Anchor Capital: Essential market review, 10 April

At 06:00 SAST today, gold prices advanced 0.1% to trade at $1,195.73/oz. Yesterday, gold declined 0.6% to close at $1,194.81/oz, amid strength in the US dollar.

Yesterday, copper declined 0.2% to close at $6,015.00/mt. Aluminium closed 0.3% lower at $1,765.00/mt.

At 06:00 SAST, the US dollar is trading 0.1% lower against the South African rand at R11.9279, while the euro is trading 0.1% higher at R12.7385.

Yesterday, the euro weakened against most of the major currencies, despite the release of upbeat data from the eurozone's largest economy. Data showed that German industrial production rose in February, in line with market expectations. Additionally, the trade surplus in Germany was slightly better than anticipated for February. Traders today will eye the Spanish and France industrial output and Swiss unemployment rate data.

At 06:00 SAST, the euro advanced 0.2% against the US dollar to trade at $1.06793, while it has gained 0.2% against the British pound to trade at GBP0.7257.

The South African Reserve Bank has indicated that, in March, the net gold & forex reserves in South Africa fell to a level of $41.28 bn, lower than market expectations of a fall to $41.66 bn. The net gold & forex reserves had recorded a reading of $41.92 bn in the prior month.

The total trade deficit in the UK expanded to GBP2.86bn in February, following a total trade deficit of GBP0.62bn in the previous month. Markets were anticipating the nation to post a total trade deficit of GBP1.50bn.

In the UK, the Halifax house price index registered a rise of 8.1% in three months ended March on an annual basis, compared with an advance of 8.3% in three month ended February. Market expectations were for the Halifax house price index to advance 8.2%.

In February, the seasonally adjusted trade surplus in Germany widened to EUR19.20bn, compared with market expectations of a trade surplus of EUR19.00bn. Germany had reported a trade surplus of EUR15.90bn in the previous month.

In February, on a monthly basis, the seasonally adjusted industrial production in Germany climbed 0.2%, compared with a revised fall of 0.4% in the prior month. Market anticipations were for industrial production to rise 0.1%.

Compared with a revised level of 267.00k in the prior week the seasonally adjusted initial jobless claims recorded a rise to 281.00k in the week ended 4 April 2015, in the US. Markets were anticipating initial jobless claims to rise to a level of 283.00k.

The building permits recorded an unexpected drop of 0.9% on a monthly basis in Canada, in February. In the previous month, building permits had fallen by a revised 12.3%.

In Japan, the flash machine tool orders registered a rise of 14.6% on an annual basis, in March. In the previous month, machine tool orders had registered a rise of 28.9%.

In March, the consumer price index (CPI) recorded a rise of 1.4% in China, on an annual basis, higher than market expectations for an advance of 1.2%. The CPI had registered a similar rise in the prior month.

Standard Bank introduces biometric mobile banking: Standard Bank has introduced a biometric mobile banking solution that allows iPhone and an iPad user to use their device's fingerprint scanner to sign into the financial service company's mobile banking application.

Cell C to build 4G wireless network: Cell C said on Thursday it will spend R8bn over the next three years to build a superfast long term evolution (LTE) or 4G wireless network.

Stellar makes its mark with Cadiz deal: Stellar Capital Partners, a small investment firm with retail tycoon Christo Wiese as an anchor shareholder, is looking to make its mark in the sprawling South African fund management industry.

SAA's CEO suspension linked to bug allegation: South African Airways suspended its Chief Executive officer over allegations including that he used company equipment to record colleagues in his fight against a sexual harassment claim and that he had an affair with a colleague, a document seen by Bloomberg shows.

Third SA company wins major St Helena contract: South African Mantis hospitality group has been awarded the contract to develop and manage a 32-room four-star hotel on the remote island of St Helena, a British overseas territory situated in the South Atlantic Ocean.

Botswana-De Beers diamond firm to cap output: Debswana Diamond Company, a joint venture between Botswana and diamond giant De Beers, will trim output as it waits for demand for the precious stone to recover, an Executive said on Thursday.

UK and US
Citrix Systems: The software company, in its preliminary results for 1Q15, indicated that revenue is expected to be in the range of $755.00mn to $760.00mn, below the company's guidance of $780.00mn to $790.00mn. It stated that net diluted EPS is expected to be in the range of $0.15 to $0.17, compared with diluted EPS guidance of $0.20 to $0.22.

Medicines Co.: The pharmaceutical company, in its preliminary 1Q15 results, stated that it expects worldwide net revenue in the range of $125.00mn to $130.00mn, which reflects a 29.5% to 26.6% decrease from the $177.20mn in worldwide net revenue reported for 1Q14. It added that the decrease in worldwide net revenue is a result of lower worldwide net revenue from sales of Angiomax® (bivalirudin)/Angiox® (bivalirudin), which the company expects to be in the range of $97.00mn to $105.00mn, compared with $155.70mn in 1Q14.

