(HAA) Fears of coup as Shi'ite rebels seize Yemen state media


Fears of coup as Shi'ite rebels seize Yemen state media
2015-01-19 12:36:20.626 GMT

The Associated Press

    (Haaretz) -- Rebel Shi'ite Houthis battled soldiers near Yemen's
presidential palace and elsewhere across the capital Monday, seizing control
of the country's state-run media in a move an official called "a step toward a
coup."
     The fighting near the palace marks the biggest challenge yet to the
government of Yemen President Abed Rabbo Mansour Hadi by the Houthis, who
seized the capital, Sanaa, during their advance in September across parts of
Yemen. Many believe deposed President Ali Abdullah Saleh, ousted in a deal
after Arab Spring protests, has orchestrated their campaign.
     The battles saw the convoys of Yemen's prime minister and a top
presidential adviser affiliated with the Houthis come under fire, as well as
Houthi fighters take over Yemen state television and its official SABA news
agency, Information Minister Nadia Sakkaf said.
     "This is a step toward a coup and it is targeting the state's
legitimacy," Sakkaf told The Associated Press.
     The violence began early Monday, with witnesses saying heavy machine gun
fire could be heard as artillery shells fell around the presidential palace.
Civilians in the area fled as columns of black smoke rose over the palace. The
fighting caused a number of casualties as ambulance sirens wailed throughout
Sanaa.
     "Oh God! There are bodies on street," well-known Yemeni activist Hisham
Al-Omeisy wrote on Twitter.
     The Houthis' al-Maseera satellite television channel aired a report
accusing the army of opening fire without reason on a militia patrol in the
area of the presidential palace, sparking the violence. A Yemeni military
official, speaking to the AP on condition of anonymity as he wasn't authorized
to brief journalists, said the Houthis provoked the attack by approaching
military positions in the area and setting up their own checkpoints.
     Hadi doesn't live at the palace, but his home nearby quickly was
surrounded by additional soldiers and tanks amid sporadic gunfire, witnesses
said. Schools located near the clashes also closed as Houthi rebels manned
checkpoints throughout the city. Many families remained trapped in their
homes.
     "People are leaving on foot, searching for safety," resident Tarfa
al-Moamani said.
     Sakkaf later told the AP that Hadi reached a cease-fire with Houthi
rebels, though that apparently disintegrated into further gunfire. Prime
Minister Khaled Bahah's convoy also came under fire after leaving Hadi's home
for a meeting with a Houthi representative, Sakkaf said. It wasn't clear
whether Bahah was wounded.
     Foreign ambassadors also appeared to be attempting to negotiate an end to
the fighting. "Working to promote cease-fire and political negotiations," a
message on British Ambassador Jane Marriott's Twitter account read.
"Challenging times. And all most Yemenis want is food and a job."
     The spark of the latest spasm of violence appears to be rooted in the
Houthis' rejection of a draft constitution that divides the country into six
federal regions. On Saturday, the Houthis kidnapped one of Hadi's top aides to
disrupt a meeting scheduled for the same day that was to work on the new
constitution.
     Monday's battle comes a day after Hadi chaired a meeting in which he
demanded the army defend Sanaa, SABA reported. It wasn't clear whether Hadi,
who has made similar calls in the past, was issuing a new order for security
services to take back control of Sanaa from the Houthis.
     Hadi and Houthis accuse each other of not implementing a U.N.- brokered
peace deal calling for Hadi to form a new national unity government and reform
the country's government agencies as Houthis withdraw their fighters from
cities they seized. Houthis also demand integration of their militias into
Yemen's armed forces and security apparatus, something Hadi strongly opposes.
     Houthis also accuse Hadi of financing and harboring al-Qaida militants.
Hadi's government says the Houthis use the accusation as an excuse to seize
more territory.
     Hadi was elected as a president in 2012 after a popular revolt toppled
Saleh, who is a Zaydi, a branch of Shi'ite Islam that exists almost solely in
Yemen. Houthis, who are Zayidis, represent about 30 percent of Yemen's
population.
     Saleh waged six-year-war against Houthis that ended in a cease-fire in
2010. Now, however, the old foes appear to have joined forces to challenge
Yemen's traditional power players, including top generals, tribal alliances
and the Islamist Islah party, the Muslim Brotherhood's branch in the country.
     The U.N. Security Council last year put Saleh on a sanctions list, along
with two Shi'ite leaders, for destabilizing the country. Saleh's
representatives have denied the allegations.
     Security officials, speaking on condition of anonymity to discuss
intelligence matters, said they believed tribal fighters loyal to Saleh were
racing into Sanaa to back the Houthis in the fighting.
     Yemen, the Arab world's poorest country, is also home to al-Qaida in the
Arabian Peninsula, considered by the U.S. to be the most dangerous arm of the
terror group. That group has said it directed the recent attack against the
French satirical magazine Charlie Hebdo in Paris "as revenge for the honor" of
Islam's Prophet Muhammad.
     The U.S. has carried out a campaign of drone strikes in the country
targeting suspected militants. Civilian casualties from those strikes have
angered Yemenis.
     -0- Jan/19/2015 12:36 GMT

