(Citi) Global Asset Managers & Broker Dealers : More Questions Than Answers Abou

Global Asset Managers & Broker Dealers
More Questions Than Answers About MiFID II – Following
Industry Conference In NY
* More MiFID II Uncertainty — Following our recent regulatory work (see also, 5/5,
Assessing The Regulatory Landscape; Changes Are Brewing), we attended an
Equity market structure conference in NY which focused on MiFID II – we were
surprised to see the crowd largely unaware of potential repercussions and timing of
the drafts. We believe industry members (and European member states) are far
from ring-fencing MiFID II implications, potentially weighing on sector valuations. In
this note we address key takeaways.
* Will MiFID II Be A Regulation Or Directive? Perhaps the biggest takeaway was
conference panelists were leaning towards MiFID taking a directive form.
Additionally, the recent Expert Group meeting yielded eight European member
states arguing for a partial directive at least – causing great uncertainty over
regulation/directive as a leaked draft of the act indicated regulation was more likely
(see also our 5/18, European Asset Managers - MiFID II – “Leaked” Draft Delegated
Acts = Small Positive). A directive would be a weaker result, we believe, and
heightens risks of unintended consequences. While a directive may be less
stringent, it would add layers of complexity and likely increase compliance costs as
managers navigate multiple interpretations.
* Are Larger Managers Incentivized To Support MiFID II? Per the panelists, larger
managers will likely have greater pricing power versus smaller peers during Sell
Side/Buy Side negotiations to determine hard dollar costs for research. Additionally,
the Sell Side will likely see greater consolidation of market players with the Buy Side
focusing on the most effective research – as quantifying “return on research”
becomes increasingly important. The panel sees a potential unintended
consequence being a greater focus from the Sell Side on Large Cap research,
limiting time spent on Small/Mid Cap and reducing coverage universes; ultimately
weighing on the capital formation process.
* Does MiFID II Cross The Pond? Simple answer – most likely. Nuanced answer –
to a degree. Some global managers have already indicated they will apply the
strictest interpretation across all jurisdictions, indicating some separation between
research/execution payments in the U.S. is likely. The conference panel expected
pricing conversations to be driven by the Buy Side, although most conversations are
yet to take place in the U.S., we believe.
* What Are The Implications For Our Joint Coverage? We continue to favor large
global Asset Managers with U.K.-based SDR and U.S.-based IVZ best positioned.
We also see net beneficiaries among Alternative Asset Managers and ETF
manufacturers.

>>> Teleste could acquire or become a target; Arris and Ericsson potential buyer



Teleste could acquire or become a target; Arris and Ericsson potential buyers - report (translated)

Teleste, the Finnish IT services company, could be an acquisition target or it could acquire, according to Turun Sanomat.

The Finnish-language piece cited a report from FIM, the Finnish investment bank, which said that the tech company could be an interesting target to an international company because the company is in good shape and it has an excellent order book.

Possible buyers include Swedish Ericsson or Arris, the Georgian tech group, the piece speculated.

The company could also be an acquirer, thanks to its strong cash flow and it could be looking to expand to US or Asia via acquisitions.


Turun Sanomat

{TLT1V FH Equity DES <GO>}
Teleste Oyj is an international technology group specializing in broadband data communication
networks and solutions. The Company is a supplier of network solutions for digital television,
high-speed Internet, and voice communication. Teleste also produces digital fiber transmission
solutions for security applications such as monitoring. The Company sells its products worldwide.

