(ZH) Yuan Dumps, Bitcoin Jumps As China Researchers Suggest "One-Off Devaluation

Yuan Dumps, Bitcoin Jumps As China Researchers Suggest "One-Off Devaluation" & Capital Controls

As we have detailed numerous times recently, the recent move in Bitcoin has been strongly suggesting increasing fears of capital controls and/or expectations of a looming (and quite notable) devaluation of the Yuan against the US Dollar. Tonight saw China's largest nationalist tabloid suggesting that China should consider one-off yuan devaluation to keep the currency stable at equilibrium level. Offshore Yuan is tumbling - to new record lows.
As we noted earlier, a quick look at the uncanny correlation between the decline in the Yuan and the rise in the bitcoin, confirms that the digital currency has indeed been largely used to evade capital controls.
Based on this chart alone, the recent surge in Bitcoin would imply that a substantial devaluation of the yuan is looming. That, or even more aggressive capital controls.
And tonight, researchers with State Information Center led by Zhu Baoliang wrote in an article published on Shanghai Securities News, that China should consider one-off yuan devaluation to keep the currency stable at equilibrium level and suggest capital controls and as well as what seems like a reference to "virtual currency"...


...the effect of monetary policy continues to weaken. After repeatedly cut interest rates, lowering after registration, our short futures money market interest rates have dropped to about 2.2%, in the history of a relatively low level. Money supply growth rate far exceeds the rate of economic growth, social capital is abundant. But because of the lack of investment opportunities, more funds through the state-owned enterprises and financing platform to invest in less efficient infrastructure, or real estate, or idle in the virtual economy. Capital continues to off real to the virtual, will breed all kinds of asset bubbles, a huge impact on financial stability. At the same time, state-owned enterprises, financing platforms, real estate and other sectors and industries a large number of financing, but also pushed up the financing costs of financial markets, private enterprises and small and medium-sized enterprises to reduce the financing cost is not large, thus out of private investment.

...

It is suggested that the total social financing and broad money growth should be about 12%, and maintain a reasonable and reasonable liquidity scale. The second is to further improve the RMB exchange rate market-oriented level, and enhance the flexibility of the RMB exchange rate, or even a one-time devaluation of the renminbi, so as to maintain the stability of the RMB in the equilibrium level.

At the same time, the proper control of foreign exchange outflow, the state-owned enterprises in overseas real estate, antiques, teams and other non-substantive, non-technical M & A activities to be strictly limited. Third, closely tracking study American influence elected president's economic policies on China, the foreign exchange market volatility and prevent cross-border capital outflows triggered massive financial risk domestic bond market, the real estate market.
And for now the reaction is offshore Yuan selling to record lows...

And Bitcoin (in China) surging very close to record highs...

7,588 Yuan per Bitcoin in the record high and volume in this most recent surge is dramatically higher. But as we noted earlier, for those buying into bitcoin here on the momentum, most of which originates in China, we urge readers to be cautious as by now the PBOC has certainly noticed that the digital currency remains one of the final, and most successful, means of bypassing capital controls in China. Should Beijing mandate that bitcoin no longer be a means to illegally transfer capital offshore, there is risk of a dramatic, and sharp, drop in its price.

>>> Agent Provocateur attracts interest from wealthy individuals and sovereign w

Agent Provocateur attracts interest from wealthy individuals and sovereign wealth funds - report
03 JAN 2017
The potential sale of the UK-based lingerie retailer Agent Provocateur has attracted interest from wealthy individuals and sovereign wealth funds, according to a Financial Times report. The newspaper cited a person familiar with the potential sale for the information. The article did not name any potential bidders.
Agent Provocateur’s owner, the private equity firm 3i [LON:III], is thinking about selling the business, the item said. As previously reported, the restructuring specialist AlixPartners is advising 3i on options to improve Agent Provocateur’s performance. 3i is thinking about either an outright sale or securing new investment while retaining a minority interest in the retailer, the article added.
3i has hired investment bankers at Rothschild to work on a potential sale process for Agent Provocateur, the report continued.
Rothschild refused to comment on its involvement, while AlixPartners was not immediately available for comment, the article said.
Background:
A Sunday Times report on 1 January cited one retail source who estimated that Agent Provocateur might fetch as little as GBP 15m (EUR 17.6m) in a sale.
This news service reported on 10 April 215 that 3i had postponed a sale of Agent Provocateur following a strategic review conducted by the investment bank Goldman Sachs.