(BFW) 2015 E&P Capex Cut May Exceed 15% With No 2016 Rebound: JPMorgan


2015 E&P Capex Cut May Exceed 15% With No 2016 Rebound: JPMorgan
2015-01-19 09:43:45.199 GMT


By Benjamin Dow
(Bloomberg) -- Global oil & gas capex cuts trending to
exceed 15% y/y drop seen in 2009, only this time “without a
rebound” in 2016, JPMorgan says in note.
* U-shaped rather than V-shaped oil price recovery may lead to
multi-year down-cycle
* Raises Gulf Marine Services to overweight, PT cut 27% to
120p; says co. has high 2015 rev. coverage, high exposure to
resilience of Mideast NOC opex spend
* Cape cut to neutral, PT cut 42% to 203p; has risk of work
deferral in U.K. offshore, low (50%-60%) rev. coverage
* CGG cut to underweight, PT down 47% to EU3.80, sees seismic
co.’s “asset heavy” Acquisition & Equipment businesses to
fare poorly
* Tecnicas Reunidas cut to underweight, PT cut 38% to EU29;
sees shrinking bid pipeline, premium valuation difficult to
justify
* Consensus ratings for select U.K.-listed oil svcs names led
by Gulf Marine with 4.7 rating on 5-point scale, followed by
AMFW 4.05, Cape 4, Lamprell 3.8, Petrofac 3.6, Weir 3.5:
Bloomberg data


Link to Company News:CIU LN <Equity> CN <GO>
Link to Company News:GMS LN <Equity> CN <GO>
Link to Company News:CGG FP <Equity> CN <GO>
Link to Company News:TGS NO <Equity> CN <GO>
Link to Company News:PGS NO <Equity> CN <GO>
Link to Company News:FUR NA <Equity> CN <GO>
Link to Company News:SUBC NO <Equity> CN <GO>
Link to Company News:PFC LN <Equity> CN <GO>
Link to Company News:AMFW LN <Equity> CN <GO>
Link to Company News:WEIR LN <Equity> CN <GO>
Link to Company News:SPM IM <Equity> CN <GO>
Link to Company News:TEC FP <Equity> CN <GO>
Link to Company News:HTG LN <Equity> CN <GO>

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

To contact the reporter on this story:
Benjamin Dow in Moscow at +7-495-771-7735 or
bdow2@bloomberg.net

To contact the editor responsible for this story:
James Ludden at +44-20-3525-2645 or
jludden@bloomberg.net

