>>> Europe : Brokers Upgrades & Downgrades - 27th of October 2015

>>> Up
*AKASTOR ASA RAISED TO HOLD AT NORDEA
*APR ENERGY PLC RAISED TO HOLD AT JEFFERIES
*HAMBURGER HAFEN RAISED FROM UNDERWEIGHT AT MORGAN STANLEY
*LEONI RAISED TO BUY VS SELL AT BANKHAUS LAMPE
*MICRO FOCUS RAISED TO BUY SV NEUTRAL AT UBS

>>> Down
*ACERINOX CUT TO NEUTRAL VS BUY AT GOLDMAN
*APERAM CUT TO NEUTRAL VS BUY AT GOLDMAN
*DUFRY CUT TO NEUTRAL VS BUY AT UBS
*ENTERTAINMENT ONE CUT TO HOLD VS BUY AT PEEL HUNT
*IMAGINATION TECH CUT TO HOLD VS BUY AT LIBERUM
*LUNDIN PETROLEUM CUT TO SELL AT NORDEA
*NYRSTAR CUT TO SECTOR PERFORM AT RBC CAPITAL
*OUTOKUMPU CUT TO NEUTRAL VS BUY AT GOLDMAN
*PEARSON CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
*SAGAX CUT TO HOLD VS BUY AT PARETO
*SIG CUT TO HOLD VS BUY AT LIBERUM

>>> PT Change


>>> Initiation
*STANDARD LIFE RATED NEW OUTPERFORM AT MACQUARIE, PT 470P
*SULZER RATED NEW NEUTRAL AT CITI; PT CHF105

>>> Call
>> Stock
*ASMI ADDED TO RABOBANK CONVICTION BUY LIST
*HELLA ADDED TO BANKHAUS LAMPE’S ALPHA LIST, OSRAM REMOVED
*YOOX NET-A-PORTER ADDED TO PAN-EUROPE BUY LIST AT GOLDMAN

>>> Asian Update

Asian Mid-session Update: US elicits China protest over naval ship approaching Beijing-claimed waters; New Zealand trade deficit widens


***Economic Data***
- (CN) CHINA SEPT INDUSTRIAL PROFITS Y/Y: -0.1% (4th straight decline) V -8.8% PRIOR; YTD: -1.7% V -1.9% PRIOR
- (JP) JAPAN SEPT PPI SERVICES M/M: -0.1% v 00.1% PRIOR; Y/Y: 0.6% V 0.6%E
- (NZ) NEW ZEALAND SEPT TRADE BALANCE (NZD): -1.2B V -0.9BE (4th straight deficit)
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.4 v 113.3 prior
- (KR) SOUTH KOREA OCT CONSUMER CONFIDENCE: 105 V 103 PRIOR; 4th straight increase and a 5-month high
- (SG) Singapore Central Bank (MAS) semi-annual Macro review: Forecasts 2016 GDP between 2.0-2.5% range with risks tilted towards the downside
- (PH) Philippines Aug Trade Balance: -$1.0B v -$0.8Be; Imports Y/Y: 4.1% v 10.4%e

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.7%, S&P/ASX -0.1%, Kospi -0.3%, Shanghai Composite -1.8%, Hang Seng -0.9%, Dec S&P500 -0.1% at 2,059

***Commodities/Fixed Income***
- Dec gold -0.2% at $1,164/oz, Dec crude oil -1.0% at $43.52/brl, Dec copper +0.1% at $2.36/lb
- (CN) PBoC to inject CNY10B in 7-day reverse repos (33rd consecutive injection, smallest injection since Apr); Offer yield at 2.25% v 2.35% on Oct 22nd (9th yield cut this year)
- JGB: (JP) Japan MoF sells ¥399.3B in 40-year bonds, bid to cover: 2.89x v 2.60x prior

***Market Focal Points/FX***
- Asian equity markets are decidedly negative, with regional risk-off flows in part driven by tensions in the South China Sea. Against a warning by the Chinese foreign ministry, US guided missile destroyer USS Lassen has reportedly approached the 12-mile territorial limit around Subi Reef in the Spratly Islands archipelago that Beijing contends to control. Obama administration however considers Beijing's "excessive claim" of sovereignty in those waters, and the US naval officials noted that it would one of several passages. China Foreign Ministry has since declared that "US warship has illegally entered waters near China island." Shanghai Composite and Hang Seng are the biggest regional decliners, while S&P emini futures were under pressure with a 0.2% slide. AUD/USD and NZD/USD are also down 0.2% below 0.7230 and 0.6770 at their lows, while USD/JPY fell over 50pips below 120.50 on heightened risk aversion.

