Anchor Capital: Essential market review, 9 March

On Friday, the Illinois North Central No.2 Yellow corn spot prices fell 1.2% to $3.58/bushel.

At 06:00 SAST today, gold prices advanced 3.0% to trade at $1,202.31/oz, rebounding from Friday’s losses. On Friday, gold declined 2.6% to close at $1,167.29/oz, as the US dollar strengthened against major currencies following upbeat US jobs data.

On Friday, copper declined 1.6% to close at $5,765.50/mt. Aluminium closed 1.0% lower at $1,769.25/mt.

The yield on benchmark government bonds rose on Friday. The yield on 2015 bond advanced to 6.17% while that for the longer-dated 2026 issue rose to 7.96%.

At 06:00 SAST, the US dollar is trading almost unchanged against the South African rand at R12.0307, while the euro is trading 0.1% lower at R13.0415. At 06:00 SAST, the British pound has advanced marginally against the South African rand to trade at R18.1186.

On Friday, the euro declined against most of major currencies, but was marginally higher against the South African rand. Meanwhile, data showed German industrial production rose more than market expectations in January. Eurozone officials will meet today to discuss about the reform measures sent by Greece. Investors will also keep a tab on trade balance data from Germany, scheduled today.

At 06:00 SAST, the euro dropped 0.1% against the US dollar to trade at $1.0841, while it has weakened 0.1% against the British pound to trade at GBP0.7198.

The South Africa Reserve Bank has reported that gross gold & forex reserve recorded a drop to $47.19bn in February, in South Africa, compared with a level of $47.61bn in the previous month. Markets were expecting gross gold & forex reserve to fall to $47.42bn.

The Bank of England, in its latest survey, reported that the consumer inflation expectations for the next 12 months eased to 1.9%, in the UK. In the previous survey, consumer inflation expectations for the next 12 months had recorded a level of 2.5%.

On a seasonally adjusted monthly basis, industrial production advanced 0.6% in January, in Germany, more than market expectations for a rise of 0.5%. In the prior month, industrial production had climbed by a revised 1.0%.

In 4Q14, on a seasonally adjusted quarterly basis, the final gross domestic product (GDP) in the eurozone climbed 0.3%, compared to an advance of 0.2% in the prior quarter. The preliminary figures had also indicated a rise of 0.3%. Market anticipations were for GDP to advance 0.3%.

Nonfarm payrolls climbed by 295.00k in the US, in February, higher than market expectations of an advance of 235.00k. Nonfarm payrolls had recorded a revised gain of 239.00k in the prior month.

In February, the unemployment rate in the US eased to 5.5%, compared with market expectations of a drop to 5.6%. In the prior month, unemployment rate had recorded a level of 5.7%.

The trade deficit in the US dropped to $41.80bn in January, from a revised trade deficit of $45.60bn in the previous month. Market anticipations were for the country’s trade deficit to fall to $41.20bn.

In 4Q14, the final GDP in Japan, climbed 0.4% on a quarterly basis, lower than market expectations for a rise of 0.5%. The preliminary figures had indicated a rise of 0.6%. In the previous quarter, GDP had fallen by a revised 0.6%.

The trade surplus in China widened to $60.62bn in February, from a trade surplus of $60.03bn in the prior month. Markets were anticipating the nation to post a trade surplus of $7.40bn.

Ascendis Health Limited: The pharmaceutical company, in its trading statement for six months ended31 December 2014, stated that normalised headline EPS is anticipated to be 27.0% to 32.0% higher, compared with 33.40c reported in the corresponding period previous year. It further indicated that its basic EPS is expected to be between 34.70c and 36.20c, an increase of 19.0% to 24.0% from the same period a year ago. Its headline EPS is expected to be 19.0% to 24.0% higher, compared with 29.20c recorded in the same period of last year.

Firstrand Limited: The banking company announced the retirement of SizweNxasana as Chief Executive Officer, effective 30 September 2015. Furthermore, the company indicated that Johan Burger, currently Group Deputy CEO would be appointed as Group CEO and Alan Pullinger would be appointed as Group Deputy CEO.