(BofA-ML) The Thundering World - Crazy Little Thing Called Rates

* Lust for Yield
83% of global equity market cap is currently supported by ZIRP, 52% of all global government bonds yield less than 1%, there is now $7.3 trillion of negativelyyielding government debt in the Eurozone, Switzerland & Japan, and 1.4 billion
people are experiencing negative real interest rates around the world. No wonder there is a lust for yield. In Q1 it is the turn of REITs to be the asset class attracting large speculative inflows in search of Yield & Growth.
* Wall Street’s Existential Crisis
We are bullish volatility. Market “tremors” are getting stronger (“flash crash” in US Treasuries, collapse in oil, 20% intraday move in Swiss franc). Investors fret regulatory backdrop will exacerbate liquidity & volatility. Investors increasingly questioning “how to invest”, how to construct portfolios in the coming years in a backdrop of weak growth, zero/negative interest rates and richly-valued equities. Owning volatility is one solution. Last time Gold & Dollar outperformed together was Q3’2011 (Greece, US debt downgrade). They are doing it again in Q1.
* Buy Signals versus “Bye-Bye” Signals
Our trading rules say market oversold and risk trades higher short-term through ECB. But investors fear event risks in credit, EPS & following the ECB. Should financial stresses grow, or US growth stumble, or Europe fail to respond to lower
oil/currency/rates, a large risk off asset allocation would be likely in the next 2 months. Watch bank stocks for stress, inflation expectations in Europe for ECB success/failure, small cap consumer discretionary stocks for US macro.
* Happy Workers, Sad Brokers...Happy European, Sad Americans
Oil will work to boost growth. It normally does (Chart 1). Long Main Street, short Wall Street remains a core position. Once activity shows a global pulse, EU asset trends most likely to reverse: French yields are at 270-year lows; Eurozone stocks at 50-year lows vs the US; and UK stocks now at 40-year lows vs the US.

>>> US Market Closed today for MArtin Luther King Day - Comp reporting tom.

Allegheny Technologies Inc ATI US 20/01/2015 C Bef-mkt ER Q4 2014
Delta Air Lines Inc DAL US 20/01/2015 C Bef-mkt ER Q4 2014
SunEdison Inc SUNE US 20/01/2015 11:30 CP
Regions Financial Corp RF US 20/01/2015 C 12:00 ER Q4 2014
JPMorgan Chase & Co JPM US 20/01/2015 12:15 CP
Citigroup Inc C US 20/01/2015 12:15 CP
Baker Hughes Inc BHI US 20/01/2015 C 12:30 ER Q4 2014
Citigroup Inc C US 20/01/2015 12:45 CP
Halliburton Co HAL US 20/01/2015 C 13:00 ER Q4 2014
MGIC Investment Corp MTG US 20/01/2015 C 13:00 ER Q4 2014
Morgan Stanley MS US 20/01/2015 C 13:00 ER Q4 2014
Johnson & Johnson JNJ US 20/01/2015 C 13:45 ER Q4 2014
Baker Hughes Inc BHI US 20/01/2015 C 14:00 EC Q4 2014
Iron Mountain Inc IRM US 20/01/2015 14:00 SM Y 2014
Johnson & Johnson JNJ US 20/01/2015 C 14:30 EC Q4 2014
Morgan Stanley MS US 20/01/2015 C 14:30 EC Q4 2014
Allegheny Technologies Inc ATI US 20/01/2015 C 14:30 EC Q4 2014
Halliburton Co HAL US 20/01/2015 C 15:00 EC Q4 2014
MGIC Investment Corp MTG US 20/01/2015 C 16:00 EC Q4 2014
Delta Air Lines Inc DAL US 20/01/2015 C 16:00 EC Q4 2014
NephroGenex Inc NRX US 20/01/2015 16:30 CP
Regions Financial Corp RF US 20/01/2015 C 17:00 EC Q4 2014
Citigroup Inc C US 20/01/2015 19:00 CP
Gannett Co Inc GCI US 20/01/2015 19:30 CP
Cree Inc CREE US 20/01/2015 C 22:00 ER Q2 2015
Interactive Brokers Group Inc IBKR US 20/01/2015 C 22:00 ER Q4 2014
Netflix Inc NFLX US 20/01/2015 C 22:05 ER Q4 2014
International Business Machines Corp IBM US 20/01/2015 C 22:30 EC Q4 2014
Interactive Brokers Group Inc IBKR US 20/01/2015 C 22:30 EC Q4 2014
Cree Inc CREE US 20/01/2015 C 23:00 EC Q2 2015
Netflix Inc NFLX US 20/01/2015 C 23:00 EC Q4 2014
Advanced Micro Devices Inc AMD US 20/01/2015 C Aft-mkt ER Q4 2014
International Business Machines Corp IBM US 20/01/2015 C Aft-mkt ER Q4 2014
Advanced Micro Devices Inc AMD US 20/01/2015 C 23:30 EC Q4 2014
SunEdison Inc SUNE US 20/01/2015 23:30 CP
El Pollo Loco Holdings Inc LOCO US 20/01/2015 CP
Zoe's Kitchen Inc ZOES US 20/01/2015 CP