- Investors await the findings of China's 13th plenum that could contain an update on growth projections for 2016-2020 five year plan. NDRC researcher called for China to set an average GDP target of 6.5%, with 7% prior forecast seen as increasingly challenging. Another NDRC report did speculate that a hard landing in China economy is not likely. Meanwhile, Sept industrial profits declined for the 4th straight month but at a much slower pace, and NBS cited weak external demand restricting output.

- Ahead of Friday's BOJ policy statement and economic outlook projections for GDP and CPI, a financial press report citing sources stated the BOJ is open to possibilities but more QE is not a given. Officials cited risks of corporates being less inclined to pass on higher profits through wages due to possibility of emerging market slowdown. Discussions at the BOJ indicated the risks are no smaller than last year - recall last October the BOJ decided to expand its QE accompanying the same semi-annual report.

- New Zealand posted its 4th straight trade deficit that was significantly wider than expected. Exports component of NZD3.7B was worse than NZD3.9Be and an 8-month low, while imports came in at a 12-month high of NZD4.9B. Shipments to Australia were especially soft, falling 8.7%, while exports to China were up a modest 1.3%. Dairy shipment decline was also telling at -21.9%, much higher than -7.5% in the prior month.

***Equities***
US equities / ADRs:
- IDTI: Reports Q2 $0.35 v $0.31e, R$169M v $166Me; Boosts share buyback program by $300M (8.5% of shares outstanding); +12.6% afterhours
- EW: Reports Q3 $1.07 v $0.98e, R$615.5M v $598Me; +5.6% afterhours
- CDNS: Reports Q3 $0.28 v $0.26e, R$434M v $430Me; +0.4% afterhours
- SWFT: Reports Q3 $0.31 v $0.31e, R$1.07B v $1.08Be; Adds $100M to buyback plan (4.7% of market cap); -1.5% afterhours
- HIG: Reports Q3 $0.90 (adj) v $0.98e, total consolidated Rev $4.56B v $4.77B y/y; -4.7% afterhours
- CAKE: Reports Q3 $0.59 v $0.56e, R$527M v $536Me; -5.8% afterhours
- MSTR: Reports Q3 $2.06 v $1.96e, R$129.5M v $141Me; -13.3% afterhours
- RCII: Reports Q3 $0.47 v $0.45e, R$791.6M v $803Me; -19.6% afterhours

Notable movers by sector:
- Consumer discretionary: Belle International Holdings 1880.HK +6.2% (H1 result)
Esprit Holdings 330.HK +12.1% (Q1 result); Jiangling Motors Corp 000550.CN +1.0% (9M result); Harvey Norman HVN.AU +3.4%(Q1 result)
- Financials: China Overseas Land 688.HK -2.1% (Q3 result); Seven & I Holdings 3382.JP +3.4% (Third Point's investment); FlexiGroup FXL.AU -0.8% (acquisition); ALE Property Group LEP.AU -0.5% (raises distribution guidance)
- Industrials: Zhengzhou Yutong Bus Co 600066.CN +1.2% (9M result); Zhengzhou Coal Mining Machinery Group Co 601717.CN -4.5% (9M result); Worley Parsons WOR.AU -5.1% (guidance); Samsung Heavy Industries 010140.KR +3.8% (Q3 result); Hyundai Heavy 009540.KR +6.0% (Q3 result)
- Technology: Leshi Internet Info & Tech Co Beijing 300104.CN -1.9% (Q3 result); LG Display Co 034220.KR -1.4% (likely to lower LCD panel production); Sharp Corp 6753.JP -0.7% (cuts guidance)
- Materials: Anhui Conch Cement 914.HK -1.2% (Q3 result); Yunnan Aluminum Co 000807.CN -3.4%(Q3 result, to issue bonds)
- Energy: Xinyi Solar 968.HK -7.4% (placement); China Longyuan Power Group 916.HK -5.3% (9M result); Yanzhou Coal Mining Co. 600188.CN -4.6% (9M result); Beach Energy BPT.AU -5.6% (Q1 result); Shaanxi Coal and Chemical Industry Group Co 601225.CN -4.9% (9M result)
- Healthcare: Shenzhen Neptunus Bioengineering Co 000078.CN +1.5% (9M result)

>>>US Close Stocks Post Slim Losses Amid Weakne


Closing Market Summary: Stocks Post Slim Losses Amid Weakness in Energy

The stock market began the trading week on a quiet note with the S&P 500 (-0.2%) spending the session inside a nine-point range. The benchmark index settled right above the midpoint of that range while the Nasdaq Composite (+0.1%) outperformed throughout the session.

