19 April 2011
Bet of the Day: Spread-betters who read charts were selling BHP Billiton‟s
share price before a production update. The charts indicated a potentially
bearish picture after last week‟s “abandoned baby” — a jump higher, quickly
followed next day by a gap lower and steep retreat — presaged a “head and
Deal of the day: Avanti Communications, a satellite company and one of
those shares bet against by Evil Knievil, the bear raider otherwise known as
Simon Cawkwell, rose 5.7% to 464½p, after being awarded almost $7.6
million (£4.7 million) from Space Exploration Technologies, an American
rocket company that failed to honour a launch contract.
Gilts: Gilts were spurred by ongoing talk that Greece would restructure its
debt and a downgrade of the U.S. credit outlook. June gilt futures settled 46
ticks higher, but underperformed the equivalent bund by 79 ticks as investors
sold U.S. Treasuries and bought German debt. In the cash market, the yield
on ten-year gilts fell six basis points to 3.55%.
Football highlights? Just point your phone at a picture: A roaring 3D dinosaur
emerges from behind Buckingham Palace as a cartoon character leaps out of
a bus stop and points at a movie trailer that has started to play. Welcome to
a reality where mobile phones and tablet computers bring images to life.
Lloyds of London appoints new Chairman: Lloyd‟s of London has appointed
John Nelson as Chairman to succeed Lord Levene, who has presided over the
insurance market‟s council for nine years. Mr Nelson, who has chaired
Hammerson, the property company, since 2005, will take over from Lord
Levene in October.
Libya fails to dent Halliburton profits: Turmoil in Libya and the imposition of
United Nations sanctions on Tripoli forced Halliburton to take a $46 million
charge in the first quarter. This, however, was more than offset by a
threefold jump in profits at its key North American operations.
Glencore‟s numbers just get bigger and bigger: Two of Glencore‟s banks have
valued the Swiss commodities trader at up to $69 billion in the run-up to its
planned flotation next month. The generous valuations have been greeted
with scepticism by some City investors, who point out that Credit Suisse and
Barclays Capital have a vested interest in promoting the value of their client.
Towergate appointment taken as signal it is preparing to float: Speculation
Manoj Ladwa 0207 392 1487 mounted that Towergate was lining up a flotation as the acquisitive insurance
broker named a stock market veteran as its boardroom figurehead.
Index and Equity Desk 0207 392 1479
Towergate, founded by the billionaire Peter Cullum, said that Alastair Lyons
Institutional Equities 0207 392 1477
would be taking over as Non-Executive Chairman. Mr Lyons chairs Admiral, an
Commodities 0207 392 1403 insurance group that he helped to bring to the market, and Serco, the
Options 0207 392 1472 government outsourcing company.
Currencies 0207 392 1455
Internet Dealing Desk 0207 392 1434
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19 April 2011
Kheraj to rejoin Barclays as Diamond‟s adviser: Naguib Kheraj, former Finance
Director of Barclays, will rejoin the bank as an adviser to its Chief Executive,
Bob Diamond. Mr Kheraj stepped down from a specially created international
role at investment bank Lazard in February after just six weeks, saying he did
not have enough time to fulfil his charitable commitments.
Sainsbury‟s puts best foot forward in battle with the department stores: J
Sainsbury is experimenting with its first outside concessions as it uses its larger
supermarkets to take on the department stores. It is testing two Clarks‟ shoe
concessions in larger stores. It is also operating an O2 mobile phone
concession in a 100,000 sq ft hypermarket in Crayford, Kent.
Looking for bargains on the forecourt: Dozens of independent car dealers are
struggling in the wake of the recession and could be ripe for takeover,
according to one of several businesses aggressively cleaning up distressed
forecourts across Britain. Cambria Automobiles says that many dealers are
over borrowed and are failing to shift stock — and it senses an opportunity.
Explorers fight it out over tax bill in Uganda: A row between two oil
companies over tax liabilities has erupted into multimillion-dollar lawsuits
Tullow Oil is suing its former partner Heritage Oil for the $313 million (£192.5
million) that it has had to pay in tax to the Ugandan Government. Heritage
has countered with legal action seeking the return of $283 million held in an
BAE veteran joins queue at Dollywood: Question: what do nuclear
submarines, battle tanks and the Eurofighter have in common with
Dollywood, “The Great Smoky Mountains‟ family fun vacation adventure”
owned by the singer who brought you Jolene? Answer: John Weston.
