free em uk november 26 2010

8/8/2019 Free Em Uk November 26 2010

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26 November 2010

The Intelligent InvestorU.K.

The Economic Monitor Series. Free Edition.

Britain's leading shares were down, reversing recent gains, withbanks knocked by ongoing concerns over Europe's debt crisis, andcommodity issues hit by weak metals and crude prices. The FTSE100 was 30.23 points lower, or down 0.53 percent at 5,668.70,erasing most of a 117 point rally made in the past two sessions.

British government bonds rose and slightly outperformed Bundsas growing concerns around peripheral euro zone debt knockedstock markets and boosted the appeal of UK debt. The yield on 10

-year gilts fell over four basis points to 3.32 percent while thespread against Bunds tightened to 63 basis points.

Sterling fell nearly 1 percent against the dollar to $1.5612, itsweakest since late September, before a small recovery to $1.5626.

U.S. oil prices fell towards $83 per barrel, as Europe's debt crisispushed the euro to a two-month low against the dollar and asinvestors worried about tensions in Korea. ICE Brent futures forJanuary were down 50 cents at $85.60 per barrel.

Gold fell 1 percent to a session low of $1,359.65 an ounce as thedollar extended gains against the euro amid nervousness overEurope's debt crisis, with speculation of an imminent Portugalbailout.

MARKETS AT A GLANCE

STOCK INDICES

CURRENCIES

FUTURES

INDEX LAST CHNG % CHNG

FTSE 100* 5668.70 -30.23 -0.53

FTSE Tech Mark 100* 1925.22 16.11 0.84

FTSE Eurofirst 300* 1087.02 -5.78 -0.53

DAX* 6848.98 -30.68 -0.45

CAC 40* 3728.65 -31.77 -0.84

Stoxx Europe 600 266.55 -1.17 -0.44

* CLOSING VALUES

INDEX LAST PRIOR

Euro (EUR/USD) 1.323 1.3355

U.K. Pound (GBP/USD) 1.5599 1.5763

Japanese Yen (USD/JPY) 84.1 83.61

All prices are at 11.45 AM EST

LAST CHANGE

Crude Oil 83.37 -0.49

Natural Gas (Jan) 4.399 0.011

Gold, (Feb) 1357.1 -17.9

Copper (Mar) 374.65 -2

All prices are at 11:34 AM EST

INSIDE THE REPORT

Stock recommendations and price targets from topbrokerage firms

Analysis and views on MPC's Posen criticises Kingas too political

Economic Indicator Watch along with Graphs

List of companies earnings which hit and miss theanalysts expectations

Important Events Scheduled on November 29

Economic Events & Indicators

BoE Consumer Credit (October)

Money Supply M4 (Oct)

Mortgage Approvals (Oct)

Mortgage Lending (Oct)

Corporate Events

Acal, Invista Foundation Property Trust, Iomart

Group, Phoenix IT Group interim results

Phytopharm final results

Breaking News

Afren plans to raise funds

Rio Tinto defines its spending plans

Balfour to wipe out pension deficit

Ofgem to investigate in U.K. utilities

Bowleven plans fund raising

BMG buys Chrysalis

StanChart leaves British banking pact

Quintain Estates NAV falls in H1


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The Intelligent Investor - U.K.

Disclaimer: The views and investment tips expressed by investment experts are their own, and not that of IBTimes or its management. We advise users to check with certified experts beforetaking any investment decisions.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING LAST CLOSING

Goldman Sachs

Balfour Beatty Upgrades to buy from neutral Buy 273p

Carillion Raises price target to 440p from 372p -- 340p

Daily Mail Raises price target to 605p from 583p Neutral 544.50

Kier Raises price target to 1569p from 1310p Neutral 1294p

Marshalls Raises price target to 132p from 110p Neutral 108p

SIG Downgrades to neutral from buy Neutral 117.30p

Old Mutual Raises to buy from neutral and adds to pan-European buy list Buy 128.10p

