Eur$ - Morgan Stanley analyst cuts end-2015 forecast for Euro from 1.13 to 1.06
- Lowers forecast for Q1 EUR/USD from 1.11 to 1.03
Asian markets are lower to start the new week, with the latest round of PMIs out of China showing no improvement. The official manufacturing PMI missed expectations for breakeven, remaining on par with last month at 49.8, while the official Services PMI hit a 3-year low of 53.1. Stats Bureau economist said imports and exports will continue to face challenges due to sluggish global economic recovery and downward pressure for the domestic economy. Earlier, China Premier Li also added that the economy has a lot of room to grow but also took another step further from 7% GDP target, noting 6.5% growth helps China accomplish its targets. Japan final PMI slowed slightly relative to prelim figure but still hit a 1-year high at 52.4. Markit economist said operating conditions at Japanese manufacturers improved substantially at the start of the final quarter of 2015, and growth in production accelerated to the fastest since February. The findings would support the decision by the BOJ late last week to hold off on further policy easing, even with local press surveys showing companies are increasingly convinced that Japan will return to a technical recession with another contraction in GDP.
Nikkei-2.10% Hang Seng-0.88% Shanghai-1.06%
Eur$ 1.1027 CNY 6.34 JPY 120.41 GBP 1.5431 BRL 3.8558 RUB $63.8906 WTI $46.65 (-0.52%)
S&P -0.37% EuroStoxx-0.56% Dax -0.62% SMI -0.63%
Macro :
- Greek Banks Need Less Capital Than Expected: Germany’s Spahn
- China Factory Gauge Signals Contraction Continued a Third Month
- China Selling German Bonds to Aid Euro Zone Monetary Easing: FT
Keep an eye on :
- AIR FP : Boeing May Match Airbus on Single-Aisle Output of ~60/Mo.: Rtrs
- AIR FP : Airbus Delays Decision on A380 Modernization, Handelsblatt Says
- AF FP : Air France Has Drop in Reservations, Europe1 Reports
- ALPHA GA : Alpha Bank Has EU2.74b Total Capital Shortfall in ECB Test
- AMUPATE FP : Amundi IPO to Raise $1.8 Billion as Societe Generale Sells Stake
- BA/ LN : BAE Systems Takes 20% Equity Stake in Reaction Engines: WSJ
- BMW GY : Brilliance (1114 HK) -3.71%
- BNP FP : BNP CEO Says New Rules May Force Banks to Raise Capital: Figaro
- BN FP : Danone’s Cow & Gate Recalls Muesli Batch Sold in U.K., Ireland
- CBK GY : Commerzbank Says CEO Martin Blessing Won’t Extend Contract
- CBK GY : Commerzbank Mgmt Plans to Propose 20c Dividend for 2015
- DAI GY : Mercedes-Benz to Recall Some Imported S-Class Vehicles in China
- DSY FP : +ve artcile in Barrons http://bit.ly/1RnZKnE
- DLG GY : Dialog Reaffirms Unanimous Support for Atmel Acquisition
- EUROB GA : Eurobank Has EU2.12b Total Capital Shortfall in ECB Test
- GLEN LN : Glencore's CSA copper mine draws interest from Zijin
- HSBA LN : HSBC 3Q Pretax Beats Est.; May Delay Domicile Decision
- MC FP : Sephora Said to Plan Opening Stores in Iran in 2016: Reuters
- MKS LN : Marks & Spencer CEO looking for acquisitions but has yet to inform board; not interested in Jaeger
- PNL NA : PostNL 3Q Income Falls; Says on Track to Achieve FY 2015 Outlook
- RR/ LN : Rolls-Royce Shifts Work for Biggest-ever Order Back to Britain
- TPEIR GA : Piraeus Bank Has EU4.93b Total Capital Shortfall in ECB Test
- TIT IM : Italy Regulator Seeks Info on Niel-Telecom Italia: Ansa
- TEL NO : Telenor May Face New Hearing on VimpelCom and Uzbekistan: NRK
- VIV FP : Vivendi CEO Says Co. Didn’t Act in Concert With Niel: Corriere
- VIV FP : Vivendi Considers Raising Telecom Italia Stake to 24.9%: Figaro
- VOD LN : Vodafone U.K. Says Attempt Made to Access Some Customer Accounts
- VPK NA : Enters agreement to build industrial terminal in Saudi Arabia
- VOW3 GY : Volkswagen Expects to Recall Diesel Vehicles in China in 1Q 2016
>>> Up
*CREDEM RAISED TO NEUTRAL VS UNDERPERFORM AT EXANE
*CREST NICHOLSON RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
*DANSKE RAISED TO OUTPERFORM VS SECTOR PERFORM AT RBC
*ENGIE RAISED TO BUY VS HOLD AT BERENBERG
*GEBERIT RAISED TO BUY VS HOLD AT HSBC