Resolution: Lost 143/4p to 2943/4p, after UBS urged clients to no longer rate
Clive Cowdery‟s company as a consolidation vehicle but rather to weigh it as a
less racy, “normal” life company.
Alterian shares recover after sales forecast: Alterian, the struggling marketing
technology company, admitted it “overreached” itself in recent months as it
issued a trading update clarifying its two recent profit warnings.
Resolution wavers as UBS downgrades and insurers retreat: Insurers led the
London market lower as the FTSE 100 registered its biggest daily fall since
November. Clive Cowdery‟s Resolution led the sector lower, down 4.8% to
297½p, after UBS took the stock off its “Buy” list and cut earnings forecasts
by about 30%.
„Nimbys‟ begin struggle over High Speed 2: The political backlash against the
High Speed 2 rail project arose in the predictable cluster of verdant
Conservative constituencies in Buckinghamshire, Northamptonshire and
Warwickshire, which will find themselves bisected by the scheme.
NHS electronic record scheme in danger: The National Health Service‟s £12.7
billion programme to create an electronic patient record has been plunged
into yet another crisis after CSC, its biggest supplier, missed yet another series
of deadlines and one of its key NHS partners walked away – saying it does
not want the systems on offer.
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19 April 2011
PGI takes majority stake in Finisterre: U.S. Asset Manager Principal Global
Investors, part of the Principal Group, has taken a majority stake in Finisterre
Capital – netting the London-based hedge funds five founders an estimated
$52 million (£32 million).
FSA goes for two-tier capital approach: U.K. regulators will focus resources
only on the largest insurers in their efforts to assess new capital models
before a January 2013 deadline, in effect leaving smaller groups to fend for
Wrecking ball fells former Hyundai plant: A factory once hailed as a flagship
of Scotland‟s aspirations to become global centre for semiconductor
manufacturing fell to the wrecking ball on Monday as the site‟s new Owner
launched its redevelopment with a focus on the renewables industry.
SFO ponders probe into Notts County deal: Fraud investigators said on
Monday they would decide shortly whether to examine the case of how
football‟s oldest club was taken over by a convicted fraudster whose scam
deceived both a former England Manager and the government of North
Nat Express faces further scrutiny: The troubles at National Express deepened
on Monday when a leading U.S. shareholder lobby group said it had concerns
over the transport company‟s corporate governance procedures.
Big guns vie to tap Azeri gas riches: An ugly mass of buildings, pipes and
vents sprawled beside the Caspian Sea appears an unlikely beginning for
Europe‟s future energy supply.
International diversity of U.K. boards grows: The number of Foreign Directors
on the boards of Britain‟s biggest companies has risen by more than half in
five years, according to a study that is being used to shape corporate
governance policy in Europe.
Standard Life: Down 3.4% to 208½p, after Citigroup cut its target price to
Petropavlovsk: Off 4% to 853½p, amid growing doubts among investors
about the cost of switching its two main mines to refractory ore, which needs
a more complex and expensive extraction process.
Heritage Oil: Dropped 6.8% to 251½p, on news that Tullow Oil was suing it
for alleged breach of contract over its refusal to reimburse a $313 million
payment that Tullow made to the Ugandan government.
Bwin Party Digital: Surged 29.8% to 170p, on a short squeeze while Playtech
climbed 7.5% to 339½p.
U.S. debt: credit where it‟s due: Bond vigilantes tend to be rude about
rating agencies, and with good reason. But it is Standard & Poor‟s, not
the bond market that is trying to get U.S. politicians to treat the country‟s
fiscal deficit seriously. Should anyone care that S&P has put U.S. sovereign
debt on negative credit outlook? The answer should plainly be “no”. This
is only an opinion, based on public data, with a one-third chance that
action will follow within two years. Given the scale of the deficit, it is
obvious that rating agencies should at least consider downgrades,
whatever they say in public. But this gesture is important precisely
because it is aimed at politicians, not investors. S&P chose to surprise the
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19 April 2011
market, and to move to a formal negative outlook when it could merely
have mused publicly about downgrades, as Moody‟s did earlier this year.
It could have raised the alarm about the debt ceiling, the current hot
topic. Instead, it emphasised the risk that “U.S. policymakers might not
reach an agreement on how to address medium and long-term budgetary
challenges by 2013”. In other words, if politicians try to avoid this issue
until after the 2012 election, they will suffer a downgrade.