(BarCap) Luxury Goods : Swiss watch exports for April -0.8%,high end -3.1%

Swiss watch exports for April -0.8%, high end -3.1%

Swiss watch exports for April showed a decline of -0.8% y/y vs March 6.3% on 3 ppt
easier comps, which we estimate translates to -0.6% on constant FX. Wristwatches
specifically were -3.1% on 4ppt tougher comps. The figures were better than the
comments from Richemont at its FY results last week that wholesale purchases
slowed significantly in “anticipation of worldwide pricing adjustments in May” with
the company reporting sales in April -8% at constant FX with Hong Kong and Macau
driving the Asia-Pacific underperformance. By region:

• Hong Kong, the largest Swiss watch export market, declined -29.7% in April on flat
comps (March -13.8%), and Mainland China recorded growth of +48.7% on 13 ppt
easier comps (March -2.4%), albeit distorted by ‘temporary exports’ with underlying
growth said to be nearer 10% (equivalent to 2% of total SWE growth).
• Europe posted solid Swiss Watch Export data +8.0% y/y (+16.3% in March) on 4ppt
tougher comps driven by tourists with Global Blue data recording a +72% y/y
increase in tourist spending in Europe in April.
• US continued its positive trend with a +3.1% increase (+22.4% in March) with the
comp 14 ppt tougher.
• Japan was 5.7% (March -5.1%) with the comp 3 ppt tougher.
By price point, growth continued to be focused on the sub CHF 200 segment +13.4%,
mid priced CHF 200-500 category declined -7.5% y/y, premium CHF 500-3,000 -7.9%,
and luxury CHF 3,000+, most important for Richemont, -2.4% despite volumes
increasing +0.9% with precious metal watches, especially gold (-9%), weak.
We continue to prefer the hard luxury names, despite their outsized exposure to the
challenging environment in Hong Kong, because soft luxury goods are retailing at
significantly higher premiums than hard luxury goods which we believe already largely
factor in lower expectations. Swatch and Richemont currently trading on 13.8x and
19.8x cal 2016E PE respectively vs sector on 18.7x.

>>> What to look at today - 29th of May 2015

Dow-0.20% S&P-0.13% Nasdaq-0.17% Russell-0.10%
US Market closed slightly lower. Shanghai performance (-6.5%) weighted on the global market, China today moved surrender its week-to-date gain. European session didn't helped the sentiment with mix noise on Greece. IMF Managing Director Christine Lagarde as saying it is possible that Greece will exit the eurozone. Not long after, the IMF sought to clarify the quotes obtained from Ms. Lagarde, claiming they were inaccurate. Spain's Economy Minister Luis de Guindos reportedly said that a deal between Greece and the institutions remains possible. utilities (+0.2%) and materials (+0.3%) outperformed, but had little impact on the overall market, volume were just below average @ 675 mil shares...US After Hours BOOT +5.5%, GME +3.9%, MX +3.3%, PSUN -18%, VEEV -9.0%, GEF -7.3% following earnings/guidance Intel nears $15b deal to buy Altera (http://bit.ly/1KBVCA7)...Asian market is quite waiting for US GDP this afternoon...After an overnight collapse in Shanghai Composite, where the the 2nd biggest of the year drop of 6.5% erased all of the gains of this week, trading remained volatile in the opening hours. The index rose 0.7% at the open, then renewed its freefall to trade down some 4%, and finally settled into its midday break up 0.1%. Commentary in the press after the precipitous decline yesterday was fairly wide in scope. The official People's Daily issued a warning to be sensitive to "overdevelopment" of financial sector - a veiled reference to the high-leveraged equity trading that fanned the latest run up. Report noted that overdevelopment would bring in risks including accumulated asset bubbles leading to financial and economic crisis, adding that regulations were lagging behind. Separately, a Xinhua feature praised the two-way nature of the correction as healthy, and State Council announced plans to east China investors' ability to invest abroad to help redirect some of the speculative flows of easy money. Japan cabinet noted household spending disappointment does not warrant expectations for a slowdown, while Econ Min Amari reiterated JPY has not reached an excessively weak level.