*MEDIASET RAISED TO BUY VS HOLD AT LIBERUM
*SABADELL RAISED TO NEUTRAL VS SELL AT CITI
*SERCO RAISED TO SECTOR PERFORM AT RBC CAPITAL
*SNAM RAISED TO OUTPERFORM VS NEUTRAL AT MEDIOBANCA
>>> Down
*ASTRAZENECA CUT TO HOLD AT NORDEA
*BANCO POPOLARE CUT TO NEUTRAL VS OUTPERFORM AT EXANE
*BARRATT DEVELOPMENTS CUT TO NEUTRAL AT JPMORGAN
*COMPASS GROUP CUT TO UNDERPERFORM VS NEUTRAL AT CREDIT SUISSE
*EASYJET CUT TO REDUCE VS HOLD AT HSBC
*HENDERSON GROUP CUT TO SECTOR PERFORM AT RBC CAPITAL
*IAG CUT TO HOLD VS BUY AT HSBC
*LANCASHIRE HOLDINGS CUT TO NEUTRAL VS BUY AT CITI
*LUXOTTICA CUT TO UNDERPERFORM VS NEUTRAL AT BOFA
*MEDA CUT TO SELL AT NORDEA
*PERSIMMON CUT TO UNDERWEIGHT VS NEUTRAL AT JPMORGAN
*SAIPEM CUT TO UNDERPERFORM AT JEFFERIES
*WASHTEC CUT TO HOLD VS BUY AT HSBC
*WHITBREAD CUT TO REDUCE VS ADD AT NUMIS
>>> PT Change
>>> Initiation
>>> Call
>> Stock
*BUZZI UNICEM EXITS CONVICTION BUY LIST AT GOLDMAN; STILL BUY
Dassault Systèmes: Still Room on the Upside http://bit.ly/1RnZKnE
The French software developer has seen its shares rise some 40% this year. Despite choppy European stock markets, the shares could move higher.
Dassault Systèmes (ticker: DSY.France) is best known for developing 3D virtual-creation software that allows engineers to design, simulate, and optimize cars, planes, and industrial goods. For manufacturers, it’s a cost-effective way of launching products, often eliminating the need to develop prototypes that were once effective means for testing new designs under real-world conditions.
Greg Padilla, a principal and fund manager with Aristotle Capital Management, has owned the stock since 2014 and says it’s one of his fund’s top 10 holdings.
“Growth is hard to find right now, but there are still numerous opportunities in Europe, unique businesses,” he says. “Dassault Systèmes is a company that ticks a lot of the right boxes.”
In spite of the stock’s recently impressive performance, Padilla says the company’s potential still isn’t fully appreciated by investors. “It’s optically not a supercheap stock, but it’s a company that has a dominant market share, a strong balance sheet, and is making the transition from its core business into other areas,” he says.
DASSAULT’S SOFTWARE IS associated with highly durable projects, often with 20-to-30-year product cycles. In recent years, the company has been improving its offering in product life-cycle management, or PLM, which helps companies manage designs from conception through to development. And it has been exploring new sectors such as consumer packaging, retail, health care, and life sciences. This expansion has been assisted by a reorganization of Dassault’s sales operations following its 2010 acquisition of a PLM sales and client-support team from IBM, increasing its capacity for cross-selling.
Padilla is struck by the potential for the company’s Biovia life-sciences business, which for the first time can digitally mock up a cancer cell, and Enovia, which provides cloud-based software that allows designers to collaborate on projects. The strategy has created a business Padilla says is both resilient and has strong earnings visibility. The company aims to double earnings per share from 2014 to 2019.
Last week Dassault said third-quarter net profit jumped 48% to 105.5 million euros ($115.75 million) from the year earlier, lifted by a strong performance in Europe and the Americas. Earnings are being helped by the relative weakness of the euro against other currencies, with close to two-thirds of revenue generated outside the euro zone.
Goldman Sachs analyst Mohammed Moawalla rates Dassault Systèmes a Buy with an €85 price target and a return potential of 23%. He describes the company’s organic growth as “solid,” despite a slowdown in Asia caused by some deal slippage in China. He estimates earnings per share will grow at a compound annual rate of 20% in the next five years, and puts Dassault’s 2015 price/earnings ratio at 31.6, falling to 25.1 next year and 21.2 in 2017. Dassault Systèmes’ shares closed Friday at €71.84.