>>> Europe Pre-Market Indications

ML
INFINEON - Zeitung reporting that the company could be takeover target (17).+2%
TELENOR - ET reporting that Bharti Airtel is in talks to buy India biz (134)+1%
M6 - CEO says that he is confident for 2017; Les Echos reports (EUR17.95)...+1%
BVIC - Small acquisition of Belia Ischia (£54.5m). Earnings accretive (575).+1%
MORRISON - Kicks off supermarket price war; cuts prices on 800 skus (230).-0.5%
PGS - Vessel allocation for 4Q comes in at 52%, well down on 78% in 3Q (30).-1%
RYANAIR - We DOWNGRADE to Underperform on a threat of regulation (14.25)....-2%

CS
Accor +0.5% Negative article on short-term rentals for Airbnb
AMS -1% Negative article on Apple cutting production
Britvic +1-2% Proposed purchase of Bela Ischia, accretive year 1
D'ieteren +1% Belgian Car Registrations Rise 7.7% to 5-Year High
IHG +1% Negative article on short-term rentals for Airbnb
Imagine Tech -1% Negative article on Apple cutting production
Miners +1% Brent +0.50%, Iron Ore +1.25%, China +1.00%
Telenor M/P May Quit India Due to Narrow Spectrum

Shore
BRITVIC - agreement in principle to acquire Bela Ischia for £54.5m........+0.5%
XL MEDIA - acquires Canadian credit card comparison website.................UNCH
BBA AVIATION - JV with Gama Aviation to create leading aircraft charter co..+2%
CONSORT MEDICAL - Bats terminate all supply agreements......................-5%
BURFORD - sells 'several million $ of interests'relating to Perterson claims.MKT
RIGHTMOVE - starts £17m share buyback.....................................+0.5%
LSE - proposed sale of LCH SA for €510m to Euronext.........................+1%

Les Echos ; une année décisive pour Vincent Bolloré et Vivendi (yest)

une année décisive pour Vincent Bolloré et Vivendi

Mediaset, Ubisoft, Havas, Orange, refonte du modèle de Canal... beaucoup de chantiers ont été ouverts ces derniers mois.
Vincent Bolloré, qui préside le conseil de surveillance de Vivendi, le propriétaire de Canal et d'Universal Music, et en détient un peu plus de 20 % du capital, va-t-il vraiment faire de ce groupe un leader mondial des médias de européenne ? Quelques dossiers brûlants devraient en tout cas trouver leur épilogue en 2017 et faire un peu la lumière sur ses ambitions.
Ces derniers temps, Vivendi a en effet ouvert d'innombrables chantiers. Dans les jeux vidéo, il a certes conclu en 2016 l'OPA hostile sur Gameloft pour un peu moins de 700 millions d'euros mais sa tentative de s'imposer chez Ubisoft, le navire amiral des ambitions des frères Guillemot dans les jeux, n'a toujours pas abouti.

Avec sa banque d'affaires Lazard, Ubisoft a réussi à rallier ses actionnaires pour qu'ils bloquent la nomination d'administrateurs représentant Vivendi. C'est certainement ce que la famille essaiera de refaire à l'AG de 2017. Vivendi, qui est monté petit à petit à 25 % du capital, ira-t-il jusqu'à l'OPA ? Ubisoft pèse plus cher que Gameloft, puisqu'il capitalise 3,8 milliards d'euros.

Mediaset, le dossier le plus « chaud »

Le dossier le plus « chaud » du moment est cependant l'alliance avec Mediaset, le leader italien de la télévision gratuite et payante contrôlé par la famille Berlusconi. A peine quelques semaines après l'annonce du mariage, le 8 avril, cette entente cordiale transalpine s'est vite envenimée.

Vivendi ne voulait plus reprendre le bouquet payant Mediaset Premium et souhaitait à la place monter au capital du groupe Mediaset tout entier. Le camp italien a alors saisi la justice, accusant Vivendi de ne pas respecter ses engagements. Le dialogue ne reprenant pas, Vincent Bolloré a décidé de faire un coup de force en décembre.

Il est monté à un peu moins de 30 % des droits de vote de Mediaset, juste au-dessous du seuil l'obligeant à déclencher une OPA. Veut-il prendre le contrôle du groupe ou pousser la famille de Silvio Berlusconi à s'allier sur de nouvelles bases ? Réponse probablement rapidement, car la situation financière de Mediaset Premium se dégrade.

