WSJ : China To Eclipse South Korea In Most Export Industries By 2018, Report Say

Is China doing to Korea what Korea did to Japan in manufacturing?

Increasingly it looks like it, according to a recent report by a Seoul-based state research house.

The Korea Institute for Industrial Economics and Trade forecast in a report this week that by 2018, Chinese manufacturers will likely catch up with or overtake their South Korean competitors in most of the industries in which Korea currently leads the world.

Over the next few years, South Korea will gradually lose out to China in the former’s flagship export items such as mobile phones, displays, ships, machinery, petrochemicals, steel and textiles, the institute said.

Only in making cars and memory chips will South Korea stay stronger than China beyond 2018, it forecast.

The shift is reminiscent of how South Korea overtook Japan in several export industries late last century following a government-directed move in the 1960’s to pour capital into key manufacturing sectors.

The institute expects Chinese firms to “be on a par with Korean liquid crystal display manufacturers within two to three years” thanks to government support and Chinese firms’ aggressive investment in the industry. China’s government has a target for local manufactures to supply about 80% of the country’s total display demand by 2015, up from last year’s 36%, the report notes.

Korean companies’ share of the global LCD market fell from 51% in 2013 to 44% in the first half of this year, the report says.

In the shipbuilding industry, China has already surpassed Korea in the number of orders taken since 2010. By value, Korea just marginally exceeded China in the first half of 2014, the report notes.

The institute says it expects China will outperform Korea within two years in making oil tankers and cargo vessels. But Korea will likely remain the leader in the higher-end segments of ships specially designed to carry liquefied natural gas or to explore and store oil offshore.

The threat to Korean phone makers from Chinese manufacturers was crystal clear in Samsung Electronics’ latest financial report on Thursday. Samsung’s quarterly net profit nearly halved as Chinese companies ate into its market share.

In the Chinese market, local player Xiaomi Inc. replaced Samsung as the biggest supplier of mobile handsets during the second quarter of this year.

The institute expects China to outshine South Korea globally in the mid- and low-end smart phone markets “within two years”

Korean manufacturers, however, will likely continue to excel Chinese rivals in the higher-end smartphone market even after five years, the institute said.

The institute said China is two to three years away from matching Korea in the manufacture of numerical-control milling machines, excavators and loaders, and three to five years away from overtaking Korea in making textiles for higher-end clothing. China is also quickly moving up the value chain in steel products, such as those used for vehicles, the report says.

>>> DSM eyed as takeover target by Evonik - Newswire Round-up

DSM eyed as takeover target by Evonik - Newswire Round-up

Evonik Industries, a German chemical maker, is exploring the option of buying Royal DSM, a Dutch competitior, a newswire reported citing people familiar with the matter.

Evonik is in talks with advisers about the possibility of a deal, which if it were to go through would create a company with around EUR 22bn in sales, the Bloomberg report said.

At the beginning of this year, DSM would have rejected an offer by the Germans, due to fears about relocating to Germany and concerns about the corporate governance structure and strategic fit, the report added.

Evonik is interested in acquiring either all of DSM, with a market value of EUR 8.7bn or just part of the company. It is most interested in the nutrition division, the report added.

The chemical maker, Germany’s second largest, is looking for a large European target. Apart from DSM, it is also considering companies such as Croda International in the UK and Clariant in Switzerland, the report said.

Evonik's CFO Ute Wolf has said the company is ready to make 'sizeable acquisitions', as previously reported by this service.

Evonik denied the talks and a spokesman for DSM declined to comment, Bloomberg reported.


Source Newswire Round-up

FT : Spirit and Greene King agree bid talks extension

Extra time at the bar.

Pub groups Spirit and Greene King have agreed a one week extension to the Takeover Panel's "put up or shut up" deadline as Greene King continues to weigh a possible offer, the FT's Claer Barrett writes**.

The two groups now have until 5pm on 4 November to continue their discussions.

On Thursday, the Spirit board reiterated that it was "willing to recommend" Greene King's revised proposed offer, a ratio based on Greene King's share price, plus cash which values the group at around £750m, but added:

This remains subject to the satisfactory resolution of the other terms of the possible offer.

If the merger goes ahead, it would create the largest managed pubs group in the UK. Spirit has recently rejected a rival approach from Dublin-based C & C, the maker of Magners cider.

