14 September 2010

THE ECONOMIC MONITOR U.K.
Free Edition

INSIDE THE REPORT

MARKETS AT A GLANCE

Stock recommendations and price targets from top brokerage firms Important Events Scheduled on 15 September

At the close, the FTSE 100 was up 1.88 points, or 0.1 percent, at 5,567.41, marginally extending Monday's fourmonth closing high. At 1457 GMT, sterling was trading up around 0.5 percent versus a broadly weaker dollar at $1.5505. By 1321 GMT, December gilt future were 53 ticks up at 123.12. At 0628 GMT, ICE Brent inched 2 cents higher to $79.05. Spot gold was at $1,269.65 an ounce by 1515 GMT, up from $1,245.25 the day before.

Economic Events

Economists emerging market summit

Corporate Events

 

Next, Brooks Macdonald, Galliford Try, Indus gas, Regenersis, Unitech Corporate Parks, Fairpoint, Ideal Shopping Direct earnings releases

Breaking News

STOCK INDICES
INDEX FTSE 100* FTSE 250* FTSE 350* FTSE Tech Mark 100* FTSE AIM 100* FTSE All Share* FTSE Eurofirst 300* DAX* CAC 40* Stoxx Europe 50* * CLOSING VALUES LAST 5567.41 10472.44 2937.02 1934.6 3444.47 2872.1 1087.63 6275.41 3774.4 2587.22 CHNG 1.88 -35.89 -0.47 2.04 22.08 -0.63 -0.34 13.73 7.25 -1.70 % CHNG 0.03 -0.34 -0.02 0.11 0.65 -0.02 -0.03 0.22 0.19 -0.07

RBS plans to sell mortgage-backed securities: Reports Rio Tinto raises stake in Ivanhoe Mines Rio Tinto plans expansion of diamond mine NBNK to raise funds for buying assets BP resumes drilling on Gulf relief well Amec look for acquisitions in Asia, South America Aer Lingus intensifies talks with BA and competitors Ashmore profits rise driven by strong flows U.K. August house price index falls: RICS U.K. consumer confidence rises in August U.K. annual inflation unchanged Government not to gain from oil price rise: OBR FDA sets committee for Glaxo-Human Genome’s drug U.K, Brazil to sign defence agreement

CURRENCIES
INDEX Euro (EUR/USD) U.K. Pound (GBP/USD) Japanese Yen (USD/JPY) LAST 1.2989 1.5517 83.13 PRIOR 1.2876 1.5421 83.67

All prices are at 11:31 AM EDT

FUTURES
LAST Crude Oil Natural Gas Gold, Dec. Copper (¢), Dec Wheat (¢), Dec. 77.67 3.955 1272.3 348.95 741 CHANGE 0.48 0.017 25.20 1.05 -4.00

All prices are at 11:21 AM EDT

THE ECONOMIC MONITOR - U.K.
STOCK RECOMMENDATIONS BY BROKERAGE HOUSES
BROKERAGE/COMPANY Investic Hilton Food RBC Premier Oil KBW St. James’s Place Collins Stewart Hill& Smith Holdings Minera Seymour HMV Group UBS Carphone Warehouse Group Exane BNP Paribas Pearson KBC Peel Hunt Hilton Food Arbuthnot YCO Group Spectrics Panmure JD Weherspoon Jefferies GKN BBA Aviation Credit Suisse Cobham Ultra electronics Holdings Rolls-Royce Group HSBC Segro Bofa Merrill TUI Travel Goldman Sachs William Hill Raises price target to 195p from 235p Neutral Raises price target to 230p from 270p Underweight Raises price target to 230p from 290p Underweight Recommends price target of 190p Recommends price target of 220p Recommends to outperform from neutral Raises price target to 1,400p from 1,200p Raises price target to 640p from 580p Buy Buy Outperform -Buy Cuts price target to 525p from 580p Buy Recommends hold from buy Raises price target to 33p from 25p Raises price target to 1,100p from 995p Hold Buy Buy Cuts to neutral from outperform Neutral Raises price target to 260p from 235p Buy Recommends to sell from buy Sell Cuts price target t 372p from 400p Recommends price target of 90p Buy Buy Recommends price target of 345p Outperform Raises price target to 1,850p from 1,600p Outperform Raises price target to 290p from 255p Hold ACTIONS RATING

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 before taking any investment decisions.