Generally speaking, the Monday affair was very quiet and free of noteworthy earnings. Accordingly, the benchmark index opened with a two-point loss and traded in sideways fashion until the closing bell. Seven sectors registered losses between 0.2% (consumer staples and industrials) and 2.5% (energy) while consumer discretionary (+0.8%), health care (+0.5%), and telecom services (+0.1%) outperformed.

Notably, the energy sector fell to the bottom of the leaderboard at the start and remained there throughout the day. The daylong retreat caused the sector to narrow its October gain to 9.0% while crude oil fell 1.4% to $43.98/bbl.

Elsewhere among cyclical groups, heavily-weighted financials (-0.3%) and technology (-0.3%) underperformed while the consumer discretionary sector (+0.8%) displayed relative strength thanks to a rebound in retail names. The SPDR S&P Retail ETF (XRT 45.23, +0.24) added 0.5%.

On the downside, the technology sector kept the market under pressure after spiking more than 3.0% on Friday. Chipmakers paced today's pullback with the PHLX Semiconductor Index sliding 2.0%.

That being said, the Nasdaq was able to overcome the weakness in technology thanks to relative strength in biotech. To that point, the iShares Nasdaq Biotechnology ETF (IBB 317.01, +0.73) advanced 0.2% while the health care sector added 0.5%.

Unlike stocks, Treasuries inched higher throughout the session with the 10-yr yield slipping three basis points to 2.06%.

Unsurprisingly, today's participation was below average with fewer than 850 million shares changing hands at the NYSE floor.

Today's economic data was limited to the New Home Sales report for September, which hit an annualized rate of 468,000. This was down from the revised August rate of 529,000 (from 552,000), and worse than the rate of 550,000 that had been broadly expected by the consensus. The September report was a bit surprising, considering the latest homebuilder surveys have shown strong improvement in current and expected sales growth. The September drop in sales brought inventories back into alignment with sales trends.

Tomorrow, the September Durable Goods (consensus -1.3%) report will be released at 8:30 ET, August Case-Shiller 20-city Index (expected 0.2%) will be released at 9:00 ET, and October Consumer Confidence (expected 102.5) will be reported at 10:00 ET.

  • Nasdaq Composite +6.3% YTD
  • S&P 500 +0.6% YTD
  • Dow Jones Industrial Average -1.1% YTD
  • Russell 2000 -3.8% YTD

Fwd:Briefing; WRAPX; Closing Market Summary: Stocks Post Slim Losses Amid Weakness i


Closing Market Summary: Stocks Post Slim Losses Amid Weakness in Energy

The stock market began the trading week on a quiet note with the S&P 500 (-0.2%) spending the session inside a nine-point range. The benchmark index settled right above the midpoint of that range while the Nasdaq Composite (+0.1%) outperformed throughout the session.

Generally speaking, the Monday affair was very quiet and free of noteworthy earnings. Accordingly, the benchmark index opened with a two-point loss and traded in sideways fashion until the closing bell. Seven sectors registered losses between 0.2% (consumer staples and industrials) and 2.5% (energy) while consumer discretionary (+0.8%), health care (+0.5%), and telecom services (+0.1%) outperformed.

Notably, the energy sector fell to the bottom of the leaderboard at the start and remained there throughout the day. The daylong retreat caused the sector to narrow its October gain to 9.0% while crude oil fell 1.4% to $43.98/bbl.

Elsewhere among cyclical groups, heavily-weighted financials (-0.3%) and technology (-0.3%) underperformed while the consumer discretionary sector (+0.8%) displayed relative strength thanks to a rebound in retail names. The SPDR S&P Retail ETF (XRT 45.23, +0.24) added 0.5%.

On the downside, the technology sector kept the market under pressure after spiking more than 3.0% on Friday. Chipmakers paced today's pullback with the PHLX Semiconductor Index sliding 2.0%.

