FT : FCA to probe peer-to-peer lending sector

FCA to probe peer-to-peer lending sector

The UK’s financial watchdog is probing the £2.7bn peer-to-peer lending sector for the second time in two years, following widespread calls for tougher regulation of so-called “alternative finance” providers.
On Friday, the Financial Conduct Authority said it would scrutinise the burgeoning sector to find out if consumers who lend money on P2P and similar crowdfunding platforms understood the risks they were taking — especially as the industry attracts more “retail investors who are less experienced or knowledgeable”.

According to the regulator, one of the systemic risks posed by P2P platforms is a “maturity mismatch”: between the three-to-five-year terms of the loans people make, and the promise to return their cash within 30 days if needed.
It was possible that platforms could “only repay investors if they have money of their own available”, the FCA warned, adding this “might also transfer risk from investors who leave platforms to those that stay on”.
P2P lending and crowdfunding became subject to FCA regulation in 2014 and Friday’s announcement — of a post-implementation review of the rules — follows growing political pressure for more scrutiny.
Last month Andrew Tyrie, the chairman of parliament’s Treasury Committee, wrote to the FCA to warn that “poorly informed investors may be left with a false sense of security about the balance of risks versus returns”.
Lord Adair Turner — former chair of the FCA’s predecessor, the Financial Services Authority — has also warned that P2P lending and crowdfunding may pose grave systemic risks. In February, he told a BBC interviewer that, over the next five to ten years, P2P loans could be the source of losses that “make the worst bankers look like absolute lending geniuses”.
P2P and crowdfunding platforms gave news of the FCA’s review a cautious welcome. Their trade body, the Peer-to-Peer Finance Association, said it created “an opportunity to ensure an appropriate balance of regulation protecting investors and borrowers, without stifling innovation and competition”.
Rhydian Lewis, chief executive of P2P lending platform Ratesetter, said: “Peer-to-peer investing is becoming very popular and it makes sense for the FCA to ensure it is appropriately regulated.”
According to the FCA, £2.7bn was invested on regulated P2P and crowdfunding platforms last year, up from £500m in 2013. Crowdfunding — whereby many small investors lend to or invest in a start-up project — has provided finance to organisations as diverse as Blaze, the company that makes the lights for London’s so-called Boris bikes, and CrowdJustice, a group aiming to test the legality of Britain’s Brexit vote.
But the industry has also become a cause for concern in the US, where it is more established than in Britain.
In mid-May, shares in Lending Club, the biggest P2P platform, halved in value after employee fraud was exposed and its chief executive resigned.
In its paper published on Friday, the FCA detailed a range of risks for UK investors using P2P or crowdfunding platforms. These included the “pooling of credit risk” whereby all investors become vulnerable to defaults by borrowers they did not wish to be exposed to.

(CS) EUROPEAN BEVERAGES: We raise our FY17-18 EPS estimates for Diageo and Perno

EUROPEAN BEVERAGES: We raise our FY17-18 EPS estimates for Diageo and Pernod by 10/12% and 2%, respectively, driven by a weaker sterling, partly offset by small underlying downgrades. We lower our Heineken and CCH EPS by c2-3% reflecting the recent Naira weakness and corresponding negative impact on volumes. Elsewhere, our estimates are broadly unchanged. We continue to prefer spirits over the brewers on a 12m view. We believe Pernod can surprise positively on margins, which could lead to improved sentiment on the stock. Diageo has moved 17% since the Brexit vote; however, it has not re-rated versus the staples sector (+3%), given underlying FX upgrades of c14%.

>>> Ipsos in early sale talks with large-cap PEs - Merger Market

Ipsos in early sale talks with large-cap PEs
Ipsos SA (EPA:IPS), a French market research company, is in sale talks with large-cap sponsors including Blackstone, BC Partners and KKR, two sources briefed on the situation said.

Preliminary management presentations with potential buyers were held yesterday (July 7), the sources said.

The sale process is at an early stage with first round bids expected to be submitted at the end of July, one of the sources briefed and a person briefed said.

Ipsos' shares were trading at EUR 26.06 today (8 July), giving the company a EUR 1.18bn market capitalization.