FT Lex : European telecoms: hold the line please

European telecoms: hold the line please
High hopes for deals in markets where competition appears excessive
©Bloomberg
Four is an unlucky number in China; it sounds like death. Three though sounds like life. That superstition should also apply to European telecoms companies. Those that operate in countries with four or more competitors have generally had poor profitability.
That does not concern regulators, although the resulting low rate of investment should. But regulators are slowly changing their tune on consolidation, for example allowing Telefonica’s purchase of E-Plus in Germany in July. That is good news for a sector whose shares have underperformed the market over the past decade.
    Both incumbents and challengers have struggled with the current structure. In particular the mobile operators have taken a hit. Return on capital employed over the past five years has fallen from more than 20 per cent to just 13 per cent, according to New Street Research. This is well above their cost of capital of 7 per cent. In the US, the decline has been less dramatic. And while US telecom investment has boomed since 2008, in the EU it has hardly changed. More consolidation could change that.
    Yet, even if the EU softens its stance further, the process will take time. The Byzantine structure of telecoms regulation in the EU means that while there is a Directorate General (DG Connect) responsible for telecommunications – much like the US Federal Communication Commission – the national regulators also have great influence. Since 2009 these authorities have had their own body in Brussels (BEREC) to argue their respective local issues. And they do not all agree that consolidation is a good thing.
    Hopes are high for consolidation in markets where competition appears excessive, such as in France. Returns there are nearly at the cost of capital, at best. Already Numericable has bought SFR from Vivendi for €17bn, bringing the number of operators down to four. France’s competition authority formally blessed that deal on Tuesday. The next possible target: Bouygues Telecom, the conglomerate that narrowly lost out in the battle for SFR. Unlucky for some.

    >>> What to look at today - 30th of October 2014

    US Market Closed slightly lower after FOMC meeting that confirmed long timed rumored end of QE, comments were little changed..."considerable time"...USD rallied on that...1,2595...Financials outperformed (+0,2%) helped by spike in short term rates..AAPL OP (+0,7%) also after FB numbers and the stock UP (-6,1%)...materials sector was week (-1,3%)..Crude climbed 1% to $82.18 helping energy to OP (-0,2%)...volume were above average @ 822mil shares...VIX @ 15,15 +5,28%...US after Hours SMSI +15.8%, TTWO +6.4%, DWA +4.8%, V +4.1%, AFOP -17.2%, GLUU -16.8%, WTW -11.8% following earnings/guidance...Brazil central bank surprised with a 25bp hike of its SELIC rate against unanimous analyst expectations of another hold. The vote was 5-3 in favor of the hike, as board members noted "intensification of increases in relative prices with the balance of inflation risks becoming less favorable since last meeting."...BRazil -2,45%...China Premier Li called for a boost in private consumption, the opening of financial services, and support of green industries. Separately, Moody's research noted that property sector sales are improving in Q4...Japan PM Abe was reported to have submitted an order for the cabinet to draft an extra budget for November. Separate press report speculated Tokyo may cut effective corporate tax rate by 2-3% for FY15, implying the recent improvement in retail and output data may have shifted the bias in favor of another sales tax increase...Yahoo Japan (4689 JP) -6,1% on H1 Numbers...Samsung +4,51% on worst numbers...Mitsubishi Motors 7211.JP -5.3% (H1 results, cuts FY14/15 Rev guidance)...Nikkei +0,73%...Hang Seng -0,37%...Shanghai +0,19%...