UK and US

Staples Inc.: The office supply chain store, in its FY15results, indicated that sales dropped 2.7% to $23.11bn from the last year. Its diluted EPS from continuing operations stood at $0.21, compared with $1.07 posted in the previous year. For 1Q16, the company anticipates sales to be lower compared with 1Q15 and expects to achieve fully diluted non-GAAP EPS in the range of $0.16 to $0.18 for the same period.

Chimerix Inc.: The biopharmaceutical company, in its FY14 results, stated that its total revenue fell 7.6% to $4.04mn from the preceding year. It reported a net basic and diluted loss of $1.80/share, compared with a loss of $3.65/share recorded a year ago. The company revealed that its phase 3 SUPPRESS enrollment, a trial of brincidofovir for the prevention of cytomegalovirus in hematopoietic cell transplant recipients, is expected to be completed in summer 2015 and data are anticipated in early 2016.

Beasley Broadcast Group: The radio broadcasting company, in its FY14 results, revealed that net revenue was up 4.6% to $58.71mn, compared with the previous year. Its diluted EPS from continuing operations was $0.04, compared with $0.01 reported in the preceding year. The company stated that going forward, it is focused on ensuring that its station clusters match or exceed its market’s revenue performance while further strengthening its balance sheet.

Apple Inc.: Dow Jones announced that the technology company would replace AT&T on the Dow Jones Industrial Average at the opening bell 19 March 2015.

Tesla Motors: The electric car making company stated that it believes it can deliver 50.0% more Model S cars in 2015 than it did in 2014. Additionally, some media reports revealed that the company is planning to cut around 30.0% of its workforce in China.

Alcoa Inc.: The aluminium producer indicated that it would look to offload up to 14.0% of its smelting capacity, as it continues to battle lower prices and an oversupplied global market.

BP Plc: The petroleum company announced that it has signed the final agreements of the West Nile Delta project to develop 5.00tn cubic feet of gas resources and 55.00mn bls of condensates with an estimated investment of around $12.00bn by the company and its partner.

Vodafone Group: The telecommunication company announced that that it would become one of the first organisations in the world to introduce a mandatory minimum global maternity policy, even if the country they work in does not insist on it.

AstraZeneca: The biopharmaceutical company announced a change in the presentation of its statement of comprehensive income, which will see revenue from externalisation becoming more visible to enhance transparency for investors, effective from 1 January 2015.

Financial Times

Whitewood seeks GBP125.00mn IPO as property investors turn their eyes to Benelux: A new investment trust is to seek to raise GBP125.00mn in an initial public offering to lend on commercial mortgages in the Netherlands, Belgium and Luxembourg in the latest sign that property investors’ attention is turning to the Benelux region.

Greystar buys Round Hill’s Nido housing portfolio for GBP600.00mn: Round Hill Capital has sold the Nido portfolio – consisting of three blocks in Notting Hill, King’s Cross and Spitalfields – to Greystar Real Estate Partners for GBP600.00mn, according to sources familiar with the deal.

Big four auditors extend reach into consultancy: The consulting arms of the big four professional services firms are growing faster than traditional management consultants, according to research, illustrating the power wielded by PwC, KPMG, Deloitte and EY that extends far beyond their roots in audit.

Antitrust Chief sends tough message to EU telecoms: Europe’s new antitrust Chief has warned that telecoms mergers must not endanger “affordable prices” for consumers, in a shot across the bows of dealmaking Executives that suggests takeovers will face tougher EU scrutiny.

US news group Moguldom seeks GBP50.00mn float: Moguldom, which targets Afro-American and Hispanic audiences in the US, is seeking to raise GBP8.00mn – equivalent to GBP20.00 for each follower that its sites have on Twitter. A person familiar with its upcoming AIM float said its intended market capitalisation was nearly GBP50.00mn, or more than 50 times its last reported pre-tax profits.