(Economist) Blood in the water, BP could be possible takeover target

The oil giant’s troubles could make it a takeover target, especially if the price of crude keeps falling 

Link to article{http://econ.st/1IWLuP3}

INVESTORS in BP are a patient bunch, and well rewarded for it. Britain’s third-largest company pays generous and reliable dividends, making it a mainstay of many private and institutional portfolios. But in the run-up to the oil giant’s quarterly results on February 3rd, some investors are jittery. Although BP’s dividend yield is a juicy 5.8%, its shares have fallen by a fifth over 10 years, greatly underperforming the broader market (see chart) and making total shareholder returns slightly negative. This is mainly because of the Deepwater Horizon disaster in the Gulf of Mexico in April 2010, which cost 11 lives and a stonking $43 billion (and maybe more) in fines, legal bills, compensation and clean-up.

BP has slimmed since then. It has sold more than $40 billion of assets, cutting its size by a third, as it continues to fight (and mainly lose) lawsuits and appeals. Now cheap oil is adding a new edge to its woes. Until recently BP made plans based on an oil price of $100 a barrel. When it announced its latest $1 billion restructuring plan in December, it tried to reassure investors that its investment plans assumed an oil price of $80, but with a fallback level of $60. The price was $65 then. Now it is below $50. As we went to press on January 15th BP was announcing further job cuts.

Not only does existing capital spending (an annual $24 billion-plus) look unaffordable, but those generous dividends—the top priority—will gobble cash. An institutional shareholder wonders if BP may resort to paying next month’s dividend in new shares (or “scrip”). “They are being overwhelmed by events,” he says.

So the chances have grown that one of BP’s rivals will seek to capitalise on its weakness and bid for it. Although its value has fallen sharply, its market capitalisation is still $107 billion, so the list of possible buyers is short. The most talked-about potential suitors are Exxon Mobil (market value $380 billion) and Shell ($197 billion), with Chevron ($196 billion) as a possible “white knight” merger partner to fend off the other two. There are some state oil and gas firms big enough to afford BP (the Saudi, Qatari or Kuwaiti ones, say), but none seems to be in shopping mood just now.

All the firms involved decline to comment. But it is easy to see some advantages to a takeover by Exxon. The two companies fit, in that Exxon’s American business is smaller than its international operations. And BP, though nominally British, is strongest in America. Exxon has lots of cash and low borrowing costs. It did a good job of absorbing Mobil, another rival, in 1999. Moreover, the biggest blight on the BP share price is its American lawsuits. It has handled these badly. Exxon, with its unrivalled political clout, might do better.

Another attraction is BP’s nearly 20% stake in Rosneft, Russia’s biggest and best-connected oil company. Rosneft is in trouble: heavily indebted, cut off from Western capital markets by sanctions, and bailed out by the Russian state in December. But for a far-sighted outsider, Russia’s oil and gas reserves are hard to ignore. BP has made a lot of money there so far. Sanctions forced Exxon, which has deep ties with Russia, to cancel its Arctic drilling project with Rosneft. Buying BP could offer a way back in. It would take a brave boss to do this; but Exxon’s Rex Tillerson is made of stern stuff.

Perhaps the strongest reason for a takeover is not BP’s plight, but the oil industry’s general gloom. The S&P Global Oil index has performed only marginally worse than BP over the past 10 years—it is up just 2.6%. All the big energy companies were wrestling with rising costs and falling reserves even before the oil-price fall. Now they are grappling with its consequences. Mergers offer a chance to cut costs and save money. Prices are low. BP, now fit, lean and cheap, is not best placed to go shopping itself. So it could be on someone else’s list.

BP wants to stay independent. Its bosses believe they have done well since 2010, ending an era of bloat, excessive ambition and corner-cutting on safety. Any buyer would have to surmount some big obstacles. Britain’s former imperial oil company has close ties to the establishment. A sale to an American buyer would mean a political row, in an election year.

