesday. With two solid wins under its belt, the financial sector is back near its high from early December, overcoming the sell-the-news response that was invited by earnings from the sector's top components.

The financial sector was followed by industrials (+1.0%) and technology (+1.1%) with the latter benefiting from a 1.5% increase in the PHLX Semiconductor Index. Chipmakers received a nice bump from Texas Instruments (TXN 78.58, +1.50) as the stock jumped 2.0% in reaction to above-consensus earnings.

Energy (+0.6%) underperformed its cyclical peers, as crude oil finished 0.7% lower at $52.76/bbl. The energy component had a somewhat volatile session, reacting to a downtick in the U.S. Dollar Index (99.94, -0.34) and an Energy Information Administration report that showed a build of 2.8 million barrels of crude and a big build in gasoline inventories. 

On the countercyclical side, real estate (-0.6%), telecom services (-0.2%), and utilities (unch) all finished in the red, while health care (+0.9%) bucked the trend. The health care space remains slightly lower for the week after today's gain, showing a week-to-date loss of 0.2%.

U.S. Treasuries return to negative territory for the week after Wednesday's risk-on attitude resulted in selling pressure. The 10-yr yield finished five basis points higher at 2.52%.

Today's economic data included FHFA Housing Price Index and MBA Mortgage Index:

  • The FHFA Housing Price Index for November rose 0.5%, which followed a revised increase of 0.3% in October (from 0.4%).
  • The weekly MBA Mortgage Index rose 4.0% to follow last week's 0.8% increase

Tomorrow's economic data will include Advance International Trade in Goods (consensus -$65.0 million) and Initial Claims (consensus 246,000) at 8:30 am ET, while Leading Indicators ( 0.5%) and New Home Sales (consensus 589,000) will cross the wires at 10:00 am ET.

  • Russell 2000 +1.9% YTD
  • Dow Jones Industrial Average +1.6% YTD
  • S&P 500 +2.7% YTD
  • Nasdaq Composite +5.1% YTD

FT : Italian insurer Generali loses another senior executive

Italian insurer Generali loses another senior executive
With Intesa circling, chief financial officer Alberto Minali departs

Generali, the Italian insurer facing a fight for its independence, has lost another one of its most senior executives.

The company said on Wednesday that Alberto Minali, the chief financial officer, would leave next week. Last month Generali announced the departure of Nikhil Srinivasan, its chief investment officer.

Generali is the target of takeover interest from Intesa Sanpaolo, Italy’s largest bank. Intesa confirmed its interest on Tuesday after speculation about its intentions, although any firm offer is thought to be some way off and could involve a break-up of the group.

Mr Minali became CFO of Generali in 2012, just after the appointment of Mario Greco as chief executive. However Mr Greco left the Italian group last year to take over at Zurich, the Swiss insurer.

Mr Greco was replaced as chief executive by Frenchman Philippe Donnet, who gave Mr Minali an expanded role with the title of general manager. He was given responsibility for insurance, strategy, marketing, data and operations as well as the usual CFO functions. However a person close to Generali said this week that he and Mr Donnet had been at loggerheads over strategy for months.

Related article
Intesa chief faces challenges in selling merits of Generali bid
Regulators and investors need convincing of deal that would reshape Italian finance
Mr Minali will leave Generali with a pay off of €5.8m, part of which relates to an agreement not to work for major competitors for six months after his departure.

He will not be replaced as general manager but the group’s head of corporate finance, Luigi Lubelli, has been appointed CFO.

Generali chairman Gabriele Galateri di Genola, said: “The appointment of Luigi Lubelli is a positive news, also because it confirms the high level of skill and professionalism within Assicurazioni Generali.”

Generali’s share price, which had been hovering near four year lows last November, has jumped sharply this week in the wake of Intesa’s interest. It closed at €15.5 on Wednesday, up 1 per cent on the day, giving the group a market capitalisation of €24bn.

(Makor)Special Sit: Luxury Our thoughts following YTD performance + pair trading

Special Sit: Luxury – Our thoughts following YTD performance + pair trading recommendation

Luxury – our thoughts following YTD performance + pair trading recommendation

 

Ø  2016 was a challenging year for the luxury sector. After five years of strong performance and accelerating growth rates, in 2016 most of the companies experienced slower revenue growth and operational de-leverage. This was strongly felt in the first half of 2016 which was the weakest since 2009 in terms of growth.

