International Morning News
Monday, 15 September 2008
Market Commentary: Most U.S. stocks gained ground on Friday as higher gasoline and metal prices lifted commodity producers, overshadowing concern that the government will balk at funding a bailout of Lehman Brothers Holdings. Valero Energy and Tesoro gained ground as Hurricane Ike's progress toward Texas pushed up gasoline. Freeport-McMoRan Copper & Gold and Newmont Mining also rose as copper jumped the most in 3 weeks and gold snapped a 9-day losing streak as a weaker dollar revived demand for metals as an alternative investment. On the other hand, American International Group declined on concern it will be the next major financial company to face a capital shortage. Lehman also declined leading finnancial companies in the S&P 500 to a 1%drop as CEO Richard Fuld courted buyers for the investment bank amid signs that the U.S. government may not provide the funding that enabled Bear Stearns to sell itself and avoid bankruptcy. On the macroeconomic front, a report showed confidence among U.S. consumers climbed more than estimated this month as a drop in gasoline prices provided relief from rising unemployment and tumbling home values. The S&P 500 rose 0.21% and the Nasdaq gained 0.14%, while the Dow Jones lost 0.10%. European stocks advanced for the 1st time in 4 days on Friday as speculation Lehman Brothers Holdings will find a buyer lifted banks and rising metals prices sent commodity producers higher. UBS and Barclays led the advance among financial shares. BHP Billiton rallied as copper increased. SAS Group jumped after the biggest Nordic airline said it's “evaluating various structural possibilities'' for the carrier's future. Total and Eni led gains by energy producers as oil rebounded from a 5-month low to $102.89 a barrel. ITV also rallied as Mediaset reiterated interest in the U.K.'s biggest commercial broadcast. Around Europe, the CAC 40 gained 1.97%, the DAX added 0.91% and the FTSE 100 increased 1.85%. Asian stocks tumbled today as credit market turmoil pushed Lehman Brothers Holdings to bankruptcy and Merrill Lynch agreed to be sold to Bank of America. Macquarie Group tumbled as the New York Times reported American International Group is seeking a $40bn bridge loan from the Federal Reserve. Stock indices fell more than 2.5% in Australia, Singapore, the Philippines and Taiwan. Japanese markets are closed today for a national holiday.
International Equity Markets
Index DOW JONES S&P500 NASDAQ NIKKEI HANG SENG
INDEX
Price % Change 11,421.99 -0.10% 1,251.70 0.21% 2,261.27 0.14% 12,214.76 0.93% 19,352.90 -0.19%
S&P 500
19,000 18,000 17,000 16,000 15,000
5 days 1.79% 0.76% 0.24% 0.02% -2.91%
INDEX
1 month -2.04% -3.58% -7.80% -6.18% -8.54%
NIKKEI
Y-t-d -13.89% -14.76% -14.74% -20.21% -30.42%
Index DJ STOXX50 DAX FTSE-100 CAC 40 SWISS
INDEX
Price % Change 2,858.68 1.82% 6,234.89 0.91% 5,416.70 1.85% 4,332.66 1.97% 7,215.50 2.04%
INDEX
5 days 3.79% 1.75% 3.36% 3.24% 3.42%
1 month -1.62% -3.28% -0.70% -2.72% -0.28%
DAX
Y-t-d -22.40% -22.71% -16.11% -22.83% -14.96%
DJSTOXX 50
1,600 1,550 1,500 1,450 1,400 1,350 1,300 1,250 1,200 1,150
17/09/2007 10/01/2008 06/05/2008 28/08/200
4,200 4,000 3,800 3,600 3,400 3,200
8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000 4,500
10/01/2008 06/05/2008 28/08/2008
17/09/2007 10/01/2008 06/05/2008 28/08/2008
14,000 13,000 12,000 11,000 17/09/2007
3,000 2,800 2,600 2,400 17/09/2007
10/01/2008
06/05/2008
28/08/200
Macro Agenda - Today