It is also uncertain that Exxon would be able to solve BP’s remaining American lawsuits. The biggest headaches are in Louisiana, a state where outsiders tend to fare poorly, whether they are foreigners or just from out of state. Many legal wheels have turned since Barack Obama ostentatiously referred to BP as “British Petroleum” in what some saw as opening the hunting season on the company. One would have to believe that the American legal system was open to influence from politics and money to think that switching ownership would help. Some might say it is, but Exxon would hesitate to argue that case publicly. Boards are usually nervous about buying a company embroiled in lawsuits.

You can’t be sure of Shell

Nor does the idea of Shell taking over its old partner and rival look quite so attractive when examined in detail. BP’s former chief executive, Lord (then John) Browne, did once consider a merger, at a time when his company was top dog. Shell is now the stronger party. It has a solid balance-sheet, and there are some attractive synergies and cost savings to be had.

But big, hostile bids are not the Anglo-Dutch company’s style. It has a lot on its plate. Its big bets on gas and Alaskan drilling are not going well. Whereas BP sold assets when oil prices were high, Shell is now scrambling to do the same at a time when takers are few. This week it had to scrap a huge petrochemicals project in Qatar.

Melding together the two firms’ cultures might be no easier than if Exxon were the buyer. BP has never quite shed its imperial ways, including a climate in which employees feel nervous about bringing the boss bad news. Shell is an engineering-driven company, which sees itself as flatter and more collaborative. Anti-monopoly worries would require complicated and risky untangling of downstream assets—and in hard times.

The risks and costs of trying to buy BP, and then absorbing it, may be enough to make potential predators think twice about having a go right now. And there are plenty of other oil firms they could buy, that would not come with BP’s baggage. But if the oil price stays low, or if BP’s condition worsens for other reasons, all bets are off. The company has changed a lot in the past decade. To guarantee its independence it will have to do even more now.

>>> US Companies Reporting today - 19th of January 2015

Chalres Schwab - SCHW - Cons. EPS 0.24 Cons REV 1535.66
Comerica - CMA - Cons. EPS 0.78 Cons REV 633.72
Goldman Sachs - GS - Cons. EPS 4.32 Cons REV 7638.09
PNC - PNC - Cons. EPS 1.73 Cons REV 3805.70
Private Bancorp - PVTB - EPS 0.50 Cons REV 147.63
SunTrust Banks - STI -  EPS 0.81 Cons REV 2049.55
Wipro - WIT -  EPS 8.78 Cons REV 121176.12

>>> What to look at today - 19th of January 2015

Dow+1,10% S&P+1,34% Nasdaq+1,39% Russell+1,90%
US market closed higher on Friday, Rebound of Crude helped sentiment, countercyclical side, consumer staples (+0.8%) and utilities (+0.9%) underperformed throughout the day while telecom services (+1.7%) and health care (+1.9%) spent the day among the leaders, technology sector struggled to keep pace with the market as Apple (AAPL 105.94, -0.88) weighed. The largest sector component lost 0.8% while most other heavily-weighted tech names settled with gains. On the earnings front, Intel (INTC 36.45, +0.26) gained 0.7% after beating bottom-line estimates, financial sector could not catch up to the S&P 500 as Goldman Sachs (GS 177.23, -1.26) weighed. volume were above average @950mil shares...VIX @ 20.95 -6.43%...Shanghai Composite entered midday break near session and 2015 lows, crashing over 6% in the wake of CSRC suspending new margin trading accounts at brokers CITIC, Haitong and Guotai Junan after market close on Friday. The measures reflect regulators' discomfort with the extent of the leverage-driven rally in equities in the final week of 2014 that coincided with the open of Shanghai-Hong Kong stock link. All major mainland-listed brokerage tickers were limit down, while Hong Kong-listed shares are off by mid-teens percent. China will also post its latest GDP along with some December economic figures tomorrow, and analysts expect Q4 growth to confirm a miss in annual GDP target for the first time in 1998. Former PBoC adviser Yu said China growth is still the highest in the world despite the slowdown, while policy advisor Song noted 2015 GDP would trend around 7.3%. A research note out of Moody's also indicated China banking system outlook is stable.Swiss officials were in damage control after the surprise SNB policy action riled the markets last week. SNB Gov Jordan said he expects markets to stabilize, adding the cap on the franc was no longer justified as Swiss economy was improving. Jordan also said exchange-rate situation will remain under consideration in future decisions, and the minimum rate risked loss of monetary conditions through inflated balance sheet. Swiss Fin Min Widmer-Schlumpf noted the economy can cope with the removal of the cap, but also estimating EUR/CHF cross at 1.10 as a reasonable level for companies' adjustment.
Nikkei+0.89% Hang Seng -1.98% Shanghai -7.75%