Asian Mid-session Update: China PMIs remain in contraction; Lower Australia inflation and house prices bolster the case for RBA easing tomorrow
***Economic Data***
- (CN) CHINA SEPT FINAL CAIXIN PMI MANUFACTURING: 48.3 V 47.6E (8th straight conctraction; 4-month high)
- (CN) CHINA OCT MANUFACTURING PMI (OFFICIAL): 49.8 (3rd straight contraction) V 50.0E; NON-MANUFACTURING PMI (SERVICES): 53.1 (3-year low) V 53.4 PRIOR
- (CN) China Index Academy: Avg price of new residential properties in 100 major cities in Oct m/m: +0.30% v +0.28% prior, y/y: +2.07% v +1.36% prior (6th straight rise)
- (JP) JAPAN SEPT FINAL PMI MANUFACTURING: 52.4 V 52.5 PRELIM
- (AU) AUSTRALIA OCT AIG MANUFACTURING INDEX: 50.2 V 52.1 PRIOR; 4th straight expansion
- (AU) AUSTRALIA SEPT BUILDING APPROVALS M/M: 2.2% V 1.0%E; Y/Y: 21.4% V 24.1%E
- (AU) AUSTRALIA OCT TD SECURITIES INFLATION M/M: 0.0% (8-month low) V 0.3% PRIOR; Y/Y: 1.8% V 1.9% PRIOR
- (AU) AUSTRALIA OCT CORELOGIC RPDATA HOUSE PRICES M/M: 0.2% V 0.9% PRIOR
- (KR) SOUTH KOREA SEPT CURRENT ACCOUNT BALANCE: $10.6B V $8.4B PRIOR
- (KR) SOUTH KOREA OCT TRADE BALANCE: $6.7B V $7.1BE
- (KR) SOUTH KOREA OCT PMI MANUFACTURING: 49.1 V 49.2 PRIOR
- (HK) Macau Oct casino revenue -28.4% y/y v -28%e; Smallest monthly y/y decline since Jan
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -2.1%, S&P/ASX -1.2%, Kospi +0.2%, Shanghai Composite flat, Hang Seng -0.6%, Dec S&P500 -0.4% at 2,065
***Commodities/Fixed Income***
- Dec gold -0.1% at $1,139/oz, Dec crude oil -0.5% at $46.38/brl, Dec copper -0.2% at $2.31/lb
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3154 v 6.3495 prior setting; strongest Yuan setting since Aug 10th; Largest Yuan strengthening since 2005
- GLD: SPDR Gold Trust ETF daily holdings fall 2.0 tonnes to 692.3 tonnes
***Market Focal Points/FX***
- Asian markets are lower to start the new week, with the latest round of PMIs out of China showing no improvement. The official manufacturing PMI missed expectations for breakeven, remaining on par with last month at 49.8, while the official Services PMI hit a 3-year low of 53.1. Stats Bureau economist said imports and exports will continue to face challenges due to sluggish global economic recovery and downward pressure for the domestic economy. SME-oriented Caixin manufacturing PMI also remained in contraction for 8th straight month, but beat estimates and hit a 4-month high, with resident economist stating the manufacturing industry's overall weakening has slowed down. Earlier, China Premier Li also added that the economy has a lot of room to grow but also took another step further from 7% GDP target, noting 6.5% growth helps China accomplish its targets.
- Japan final PMI slowed slightly relative to prelim figure but still hit a 1-year high at 52.4. Markit economist said pperating conditions at Japanese manufacturers improved substantially at the start of the final quarter of 2015, and growth in production accelerated to the fastest since February. Markit added that cost pressures were evident as purchasing prices rose, albeit at a weak rate. The findings would support the decision by the BOJ late last week to hold off on further policy easing, even with local press surveys showing companies are increasingly convinced that Japan will return to a technical recession with another contraction in GDP.
- Ahead of tomorrow's RBA policy decision, the latest set of data could tip the scale in favor of an easing. Manufacturing PMI remained in expansion but just barely, falling to 50.2 from 52.1. TD Securities Inflation and house prices also slowed markedly. Note that majority of analysts are still in the Hold camp, but fixed income markets have been tilted toward a rate cut since the soft CPI figures last week.
- In FX, AUD/USD opened down 20pips below 0.7115, but rose toward 0.7150 later in the day. USD/JPY was down another 40pips as low as 120.25, while NZD/USD reversed its initial 40pip drop to 0.6730 to rise as high as 0.6780s. EUR/USD opened up about 40pips above 1.1030 and held those gains on comments from ECB's Draghi that further ECB stimulus is still an "open question" rather than the preferred outcome toward the end of the year.