Jean-Claude Juncker calls for creation of EU army: The president of the European Commission has called for the creation of an EU army in order to show Russia “that we are serious about defending European values”.

UK poised to miss target for women board members: The UK government’s target for women to hold a quarter of FTSE 100 board directorships looks impossible to hit before May’s election, despite new evidence that boards with greater gender diversity are better at avoiding scandal.

Rio Tinto to cut hundreds of jobs: Rio Tinto is bracing itself for a further lurch down in commodity markets by embarking on one of its biggest internal restructurings since Sam Walsh took the helm at the mining group two years ago.

Return to profit sparks Clydesdale move for AIB Chief David Duffy: The outgoing Chief Executive of Allied Irish Banks recalls being on a business trip to London from his base in Singapore in late FY11 when, in the course of a day, two friends suggested he might be the man to run Ireland’s ailing banking group, which had been hit by the country’s financial and property market crisis.

Highway Agency braced for shake-up: Britain’s Highways Agency is braced for the biggest shake-up in its 20-year history next month when it is turned into an autonomous state-owned company at the same time as it embarks on a GBP15.00bn roadbuilding programme.

China and Russia set to finalise gas deal: China and Russia will seal an agreement later this year on piped gas from Western Siberia, China’s foreign minister said on Sunday a deal that will continue Russia’s economic shift towards Asia and away from Western Europe.

Novartis leads way for big pharma cost-cuts: Novartis is showing the way for big pharmaceutical groups to become more productive, according to its Chief Executive, as the Swiss group pushes through a sweeping reorganisation aimed at boosting growth and saving billions of dollars in costs.

Just Retirement: Dropped 8.4% to 160.20p after majority shareholder Avallux sold 50m shares in the annuities specialist at 162.00p apiece.

Vodafone: Closed 2.8% lower at 219.90p, amid speculation of a dividend cut.

Subprime lending: Long Branch: Lending is a rather important bit of the banking business. Perhaps a shame, then, that banks seem less interested in lending than they used to be – at least to riskier borrowers. Earlier this week Citigroup sold its consumer lending business, OneMain Financial, to rival Springleaf Financial for $4.25bn. Springleaf believes that the key to good underwriting is a branch network. The company operates in 2,000 US locations. Peer-to-peer platforms such as Lending Club are strictly online (and mostly for prime borrowers) but Springleaf believes there is a value in having boots on the ground. While US households have deleveraged overall since the financial crisis by cutting mortgage debt, total consumer debt (auto, student, credit card etc) has inched up to $3.00tn. Springleaf, which has mostly withdrawn from mortgages, prospers in an era where its funding costs are around 4.0%. The question is what happens when funding costs rise or if the economy slows and customers struggle to service their loans. But as Springleaf is not a bank with depositors, its bondholders and shareholders, not taxpayers, will take the hit.

Thomas Cook: sunny days: The deal that Thomas Cook has signed with Fosun, a Chinese conglomerate, has several strands: a new investment company to own Thomas Cook-operated hotels; closer ties with Fosun-owned Club Med; an investment by Fosun in the UK company’s equity; and the chance for Thomas Cook to expand in China. That last point is the most intriguing. Chinese outbound tourism is growing by 15.0% a year. The European market is not nearly so nice. And Thomas Cook could do with some sunshine. It has recovered from what might politely be described as a rocky patch between FY11 and FY13 (the shares, which bottomed at 10.00p in FY11, have risen to 145.00p) but top-line growth is forecast to be in the low single-digits for the next few years. Thomas Cook shares jumped a fifth on Friday, suggesting something more exciting than the vague hope of more Chinese customers. Fosun has bought 5.0% of Thomas Cook and will buy another 5.0%. It says 10.0% is all it wants. But Fosun has a taste for acquisitions, as its long fight for Club Med showed. Even after the share-price rise, Thomas Cook is trading at an 18 % discount to the valuation that Fosun paid for Club Med.