RUB $64.71 RUB €74.90 WTI $48.64 Brent $50.23 CHF 0.8675 CHFEUR 0.9954

Eur$1.1577 S&P -0.22% EurosToxx +0.28% CAC +0.37% Dax +0.43% AEX +0.17% SMI +1.55%

Macro :
- China Stocks Sink Most Since 2008 on Margin-Trading Suspensions
- Euro zone ponders up to six-month Greek program extension, third bailout - {http://reut.rs/1IUldPv}
- Greece Outlook Revised to Negative From Stable by Fitch
- Greece’s 4 Biggest Banks Have Requested ELA, Capital.gr Reports
- *RUSSIA’S CUT TO Baa3 BY MOODY’S, MAY BE CUT FURTHER TO JUNK
- CHINA DEC NEW HOME PRICES M/M: Fall in 66 out of 70 cities vs 67 prior; Y/Y: Fall in 68 cities v 68 prior 
- Dijsselbloem said QE would give banks more room to invest and finance companies, which could give a Eurozone Economies a boost

Keep an eye :
- ABY US : Abengoa Yield Greenshoe Fully Exercised, Abengoa SA Says
- ACA FP : Credit Agricole, Fiat Chrysler Create FCA Bank
- ALT FP : Altran Technologies CEO Philippe Salle to Step Down April 30
- AMP IM : Amplifon CEO Moscetti Is Confident on 2015 Growth After Good 4Q
- CA FP : Carrefour CEO Doesn’t Favor Sunday Opening for Hypermarkets
- FCA IM : Fiat Chrysler to Step Up Investments With 20 New Models by 2016
- FRE GY : Fresenius SE Raised to Investment Grade by S&P
- DTE GY : Deutsche Telekom Hasn’t Ruled Out KPN Takeover: De Telegraaf {http://bit.ly/1GdmzZC}
- EDF FP : EDF Under Pressure From Lower Electricity Prices: Les Echos
- ENEL IM : Enel Sees Future Investments in Chile, CEO Tells La Tercera
- GETIB SS : Getinge’s New CEO to Continue With Current Strategy, DI Reports
- IBE SM : Iberdrola Has Attractive Growth, Low Risk Profile, UBS Says
- ISP IM : Intesa Seeks Private Banking Acquisition: CEO in Repubblica
- UG FP : Peugeot Citroen to Raise Japan Prices From Feb. 2
- PTC PL : P. Telecom Transfers EU400m Notes to P. Telecom Intl Finance
- SCHP VX : Schindler Sees 2014 Profit ~CHF900m, Saw CHF815m-CHF865m
- SGO FP : Saint-Gobain’s Verallia Sale Process to Start by March: Reuters {http://reut.rs/1sLyTdt}
- SIK VX : Sika Says Saint-Gobain Isn’t Taking Its Concerns Seriously
- SKFB SS : SKF Says CFO Lange to Resign to Become CEO of Gunnebo
- STERV FH : Stora Enso Says One-Time Items Will Decrease 4Q EPS by EU0.22
- TFI FP : TF1 Sells Some Rugby World Cup Rights to Canal Plus, Figaro Says
- MHG NO : Marine Harvest Says 4Q Operational Ebit at About NOK990m
- NOVN VX : Novartis Says Cosentyx First IL-17 Inhibitor to Get EU Approval
- OHL SM : OHL, Hinduja to Spend GBP600m on U.K. War Office Site: Expansion
- UNA NA : Unilever CEO Says Climate Change Set to Erode Earnings: Times
- WHA NA : Wereldhave Belgium Plans Rights Offering
- WIN GY : Wincor Nixdorf 1Q Rev. Beats, Profit Falls 11%; Confirms Targets