UBS

Betfair Starts with sell rating with a target price of 1250p Sell 1,471p

Cairn Energy Cuts price target to 400p from 435p Neutral 393.70p

Daily Mail Cuts to neutral from buy Neutral 544.50

Johnson Matthey Raises price target to 1975p from 1900p Neutral 1,892p

Panmure

Capital Shopping Centres Raises to hold from sell Hold 673p

Rotork Raises price target to 1670p from 1530p Hold 1,621p

Investec

Consort Medical Raises price target to 476p from 462p Hold 472.50

Dunelm Cuts to hold from buy Hold 510p

HMV Group Cuts to sell from hold Sell 46.75p

JJB Sports Cuts to sell from hold Sell 6.42p

Kingfisher Cuts to sell from hold Sell 249.50p

Topps Tiles Cuts to sell from hold Sell 58.50p

Marks and Spencer Raises to buy from hold Buy 384.10p

Citigroup

Cobham Cuts price target to 240p from 275p Buy 197.50p

HSBC

Goldenport Cuts price target to 170p from 200p Overweight 121.75p

Credit Suisse

Intermediate Capital Raises price target to 390p from 365p Outperform 329.10p

Paragon Raises price target to 230p from 225p Outperform 168.30p

KBC Peel Hunt

Paragon Raises price target to 262p from 247p Buy 168.30p

Canaccord Genuity

Petroneft Resources Raises price target to 73p from 64p Buy 58.50p

Collins Stewart

Telecity Group Starts with buy rating and recommends target price of 560p Buy 444p

RBS

WS Atkins Cuts price target to 785p from 850p Hold 714.50p

Exane

BT Group Raises price target by 20 pct to 265p Outperform 166.90p


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THE NEXT TRADING DAY

Economic Events

No major economic events scheduled.

Company Events

Acal, a provider of technology products and services, is expected to declare its H1 results. The company is estimated to report a full year profit of7.15 pence per share for FY 2011, against a loss of 8.20 pence reported a year ago. Analysts expect the company to announce a full year revenue of245.35 million with pre-tax profits of 3.05 million in FY 2011. Full year net debt is expected at 4.80 million.

Invista Foundation Property Trust, a closed-ended investment company, is expected to announce first half results for FY 2011. Analysts expect thecompany to report a full year profit of 1.70 pence per share, against 1.21 pence reported a year ago. Full year Revenue is estimated at 22.50 million,down from 25.01 million reported a year earlier, with a net profit of 24 million.

Iomart Group will announce its interim results for FY 2011. The company is expected to report a full year revenue of 24.27 million, against 18.33million reported a year ago. Analysts estimates the company to declare a full year profit of 3.167 pence per share, against 1.62 pence, reported a yearago.

IT services provider, Phoenix IT Group will declare its H1 results. The company is estimated to report an EPS (GAAP) of 27.93 pence for FY 2011against 24.60 pence, reported a year ago. Analysts expect the company to announce a full year revenue of 265.90 million with pre-tax profit (GAAP)

of 29.23 million in FY 2011. Full year net debt is expected at 54.12 million.

Phytopharm, a pharmaceutical development and food development company, is expected to announce its final results for FY 2010. Analysts expectthe company to report loss of 2.10 pence per share, against 3.67 pence reported a year ago. Full year Revenue is estimated at 0.10 million.


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MPC's Posen criticises King as too political

Mervyn King, the governor of the Bank of England has been criticised by central bank policymaker Adam Posen as he said that the governorsendorsement of the coalitions deficit reduction programme was excessively political.

Posen, one of the nine members of the Banks Monetary Policy Committee claimed that governor Kings support for the administrations austeritypropel earlier this year had been too political. He told MPs that King had overstepped the border that separates monetary and fiscal policy byendorsing George Osbornes push for immediate spending cuts to domicile Britains deficit.

The thinly-veiled criticism of King represents a huge challenge to his authority.

Novembers policy meeting minutes revealed the MPC was split three ways, however a large majority still voted for no change i n either the level ofinterest rates or the size of the current quantitative easing programme. In the minute meeting Andrew Sentance wanted a quarter-point rise ininterest rates while Adam Posen voted for a 50 billion increase in the stimulus package.

King defended Posen comments at the Treasury committee saying that he had never spoken about the appropriate balance between spendingand taxes as a path of reducing the deficit. He said that he had merely commented about the outlook for the U.K. economy of the largest peacetimedeficit ever. He also added that most central bank governors world over had spoken more about fiscal deficits than he had done.

Megalopolis economists commented saying that it was unusual for a governor to comment on deficit reduction however argued that Kings

intervention was understandable.

ANALYSIS AND VIEWS

Adam Posen, an externalmember of the Monetary

Policy Committee

A significant fiscal consolidation is necessary in the medium term. The committee's projections are conditioned onthe plans set out in the March 2010 Budget.

"A more detailed and demanding path of fiscal consolidation than set out in the March 2010 Budget may thereforebe needed in order to avoid unnecessary increases in the cost of issuing public debt."

"A number of people on the committee, myself plus at least one other... were concerned that the statement could beseen as excessively political in the context of the election.