AngioDynamics Inc.: The healthcare company, in its 3Q15 results, indicated that revenue was $88.60mn, compared with market expectations of $89.80mn. It stated that EPS stood at $0.12, worse than market expectations of $0.16. The company revealed that it currently expects revenue for FY15 to be in the range of $356.00mn to $360.00mn, compared with previous guidance of $362.00mn to $368.00mn.

Extreme Networks: The networking company, in its preliminary results for 3Q15, revealed that it expects non-GAAP revenue to be between $118.00mn and $120.00mn, compared with the guidance of $130.00mn to $140.00mn. It anticipates reporting non-GAAP net diluted loss in the range of $0.09/share to $0.07/share.

General Electric Co.: Media reports revealed that the company could unload its real estate portfolio, which holds about $30.00bn worth of office buildings, apartment complexes, and other commercial properties. The company is said to be in discussions with Blackstone and Wells Fargo on various parts of the portfolio.

Intel Corporation: Media reports revealed that the semiconductor manufacturing company has ended talks to acquire Altera.

Novogen Limited: The drug discovery company announced that studies conducted at the University of Queensland Diamantina Institute revealed that the experimental drug, Anisina, killed melanoma cells irrespective of their mutational status.

Victrex Plc: The high performance polymer solutions company, in its 1H15 trading update, revealed that group revenue was 8.7% ahead from the same period a year ago to GBP130.30mn and sales volume was 2,028.00t, compared with 1,584.00t recorded in the corresponding period of previous year. The company stated that the adverse currency impact seen during the 1H15 would continue in the 2H15, but it expects to fully overcome the currency impact for FY15.

PZ Cussons: The personal healthcare products and consumer goods manufacturing company, in its trading update for the period 28 January 2015 to 8 April 2015, indicated that overall performance was in line with expectations. It stated that trading in its largest market Nigeria has resumed as normal following a short period of lost trading days during the presidential election process.

Cranswick Plc: The foods and pet products producing company, in its trading update for 4Q15, indicated that total sales were 4.0% higher from the same period a year ago. Its underlying volumes were 4.0% ahead from the corresponding quarter a year ago. It stated that the board expects to report a trading performance for FY15 in line with its expectations.

Shire Plc: The biopharmaceutical company announced that the 13-week Phase 2 IMAGO trial of its investigational compound SHP625 (LUM001) did not meet the primary or secondary endpoints in the study of 20 pediatric patients with Alagille syndrome, a rare, life-threatening genetic disorder that presents with chronic cholestasis (accumulation of bile acids in the liver) and severe pruritus (itching).

Spirax-Sarco Engineering: The steam management systems and peristaltic pumps manufacturing company announced that it has acquired the entire issued share capital of Asepco for GBP7.00mn and it would operate as part of its Watson-Marlow Fluid Technology Group. It stated that the acquisition is expected to provide a small benefit to its EPS from FY15.

Catlin Group: The company along with XL Group announced that they have agreed to the terms of a recommended cash and share acquisition of the entire issued and to be issued share capital of the former by the latter. XL Group stated that it anticipates funding the acquisition through cash on hand and the issuance of subordinated notes.

ST Modwen Properties: The property investment and development business company stated that all of the contracts for the New Covent Garden Market development in Nine Elms in London have gone unconditional. It further indicated that the main construction work on the project is due to start this summer.

Financial Times

UK Mail gains business and higher costs from City Link failure: The collapse of courier company City Link boosted parcel volumes at UK Mail, the British postal business, but created a rise in operating costs that will hit profits this year.

Atom Bank keeps faith with wearable technology: The Chief Executive of Atom Bank is looking to wearable technology for the future of banking in spite of concerns about customers resistance.
Co-op Group emerges from 'rescue' phase: Britain's newly slimmed-down Co-operative Group has returned to profit as it looks to draw a line under the most turbulent periods in its 170-year history, which nearly saw the collapse of its banking arm.

Shell takeover of BG sparks North Sea jobs fears: Royal Dutch Shell's takeover of smaller UK rival BG Group is fuelling anxieties about industry job losses in Aberdeen, centre of the North Sea oil sector, because both companies have substantial operations there.

French magistrates open formal criminal probe into HSBC: HSBC Holdings has been placed under criminal investigation by French authorities and made to post €1bn bail over allegations that its Swiss private banking arm helped clients avoid taxes.

Hastings Chief says motor insurance price war is at an end: Hastings' Chief says the motor insurance industry's long-running price war is at an end as the Goldman Sachs-backed business prepares for a possible GBP1.00bn float.