>>> Brokers Upgrades & Downgrades - 19th of January 2015

>>> Up
*AGGREKO RAISED TO OUTPERFORM VS SECTORPERFORM AT RBC
*BHP BILLITON RAISED TO OVERWEIGHT VS NEUTRAL AT HSBC
*EDENRED RAISED TO BUY VS NEUTRAL AT CITI
*GULF MARINE SERVICES RAISED TO OVERWEIGHT VS NEUTRAL: JPMORGAN
*HEINEKEN RAISED TO BUY VS HOLD AT SANTANDER, PT EU70 VS EU60
*HELVETIA RAISED TO BUY AT GOLDMAN
*JERONIMO MARTINS RAISED TO OUTPERFORM VS NEUTRAL AT EXANE
*TESCO RAISED TO OVERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY
*TRAVIS PERKINS RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
*VEDANTA RAISED TO NEUTRAL VS UNDERWEIGHT AT HSBC

>>> Down
*CAPE CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*CGG CUT TO UNDERWEIGHT VS NEUTRAL AT JPMORGAN
*DSM CUT TO HOLD VS BUY AT ING
*EFG INTERNATIONAL CUT TO NEUTRAL VS BUY AT UBS
*HANNOVER RE CUT TO SELL AT GOLDMAN
*JULIUS BAER CUT TO NEUTRAL VS BUY AT UBS
*KESKO CUT TO HOLD AT NORDEA
*MOBISTAR CUT TO SECTOR PERFORM VS OUTPERFORM AT RBC
*SAMPO CUT TO SELL AT GOLDMAN
*SOCO CUT TO HOLD VS BUY AT JEFFERIES
*SWATCH (BEARER) CUT TO NEUTRAL VS BUY AT GOLDMAN
*SWISS LIFE CUT TO SELL AT GOLDMAN
*SWISS RE CUT TO HOLD VS BUY AT DEUTSCHE BANK
*TECNICAS REUNIDAS CUT TO UNDERWEIGHT VS OVERWEIGHT: JPMORGAN


>>> PT Changes


>>> Initiation
*SOLVAY REINSTATED NEUTRAL AT CREDIT SUISSE, PT EU115

>>> Call
>> Stock
*SCOR ADDED TO CONVICTION BUY LIST AT GOLDMAN
*TESCO ADDED TO EUROPE BEST IDEAS LIST AT MORGAN STANLEY

(BN) China Stocks Sink Most Since 2008 on Margin-Trading Suspensions


China Stocks Sink Most Since 2008 on Margin-Trading Suspensions
2015-01-19 06:03:01.609 GMT


By Bloomberg News
(Bloomberg) -- Chinese equities plunged the most in six
years, led by brokerages, after regulatory efforts to rein in
record margin lending sparked concern that speculative traders
will pull back from the world’s best-performing stock market.
The Shanghai Composite Index sank 7.1 percent to 3,138.59
at 1:59 p.m. local time, poised for the steepest drop since June
2008. Citic Securities Co. and Haitong Securities Co., the
nation’s two biggest listed securities firms, fell by the 10
percent daily limit after they were suspended from lending money
to new equity-trading clients. Industrial & Commercial Bank of
China Ltd. tumbled 9.7 percent. The stock gauge’s 30-day
volatility rose to a five-year high.
The penalties have raised concern that policy makers are
trying to curb a surge in stock purchases using borrowed money,
after outstanding margin loans surged to 1.08 trillion yuan
($174 billion) as of Jan. 13 from about 400 billion yuan at the
end of June. The Shanghai Composite index has jumped 61 percent
during the past 12 months on record volumes as individual
investors piled into the market.
“Regulators are concerned that shares have run too hard,
too fast,” said Hao Hong, a strategist at Bocom International
Holdings Co. in Hong Kong. “They want a measured increase in
the stock market. After all, margin financing is one of the
reasons for people to be bullish on brokerage stocks, and these
stocks have run particularly hard.”
The Shanghai measure advanced 2.8 percent last week, a 10th
week of gains that’s the longest winning streak since May 2007,
after credit growth expanded and speculation grew the central
bank will cut reserve-requirement ratios.