Nikkei +0.25% Shanghai+0.37% Shanghai+0.89%

Eur$1.0949 GBP1.5330 EURCHF 1.0328 JPY 123.89 CHF 0.9433 RUB $52.6843 WTI $58.26 (+1.01%)

S&P -0.08% EuroStoxx+0.30% Dax +0.30% SMI +0.09%

Macro :
- IMF’s Lagarde Doesn’t Rule Out Greek Euro Exit: FAZ Newspaper, FAZ Says It Will Remove Lagarde Quote on Greek Exit
- Janus’s Gross Says China ‘Asset Prices at Risk’
- China Said to Plan Easing Limits on Overseas Investments: DJ
- Japan’s Kuroda Says Grexit Should Be Avoided: Handelsblatt
- MSCI to Exclude Ukraine Index From Frontier Markets Index
- Swiss GDP Contracts 0.2% Q/q in 1Q; Est. Unchanged Q/q
- Gabriel Says European Countries Need Different Speeds: Bild

Keep an eye on :
- AIR FP : Airbus’ Lahoud Says Blackbox Shows Assembly Errors: Handelsblatt
- AF FP : Air France Should Have ‘Positive’ Results This Year: Gagey
- ALCLS FP : Cellectis Said to Be in Sale Talks, Pfizer Potential Buyer: FT
- BSLN SW : Basilea’s Biggest Holder HBM Lowers Stake, Now Holds 9.72%
- BMW GY : BMW Recalls 3,488 Units of 5-Series Sedans in S. Korea: Yonhap
- CGG FP : CGG Offers Five 2020 Oceane Bonds for Two 2019 Bonds Tendered
- DAI GY : Daimler Seeks to Sell Batteries to Power Homes With EnBW: FAZ
- DTE GY : German Mobile Spectrum Auction Reaches EU1.8b After 23th Round
- ELIOR FP : Elior 1H Organic Growth 2.8%, Confirms Full Year Outlook
- ENEL IM : Enel in Talks With All Telecom Providers, Starace Says
- INT IM : GE Said to Work With Deutsche Bank on Sale of Italy’s Interbanca
- MAR PL : Martifer 1Q Loss EU2.7m Vs Loss EU10.3m Y/y
- MASSIMO ZANETTI IPO : Priced @ €11.60 / share (Low of the range, start trading on the 3rd of June)
- RDSA LN : Royal Dutch Shell at Fault in 2012 Incident In Alaska, NTSB Says
- RDSA LN : U.S. Arctic Rules May Prevent Single-Season Drilling: Industry
- SDRL NO : Seadrill May Cold Stack or Sell Two Rigs: Conf. Call
- STR AV : Strabag 1Q Loss Narrows to EU116.5m; Revenue Rises 6% to EU2.28b
- GLE FP : SocGen Unit to Pay $1.36m to Resolve U.S. Tax Probe
- SYNN VX : Syngenta Said to Build Defenses as It Braces for Monsanto Return
- TEF SM : Telefonica Says GVT Brazil Deal Closed
- TCY LN : Equinix Nears Deal for Telecity: Reuters
- VIV FP : Vivendi Completes GVT Sale; Will Pay Dividends June 29, Feb 3
- VOD LN : Vodafone Group Cut to BBB+ From A- by S&P, Outlook to Stable
- VOD LN : Vodafone Sells Its 4.2% Stake in Bharti to Bharti Enterprises
- VOLVB SS : Volvo Targets U.S. Sales Reaching 100,000 Within Four Years

>>> Europe : Brokers Upgrades & Downgrades - 29th of May 2015

>>> Up
*ASSOCIATED BRITISH FOODS RAISED TO BUY VS SELL AT GOLDMAN
*DUERR RAISED TO BUY FROM HOLD AT BANKHAUS LAMPE
*FLUGHAFEN ZUERICH RAISED TO BUY VS NEUTRAL AT UBS
*MUNICH RE RAISED TO HOLD VS SELL AT SOCIETE GENERALE (EARLIER)
*OPHIR ENERGY RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS


>>> Down
*ALPHA BANK CUT TO UNDERPERFORM VS NEUTRAL AT BOFA
*FRAPORT CUT TO NEUTRAL VS BUY AT UBS

>>> PT Change


>>> Initiation
*AVIVA RATED BUY AT GOLDMAN; WAS NOT RATED

>>> Call

NY POST - Intel nears $15B deal to purchase Altera


Chip giant Intel is close to a deal to buy fellow chip maker Altera Corp. for about $15 billion, The Post has learned.

