>>> FCC shareholder Carlos Slim readies for full takeover as regulator probes co

FCC shareholder Carlos Slim readies for full takeover as regulator probes control 

Fomento de Construcctiones y Contratas (FCC) shareholder Carlos Slim is getting ready to make a full takeover offer, El Confidencial reported without citing sources. According to the item, the operation would be a logical suit to the capital increase approved in December. The potential offer would be at the price of the new shares to be issued now, at EUR 6 per share.

The Spanish securities market regulator CNMV has been for some time probing whether Slim’s deals with the Koplowitz family in FCC are evidence of an effective control of the company, which would trigger a compulsory offer from Slim’s investment vehicle Inversora Carso.

Inversora Carso has been acquiring shares of FCC in the past two weeks and currently holds more than 26%, according to the Spanish-language report.

FCC stock closed on Tuesday at EUR 6.83.

El Confidencial

(MS) European Telco : Regulation: Potential for better news - Wo

Telco equity performance faltered after a proposed Danish mobile merger was blocked. This note examines regulatory prospects for potential mobile deals in Italy, the UK and France, as well as BT/Openreach & the possibility of increased cable regulation.

* Could failed Danish merger re-emerge? The proposed Telia/Telenor
Denmark merger was blocked as the proposed deal would have left Denmark
with a weak No3 (19% share, receiving too few remedies) and extremely high
market concentration (HHI, Ex. 12). However, Danish M&A could reportedly reemerge,
driven by 3 (Source: Telecom Paper, 11 Sept).

* Italy - MVNOs a possible remedy. The proposed merger between Wind and
3 Italy would trigger high concentration (Ex 13). As was the case in Germany
(TEF D hosts Drillsch), we believe stronger MVNOs could be a key remedy, with
La Poste and Fastweb potential candidates. We see a positive outlook for
Italian mobile - with or without consolidation - easy comps (TI/VOD revs 50%
off peak), price rises, tax declines and rising consumer confidence.

* Sky could hold the key to UK consolidation. 3's proposal to acquire O2 UK
faces challenges, as this would lead to very high UK mobile concentration (Ex.
17). We therefore think very significant remedies could be needed, including
Enhanced MVNO terms and disposals of retail stores and spectrum. Sky
Mobile could be key to deal approval, given its intention to launch mobile, and
its previous success in fixed broadband (organic 23% market share win).

* French consolidation prospects re-emerging. Orange and Bouygues have
recently confirmed they are in discussions around their French telecom assets,
after several press reports. Regulatory headwinds here could be less than
some expect if France (rather than EC) were to claim jurisdiction. Altice's
leverage and intent to slow its deals may deter it from leading French M&A.

* BT Openreach: separation prospects receding? First, UK broadband is
already very competitive (BT: low b'band share). Second, models such as
Kontingentmodell have been favored (over separation) in Europe. Third,
structural separation delayed investments in Australia & NZ. Fourth, we note
some support for BT from government minister Ed Vaizey. An alternative
would be for the regulator to consider lowering BT's wholesale fibre rate.

* Cable regulation - moderate risk (NL, UK). Wholesale cable access is now
mandated in Belgium & Denmark (also considered in NL, subsequently
rejected). Retail-minus pricing gives cable wholesalers some (but limited)
ability to under-cut on price. Spain's regulator has announced NGN fixed-line
regulation by region. We see moderate risk of wholesale cable regulation in
the NL and UK (given cable's high market share, within footprint).
We remain positive on Euro Telcos, driven by better revenue growth, operating
leverage, cost-cutting and attractive 17e valuations & dividend yield (5.0%).

>>> Europe : Brokers Upgrades & Downgrades - 7th of January 2016

>>> Up
*BPOST SA RAISED TO ADD AT BANK DEGROOF PETERCAM
*CARLSBERG RAISED TO BUY AT SOCIETE GENERALE
*DEUTSCHE BANK RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*INDITEX RAISED TO BUY AT BOFA
*K+S RAISED TO OUTPERFORM VS MARKET PERFORM AT BERNSTEIN
*KERRY GROUP RAISED TO BUY AT SOCIETE GENERALE
*RECKITT BENCKISER RAISED TO BUY AT HSBC
*SNAM RAISED TO NEUTRAL VS SELL AT GOLDMAN Full note attached)
*SPIRENT COMMUNICATIONS RAISED TO BUY VS HOLD AT LIBERUM
*WOLTERS KLUWER RAISED TO OUTPERFORM AT BERNSTEIN
*YARA RAISED TO MARKET PERFORM VS UNDERPERFORM AT BERNSTEIN