Country Index EC US US US Labour Costs (YoY) 2Q Empire Manufacturing SEP Industrial Production AUG Capacity Utilization AUG 3.5% 3.3% 12:00 1.3 2.8 15:30 -0.3% 0.2% 16:15 79.6% 79.9% 16:15
Corporate Agenda - Today Macro Agenda - Yesterday
Cons Prev. Time Country Company No corporate news Country Index FR FR FR FR EC EC EC EC US US US US US US US US CPI (MoM) AUG CPI (YoY) AUG CPI - EU Harmonised MM AUG Employment (QoQ) 2Q Employment (YoY) 2Q Industrial Prod. w.d.a. YY JUL PPI (MoM) AUG PPI Ex Food & Energy MM AUG PPI (YoY) AUG PPI Ex Food & Energy YY AUG Advance Retail Sales AUG Retail Sales Less Autos AUG UoM Confidence SEP P Business Inventories JUL Cons Prev. Act. 0.1% -0.2% 0.0% 3.3% 3.6% 3.2% 0.1% -0.3% -0.1% 0.3% 0.2% 1.6% 1.2% -1.0% -0.8% -1.7% -0.5% 1.2% -0.9% 0.2% 0.7% 0.2% 10.2% 9.8% 9.6% 3.7% 3.5% 3.6% 0.2% -0.5% -0.3% -0.2% 0.3% -0.7% 64.0 63.0 73.1 0.5% 0.8% 1.1%
CPI - EU Harmonised (YoY) AUG 3.7% 4.0% 3.5%
Industrial Production s.a. MM JUL -0.2% -0.2% -0.3%
US MARKETS
American International Group Inc.
CP USD 12.14 L
American International Group was working on plans late yesterday to raise capital and sell units to forestall credit downgrades that may hobble the company. AIG asked the Federal Reserve for a $40bn bridge loan after rejecting an offer from J.C. Flowers & Co. that would have given the buyout firm an option to acquire the whole company, the New York Times reported.
For important disclosures refer to last page
Bank of America Corp.
CP USD 33.74
CP USD 65.45
Barclays said it abandoned talks to buy Lehman, contending it couldn't obtain guarantees to protect against potential losses at the U.S. securities firm. Bank of America also terminated discussions to buy Lehman, according to a person with knowledge of the matter. Lehman Brothers Holdings said it intends to file for bankruptcy after Barclays and Bank of America abandoned talks to buy the crippled firm.
ASIAN MARKETS
Aeon Co.
CP YEN 1,112 <8267.T / 8267 JT>
Aeon said sales at stores open for at least 12 months fell 3.1% from July 21 to Aug. 20 from the same period a year earlier, dragged down by weak sales of clothes. All Nippon Airways Co.
CP YEN 378 <9202.T / 9202 JT>
All Nippon Airways canceled 47 domestic flights because of a malfunction of its automated check-in system. About 6,500 passengers were affected as of 4 p.m., All Nippon said. Canon Inc.
st
CP YEN 4,270
<7751.T / 7751 JT>
Canon's net income will probably fall 12% to about 430bn yen this year, the 1 decline in 9 years, the Nikkei newspaper reported. Sales of office equipment have slowed in the U.S. and Europe, according to the report. Mitsubishi Heavy Industries Ltd.
CP YEN 447 <7011.T / 7011 JT>
Mitsubishi Heavy Industries said it will raise prices of refrigerated carriers by 5% to 10% from Oct. 1, it said. It will boost the prices to offset higher aluminum and copper prices. Nippon Mining Holdings Inc.
CP YEN 494 <5016.T / 5016 JT>
Nippon Mining said it found reserves of natural gas and crude oil in an onshore Papua New Guinea field. A unit of Nippon Mining and 2 partners including Oil Search discovered deposits of gas and condensate, a type of light-grade crude, in the block named PPL190, Nippon Mining said. Nissan Motor Co.
CP YEN 789 <7201.T / 7201 JT>
Nissan Motor, adjusting to slowing U.S. demand, said the response from Tennessee factory workers to a buyout program is favorable as the deadline to accept the voluntary departure packages arrives. The company on July 30 said it would offer payments of as much as $125,000 to workers at its plants in Smyrna and Decherd, Tennessee, aiming to eliminate 1,200 jobs by 2010. Takeda Pharmaceutical Co.