The price could be for as much as $54 a share, or a 15 percent premium over Altera’s Thursday closing price of $46.97, a source close to the situation said.

The deal, if consummated, would be the biggest acquisition ever for the $160 billion market cap Intel — and help it move from PC sales into faster-growing sectors like Altera’s data center programmable chips.

Altera reportedly rejected an Intel $54 bid just a few months ago and then broke off sales talks, but that was before Altera issued disappointing earnings.

“A deal is likely by the end of next week,” according to a source, who also cautioned that the talks could still fall apart.

Altera shares were trading around $35 in March before talk of a possible deal leaked.

Intel is not interested in making a counterbid against Avago Technologies for Broadcom, sources said. Avago agreed Thursday to pay $37 billion for Broadcom.

“A year ago it made sense for Intel to buy Broadcom when it was $25 a share, but not at $60,” said Stacy Rasgon, a senior analyst at Bernstein Research.

Further evidence Intel is not planning to buy Broadcom is that its banker on the Altera acquisition, JPMorgan’s Kurt Simon, is also Broadcom’s sell-side banker, so Intel likely was aware of the Broadcom opportunity, a source said.

Broadcom’s founders have a 47 percent voting stake and will have meaningful roles at Avago. Henry Samueli, for example, will be chief technology officer at the combined company.

The founders would likely feel less comfortable becoming part of Intel, a source said.

Intel’s largest acquisition to date was an $8 billion 2010 pickup of security company McAfee that as of now has not produced clear benefits, Rasgon said.

Altera and Intel declined comment.

(BFW) CGG Offers Five 2020 Oceane Bonds for Two 2019 Bonds Tendered

ONE 05/29 05:31 CGG: OCEANE 2019 PUBLIC EXCHANGE OFFER
BN 05/29 05:32 *CGG OFFERS FIVE 2020 OCEANE BONDS FOR TWO 2019 BONDS TENDERED
BN 05/29 05:31 *CGG: OCEANE '19 PUBLIC EXCHANGE OFFER
BN 05/29 05:31 *CGG: OCEANE 2019 PUBLIC EXCHANGE OFFER
CGG Offers Five 2020 Oceane Bonds for Two 2019 Bonds Tendered
2015-05-29 05:36:37.593 GMT


By Gaurav Panchal
(Bloomberg) -- Offer is for five bonds convertible into
and/or exchange for new or existing shares due Jan. 1, 2020 to
be issued for two 2019 OCEANE tendered.

* Duration of the offer is 15 trading days.
* Statement:Link

Link to Company News:{CGG FP <Equity> CN <GO>}

For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}

To contact the editor responsible for this story:
Gaurav Panchal at +44-20-3525-0511 or
gpanchal2@bloomberg.net

>>> Asian Update

Asian Mid-session Update: Japan CPI falls to near 2-year lows as the sales tax hike impact rolls off; Shanghai Composite still volatile in active early trade