>>> Down
*BOUYGUES CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*CONTINENTAL AG CUT TO HOLD AT HSBC
*FIDESSA CUT TO NEUTRAL VS BUY AT UBS
*LINDE CUT TO MARKET PERFORM VS OUTPERFORM AT BERNSTEIN
*POSTNL CUT TO REDUCE AT BANK DEGROOF PETERCAM
*PUBLICIS CUT TO MARKET PERFORM AT BERNSTEIN
*QINETIQ CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
*SAINT GOBAIN CUT TO HOLD VS BUY AT BERENBERG
*TEMENOS CUT TO SELL VS NEUTRAL AT UBS
*UBS CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
*USG CUT TO HOLD AT BANK DEGROOF PETERCAM

>>> PT Change


>>> Initiation
*AMUNDI RATED NEW BUY AT SOCIETE GENERALE
*BASF RATED NEW OUTPERFORM AT MACQUARIE; PT EU85
*CLARIANT RATED NEW NEUTRAL AT MACQUARIE; PT CHF21
*COLONIAL RATED NEW NEUTRAL AT BOFA; PT EU0.67
*CRH RATED NEW OVERWEIGHT AT BARCLAYS
*EDGEWELL PERSONAL CARE RATED NEW HOLD AT SOCIETE GENERALE
*HEIDELBERGCEMENT RATED NEW OVERWEIGHT AT BARCLAYS
*HISPANIA RATED NEW UNDERPERFORM AT BOFA
*ITALCEMENTI RATED NEW UNDERWEIGHT AT BARCLAYS
*LAFARGEHOLCIM RATED NEW EQUALWEIGHT AT BARCLAYS
*LANXESS RATED NEW OUTPERFORM AT MACQUARIE; PT EU52
*MERLIN RATED NEW UNDERPERFORM AT BOFA
*PSP A NEUTRAL IN NEW COVERAGE AT BOFA
*ROYAL MAIL RATED NEW SELL AT LIBERUM; PT 360P
*SRP GROUPE RATED NEW BUY AT UBS; PT EU28
*SWISS PRIME RATED A BUY AT BOFA
*SAINT-GOBAIN RATED NEW UNDERWEIGHT AT BARCLAYS
*SYNGENTA RATED NEW NEUTRAL AT MACQUARIE; PT CHF420
*VALEO RATED NEW HOLD AT HSBC

>>> Call

>>> What to look at today - 7th of January 2016

Dow-1.47% S&P-1.31% Nasdaq-1.14% Russell-1.45% VIX 20.59 (+6.46%)
US Market closed for a third day lower. YTD Dow -2.31%, S&P-1.96% EuroStoxx-3.92% Dax-4.92% Nikkei -2.48% Shanghai-5.30% still on global concerns on global growth & Oil price. PBOC devalued CNY to lowest level in five years. All Asian markets were also lower on tension with north Korea after Bomb H test. Oil sunk further on the day following the weekly gasoline inventories that reported a build of 10.5 million barrels. WTI crude ended its pit session lower by 5.4% at $34.04/bbl. FOMC showed that it was generally agreed that liftoff conditions were met in December. Interestingly, that did not stop some members from voicing concerns about a "considerable" risk to the inflation outlook. Despite the December rate hike, the minutes struck a dovish tone, leading to renewed worries that the Fed may have embarked on a tightening path amid less-than-ideal macroeconomic conditions. Speaking of less-than-ideal macroeconomic conditions, the World Bank lowered its 2016 global growth forecast to 2.9% from 3.3%, blaming a slowdown in emerging markets for the downward adjustment. Volume were above average with more than 1bil shares traded. Asian equity markets are down sharply as China's key indices are unable to complete the full trading session for the 2nd time in the week. Unlike Monday however, when the circuit breakers were set off in the afternoon hours, CSI 300 index reached the 7% threshold in the first 30 minutes of trade. US equity futures are down over 1.68%, crude oil is down another 3.5% ($32.70), while safehaven Gold, US Treasuries, and JPY are bid firmly. USD/JPY fell over 100pips below 117.70, S&P 500 futures fell below 1,960, Shanghai Composite 7% drop took the index below 3,290 - a 3-month low also seen in US markets.