    Eur$ 1,2598 S&P+0.09% EuroStoxx+0.26% FTSE +0.09% Dax +0.39% SMI +0.36%

    Keep an eye on :
    - ABE SM : Abertis to List Telecommunications Towers Unit: Confidencial
    - AC FP : Accor Buys Wipolo, Starts Digital Hospitality Plan
    - ALU FP : Alcatel 3Q Sales Miss Amid N.America Slowdown; Margins Beat
    - ASC LN : Stock jumped 5,4% yest on Stake building (5,1%) from Tybourne Capital, a HK HF that has a 190mil stake in AMZN, cited as apotential suitor for ASC
    - AZN LN : Sanofi Said to Have Contacted AstraZeneca’s Soriot for CEO Job
    - BAYN GY : Bayer 3Q Ebitda Ex-Items EU2.01b, Est EU1.95b; Raises 2014 Goals
    - BESI NA : BE Semiconductor 3Q Net Rises Y/y, Falls Q/q
    - BVI FP : Bureau Veritas 3Q Rev. EU1.065b vs Est. EU1.04b
    - CLN VX : Clariant 3Q Ebitda Ex-Items CHF211m vs Estimate CHF209.9m
    - CRBN NA : Corbion to Distribute EU100m to Shareholders in 2015; Raise Div.
    - DRN GY : DAB Bank 3Q Net Income EU4.3m vs EU2.9m, Confirms FY Targets
    - ANN GY : Deutsche Annington 9M FFO1 Rises 26%; Plans Dividend Increase
    - DSM NA : Evonik Said Exploring DSM Acquisition Amid Chemical Deals Hunt
    - EBRO SM : Ebro Foods chairman says it is targeting Africa and Middle East for acquisitions - Expansion
    - EDF FP : EDF Electricity Prices to Rise 2.5% in France on Nov.1: Echos
    - ENI IM : Eni 3Q Adj. Net EU1.17b vs Est. EU896.4m; Production 1.58mboe/d, Reports significant oil discovery offshore Congo 
    - EBS AV : Erste Group 9m Net Loss EU1.484b Vs Net Income EU430.6m Y/Y
    - EVK GY : Evonik 3Q Adj. Ebitda Beats Estimates, Confirms 2014 Forecast
    - GEBN VX : Geberit Sees FY Sales Growth at Upper End of 4%-6% Target Range
    - ING IM : Ingenico 3Q Sales Beat; Targets Excluding GlobalCollect Raised
    - JAZ SM : Jazztel 3Q Net EU17.6M; Est. EU22.3M
    - JMT PL : Jeronimo Martins 3Q Net EU92m vs Est. EU109.6m
    - LHA GY : Lufthansa Lowers 2015 Outlook; Says Strike Cost EU170m
    - LIN GY : Linde Cuts 2014, Mid-Term Growth Targets, 3Q Operating Profit In Line With Estimates
    - LUX IM : Luxottica Says 2015 Orders ‘Up Double Digits’
    - TL5 SM : Mediaset Espana 9M Net EU25.2M; Est. EU27.2M
    - MERL LN : CVC, Blackstone Selling 75m Shrs of Merlin Entertainments
    - NEM GY : Nemetschek 3Q Net Rises 25%, Sales Up 12%; Confirms Outlook
    - NOVOB DC : Novo Nordisk 3Q Net Profit In Line; Lifts FY DKK Profit Outlook
    - NXI FP : Nexity 9-Mo. Rev. EU1.72b vs EU1.89b Y/y
    - ORK NO : Orkla Q3 Pretax Profit Was NK871m vs NK879m Est.
    - QIA GY : Qiagen 3Q Adj. EPS In-Line with Est.
    - RAND NA : Randstad 3Q Revenue Meets Est.; France, Germany Markets Slowing
    - RLIA SM : Realia attracts interest of Juan Abello's Torreal - Expansion
    - RNO FP : Renault 3Q Rev. Beats Ests.; 2014 Forecast Reiterated
    - SAN FP : Sanofi Said to Have Contacted AstraZeneca’s Soriot for CEO Job
    - SCH NO : Schibsted 3Q Sales Matches Est.; Print Ads Mkt Still Declining
    - SEV FP : Suez Env Confirms 2014 Targets at Nine-Month Ebitda Rises 4.7%, 9-Month Waste Handling Volume Rises 1%: CFO
    - SIE GY : Siemens Said to Pick Hearing-Aid Unit Buyer Next Week: WSJ
    - SIK VX : Sika 9-Mo. Net CHF308.6m Vs CHF253.8m
    - RIA FP : Steria Scraps 2014 Margin Outlook, Sees Loss; 3Q Sales Rise 7.3%
    - TEC FP : Technip 3Q Net EU132m vs Est. EU153.6m; Backlog EU19.3b
    - TFI FP : TF1 3Q Rev. EU437m vs Est. 447m
    - TIT IM : Telecom Italia Completes Sale of 17% Sofora Stake to Fintech
    - TLW LN : Tullow rumored to be a target of Take over, no more details
    - WCH GY : Wacker Chemie 3Q Rev EU1.23b, Est. EU1.25b; Specifies 2014 Goals
    - WDI GY : Wirecard expected to make further buys; has EUR 300m war chest
    - YPSN SW : Ypsomed Raises Outlook as 1h Net Almost Doubles to Chf9.1m

    >>> Brokers Upgrades & Downgrades - 30th of October 2014

    >>> Up
    *BUREAU VERITAS RAISED TO EQUALWEIGHT VS UNDERWEIGHT AT BARCLAYS
    *DANONE RAISED TO BUY AT CITI
    *DMG MORI SEIKI RAISED TO BUY FROM HOLD AT BANKHAUS LAMPE
    *EULER HERMES RAISED TO NEUTRAL VS SELL AT GOLDMAN
    *STMICRO RAISED TO NEUTRAL VS SELL AT UBS
    *TOMTOM RAISED TO BUY VS HOLD AT ING

    >>> Down
    *IMAGINATION TECH CUT TO REDUCE VS HOLD AT NUMIS
    *NESTLE CUT TO NEUTRAL AT CITI
    *RED ELECTRICA CUT TO HOLD VS BUY AT SOCGEN

    >>> PT Changes


    >>> Initiation
    *DSV RATED NEW BUY AT JEFFERIES, PT DKK200
    *HOMESERVE RATED NEW BUY AT GOLDMAN, PT 455P
    *KUEHNE & NAGEL RATED NEW HOLD AT JEFFERIES, PT CHF110
    *PANALPINA RATED NEW HOLD AT JEFFERIES, PT CHF125
    *PETROLEUM GEO-SERVICES RATED NEW UNDERWEIGHT AT JPMORGAN
    *TGS NOPEC RATED NEW NEUTRAL AT JPMORGAN, PT NK127

    >>> Call