Didier Truchot, the 69-year-old co-founder and president of Ipsos, controls 50.3% of the company directly and indirectly, according to previous reports.

Barber Hauler Capital Advisers is advising on the sell-side, the two sources said. The M&A boutique was co-founded by two former senior UBS investment bankers Dominique Bazy and Pascal Hervé.

Ipsos was founded in 1975 by Didier Truchot and Jean-Marc Lech. On 3 June 2015, Didier Truchot acquired, through his holding vehicle DT&Partners, the 26.16% stake held in Ipsos by Jean-Marc Lech's heirs following Jean-Marc Lech's death on 2 December 2014.

For 1Q16, Ipsos recorded EUR 386.9m in revenues, up 1.9% compared with the same period in 2015. The company generated EUR 1.8bn revenue and EUR 93m of net profit in 2015.

Ipsos conducts market research. It uses global surveys and polls to explore market potential, test products and advertising mediums, study audiences and audience perception, and measure public opinion trends. The company offers advertising, marketing, media, public opinion, and social research.

Ipsos operates in Europe, Latin America, Asia/Pacific Rim, the United States, and the Middle East.

Blackstone, BC Partners and KKR declined to comment. Ipsos and Barber Hauler did not respond to an email seeking comment.

WSJ : Hilsenrath Analysis: June Jobs Report Raises Chances of Fed Rate Increase

Hilsenrath Analysis: June Jobs Report Raises Chances of Fed Rate Increase in September
Despite the strong number Friday, the pace of job creation appears to have cooled

Relieved Federal Reserve officials aren't likely to see Friday’s strong jobs report as a reason to raise short-term interest rates when they meet later this month, but the numbers do increase the odds of a rate move as early as September.

Policy makers are likely relieved by the Labor Department’s report Friday that employers added 287,000 jobs in June. The gain was in part a bounce back from anemic payroll growth of 11,000 in May. Looking at the two months together, they averaged 149,000 jobs added a month, roughly in line with the pace of growth officials believe is needed to keep the unemployment rate below 5%. For the second quarter as a whole, payroll growth averaged 147,000 a month, down from 196,000 in the first quarter and 229,000 in 2015.

Taken altogether, the pace of job creation appears to have cooled in recent months, despite the strong June number. But the slowdown wasn’t as severe as officials feared a month ago and was expected because an economy growing just 2% a year can’t be expected to sustain payroll gains in excess of 200,000 a month.

For the Fed, this helps resolve a set of questions Fed Chairwoman Janet Yellen posed last month: “Is the markedly reduced pace of hiring in April and May a harbinger of a persistent slowdown in the broader economy? Or will monthly payroll gains move up toward the solid pace they maintained earlier this year and in 2015?”

The answer: Somewhere in between.


Fed officials got some good news on wage growth. The 2.6% year-over-year growth in average hourly earnings of private-sector workers registered in June will strengthen the Fed’s conviction that waning slack in labor markets is putting modest upward pressure on wages. The annual rate of wage growth has lifted from levels near 2% for much of the postrecession expansion.

Other pieces of the report underscore the idea that slack in the labor market is diminishing gradually. Though the jobless rate ticked up to 4.9%, a broader measure of unemployment which includes part-time and discouraged workers dropped to 9.6%, the lowest level since April 2008.

In sum, the employment report increases the chances of a Fed rate increase in September, but officials are likely to remain in a wait-and-see mode until then, and will likely pass on moving in July. They want to see follow-through and to be sure the economy is really on its feet after a volatile first half, and they also want to be sure markets are stable in the wake of Britain’s vote to leave the European Union.