Nikkei -2.33% Hang Seng -2.93% Shanghai -7.32% (halted after 30mnts trading)

Eur$ 1.0819 CNY 6.5937 JPY 117.85 GBP 1.4630 CHF 1.0026 RUB$ 75.66 WTI $32.70(3.75%)

S&P -1.69% EuroStoxx -2.5% Dax-2.5% SMI -1.73%

Macro :
- Chinese Stocks Halted as Weak Yuan Fixing Deepens Market Turmoil
- China Regulator Said to Discuss Markets Without Taking Action
- Fed’s Dec. Minutes Cite Several Reasons for Gradual Pace
- FOMC Member Saw Decision to Raise Rates a “Close Call”
- Soros Says Global Markets at the Beginning of a Crisis

Keep an eye on :
- AF FP : Air France-KLM to Show Operating Profit for 2015: CEO Juniac
- AREIT SP : Blackstone, Gaw Said to Weigh Ascendas Bids: Reuters
- BMW GY : Brillance (1114) -3.9% in HK
- BO DC : Danish B&O Retailers Wants New Owner to Boost Sales: Borsen
- DEC FP : Lamar Said in Talks to Buy Clear Channel Outdoor Assets: Rtrs
- DPW GY : Amazon to Build Own German Parcel Distribution Network, DVZ Says
- ENGI FP : French Regulated Gas Prices to Fall by Close to 2% Feb 1: AFP
- FCC SM : FCC shareholder Carlos Slim readies for full takeover as regulator probes control
- GLEN LN : -4.7% in HK
- HOME LN : Home Retail Group could see rival bid from Clayton Dubilier & Rice and Terry Leahy
- HOME LN : Sainsbury shareholder QIA not happy about bid for HRG, could block deal
- HSBA LN : HSBC Falls to 3-Mo. Low in H.K. After Downgraded by JPMorgan (-2.87% in HK, in line with Market)
- IMT LN : Reportedly China National Tobacco to launch cash bid for £45/shr - financial press
- LLOY LN : Lloyds Seen Probed Over Possible Gov.-Bond Mkt Manipulation: WSJ
- MC FP : Prada -5.41% in HK
- ROG VX : Reiterate CL Buy at GS
- SBRY LN : Sainsbury shareholder QIA not happy about bid for HRG, could block deal
- SHP LN : FT : Shire deal hinges on Baxalta tax status - http://on.ft.com/1OAzxDw
- SHP LN : Shire bid for Baxalta depends on whether increased cash component would trigger tax liability
- STAN LN : DBS, Standard Chartered Said to Face Chinese Currency Curbs --> Standard -4.55% in HK
- VIV FP : China Wanda May Announce Legendary Purchase Next Tuesday: News

(GS) Europe : Utilities - SNAM upgraded to Neutral from Sell

Supportive environment for regulated utilities: Enagas our top pick

Regulated utilities’ dividend yields attractive vs. bond yields
For Spanish and Italian regulated utilities, spreads between dividend yields
and local bond yields are significantly above historical average levels and
in some cases close to peak levels. We believe this creates an opportunity,
as we expect a supportive macro backdrop for regulated utilities in 2016.

Little regulatory risk in 2016/17...
Following the approval of new regulation in Italy, there are no regulatory
reviews scheduled in Italy, Spain or the UK before 2018. We therefore see a
very high degree of visibility for EPS and DPS over the coming years.

...and stable European government bonds to be supportive
Regulated utilities’ share prices are inversely correlated to local
government bond yields. Our economists expect no change in Spanish/
Italian bond yields, with only a small increase in German/UK 10-year bond
yields (+30/40 bp over 2016). We see this environment as supportive
compared to commodity-exposed parts of the sector, although we remain
selective among regulated names. We are most positive in Spain, with Buy
ratings on Enagas and Red Electrica, along with Elia in Belgium.

Enagas (CL Buy) top pick among regulated utilities
Enagas is a Conviction List Buy with 29% upside potential. Spanish gas
regulation is fixed until 2020 and we see upside risks to Enagas’s dividends
(policy to be updated with FY results in February). Enagas’s dividend yield
is c.350 bp higher than Spanish 10-year government bond yields, vs. a
historical average spread of 160 bp. In the medium term, falling gas prices
could increase gas demand in Spain, enhancing Enagas’s earnings growth.
We see little risk that Enagas’s regulation is reviewed, regardless of the
eventual outcome of the Spanish election (as gas regulation was
comprehensively overhauled in 2012/13).