***Equities***
Notable movers by sector:
- Consumer discretionary: Samsonite 1910.HK +2.6% (Q3 result); China Southern Airlines Co 1055.HK -2.0% (9-month result); Kirin Holdings Co 2503.JP -5.4% (H1 result); Chongqing Changan Automobile Co 000625.CN -1.0% (9-month result); Ricoh Co 7752.JP -3.3% (H1 result); Galaxy Entertainment Group 27.HK +1.1%, Sands China 1928.HK -0.4%, Wynn Macau 1128.HK +3.7% (Macau Oct casino revenue declines slowest since Jan)
- Financials: China Pacific Insurance Group Co 2601.HK +1.1% (9-month result); Bank of Communications 3328.HK -1.4% (9-month result); Industrial and Commercial Bank of China Ltd (ICBC) 601398.CN -0.4% (9-month result); Sumitomo Corp 8053.JP -3.9% (H1 result); Macquarie Group MQG.AU -4.9% (share buyback plan); Westpac Banking Corp WBC.AU -2.1% (FY15 result)
- Industrials: CRRC Corp 1766.HK -0.6% (9-month result)China Railway Construction Corp 601186.CN -0.9% (9-month result); China Railway Group 601390.CN +0.3% (9-month result); Mitsubishi Heavy Industries 7011.JP -3.0% (H1 result); Toyota Tsusho Corp 8015.JP -3.1% (H1 result)
- Technology: BesTV New Media Co 600637.CN +2.7% (9-month result); Samsung SDI Co 006400.KR +4.2% (Q3 result); iProperty Group IPP.AU +9.7% (acquisition proposal); Sharp Corp 6753.JP -4.5% (H1 result)
- Materials: China National Building Material Co 3323.HK -2.7% (9-month result); Angang Steel 000898.CN -0.4% (9-month result); Zhejiang Longsheng Group Co 600352.CN +2.1% (9-month result)
- Healthcare: Takeda Pharmaceutical Co 4502.JP -1.4% (H1 result)
- Telecom: SK Telecom 017670.KR -1.7% (Q3 result); NTT DoCoMo 9437.JP +1.7% (H1 result)
- Utilities: China Electric Power Construction 601669.CN -0.2%(9-month result); Beijing Jingneng Power Co 600578.CN +2.3% (9-month result); Kyushu Electric Power Co. 9508.JP -1.1%(H1 result)
Marks & Spencer CEO looking for acquisitions but has yet to inform board; not interested in Jaeger
Marks & Spencer [LON:MKS] chief executive Marc Bolland is looking at possible acquisitions, the Financial Times reported. The newspaper cited two people familiar with the situation who said Bolland has been looking at specialist fashion retailers.
The people named the fashion and homewares retailer The White Company as one potential target for M&S.
M&S has previously considered buying the clothing retailer Jaeger, the article said. However, M&S is not interested in buying Jaeger despite the retailer’s owner Better Capital’s attempts to persuade M&S to enter an auction, according to the report.
A Sky News report on 8 October said Better Capital had hired the investment bank AlixPartners to advise on talks with potential buyers for Jaeger.
The FT article cited people close to the situation, who said Bolland wants to create a portfolio of brands, but has yet to put his ideas to the M&S board. The people added that the board is unlikely to back Bolland’s plan, as the retailer has only recently launched an initiative to increase clothing sales under Steve Rowe, who is in charge of M&S’ home furnishings and clothing.
M&S refused to comment, the item said.
M&S’ market capitalisation stood at GBP 8.40bn (EUR 11.77bn) at the close of trading in London on Friday, 30 October.
Financial Times, previously reported intelligence
Govt of Quebec asks Govt of Canada to match its USD 1bn investment in Bombardier's CSeries jet program
The Government of Quebec wants to see the Government of Canada match its USD 1bn investment in Montreal, Quebec-based Bombardier, reported The Globe and Mail on 31 October..
A report from the newspaper's News section, which noted that the request represents a tall order for Ottawa, cited Industry Canada spokesperson Derek Mellon as saying that from 1966 to the current date, the Canadian company has paid back USD 543m of the USD 1.3bn it has received.
The report also cited Jacques Daoust, Quebec's economy minister, as informing Bloomberg on Friday that the provincial government intends to ask Ottawa to match the USD 1bn it promised to make in Bombardier's CSeries jet program. Daoust said that if Ottawa also makes a USD 1bn investment, the "financing package" for the CSeries jet program "would be complete." He added that he would phone the new industry minister appointed by the Justin Trudeau government as soon as the incoming prime minister appoints a cabinet.
According to the report from The Globe and Mail, a spokesperson representing Trudeau, whose Liberal Party won the recent federal election in Canada, the party is carefully watching the Bombardier situation and will, after it is sworn in on 4 November, determine whether or not to provide assistance.
Meanwhile, David Provencher, an assistant to Daust, said in the report that the province is open to bringing aboard an additional partner to help with the CSeries jet program. He added that the province will assist Bombardier in finding any possible partner that can exert a "positive influence."
The Globe and Mail