Margin Suspensions

About seven shares fell for each that rose on the Shanghai
stock gauge today, as an index of financial companies tumbled by
a record. The Hang Seng China Enterprises Index of mainland
shares traded in Hong Kong sank 5.2 percent, while the Hang Seng
Index fall 1.5 percent.
Citic Securities, Haitong Securities and Guotai Junan
Securities Co. were suspended from lending money and stocks to
new clients for three months, the China Securities Regulatory
Commission said on its microblog on Jan. 16 after the market
closed.
The regulator punished nine other brokerages for offenses
including allowing unqualified investors to open margin finance
and securities lending accounts, it said. On the same day, the
China Banking Regulatory Commission banned banks from lending to
companies that borrow to invest in equities, bonds, futures and
derivatives. So-called entrusted loans extended by banks
increased to about 458 billion yuan in December, the most since
data became available in 2012.

Record Plunge

“China is trying to rein in over-bullishness in the stock
market as moves have been exaggerated,” Pauline Dan, Hong Kong-
based head of Greater China equities at Pictet Asset Management
Ltd., said by phone. “Investors will have to wait and see until
this volatility settles. They don’t have a fundamental reason to
stay long since government policy is driving the market.”
The CSI 300 financial index tumbled 9.5 percent, heading
for a record loss, according to Bloomberg data going back to
July 2007. Ping An Insurance Group Co., China Minsheng Banking
Corp. and China Merchants Bank Co. all fell by the daily limit.
Other large-cap stocks also slumped, with PetroChina Co. falling
7.8 percent and Agricultural Bank of China Ltd. dropping 9.9
percent.

Minimum Requirement

Citic said in a stock filing today that it raised the
minimum requirement for opening margin lending accounts to
500,000 yuan from 300,000 yuan.
In a margin trade, investors use their own money for just a
portion of their stock purchase, borrowing the rest from a
broker. The loans are backed by the investors’ equity holdings,
meaning that they may be forced to sell when prices fall to
repay their debt. Huatai Securities advertised margin lending
rates of 8.6 percent on its website today.
Small-cap stocks are among the favorites of margin traders,
Yu Liang, an analyst at Deutsche Bank AG, wrote in a Jan. 5
report. Beijing-based Sumavision Technologies Co., which makes
and sells digital TV software and hardware products, has $238
million of shares bought on margin, or 17 percent of its market
capitalization, according to the report. Xuzhou Combustion
Control Technology Co. has $112 million or 23 percent of the
stock’s market value.
Other companies include Shanghai Duolun Industry Co. and
Zhejiang Jianfang Group Co., the Deutsche report shows.

Economic Figures

China is scheduled to release data tomorrow that’s forecast
to show the economy grew in the fourth quarter at the slowest
quarterly pace since 2009.
The nation’s gross domestic product growth probably
weakened to 7.2 percent in the October-to-December period,
according to the median estimate in a Bloomberg survey. The
economy grew 7.3 percent a quarter earlier. Economic expansion
may reach 7.3 percent this year, the Xinhua News Agency reported
over the weekend, citing central bank adviser Song Guoqing.
China Vanke Co. and Poly Real Estate Group Co. slid more
than nine percent. The nation’s new-home prices fell in 65 of
the 70 cities monitored and were unchanged in four last month,
the National Bureau of Statistics said in a statement yesterday.
That compares with declines in 67 cities in November.
The Shanghai Composite is the best performer among 93
global indexes tracked by Bloomberg over the past year with a 67
percent gain. The index was valued at 12.6 times 12-month
projected earnings last week, the highest level since April
2011, according to data compiled by Bloomberg.

For Related News and Information:
Bitauto Posts Weekly Drop on Dilution Concern: China Overnight
Shenzhen Home Prices Rebound After China Rate Cut Boosts Demand
China Suspends 3 Big Brokers From Adding Margin-Trading Accounts
Chinese stocks stories: TNI CHINA STK <GO>
Global stocks stories: TOP STK <GO>
World equity valuations: WPE <GO>

--With assistance from Jonathan Burgos in Singapore and Jun Luo
in Shanghai.

To contact Bloomberg News staff for this story:
Zhang Shidong in Shanghai at +86-21-6104-3040 or
szhang5@bloomberg.net;
Kyoungwha Kim in Hong Kong at +852-2977-2104 or
kkim19@bloomberg.net
To contact the editors responsible for this story:
Michael Patterson at +852-2977-4820 or
mpatterson10@bloomberg.net
Richard Frost