J&J/Synthes: what the doctor ordered: Fracture a bone anywhere in the
world and the odds are good that Synthes will supply the materials to
mend it. Snapping up the device maker for a cool $20 billion may be just
what the doctor ordered for Johnson & Johnson which, while not quite
broken, has been prone to some nasty spills lately. It lost nearly $1 billion
in sales last year due to various product recalls and has been on the prowl
since failing to consummate a big deal for British device manufacturer
Smith & Nephew. Buying Synthes is about much more than bolstering
J&J‟s wounded portfolio though. A leader in other parts of the
orthopaedic market, J&J remains a bit player in trauma, Synthes‟s forte.
An ageing population translates to far more broken bones in coming
decades, just as it means more artificial hips and knees (where J&J
already has scale). Synthes controls about half of this business, valued at
more than $5 billion, around a fifth of the overall orthopaedics market.
And its spinal products business would help J&J edge closer to market
Eurozone: panic is premature: According to the Greeks, nothing
happened. But as markets feel they have been misled by Greece in the
past, it is no surprise that they largely ignored its denial that it had asked
for its debt to be restructured. Greece‟s cause was not helped by
revelations of a German contingency plan to cope with a default. For
Eurozone unity, the latest utterances of the d-word come at a bad time.
Last Sunday‟s Finnish election saw Anti-Euro party True Finns vacuum up
19% of the vote, almost five times the support they mustered in 2007. It
may well not form part of the next coalition government, but if it does,
its anti-bail out policies could see Finland withdraw from the European
financial stability facility‟s €80 billion bail-out of Portugal – a lifeline that
requires unanimous Eurozone support. Markets – like horror movie-buffs
– love to be spooked. Spain, which must rue the timing of its Monday
debt auction, saw yields on €3.5 billion worth of 12-month bills balloon
almost one-third to 2.77%, and on €1.1 billion of 18 month bills by almost
two-fifths to 3.36%. For good measure, the Euro nosedived almost 2
cents against the dollar.
Elliott needs fresh scalps to bolster bragging rights: For a business
operating within the supposedly secretive world of hedge funds, Elliott
Management of the U.S. is gaining curious prominence. Scarcely a day
goes by without the company donning the high-visibility raiment of the
activist investor to participate in one corporate tussle or another. It is
seeking to replace Directors at U.K. transport group National Express and
Swiss biotech group Actelion. Elliott is also figuring, albeit in a supporting
role, in the defence of Danisco of Denmark from DuPont of the U.S. and
in an assault by U.K. activist Laxey on Alliance Trust, a venerable
investment fund. There is supposedly no strategic reason why the
company is suddenly as omnipresent in the business pages as Kate
Middleton is in the news sections of non-pink papers. Happenstance, it is
claimed, required Elliott to take simultaneous public positions on National
Express, Actelion and DuPont. But one might surmise that a recovery in
the potential for M&A deals, reflecting improved corporate profitability,
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19 April 2011
also has something to do with it. It makes sense to signal that a business
might be open to offers – this being Elliott‟s message regarding National
Express – when offers might reasonably be forthcoming.
Cover story: The severity of antitrust penalties does not feature in inward
investment brochures under such straplines as: “Come to the U.K. with its
skilled workforce and ferocious competition enforcers!” Yet official
belligerence towards rigged markets is a useful guarantee that incoming
businesses are unlikely to get stiffed by contractors and suppliers. So it is
regrettable that the Competition Appeals Tribunal has cut fines imposed
on nine building companies judged guilty of cover pricing. Cover pricing is
a venial rather than a mortal sin in antitrust theology. Here, two
contractors will typically collude in a tender, with one contractor
deliberately quoting a higher price than the other. The overbidder thus
stays on the customer‟s radar as a potential partner while neutralising the
risk of winning a contract that it sees as unattractive. The danger of cover
pricing is that it can spill over into price fixing. The CAT, living up to its
acronym as a bit of a pussycat, slashed fines imposed on such hard-hat
wearers as Crest Nicholson from £11.6 million to £2.7 million on Friday.
The nub of the CAT‟s argument was that the penalties, imposed by the
Office of Fair Trading, were too harsh.
The Daily Telegraph
Sovereign debt fears put Euro under pressure: The Euro fell amid fears that a
public backlash against “squanderer” member states could de-rail Brussels‟
radical plans to avert the mounting sovereign debt crises.