>>> IMF cuts euro zone forecasts, further global slowdown could derail Europe's

IMF cuts euro zone forecasts, further global slowdown could derail Europe's recovery 
- Need stronger enforcement of euro zone fiscal rules, political uncertainty rising with Brexit
- Most euro zone nations cannot afford fiscal stimulus
- Brexit impact will be worse if risk aversion in financial markets continues for a long period 
- EU needs to exercise flexibility on state aid for banks
- Euro zone banks need to start writing off non-performing loans more rapidly
- Bank regulators should encourage more bank consolidation

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • CUDA +15.1%, (also CFO David Faugno will be stepping down August 1 and Dustin Driggs (chief accounting officer and worldwide controller since 2012) will replace Faugno
  • GPS +4%, (Gap reports June same store sales +2.0% vs -3.6% Retail Metrics consensus - Banana Republic -4% vs -10.3% BR Retail Metrics consensus, Old Navy +5% vs -3.3% Old Navy consensus)
  • APOL +2.2%, (ticking higher; is not providing an updated financial outlook at this time due to the pending merger)
  • YIN +0.6%
M&A news:
  • MITL +21.6% (Mitel Networks confirms it received notice from Polycom (PLCM) of a superior proposal from a third party, waives right to match consideration payable to Polycom stockholders)
  • PLCM +13.5% (terminates previous merger with Mitel Networks (MITL), agrees to be acquired by Siris Capital Group for $12.50/share in cash)
Select EU financial related names showing strength: RBS +5.5%, LYG +5%, BCS +4.8%, DB +4.5%, PUK +4.2%, SAN+3.5%, CS +2.9%, HSBC +1.9%

Select metals/mining stocks trading higher: MT +3.2%, BHP +2.6%, SBGL +2.5%, RIO +2.3%, BBL +2.2%, GOLD+1.7%, AU +1.5%, FCX +1.2%

Other news:
  • EBIO +35.2% (announces the IND application for EBI-031 has become effective, co to receive a $22.5 mln milestone payment from F. Hoffman-La Roche & Hoffmann-La Roche)
  • MBLX +14% (Metabolix says currently engaged in discussions with interested parties concerning alternatives for its biopolymers business and Yield10 crop science program and may engage in discussions with additional parties as it progresses through the strategic review)
  • SWHC +4.3% (relating to last night's shooting in Dallas)
  • RGR +3.1% (relating to last night's shooting in Dallas)
  • CDE +1.6% (announced Q2 production of 4.0 mln ounces of silver and 92,726 ounces of gold, or 9.6 mln silver equivalent ounces; co is maintaining 2016 production guidance of 33.8-36.8 mln silver equivalent ounces)
  • CGA +1.5% (light volume, discloses entry into various strategic agreements)
  • SYF +1.1% (ticking higher, announces $0.13/share quarterly dividend, $952 mln repurchase program)
Analyst comments:
  • FUN +1.3% (upgraded to Outperform from Neutral at Macquarie)
  • INTC +1.2% (upgraded to Market Perform at Bernstein)
  • GFI +1.1% (upgraded to Buy from Neutral at Goldman)

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:
  • WDFC -4%
  • PSMT -3.9%, (PriceSmart misses by $0.15, reports revs in-line; June same store sales -1.9% vs -3.0% Retail Metrics consensus)
  • HELE -2.6%
Select drug related names showing weakness (may be related to JUNO news): KITE -7.6%, BLUE -4.8%, CELG -1.4%,SHPG -1.3%, NVS -1.1%, AZN -1%, SNY -0.7%, GSK -0.5%

Other news:
  • JUNO -26.1% (Juno Therapeutics receives notice from the FDA that a clinical hold has been placed on the Phase II clinical trial of JCAR015 )
  • TTOO -6% (pushing out the expected timeline for the completion of T2Candida cartridge trial; separately co appoints Joanne Spadoro, Ph.D., as COO)
  • KCG -2.4% (files for offering of 20.21 mln shares of Class A common stock, 2.70 mln Class A Warrants, 2.70 mln Class B Warrants, 2.70 mln Class C Warants, and an additional 8.01 mln shares of Class A common stock on behalf of selling shareholders )
  • LEDS -2.1% (following 200%+ move Thursday)
  • GALE -2% ( prices a 28 mln share registered direct offering at $0.45/share with warrants to purchase up to 14 mln shares at $0.65/share )
Analyst comments:
  • AMD -4.6% (downgraded to Underperform at Bernstein)
  • DEO -1.2% (downgraded to Equal Weight from Overweight at Barclays)
  • AV 1.3% (downgraded to Equal Weight from Overweight at Barclays)