Snam to Neutral: Italian regulation more favourable than expected
The Italian energy regulator has updated regulation for 2016, with
incentives higher than we had previously expected. With greater regulatory
clarity we believe the Italian regulated utilities should be valued as “bond
proxies”, in the same way as we treat the UK and Spanish names. We
upgrade Snam to Neutral from Sell. Terna remains a Sell.

>>> Asian Update

Asia Market Update: China trading session lasts just 30 minutes before another 7% CSI 300 decline triggers circuit breakers

***Economic Data***
- (AU) AUSTRALIA NOV TRADE BALANCE (A$): -2.9B V -3.0BE (19th straight month of deficit)
- (AU) AUSTRALIA NOV BUILDING APPROVALS M/M: -12.7% (biggest decline in 3 years) V -3.0%E; Y/Y: -8.4% V 3.9%E
- (JP) Japan Dec Tokyo Avg Office Vacancies 4.0% v 4.2% prior; lowest since Aug 2008
- (JP) Japan investors buy net ¥85.9B in foreign bonds v net buy ¥147B in prior week; Foreign investors net buy ¥136B in Japan stocks v sale ¥226B in Japan stocks in prior week

***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -1.8%, S&P/ASX -2.1%, Kospi -0.7%, Shanghai Composite -7.2% (closed early), Hang Seng -2.4%, Mar S&P500 -1.2% at 1,962

***Commodities/Fixed Income***
- Feb gold +0.6% at $1,099/oz, Feb crude oil -2.4% at $33.16/brl, Mar copper -1.0% at $2.07/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 1.4 tonnes to 641.0 tonnes
- (US) T Boone Pickens: Still believes oil could reach $70-75/bbl by end of the year - CNBC
- FCG.NZ: Announces record volume for Dec of over 300K MT
- USD/CNY: (CN) PBoC sets yuan mid point at 6.5646 v 6.5314 prior; Biggest cut in Yuan fix since August devaluation; 8th straight day of lower Yuan fix
- (CN) PBoC to inject CNY70B in 7-day reverse repos; Injects net CNY190B this week vs drain of CNY60B in prior week
- JGB: (JP) Japan's MOF sells ¥737B in 1.40% 30-year bonds; Avg yield: 1.224% v 1.397% prior; Bid to cover: 3.73x v 3.93x prior

***Market Focal Points/FX***
- Asian equity markets are down sharply as China's key indices are unable to complete the full trading session for the 2nd time in the week. Unlike Monday however, when the circuit breakers were set off in the afternoon hours, CSI 300 index reached the 7% threshold in the first 30 minutes of trade. US equity futures are down over 1%, crude oil is down another 2%, while safehaven Gold, US Treasuries, and JPY are bid firmly. USD/JPY fell over 100pips below 117.70, S&P 500 futures fell below 1,960, Shanghai Composite 7% drop took the index below 3,290 - a 3-month low also seen in US markets. AUD/USD fell 60pips below 0.7030 and NZD/USD was down 40pips at the lows near 0.6610.

- The circuit breaker trigger on Monday was in part attributed to disappointing PMIs, but today it was the currency factors that sent investors to the sidelines. PBoC's daily Yuan fix - down for the 8th straight day - was also set significantly weaker by -0.5% today. This was the biggest margin of decline since the August devaluation and, much like in August, prompted concerns that the central bank's continued efforts to weaken the Yuan will spur massive investment outflows from the mainland. In addition, China traders noted today's World Bank report which cut 2016 global growth target to 2.9% from 3.3% in June and also cut China target to 6.7% from 7.0%. Later in thd day, China's CFETS blamed the speculators for the attack on the Yuan, calling the currency stable and China's reserves as ample. CFETS noted "recent FX trading has nothing to do with real economic demand doesn't represent true market demand and supply. They only cause abnormal volatility in the yuan exchange rate and send the wrong price signal to the market." Offshore Yuan did move higher on those comments and also on some stabilizing measures, rallying some 600pip off the lows.

- Outside of the risk-off move from the FX volatility, China's CSRC unveiled the widely anticipated rules on large shareholders' share reduction. Effective Jan 9th, CSRC will cap the reduction to 1% of total outstanding over the next 3-month period. Large shareholders will also be forced to declare their stake sale intentions 15 days in advance.