CP YEN 5,440 <4502.T / 4502 JT>
Takeda Pharmaceutical filed a lawsuit against Taiyo Pharmaceutical Industry for damages related to the recall of the antibiotic drug Pansporin and other drugs, which were made by the company.
EUROPEAN MARKETS
BASF
ESN Rating BUY TP EUR 55.00 / CP EUR 37.81
BASF offered to buy Ciba Holding in a transaction valued at CHF 6.1bn ($5.5bn) to expand in specialty products. BASF will pay CHF 0.50 in cash for each Ciba share, 32% more than the closing price on Sept. 12, BASF said today. Bayer
ESN Rating BUY TP EUR 65.00 / CP EUR 54.45
Bayer offers the company protection against a takeover, Tagesspiegel said, citing CEO Werner Wenning. Further, the acquisition of Schering should yield EUR 800m of synergies per year, up from a previous estimate of EUR 700m, the newspaper said. Cable & Wireless
CP GBP 1.74
Cable & Wireless will accelerate plans to break itself up by announcing a GBP 4.5bn ($8.1bn) demerger as early as this month, the Sunday Telegraph reported. Deutsche Bank
ESN Rating HOLD TP EUR 55.00 / CP EUR 57.90
Deutsche Bank agreed to buy almost 30% of Deutsche Postbank for EUR 2.79bn. Deutsche Bank will pay Deutsche Post EUR 57.25 a share in cash for the holding. Deutsche Bank has an option to buy an additional 18% of Postbank within 3 years for EUR 55 a share. Deutsche Lufthansa
ESN Rating HOLD TP EUR 16.00 / CP EUR 15.14
Deutsche Lufthansa is in early talks with SAS Group about taking over the Scandinavian airline, the Financial Times said. Separately, the company is seeking an alliance with U.K. carriers BMI and Virgin Atlantic Airways, the London-based Times reported.
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EADS
ESN Rating BUY TP EUR 20.00 / CP EUR 15.59
EADS may forego participation in a new tender to replace the U.S. Air Force's tanker fleet because it is concerned about the fairness of the competition, Spiegel magazine reported. Separately, the Airbus SAS unit faces further production delays for its A380 aircraft, Le Journal du Dimanche said, citing an unidentified person close to the project. EDP Renovaveis
ESN Rating BUY TP EUR 9.10 / CP EUR 6.35
EDP Renovaveis plans to announce details of a EUR 140m wind farm in Poland by early 2009. The new plant will generate 120MW of energy and is part of EDP's plan to reach 1,022MW of energy from wind in Poland through 2013, EDP Renovaveis CEO Ana Fernandes said. EDP expects its total investment in Poland to reach more than EUR 1bn and is seeking projects in neighboring countries, including the Baltic states, Fernandes said. The European Union countries need more energy from renewable sources to cut emission of carbon dioxide, blamed for global warming. Fortis
ESN Rating BUY TP EUR 19.00 / CP EUR 9.11
Fortis closed 3 hedge funds at its Fortis Investments unit because of underperformance, Het Financieele Dagblad reported. HBOS
ESN Rating REDUCE TP GBP 2.50 / CP GBP 2.82
HBOS is poised to sell a share of its stake in U.K. trash company Biffa to Pi Capital, the Sunday Telegraph said. J Sainsbury
ESN Rating ACCUMULATE TP GBP 5.70 / CP GBP 3.65
J Sainsbury Chief Executive Justin King said consumer sentiment is worse then it has ever been, the Financial Times reported. Nestle
CP CHF 50.65
Nestle and its Israeli unit, Osem Investments, completed the purchase of 51% of Israeli baby-formula maker Materna Laboratories for 249m shekels ($69m). TUI
ESN Rating REDUCE TP EUR 14.00 / CP EUR 12.40
TUI may merge its TUIfly airline unit with Air Berlin as talks over an alternative alliance stall, Spiegel magazine reported, citing the heads of the two companies. UBS UBS may have to write down a further $5bn in assets in H2, SonntagsZeitung reported.