"The majority of the committee was comfortable with the endorsement of the coalitions deficit reduction plans inthe Banks May inflation report.

"We expressed that point of view. We offered alternative language. The majority of the committee decided that theywere comfortable with the language that appeared in the report."

There was a difference of belief at the MPC, in particular in the main meeting, over a particular paragraph in thereport that was talking about the demand for a particular celerity with which to deal with the fiscal deficit.

The small-term effect of the administrations austerity propel be quite contractionary.

Could monetary policy fully constitute up for this through QE? Probably however not certainly.

Mervyn King, thegovernor of the Bankof England

I have never, ever spoken about the appropriate balance between spending and taxes as a path of reducing thedeficit. I have merely commented about the outlook for the UK economy of the largest peacetime deficit ever.

The larger risk at present, given the familiarity of the at the end two weeks, would be for a fresh administration notto place in place clear and credible measures to deal with the fiscal deficit.

We could engage in further asset buys were we to reckon that necessary to keep inflation on target.

Tucker, deputy governorwith responsibility for

financial stability

I reckon we would have said those things to any administration of any complexion, of any combination, in thosecircumstances. I reckon it was an absolutely legitimate body for the governor to do You cannot operate monetarypolicy without a framework of underlying stability from administration and parliament.

Philip Shaw, chief

economist at Investec

Obviously fiscal policy is the domain of the Treasury rather than the central bank however, given the scale of thedeficit, the governor is justified in making some comments on the amount and pace of budgetary consolidation.

George Buckley, at

Deutsche Bank

The Bank had been questioned to comment on its budget reduction plans by the incoming Conservative-ledadministration.

They had been outside of ability for a extended age so the more guidance they could get, the bigger.

Chuka Umunna, a Labourmember of the selectcommittee

Kings role was becoming overly politicised, although he blamed this on politicians rather than the governorhimself.It is self-evident that the governor has been drawn into political matters but it is the fault of politicians."Nick Clegg has cited the governors opinions as the reason for his volte-face on economic policy, whileGeorge Osborne is relying on him to compensate for his fiscal austerity package with monetary levers."


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TOP STORIES

Afren plans to raise funds

Afren, an Africa-focused oil and gas company is planning to raise fresh funds through the issue of senior secured notes. The determination ofinterest rate, offering price and other terms will be at the time of pricing of the offering and with subject to market conditions. The funds will beutilized to repay debts and for general corporate purposes. The companys revenue in the first nine months of 2010 increased to $265.7 million,

while profit before tax rose to $75.3 million.

Rio Tinto defines its spending plans

Rio Tinto said that it is well positioned and is spending billions on expansion as demand for some metals is expected to double over the next 15-20years. The company said that its capital spending will probably be around US$13bn in the 18 months to December 2011. The company, whichrecently scrapped a proposed iron ore joint venture with BHP Billiton said that its annual spend is likely to remain at a comparable level over themedium term. The company said that mined copper production for 2010 is forecasted at 661,000 tonnes due to variable grades across the minelifecycle. Lower grades is expected to continue in 2011 but rebound in 2012. Chief executive Tom Albanese said With our large suite of low cost,large scale, expandable assets along with our core skills in operating excellence, exploration, technology and innovation, we are very well positioned,and are investing to take full advantage of these opportunities."

Balfour to wipe out pension deficit

Balfour Beatty, an infrastructure specialist has made an agreement with the trustees of the companys pension fund to deal with the company's375 million pension fund deficit. The company plans to settle one-off payment by Balfour Beatty of 40 million at the end of this year with thecontribution agreed. This deficit is expected to be wiped out in next eight years with the level of contributions agreed.

Ofgem to investigate in U.K. utilities

Ofgem, a Britain's energy regulator said that it will probe in U.K. utilities after a 38 percent surge in utilities' retail margins since September. Thecompany said its plans to go beyond its usual quarterly price report and look into the retail market and its recent reforms in a comprehensive review.Chief Executive, Alistair Buchanan said that their analysis reveals an increase in company margins from 65 pounds to 90 pounds at a time of risingenergy prices, which make Ofgem to rightly ask if companies are playing it straight with customers.

Bowleven plans fund raising

Bowleven, a British oil explorer plans to raise funds to ramp up exploration on its Cameroon acreage after finding additional hydrocarbons at a keywell. The Africa-focused company said that it is planning 22 million new shares, equivalent to around 11 percent of the company's existing sharecapital. The company shares on Thursday closed reached at 338 pence, the highest level for over two years. Additional funds will be used to contracta second rig, drill more wells and further understand acreage held by the firm both off the coast of and in the West African country.