***Economic Data***
- (JP) JAPAN MAY TOKYO CPI Y/Y: 0.5% V 0.5%E; CPI EX FRESH FOOD Y/Y: 0.2% V 0.2%E; 21-month lows
- (JP) JAPAN APR NATIONAL CPI Y/Y: 0.6% V 0.6%E; CPI EX FRESH FOOD Y/Y: 0.3% V 0.2%E; 23-month lows
- (JP) JAPAN APR JOBLESS RATE: 3.3% V 3.4%E; 18 year low
- (JP) JAPAN APR OVERALL HOUSEHOLD SPENDING Y/Y: -1.3% V +3.0%E; 13th consecutive month of decline
- (JP) JAPAN APR INDUSTRIAL PRODUCTION M/M: 1.0% (5-month high) V 1.0%E; Y/Y: -0.1% (smallest decline in 7 months) V -0.1%E
- (AU) AUSTRALIA APR HIA NEW HOME SALES M/M: 0.6% V 4.4% PRIOR; 4-month low
- (AU) AUSTRALIA APR PRIVATE SECTOR CREDIT M/M: 0.3% (17-month low) V 0.5%E; Y/Y: 6.1% (4-month low) V 6.3%E
- (NZ) NEW ZEALAND MAY ANZ ACTIVITY OUTLOOK: 32.6 V 41.3 PRIOR; BUSINESS CONFIDENCE: 15.7 (7-month low) V 30.2 PRIOR
- (NZ) NEW ZEALAND APR BUILDING PERMITS M/M: -1.7% V +10.3% PRIOR
- (KR) SOUTH KOREA APR INDUSTRIAL PRODUCTION M/M: -1.2% V 0.2%E (2nd straight decline); Y/Y: -2.7% V -0.5%E
- (KR) South Korea Jun Business Manufacturing Survey: 77 v 82 prior; Non-Manufacturing Survey: 76 v 78 prior
- (UK) MAY GFK CONSUMER CONFIDENCE: 1 V 4E; 3-month low

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.3%, S&P/ASX +1.5%, Kospi +0.4%, Shanghai Composite -0.4%, Hang Seng flat, Jun S&P500 -0.1% at 2,120

***Commodities/Fixed Income***
- Aug gold flat at $1,189/oz, Jul crude oil +1.1% at $58.32/brl, Jul copper +0.3% at $2.78/lb
- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥375B in 3-5 yr JGBs, ¥400B in 5-10yr JGBs, and ¥400B in T-bills
- (AU) Australia MoF (AOFM) sells A$700M in 2.75% 2019 Bonds; avg yield: 2.0487%; bid-to-cover: 4.31x
- (US) Weekly Fed Balance Sheet Total Assets for week ending May 27th: $4.46T v $4.48T prior; Reserve Bank Credit: $4.43T v $4.44T prior; M1 y/y change: 8.4% v 8.7% prior; M2 y/y change: 6.1% v 6.1% w/w

***Market Focal Points/FX***
- Asian indices are mixed following a flattish day on Wall St, where the modest declines in the morning-afternoon hours were pared in near entirety late in the day. Traders are waiting out Friday's release of GDP for any potential surprises, even though there appears to be a general consensus that Q1 prelim figure will show a contraction somewhere in the neighborhood of 1%.

- After an overnight collapse in Shanghai Composite, where the the 2nd biggest of the year drop of 6.5% erased all of the gains of this week, trading remained volatile in the opening hours. The index rose 0.7% at the open, then renewed its freefall to trade down some 4%, and finally settled into its midday break up 0.1%. Commentary in the press after the precipitous decline yesterday was fairly wide in scope. The official People's Daily issued a warning to be sensitive to "overdevelopment" of financial sector - a veiled reference to the high-leveraged equity trading that fanned the latest run up. Report noted that overdevelopment would bring in risks including accumulated asset bubbles leading to financial and economic crisis, adding that regulations were lagging behind. Separately, a Xinhua feature praised the two-way nature of the correction as healthy, and State Council announced plans to east China investors' ability to invest abroad to help redirect some of the speculative flows of easy money.

- Australian index hit 3-week highs and bond market rallied on chatter that soft CAPEX data from overnight could tip the scales for RBA to announce easing as soon as its next decision. Today's economic datapoints did little to dissuade the doves, as new home sales and private sector credit slowed to multi-month lows. AUD/USD still traded in about a 25pip range arond $0.7670. NZD also remained on the back foot after a technical breach to 2015 lows following yesterday's cut in Fonterra payout along with today's lower ANZ Business Confidence, though Asian hours also kept the kiwi volatility to a minimum.