That being said, the Nasdaq was able to overcome the weakness in technology thanks to relative strength in biotech. To that point, the iShares Nasdaq Biotechnology ETF (IBB 317.01, +0.73) advanced 0.2% while the health care sector added 0.5%.

Unlike stocks, Treasuries inched higher throughout the session with the 10-yr yield slipping three basis points to 2.06%.

Unsurprisingly, today's participation was below average with fewer than 850 million shares changing hands at the NYSE floor.

Today's economic data was limited to the New Home Sales report for September, which hit an annualized rate of 468,000. This was down from the revised August rate of 529,000 (from 552,000), and worse than the rate of 550,000 that had been broadly expected by the consensus. The September report was a bit surprising, considering the latest homebuilder surveys have shown strong improvement in current and expected sales growth. The September drop in sales brought inventories back into alignment with sales trends.

Tomorrow, the September Durable Goods (consensus -1.3%) report will be released at 8:30 ET, August Case-Shiller 20-city Index (expected 0.2%) will be released at 9:00 ET, and October Consumer Confidence (expected 102.5) will be reported at 10:00 ET.

  • Nasdaq Composite +6.3% YTD
  • S&P 500 +0.6% YTD
  • Dow Jones Industrial Average -1.1% YTD
  • Russell 2000 -3.8% YTD

FT : Fund houses lose $700bn in ‘particularly brutal’ Q3


Seven of the world’s largest fund managers collectively lost more than half a trillion dollars in assets during the third quarter as they struggled to cope with the fallout from Black Monday. The slump has sparked fears investors will pull more money during the final months of the year.
The assets of BlackRock, T Rowe Price, Franklin Templeton and the fund arms of BNY Mellon, JPMorgan, Bank of America Merrill Lynch and State Street dropped between 4 and 11 per cent in the three months to the end of September, wiping $727.7bn off their collective asset base.

The slide in assets is in stark contrast to the first half of the year, when BlackRock, JPMorgan, BofA, T Rowe Price and BNY Mellon all saw a jump in assets on the back of buoyant markets and strong investor demand.
Peter Lenardos, an analyst at RBC Capital Markets, the investment bank, said the third quarter was “particularly brutal”. Equity markets slumped globally during the summer amid turmoil in China, with billions wiped off the value of world markets on Black Monday in August. US and global equities had their worst quarterly performance since 2011.
The assets managed by BlackRock, the world’s largest asset manager, fell by $215bn during the three months to the end of September, equivalent to the funds run by Nordea Asset Management.
The fall heaps more pain on asset managers whose balance sheets are already under strain because of a price war around product fees and growing regulatory costs.
Smaller fund houses Ashmore, Jupiter and Gam also reported falls in their assets under management during the quarter.
Amin Rajan, chief executive of Create Research, a consultancy, said some investors panicked during the third quarter and took flight. “Others remain, but are completely unsure which way to jump.”
He warned that investors are likely to switch asset classes during the final months of the year. “We are going to see a lot of rebalancing. If [investors] do not see a lot of returns in asset class X, they will switch to asset Y.”
Jake Moeller, head of UK and Ireland research at Lipper, the data provider, agreed: “I would anticipate more outflows. I would expect what has started [following the situation in] China to continue.” Mr Lenardos added that the third quarter was “not a one-off”.

A decline in assets directly hits profitability. Franklin’s profits slid 44 per cent during the third quarter, while BlackRock’s fell 8 per cent compared with the third quarter of 2014.
The Dow Jones Industrial Average, the benchmark, is up around 7 per cent this month, and some analysts believe investors are unlikely to pull money from products during the final few months of the year, especially as markets have improved.
Paul McGinnis, an analyst at Shore Capital, the boutique, was doubtful the third quarter would have an impact on where investors put their money for the rest of the year. “Certainly, any institutional investors will have already been well aware of what markets were doing on a daily basis in [the third quarter] and making asset allocation decisions accordingly,” he said.
Alec Lucas, an analyst at Morningstar, the data provider, added: “My guess is that those who have been in the market will not, on the whole, be spooked.
“As for those who have yet to get back into the market, the volatility will probably continue to scare them off.”
Bank of America, JPMorgan and BNY Mellon declined to comment. The others linked the fall in assets to market volatility and some investment strategies being out of favour.