Online gaming shares jump on U.S. crackdown: Share in online gaming
companies without exposure to “illegal” U.S. gamblers rocketed this morning
in response to Friday night‟s crackdown against the three largest poker
websites in America.
Desire shares plunge after sixth oil well comes up dry: Desire Petroleum shares
collapsed by 60% on Monday, after the company said it will abandon its sixth
Falklands well. It found oil “shows” in the Ninky well, but not enough to be
commercially viable to extract, sending its share price down 241/4 to 153/4p.
Four banks cleared of market rigging in Parmalat collapse: Four of the world‟s
largest banks have been acquitted of market rigging in relation to the
collapse of Italian food group Parmalat.
Analysts claim Bart Becht fell out with Reckitt Benckiser board: Analysts have
claimed that Bart Becht, the highly-regarded Chief Executive of Reckitt
Benckiser, quit after a boardroom bust up over strategy.
Serco: Advancing 0.5p to 555½p, after contract for difference broker Galvan
placed a “Buy” rating on the company.
Smith & Nephew: Tumbled 4.6%, on the news - Johnson & Johnson had been
seen as a potential suitor for the artificial hip and knees maker.
ITV: Up 1.9%, after Jefferies International upgraded its rating for the
broadcaster to “Hold” from “Underperform”, mainly on valuation grounds.
Toyota Motor Corp.: Fell 0.3%, as it remained unclear when the automaker
would resume full production in Japan.
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19 April 2011
Euro stocks slide amid renewed fears of Greek default: Renewed fears of an
early default by Greece on its sovereign debt sent the Euro, European stock
markets and the already depressed value of bonds issued by other distressed
peripheral Eurozone members sliding.
RBS faces AGM protests over tar sands cash: Royal Bank of Scotland faces
protests from native tribespeople over its backing for the controversial
extraction of oil from tar sands in Canada.
Luxury brand names take Google fight to High Court: Some of the world‟s
most prestigious brand names are to fight a legal battle in the High Court
over Google search terms.
Sales rise of 17% puts fizz back into LVMH: LVMH posted sparkling first
quarter sales figures for all of its businesses. The maker of Moet et Chandon
champagne and Louis Vuitton handbags saw its sales grow by 17% to €5.25
billion (£4.6 billion) over the three months, and reported “strong
momentum” in the U.S., Europe and Asia.
Toyota fires up quake-hit Japanese car factories: Toyota was producing cars
at all of its Japanese factories for the first time since the devastating
earthquake and tsunami rocked the country last month.
Banks agree to delay Southern Cross tests: Southern Cross‟s lenders have
postponed a test of its banking covenants until 31 May as the care homes
group tries negotiate rent reductions with landlords in the wake of local
authority spending cuts.
Discounters take over U.K. malls: Pound shops, discount fashion chains and
fast-food outlets are moving into shopping centres in increasing numbers,
changing the face of Britain‟s malls.
Eurotunnel cruises past ferry operators in cross-channel market: Cross-channel
tourists are losing their sea legs, Eurotunnel has claimed, after the company
said rising fuel prices have pushed it ahead of ferry operators in the U.K.-to-
France travel market.
Agricultural land prices hit record high: Rising food prices have pushed up the
price of arable land in parts of the U.K., but life is tougher for livestock
farmers. Agricultural land prices in Britain have hit record levels following the
surge in global food prices, according to figures from Savills.
Citigroup profits slump 32%: Citigroup‟s profits slumped 32% in the first
quarter of the year, dragged down by lacklustre returns in its trading division
and U.S. consumer banking arm. The bank‟s revenues in the first quarter of
2011 were $19.7 billion (£12 billion), up 7% from the last quarter but down
22% from the first quarter of 2010.
Insights from ecologists show ways of preventing economic disaster: In the
eight centuries from 1000-1800 AD the world‟s fish stocks and species
numbers were stable and healthy. In the subsequent 200 years, 40% of the
species in coastal waters collapsed, showing falls in their population by 90%
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19 April 2011
Shares slide on shock U.S. credit outlook cut: The surprise downgrading of the
United States‟ credit outlook by a leading agency has sent stock markets
sliding. Ratings agency Standard & Poor‟s downgraded its credit outlook for
the U.S., from stable to negative, but maintained its top AAA credit rating.