CP CHF 23.52
Marfin Analysis Department research@ibg.gr +30 210 8173 383
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Recommendation system
From the 18 October 2004, the Members of ESN use a New Recommendation System. The new ESN Recommendation System is Absolute. It means that each stock is rated on the basis of a total return, measured by the upside potential (including dividends) over a 6 months time horizon. The ESN spectrum of recommendations (or ratings) for each stock comprises 5 categories: Buy, Accumulate (or Add), Hold, Reduce and Sell (in short: B, A, H, R, S).
th
Meaning of each rating or recommendation:
• • • • • Buy: the stock is expected to generate a total return of over 15% during the next 6 months time horizon. Accumulate: the stock is expected to generate a total return of 5% to15% during the next 6 months time horizon. Hold: the stock is expected to generate a total return of 0% to 5% during the next 6 months time horizon Reduce: the stock is expected to generate a total return of 0 to -15% during the next 6 months time horizon Sell: the stock is expected to generate a total return below -15% during the next 6 months time horizon
Disclaimer:
These reports have been prepared and issued by the Members of European Securities Network LLP (‘ESN’). ESN, its Members and their affiliates (and any director, officer or employee thereof), are neither liable for the proper and complete transmission of these reports nor for any delay in their receipt. Any unauthorised use, disclosure, copying, distribution, or taking of any action in reliance on these reports is strictly prohibited. The views and expressions in the reports are expressions of opinion and are given in good faith, but are subject to change without notice. These reports may not be reproduced in whole or in part or passed to third parties without permission. The reports have been prepared and issued by the Members of ESN. The information herein was obtained from various sources. ESN, its Members and their affiliates (and any director, officer or employee thereof) do not guarantee their accuracy or completeness, and neither ESN, nor its Members, nor its Members’ affiliates (nor any director, officer or employee thereof) shall be liable in respect of any errors or omissions or for any losses or consequential losses arising from such errors or omissions. Neither the information contained in these reports nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities (‘related investments’). ESN, its Members and their affiliates (and any director, officer or employee thereof) may trade for their own accounts as odd-lot dealer, market maker, block positioner, specialist and/or arbitrageur in any securities of the issuer or in related investments, and may be on the opposite side of public orders. ESN, its Members, and their affiliates (and any director, officer or employee thereof) may have a long or short position in any securities of the issuer or in related investments. ESN or its Members or its affiliates (and any director, officer or employee thereof) may from time to time perform investment banking or other services for, or solicit investment banking or other business from, any entity mentioned in these reports. These reports are prepared for the clients of the Members of ESN only. They do not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive any of these reports. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in these reports and should understand that statements regarding future prospects may not be realised. Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in these reports. In addition, investors in securities such as ADRs, whose value are influenced by the currency of the underlying security, effectively assume currency risk. Unless agreed in writing with an ESN member, this research is intended solely for internal use by the recipient.
Disclosure Appendix
MARFIN ANALYSIS – INVESTMENT BANK OF GREECE, 32 Aegialias str., 151 25, Maroussi, Greece, Tel: +30-210-81.73.000, Fax: +30210-68.96.322, E-mail: Research@ibg.gr The information and opinions in this report were prepared by Investment Bank of Greece. Investment Bank of Greece is regulated by the Hellenic Capital Market Commission. Investment Bank of Greece has not entered any agreement with the subject companies for the execution of this analysis. This report is for informative purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy, any security. While the information contained herein has been obtained from sources believed to be reliable, we do not represent that it is accurate or complete and it should not be relied upon as such. In producing its research reports, members of Investment Bank of Greece research departments may have received assistance from the subject company(ies) referred to in this report. Any such assistance may have included access to sites of the issuers, visits to certain operations of the subject company(ies), meetings with management, employees or other parties associated with the subject company(ies) and the handing by them of historical data regarding the subject company(ies) (financial statements and other financial data), as well as of all publicly available information regarding strategy and financial targets. Investment Bank of Greece research personnel is prohibited from accepting payment or reimbursement of travel expenses from site visits to subject companies. It should be presumed that the author(s) of this report, in most cases, has had discussions with the subject company(ies) to ensure factual accuracy prior to publication. All