Le mariage de Havas et Vivendi

Côté opérationnel, Canal, la filiale télé de Vivendi, a refondu son offre marketing en acceptant de transformer son modèle économique. L'idée est d'établir des prix d'entrée plus attractifs et d'attirer le chaland vers des offres plus premium. L'accueil serait favorable, mais cela reste à confirmer. La concurrence des services de streaming de type Netflix et Amazon se renforce.

Un autre grand dossier annoncé en 2016 pourrait aboutir en 2017 : le mariage de Havas, dont Bolloré possède 60 % du capital, et de Vivendi. Dans un entretien aux « Echos » en mai, Vincent Bolloré a révélé qu'il « était évident qu'un jour il y aura quelque chose entre [ces deux groupes] ». Yannick Bolloré, PDG d'Havas et fils de Vincent, a été nommé au conseil de surveillance de Vivendi et les passerelles entre les deux groupes se multiplient.

Ce serait une opération structurante pour tout le secteur des médias et qui est observée avec intérêt de l'étranger. Notamment par Martin Sorrell, le PDG de WPP, qui n'a pas caché sa curiosité pour ce mariage.

Revente de Vivendi à Orange ?

Mais un tel montage pourrait se faire voler la vedette par un rapprochement entre l'opérateur téléphonique Orange et Canal, pourquoi pas sous la forme de l'entrée de l'opérateur historique en tant qu'actionnaire minoritaire au capital du leader de la télé payante en France. Les spéculations vont bon train.

On évoque parfois même la revente de Vivendi à Orange afin de permettre à Bolloré de devenir actionnaire de référence de ce dernier. On n'en est pas là. Mais certains pensent que l'homme d'affaires breton pourrait profiter de la période d'incertitude autour de l'élection présidentielle pour abattre ses cartes.

Bien sûr, Vincent Bolloré peut aussi battre en retraite sur tous ces dossiers en espérant empocher des plus-values _ les titres Mediaset et Ubisoft, en particulier, ont monté sensiblement. Dans ce cas, ne manqueront pas de refaire surface les accusations selon lesquelles il est moins là pour bâtir un empire de média européen que pour maximiser avant tout son patrimoine et assurer la transmission de ce dernier à ses enfants.

(MS) US Equity Strategy : Buy the Election and Sell the Inauguration? The 2017 U

Buy the Election and Sell the Inauguration? The 2017 US Equity Portfolio Playbook

We are making several sector and portfolio changes this week to position our portfolio for the beginning of 2017. We think the investing landscape has materially changed since the US election, prices have also materially moved, and we offer our 2017 advice in today's research.

see pdf attached

WSJ : Chinese Access to U.S. Semiconductor Industry May Be Curbed

Chinese Access to U.S. Semiconductor Industry May Be Curbed
Recommendations loom on bolstering protection of industry deemed critical to national security

WASHINGTON—The Obama administration is finalizing a study that could lead to restrictions on Chinese investment in the U.S. semiconductor sector.

The report, being prepared by President Barack Obama’s chief science adviser and due to be published before he leaves office this month, will include recommendations aimed at bolstering protection of an industry deemed critical to national security, according to people familiar with the study.

Among its recommendations could be a tougher stance by the Committee on Foreign Investment in the U.S., or CFIUS, a secretive multi-agency panel that reviews foreign acquisitions of U.S. assets for national security threats.


The report will give guidance to CFIUS on China’s strategic efforts to dominate the semiconductor market and could lead to new export controls and restrictions on joint-ventures with Chinese firms, according to industry officials.

The Obama administration’s dialing up of its scrutiny of Chinese investment in the U.S. is a rare alignment of policy with the incoming Trump team, which has promised a tough stance with the Asian powerhouse.

“A loss of leadership in semiconductor innovation and manufacturing could have significant adverse impacts on the U.S. economy and even on national security,” John Holdren, the president’s chief science adviser, said in October.

CFIUS, established in 1975 to protect national interests from foreign investment, is chaired by the Treasury Department and has members from the departments of Justice, Defense, State and at least five other executive offices. It has the power to unilaterally block mergers and acquisitions of U.S. assets by foreign investors, and can require terms preventing the transfer of sensitive information and technology deemed important to national security. Often mere notification of a review by the panel discourages deals. Most of its dealings are confidential and meetings secret.

The CFIUS panel has approved some Chinese deals in recent years, including a bid for the Chicago stock exchange. However it has already ratcheted up its oversight of proposed semiconductor acquisitions.

Last month it rejected the proposed sale of Aixtron SE of Germany—which has a U.S. subsidiary—to Grand Chip Investment GmbH, the German unit of China’s Fujian Grand Chip Investment Fund. The CFIUS panel also forced the withdrawal of two other Chinese acquisition targets in the U.S. over the past 24 months.