- The raft of economic data released out of Japan appeared to be impacted by the timing of last April's consumption tax increase. Release of National CPI in particular marked the first time where annual adjustment was not required, and as suspected, low oil price and slow pace of wage increases took inflation to a near 2-yearlow. Household spending contraction was also surprising in light of the most recent BOJ upward revision of the segment, as it marked the 13th consecutive drop against expectation of a rebound. Jobless rate and rising job-to-applicant ratio does provide an opportunity for wage pressure to finally materialize - sentiment that was also expressed by Cabinet Sec Suga. Japan cabinet also noted household spending disappointment does not warrant expectations for a slowdown, while Econ Min Amari reiterated JPY has not reached an excessively weak level. JPY did strengthen late in the day, as USD/JPY retreated some 40pips from the high to 123.60.

***Equities***
US equities / ADRs:
- HRTX: Announces Positive Results from Phase 3 MAGIC Study of SUSTOL; +43.1% afterhours
- GME: Reports Q1 $0.68 v $0.58e, R$2.06B v $2.04Be; +5.7% afterhours
- DECK: Reports Q4 $0.04 v -$0.01e, R$340.6M v $320Me; -1.0% afterhours
- PSUN: Reports Q1 -$0.12 (adj) v -$0.11e, R$166.5M v $171Me; -12.2% afterhours

- ALTR: Intel said to be close to a deal to acquire Altera for $15B or as high as $54/shr (15% premium to Thur close) - NY Post

Notable movers by sector:
- Consumer discretionary: Huiyin Household Appliances 1280.HK +9.2%?(to issue new shares); Dynam Japan Holdings 6889.HK -4.7% (FY15 results); Suning Appliance Co 002024.CN -2.9% (to open finance company)
- Financials: Industrial and Commercial Bank of China 1398.HK -0.3%, CCB 939.HK -0.1% (Huijin to cut holdings); Evergrande Real Estate Group 3333.HK -20.3% (to sell shares)
- Technology: ZTE 763.HK +2.0% (jv with Kandi); Lenovo Group 992.HK +1.5% (to issue RMB notes); Alibaba Health Information Technology 241.HK -2.9% (profit warning); Chinasoft International 354.HK +6.8% (cooperation with Huawei); Yahoo! Japan Corp 4689.JP +8.6% (to partner with Alibaba)
- Materials: Chongqing Iron & Steel Co. 601005.CN +1.2%, Maanshan Iron & Steel 600808.CN +3.0% (china to cut iron ore resource tax); Mitsubishi Corp 8058.JP +0.3% (to raise base pay)
- Healthcare: Lee's Pharmaceutical Holdings 950.HK -10.3% (Q1 results)

WSJ: Shanghai Stocks Dip Into Correction Territory


Shanghai Stocks Dip Into Correction Territory
Investors spooked by margin-trading fears

Shares in Shanghai briefly fell into correction territory early Friday, a reversal of fortune for one of the world’s best performing markets this year.

The Shanghai Composite Index traded as low as 4431.56, representing a drop of more than 10% from its close on Wednesday.

Trading was extremely choppy with the benchmark down as much as 4%, and at several points it was near the flat line.

A stock tote board in Beijing on Thursday. Stocks in Shanghai dipped into correction territory on Friday.

The latest wave of volatility brings to fore the challenges Beijing faces in trying to manage China’s financial markets. Stimulus measures and expectations for more to come have stoked a massive run up in stocks in recent months, but China’s leaders are trying to coax a gradual rise as more foreign money enters and local-investor confidence starts to recover.

“Retail investors are getting nervous after yesterday’s correction,” said Gerry Alfonso, director of trading at Shenwan Hongyuan Securities. But “some positive comments in the local media seem to be having less impact on investors’ sentiment that anticipated.”

The Shanghai benchmark plunged 6.5% yesterday on fears about margin trading and a market bubble, before state-run Xinhua News Agency stepped in to say the downturn was reasonable and that market volatility remains normal. The story quoted China Southern Asset Management as saying “the bull market in medium term has not changed.”

Stocks in Hong Kong were near flat, after losing 2.2% yesterday.

The Shenzhen Composite Index was up 0.8%.