opinions, projections and estimates constitute the judgment of the author as of the date of the report and are given in good faith, but are subject to change without notice. Prices and availability of financial instruments also are subject to change without notice. Investment Bank of Greece or one of their affiliates or persons connected with them may from time to time buy and sell securities referred herein. Although Investment Bank of Greece does not set a predetermined frequency for publication, if this is a fundamental research report, it is the intention of Investment Bank of Greece to provide research coverage of the subject company(ies), including in response to news affecting this issuer, subject to applicable quiet periods and capacity constraints. Investment Bank of Greece may from time to time perform investment banking or other services for, or solicit investment banking or other business from, any company mentioned in this report. Investment Bank of Greece does and seeks to do business with companies covered in their
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research reports. Thus, investors should be aware that the firms may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Securities referred to in this research report are subject to investment risks, including the possible loss of the principal amount invested. This report is intended for professional investors only and it is not to be reproduced or copied or reprinted or transmitted for any purpose without permission. We certify that this report has been published in accordance with our conflict management policy and guidelines. According to Investment Bank of Greece, the Analysis Departments of Investment Bank of Greece is bound by confidentiality, with the exception of data allowed to be published in accordance with the applicable laws. Investment Bank of Greece relies on information barriers to control the flow of information in one or more areas within Investment Bank of Greece organisation. The communication between the Analysis Department of Investment Bank of Greece and the other departments of the aforementioned company are restricted by Chinese Walls set between the different departments, so that Investment Bank of Greece can abide by the provisions regarding confidential information and market abuse. Investment Bank of Greece may have provided companies mentioned in this report with financial advice in the last 12 months by virtue of an investment banking agreement. Investment Bank of Greece or any of their affiliates may execute additional investment banking agreements with companies mentioned in this report in the near future. Report © INVESTMENT BANK OF GREECE, 2008. All rights reserved.
Analysts Certification
For each company mentioned in this compilation report, the respective analyst who covers the company certifies that all of the views expressed in this report accurately reflect the analyst’s personal views about any and all of the subject issuer(s) or securities. The analysts also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in this report.
Important Regulatory Disclosures on Subject Company
The information and opinions in this report were prepared by INVESTMENT BANK of GREECE, which is member of the Athens Exchange S.A. and regulated by the Hellenic Capital Market Commission. The compensation of the research analysts, strategists, or research associates principally responsible for the preparation of this research report may depend on various factors such as quality of work, stock picking, client feedback and overall firm profitability.
Stock Ratings
You should carefully read the definitions of all ratings used in the research report. Moreover, you should carefully read the entire research report to obtain a clear view of the analyst’s opinions and not infer its contents from the rating alone.
Marfin Analysis Research Rating Distribution
Data current as of 29/08/2008
Buy Marfin Analysis Total Coverage % of companies in each rating category that are investment banking clients Note that 1 company is currently under review or not rated 51% 6% Accumulate 15% 0% Hold 26% 2% Reduce 0% 0% Sell 6% 0%
Regulatory Disclosures on Subject Companies
1. As of the date mentioned on the first page of this report, Investment Bank of Greece (or any of its affiliated companies) owns 5% or more of a class of common equity securities in the following companies mentioned in this report: Vivartia, Attica Group, Blue Star Ferries, Hygeia, LogicDIS 2. As of the date mentioned on the first page of this report, the following subject companies mentioned in this report own 5% or more of a class of common equity securities of Investment Bank of Greece (or any of its affiliated companies): Marfin Popular Bank 3. Investment Bank of Greece acts as a market maker for the following securities of the subject companies mentioned in this report: Alpha Bank, Bank of Cyprus, CCHBC, CosmOTE, EFG Eurobank, Emporiki Bank, GEK, Hellenic Exchanges, Hellenic Technodomiki, Intralot, Mytilineos, National Bank, OPAP, OTE, Piraeus Bank, PPC 4. Within the last 12 months, Investment Bank of Greece has provided underwriting services to the following companies mention in this report: GPSB 5. Within the last 12 months, Investment Bank of Greece had a contractual relationship or have received compensation for financial advisory services from the following subject companies mentioned in this report: Vivartia, GEK/Terna, GPSB, Motor Oil, Euroline, Interinvest, Vivere, Hygeia
Additional Disclosures
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