- In notable economic data, Australia housing inflation should become less of a concern for the RBA going into their next month's meeting as building approvals saw their biggest sequential decline in about 3 years. Australia Trade data were less disappointing on the surface - deficit was slightly lower than expected, and export rose to +1.0% v -3% prior. However, closer look at key Australian export components saw iron ore and crude oil shipments falling to 7-month lows.

- South Korea has taken more response measures after the alleged nuclear test by the North overnight, limiting the entry to jointly operated industrial park and also threatening propaganda broadcasts on the border. There were also reports that US may deploy "strategic" military assets to South Korea.

***Equities***
US equities / ADRs:
- ZUMZ: Reports Dec SSS -8.9% v -13.8% m/m; raises Q4 $0.45-0.47 v $0.43e, R$237-239M v $229Me ($0.40-0.46, R$226-231M prior); +15.4% afterhours
- MG: Reports Q2 $0.39 v $0.28e, R$194.8M v $186Me; +7.2% afterhours
- M: Reports Nov/Dec SSS owned plus licensed basis -4.7% y/y; owned basis SSS -5.2% y/y; Cuts FY15 and Q4 guidance; to close stores and cut jobs; +4.0% afterhours
- ATML: Microchip said to be reconsidering offer to acquire the company - press; -3.7% afterhours
- TLOG: Birinapant shows no activity in randomized Phase 2 MDS Study; birinapant did not demonstrate any clinical benefit over placebo; -72% afterhours

Notables Post-afterhours
- YHOO: Planning at least 10% workforce reduction (~1.0K employees) - financial press
- COST: Reports Dec SSS (ex-gas) +5% y/y; US SSS (ex-gas) +4%

(GS) Europe Pharma : Roche Prefered EU Pharma Name - Full note Attached

Maintain constructive view on EU pharma
We remain constructive on EU Pharma given our view on continued innovation improvement, and top-line driven growth at undemanding premiums vs the market. In our EU pharma coverage, we continue to prefer Roche (CL-Buy), Novo Nordisk, Bayer and GSK. We believe Novo Nordisk and Roche are best positioned in the space, with superior innovation/ execution, which is not discounted in current market valuations. We roll forward our valuation base year to 2017 for several stocks, resulting in changes to those 12-month price targets.

>>> US After Hours Summary: NSPH, ZUMZ jump on guidance, DVAX pops

After Hours Summary: NSPH, ZUMZ jump on guidance, DVAX pops in anticipation of trial data; RECN drops on earnings, TLOG plummets on trial flop

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance:  NSPH +51.72%, ZUMZ +15.38%, MGCD +13.26%, MG +7.24%, M +3.98% (also announced a series of cost-efficiency and process improvement measures), QUAD +0.79%

Companies trading higher in after hours in reaction to news:  DVAX +6.23% (announced that it plans to host a webcast conference call tomorrow to review Heplisav-B Phase 3 clinical data), ZIXI +2.72% (Announced Board approval of a $15 mln share repurchase program), DNN +2.70% (announced that preparations for its 2016 uranium exploration programs in the Athabasca Basin have commenced and that exploration drilling is scheduled to begin on January 12), UA +1.16% (announced a strategic partnership with IBM (IBM) to create and provide data-backed health and fitness insights using Watson's cognitive computing technology), QURE +0.67% (announced it will release topline results from its Hemophilia B Phase I/II gene therapy low-dose cohort clinical trial tomorrow morning)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings:  CLBS -38.68%, RECN -5.96%, GMED -5.84%

Companies trading lower in after hours in reaction to news:  TLOG -71.75% (announced that its Phase 2 study of birinapant co-administered with azacitidine in first line higher risk patients suffering from myelodysplastic syndromes did not demonstrate any clinical benefit over placebo), GALE -14.73% (announced its intent to offer shares of its common stock and warrants in an underwritten public offering; size was not disclosed), ARDX -7.15% (commenced an underwritten public offering of up to $75 mln of shares of its common stock), PSDV -5.33% (proposed a common stock offering for an undisclosed amount), ATML -3.73% (Bloomberg reporting that Microchip (MCHP) is reconsidering its interest in Atmel amid their continued business struggles), ERI -2.25% (announced the departure of its COO and CFO)