Ø  The overall deceleration in 2016 was led by numbers of factors. The first and most obvious one was weaker Chinese consumption, specifically in Mainland and HK which were tough markets with declining revenues. Another negative factor was the strong dollar which resulted in declining tourist spending. To that, external events such as terrorist attacks in Europe and the uncertainty surrounding the UK Brexit and US election also didn’t help to improve the sector’s sentiment.

Ø  However, in 3Q16 many luxury companies showed improved performance supporting a better second half and positive outlook for 2017. Last week Hugo Boss raised its guidance for 2016 after better-than-expected sales for 4Q16. Burberry also reported good growth in revenue and comps, beating analyst estimates. Both companies stated they have benefited from an improving environment in China. This echoes to Cucinelli, Richemont and Tiffany’s recent updates that Asia is returning to growth. This is clearly a bullish signal for the sector that may suggest that the negative trend in China is reverting, setting the stage for another uptrend in the industry. Next page we discuss what we expect will drive the sector in 2017.

Ø  On the back of the positive sentiment, estimates were upgraded and the market now expects the luxury sector to return to mid-single digit growth in 2017, and to renewed operating leverage. This is supported by better consumption trends globally and favorable y/y numbers.

Ø  The renewed estimates upgrades have boosted valuation multiples in recent weeks (the sector had a very strong start to the year with most of the companies significantly outperforming the market).  Though there are encouraging signs of recovery, we believe that investors should also keep in mind that the recovery seen in 3Q16 is still fragile, and could be proved short lived.

Ø  On a relative value basis, we recommend the following pair trade: Long - SFER: IM + MONC: IM /Short – CFR: VX + TOD:IM (see more details on page 4).

 

Full report attached!

 

Regards,

 

Dafna Yagur | Head of Research (Israel)

Makor Capital

Direct    +972 3 5453747

Mobile  +972 54 6655357

Fax         +972 3 7162680

 

 

 

               

 

FT : Fintechs warned to expect tougher regulation

Fintechs warned to expect tougher regulation
BoE’s Carney says disruptive technology could signal end to traditional bank model

The governor of the Bank of England has put banks and fintech companies on notice to expect tougher, more intrusive regulation as the use of disruptive technology in financial services becomes more sophisticated and widespread.

Mark Carney, who is also chairman of the Financial Stability Board that makes recommendations to G20 nations, said on Wednesday that fintech could signal an end to the traditional universal bank model. He added that it could also increase “herding” risks and make the system more interconnected and complex.

“As those risks emerge, authorities can be expected to pursue a more intense focus on the regulatory perimeter, more dynamic settings of prudential requirements, a broader commitment to resolution regimes, and a more disciplined management of operational and cyber risks,” he told an audience in Wiesbaden, Germany.

The Basel-based FSB is already scrutinising what risks and rewards fintech might present, and what regulators should do about it. It will report to the G20 in July.

Mr Carney pushed London as the “world’s leading fintech centre”, a remark that will not go unnoticed among his audience. German regulators are preparing to meet as many as 20 foreign banks next week to explain how to move some of their operations to Frankfurt in the wake of the UK’s Brexit referendum, according to a Reuters report earlier on Wednesday.

The BoE has embraced fintech innovation under Mr Carney. It has even recognised how the technology behind bitcoin might improve central banking services, and is at the early stages of examining a digital currency.

Mr Carney said on Wednesday that the burgeoning peer-to-peer lending sector, which in the UK now represents about 14 per cent of new lending to small businesses, “does not, for now, appear to pose material systemic risks”.

This sentiment runs against comments made last year by Adair Turner, the former chairman of the now-defunct Financial Services Authority and a former contender for the job that Mr Carney now holds. Lord Turner said last year that P2P loans could be the source of losses that would “make the worst bankers look like absolute lending geniuses”.

Earlier on Wednesday, Bundesbank president Jens Weidmann, who is also involved in the FSB, echoed the views of his Bank of England counterpart, saying that while enhancements in financial technology could bring banking services to more people, they could also “exacerbate financial volatility”.

Mr Weidmann also warned on the threat of cyber crime, saying that the more markets relied on digital technology “the more vulnerable the interconnected global financial system becomes to a cyber attack”.

Both Mr Carney and the Bundesbank president warned that there were risks emanating from the use of so-called robo-advice, where algorithms are used to manage risk.

The Bank of England governor said this could lead to excess volatility from “herding”, particularly if the underlying algorithms proved overly sensitive to price movements or all worked a similar way.