BMG buys Chrysalis

Chrysalis agrees takeover by German media giant Bertelsmann and private equity group Kohlberg Kravis Roberts (KKR). The agreement has beenat a figure of 160p a share in cash worth 107.4 million, a 46% premium to the price before talks were confirmed at the start of the month. Wrightsaid that the deal marks the end of one era and the start of another for Chrysalis, a company which has been at the heart of the music industry sinceI founded it jointly with my original partner, Terry Ellis, more than four decades ago. Our continued progress - evolving from management, recordedmusic, television and radio to focus on music publishing - has been clearly recognised by BMG, he added.

StanChart leaves British banking pact

Standard Chartered announced that it had withdrawn from the bonus talks, as most of the bank's operations take place outside of Britain like in theMiddle East, Asia and Africa. The company said that 97 percent of their staff are overseas and more than 90 percent of our profits come from outsidethe U.K. The company added that they do not to treat our U.K. staff differently so they pull themselves out of British bank bonus pact.

Quintain Estates NAV falls in H1

Quintain Estates and Development, a British property investor said that its net asset value for first half fell 6.7 percent, mainly due to write downsin the value of its overall portfolio. The company said that the reasons for fall were primarily due two development sites, which cut its basic NAV pershare to 112 pence at the end of September, from 120 pence at end-March 2010. The company which develops malls, student homes andregeneration schemes said it has made progress to a more profitable position with new projects, disposal of over 70 million pounds of non-coreassets and the extension of maturities for 300 million pounds of debt. In its first half the company reported a loss of 58.8 million pounds ($92.73million) after the write downs, compared with a 9.6 million pound profit a year ago.

No major companies reported earnings.

DAILY EARNINGS HITS & MISSES AS ON 26 NOV, 2010


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BoE Consumer Credit (October)Forecast: N/A , Prior: 0.26 billion

Money Supply M4Forecast: N/A , Prior: -0.2 %

Mortgage ApprovalsForecast: N/A , Prior: 47.47 k

Mortgage LendingForecast: N/A , Prior: 0.11 billion

Bank of England will release figures on consumer credit, money supplyM4, Mortgage approval and lending for the month of October at 1500LST.

Previous month British mortgage approvals stood slightly better than expected, but still fell to the lowest since February and overall credit wassubdued. For the month of September mortgage approvals were 47,474 as compared to 47,498 in August. The net mortgage lending was much

weaker than expected at 112 million pounds, well below forecasts for a rise by 1.0 billion pounds and August's level of 1.617 billion pounds. Netconsumer lending rose by 262 million pounds in September after a 21 million pound fall in August. On the year, broad money supply growth was 1.0percent, the lowest since comparable records began in 1983.

Analysts expect growth to slow sharply as government spending cuts and tax hikes kick in next year. Previous month figures suggest that thehousing market remains fragile and broader credit conditions tough. The housing market has slowed sharply and banks are still reluctant to lend tobusinesses and consumers.

Daiwa Mehta said that the weak level of mortgage lending is clearly a concern and it is likely to reflect both the unwillingness of banks to lend aswell as subdued demand.

Vicky Redwood ofCapital Economics said that the new quarterly data published by the Bank, using a new seasonal adjustment process, suggeststhat the pick up in M4 growth earlier this year wasn't as marked as the monthly figures suggest.

Howard Archer, IHS Global Insight said that the data maintain their belief that house prices will not crash but will trend down by some 10 percent

over the final months of 2010 and in 2011, in the face of a nasty combination of factors. In fact, there has been a plethora of data and surveyevidence recently that is supportive to this view.

"High (and likely to rise) unemployment, muted wage growth, an increasing fiscal squeeze, low and deteriorating consumer confidence, difficulties ingetting a mortgage, a housing supply/demand balance currently firmly in favour of buyers and a house price/earnings ratio above long-term normsare a poor combination of factors for house prices. Much will obviously depend on mortgage availability, the amount of houses coming on to themarket and how well the economy holds up as the fiscal squeeze increasingly kicks in, he adds. "

Sarah Hewin, Standard Chartered commented on the outlook saying that with uncertainties over the impact of spending cuts (and) the outlook foremployment over the next few months, they probably will see upcoming months with further net credit repayments.

ECONOMIC INDICATOR WATCH ON NOV 26, 2010

Disclaimer -All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we donot guarantee the accuracy or completeness of this report. This is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Thisdocument is provided for information purposes only and should not be construed as an offer or solicitation for investment. This document has not been prepared in

accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of thedissemination of investment research. It may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report.Past performance is not necessarily a guide to future performance.

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