Gulf Keystone Petroleum losses widen to $248.00mn: Net losses at Gulf Keystone Petroleum, the troubled oil explorer focused on the Kurdistan region of Iraq, have widened to $248.20mn in FY14 from $32.00mn following a challenging year.

Ukraine opens gas sector to investors with anti-monopoly law: Ukraine's parliament approved a law on Thursday intended to break monopolies and lure badly needed investment into the country's lucrative but opaque natural gas sector.

Caixa flirts with sale of Repsol stake in signal of readiness to streamline assets: Spain's powerful Caixa group has given the clearest signal yet that it is ready to streamline its industrial assets — a move that could include a sale of its 12.0% stake in Repsol and a stock market listing for the bulk of its other shareholdings.

Deutsche Bank faces Libor fine of more than $1.50bn: Deutsche Bank could face a more than $1.50bn penalty for allegedly manipulating Libor, which would be the biggest fine imposed so far on a bank accused of rigging the benchmark borrowing rate, according to people familiar with the case.
Nomura and RBS accused of 'deceit' in mortgage securities trial: Nomura and Royal Bank of Scotland were accused of "incompetence" and "deceit" in packaging toxic mortgages into securities, at the culmination of four-year-old US government litigation that has already extracted more than $20.00bn from other banks.

Noble Group comes out swinging after fresh attack: Noble Group has come out fighting against an attack by Muddy Waters, calling the US-based short seller's report questioning the commodity trader's financial strength and governance "inaccurate, unreliable and misleading".

3D printing pioneer Carbon3D secures Autodesk investment: A 3D printing technique that could be up to 100 times faster than current technologies has received backing from Autodesk, the US-listed software company, in a move that will help speed up its commercialisation.

Google prepares YouTube subscription plan: Google is preparing to launch a YouTube subscription service that will allow users to skip advertisements when watching online videos.

Uniqlo to boost prices as Japan battles deflation: Once the face of deflation, Uniqlo, the low-cost clothing retailer, has now positioned itself at the forefront of Japan's battle to contain a slide in prices.

LinkedIn buys Lynda.com for about $1.50bn: LinkedIn is to acquire the online learning business Lynda.com for about $1.50bn, as the social network expands offerings for its audience of professional users.

Berkeley Group: Climbed 1.8% to GBP27.10, after it was introduced into the European Quality Income index.

Aggreko: Edged down 3.3% at GBP15.43 on concerns over its exposure to tensions in Yemen.

Smurfit Kappa: paper money: The ascent has pushed the valuation of the shares, at 15 times this year's earnings, past pre-crisis highs (paper is a commoditised industry; it does not, and should not, attract high valuations). The US industry has consolidated, with the RockTenn/MeadWestvaco deal announced in January. Transatlantic consolidation could make sense for an industry that has struggled with overcapacity. And a quarter of Smurfit's sales are in the Americas. There are a number of problems with the buyout scenario. First, Smurfit Kappa outperformed its European peers — which would, in theory, be targets too. Returns at Finland's UPM and Stora Enso, for example, trail the Irish company by 20 percentage points or more this year. That may be down to the simple fact that Smurfit Kappa looks like a better target: the Finns have similar valuations, but lower top-line growth and returns on capital. The company's efforts to cut costs over the past few years have borne fruit. Then there is the question of the natural buyer. The new RockTenn-Mead will be busy, presumably, leaving International Paper and privately held Georgia Pacific as the US players with the heft to pay for a company with EUR9.00bn enterprise value.

China financials: champagne days: As Hong Kong's China Enterprise (HSCEI) and Hang Seng indices have jumped one-10th this month on a wave of mainland buying, many have suggested that the definition fits. Since Tuesday, Hong Kong Exchanges and Clearing (now the world's largest listed stock exchange) has risen by a quarter. This makes sense, in part: two-thirds of the company's revenues come from trading volume-related fees. Goldman Sachs estimates a 5.0% rise in cash equity turnover adds over 3.0% to earnings per share. The past two days' trading alone have lifted year to date average trading value by 6.0%. The stock is not cheap, priced at 35 times estimated FY16 earnings. The estimates may prove to be low. But at a multiple almost double the sector average, for similar earnings growth, rising estimates appear priced in. For foreign investors sceptical of paying up for Chinese brokers, banks may appeal. Banks make up a third of the H-share index, and shares in the top four including ICBC and Bank of China trade at about 5 times next year's earnings. All but Agricultural Bank of China are down year to date. With reason, perhaps. Non-performing loans are rising; a slowing economy is worrisome. But when a huge chunk of an index is bombed out, it hardly looks like a bubble.