Philips sells majority stake of TV business: Philips is offloading 70% of its loss-
making television business as its former flagship products can no longer
compete with lower-cost rivals and have dragged down profit at Europe‟s
biggest consumer electronics firm.
Tesco looks East as U.K. lags behind: Tesco‟s Asian stores are expected to ring
up record profits for the retailer this week, but there is unlikely to be any
relief from dismal sales in Britain.
Glencore and BP aim to placate investors: Commodities trader Glencore and
oil supermajor BP is facing twin battles to reassure investors this week, after
disgruntled institutions flexed their muscles.
Desire Petroleum: Plunged 63% to 15p, after it failed to find oil at its Ninky
well off the Falkland Islands.
BP: Edged up by 0.8p to 456.55p, as it emerged that one of its top investors
had advised the oil giant to double its £19 billion asset sale programme, with
the aim of creating a sleeker operation with greater growth potential.
Logica: Exane BNP Paribas upgrade the stock to “Outperform” and
increased the target price to 167.00p
888 Holdings: Numis Securities Ltd upgrade the stock to “Buy” and
increased the target price to 50.00p
AstraZeneca: Oehman Fondkommission upgrade the stock to
“Outperform” and increased the target price to 3245.68p
Ceramic Fuel Cells Ltd: Nomura Code Securities maintains a “Buy” rating
on the stock, with a target price of 21.00p
Avanti Communications Group: Jefferies maintains a “Buy” rating on the
stock, with a target price of 1340.00p
EnCore Oil: Arbuthnot Securities maintains a “Buy” rating on the stock,
with a target price of 211.00p
Clothes chain seeks German ban for ASOS: ASOS faces a legal challenge over
the launch of its website in Germany amid claims the brand will cause
confusion among shoppers.
S&N drifts as bid hopes slip: Shares in orthopaedics group Smith & Nephew
fell 3% as takeover hopes faded after prospective U.S. bidder Johnson &
Johnson closed in on a possible $20 billion (£12.3 billion) buy-up of Swiss
medical group Synthes.
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19 April 2011
Norwich to pay £51 million: One of Britain‟s biggest building societies is to
pay £51 million in compensation to customers after being fined £1.5 million
for mis-selling investment products.
Chevron: £2 billion tax hike could scupper North Sea hopes: Chevron has
warned the Government‟s £2 billion tax raid on North Sea oil and gas profits
could force it to invest elsewhere.
The Scottish Herald
Scottish arm of Lloyds in trading warning: Up-for-sale Lloyds TSB Scotland is
warning it expects “challenging” economic conditions north of the Border for
most of 2011, likely limiting growth in its lending and income and meaning an
improvement in the bad debt picture might not be maintained.
King Sturge ace casts verdict on property market: The big Scottish banks are
controlling a “substantial amount” of the commercial property market north
of the Border amid scarcer funding and lower valuations, consultancy King
Sturge‟s big-hitting signing Caroline Parker said.
EnCore unveils subsidiary plan: EnCore Oil said that it is planning to spin off
its North Sea exploration assets into a new company as it focuses on two key
projects in the U.K. sector, writes Douglas Hamilton.
Anti-piracy firm raises £5 million: Metaforic, a software company which has
developed products to combat piracy and hacker attacks, has raised £5
million in a funding round led by venture capital firm Scottish Equity Partners.
Maxima Chief Executive refuses to rule out job cuts: Graham Kingsmill, the
Chief Executive of troubled former Scottish technology darling Maxima
Holdings, has told The Herald that axing headcount was “not part of plan”
after announcing a comprehensive strategic review which could result in the
sale of the company.
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19 April 2011
Market Round Up
FTSE 100 declined 2.1% to close at 5,870.1.
FTSEurofirst 300 index slumped 1.7% to 1,112.4.
DJIA edged down 1.1% or 140.2 points, to settle at 12,201.6.
NASDAQ slid 1.1% or 29.3 points to close at 2,735.4. S&P 500
slipped 1.1% or 14.5 points to 1,305.1.
Nikkei 225 index is trading 1.2% lower, at 9,442.4.
In Asia, crude oil for May delivery is trading 47 cents lower at
$106.65 per barrel.
At 0400 BST today, the GBP is trading 0.1% lower against the USD
at $1.6246, slightly lower against the EUR at €1.1421 and
marginally down against the JPY at ¥134.13.
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19 April 2011
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10 Newspaper Headlines