The U.S. government views the semiconductor sector as one of the nation’s most critical industries, given that it makes computer chips for everything from smartphones to missiles, satellites to energy grids. U.S. officials are concerned the Chinese could gain backdoor entry into just about anything related to national security, including communications and military weapon systems.

Commerce Secretary Penny Pritzker has cited Beijing’s $160 billion plan to establish itself as a global leader in the semiconductor industry as a threat to the U.S. and reason for the working group’s review.

“We are seeing new attempts by China to acquire companies and technology based on their government’s interests—not commercial objectives,” Ms. Pritzker said. “We will not allow any nation to dominate this industry and impede innovation through unfair trade practices and massive, non-market-based state intervention.”


Officials at China’s Ministry of Commerce and Ministry of Industry and Information Technology didn’t respond to requests for comment.

According to a report by the Rhodium Group consultancy for the U.S.-China Economic and Security Review Commission, a congressional advisory panel, Chinese investment in the sector outside of China jumped threefold in 2014 to $3 billion.

Ms. Pritzker said Mr. Holdren’s impending report, drafted with input from top industry executives and a former senior Central Intelligence Agency official, will provide the next president “with a blueprint for action” to help secure the U.S. semiconductor sector.

Former U.S. trade officials say the semiconductor brief could give the Trump administration added reason to increase oversight of Chinese investment in the U.S., in part to leverage better trade terms with China.

Some industry and government officials are concerned current surveillance is insufficient. CFIUS reviews typically cover acquisitions, not investments where foreign companies build new operations in the U.S. from the ground up.

It is unclear, for example, whether deals such as the one inked earlier this year by Advanced Micro Devices Inc. to license its technology to China’s Tianjin Haiguang Advanced Technology Investment Co. would trigger a CFIUS review because it didn’t give the company control of the U.S. firm.

A bipartisan collection of U.S. lawmakers is gearing up to expand CFIUS’s legal mandate, in part to demand greater access by U.S. investors into China. Charles Schumer of New York, a top Senate Democrat, has urged the administration to boost scrutiny of Chinese investment deals, citing the failure of Chinese government to grant U.S. investors access in China.

The Government Accountability Office criticized the Department of Defense earlier this year for not adequately addressing the risk of foreign investment in real estate and other sectors near military training and testing ranges. In January, the GAO will explore whether the CFIUS law and administration reviews are strong enough to protect U.S. national security.

The U.S. semiconductor industry is facing an unprecedented wave of consolidations, with mergers and acquisitions in the sector valued last year at over $100 billion. Chinese officials see an opportunity: They launched a coordinated state strategy to boost its share of domestically made chips in its market from around 10% to 70% in the next 10 years, using a $160 billion state fund as its war chest.

Some lawmakers fear that tougher CFIUS reviews could give China reason to block even more U.S. investment into China. That is anathema to many U.S. firms that want to capitalize on the world’s most populated market where a burgeoning middle class is reshaping global demand for goods.

Along with Mr. Trump’s other statements promising an aggressive trade stance, many lawmakers, economists and business officials worry the next president could spark a trade war with China that could do more harm for the U.S. economy than good.

At the same time, CFIUS officials have also worried about suppressing investment and closing markets.

“It is in the national interest of the U.S. to maintain an open investment policy,” said Aimen Mir, Treasury’s deputy assistant secretary for investment security.

>>> Kone may have opportunity to acquire Toshiba's elevator business

Kone may have opportunity to acquire Toshiba's elevator business - report (translated)

Kone, the Finnish lift maker, could have an opportunity to acquire the Japanese lift maker Toshiba’s elevator business, according to Arvopaperi.

The Finnish language piece wrote that Toshiba recently announced EUR 2bn of write downs due to an acquisition that did not go as planned.

The company's share price has also suffered from accounting issues and it has dipped by 42% last week.

The item said without citing anyone by name that it could be possible Toshiba was looking to exit from its elevator business.

It also cited an unnamed analyst who said that it is fully possible Toshiba would sell its elevator business to Kone, the situation is more likely now than ever before.

The two companies have for long had a strategic alliance, the item said and Kone already owns nearly 20% of Toshiba Elevator and Building Systems Corporation.

Kone is interested in the business because it would strengthen the Finnish company’s position in Japan and elsewhere in Asia.

Kone would not have problems financing the deal, the analyst noted.

One option for Kone is to increase its stake in the business bit by bit, the item said.