MARKET PERFORMANCE

FTSE 100
A. The risers and fallers were more or less equal in number at this time and around 10% of the stocks were unchanged. The FTSE 100 was down at 5,557. Rio Tinto was up after it said it is spending $803 million (£522 million) ramping up the block cave project at its Argyle diamond mine in Western Australia. Capita, which takes on work outsourced by the government, was the top riser. Retailers were a weak spot in the FTSE 100, with Next and B&Q owner Kingfisher among the fallers. FTSE 100 down at 5,564. Footsie continued to limp along slightly below last night's close. Broker comment lifts Cobham and Marks & Spencer but did the opposite for TUI Travel and Next. FTSE 100 was down 7 at 5,558.

B.

C.

THE ECONOMIC MONITOR - U.K.
COMPANY NEWS COMPANY NEWS (contd...)

RBS plans to sell mortgage-backed securities: Reports
Royal Bank of Scotland will sell 4.7 billion pounds of mortgage-backed securities, its first such deal after the credit crisis. According to media reports an agreement over the mortgage portfolio for the securitisation deal is likely to be reached within the next few weeks. Europe's markets for asset-backed securities (ABS) reopened last year after being closed during the credit crisis, when many asset-backed bonds suffered huge losses.

Amec look for acquisitions in Asia, South America
Amec, energy-engineering company, is planning for acquisitions in regions including Asia and South America after the global recession reduced asset prices. Company’s Chief Executive Officer Samir Brikho said the company is looking for growth in several areas including Australasia, Middle East and Latin America. Amec, gets most of its revenue from North America, which accounted for 57 percent last year.

Aer Lingus intensifies talks with BA and competitors
Aer Lingus Group is strengthening talks with British Airways over a possible coalition with the Oneworld airline alliance and carriers from the rival Star alliance and Skyteam groups. Chief Executive Officer Christoph Mueller said that United Airlines and KLM will accomplish the role of intermediaries in discussions with Star and Skyteam. The problem for Mueller is that Aer Lingus already has codeshare agreements with all three airlines which generate roughly equal revenues. From Heathrow to Ireland the company has a codeshare agreement with BA. With KLM it has deals on its Dutch routes and with United it codeshares to and from the US. One of the main issues to be discussed before any agreement is signed will be the fares that are offered to Aer Lingus by its alliance partners.

Rio Tinto raises stake in Ivanhoe Mines
Global miner Rio Tinto has raised its stake in Canada's Ivanhoe Mines to 34.9 percent, on the conversion of a matured convertible credit facility. Rio Tinto till now has invested about $1.73 billion in Ivanhoe, and also holds additional rights to subscribe for common shares in the company, which controls the big Oyu Tolgoi copper-gold project in Mongolia. Rio Tinto now owns 184.75 million common shares of Ivanhoe.

Rio Tinto plans expansion of diamond mine
Rio Tinto plans to expand its Argyle diamond mine in Western Australia, and has estimated to spend around $13 billion through the end of 2011 to lift growth. It plans to invest $803 million to develop an underground mine under the existing open pit, and increase production from 2011 to reach 9 million tonnes of diamond-bearing ore a year within two years. The project, put on hold in 2009 due to the global financial crisis, will expand the life of the world's largest mine for pink diamonds to at least 2019 as the company looks to capture burgeoning demand.

Ashmore profits rise driven by strong flows
Ashmore, Emerging markets fund manager declared an increase of 36 percent in its full-year profit, lifted by a rise in investors demand for emerging market debt products. Also there was strong interest from sovereign wealth funds and governments in emerging markets themselves. The company reported a pretax profit of 217 million pounds ($334 million) for the year to June.. Performance fees were up 58 percent to 82.9 million pounds, and total net revenues were up 41 percent to 286 million. Net inflows touched $7.6 billion.

NBNK to raise funds for buying assets
New British banking venture, NBNK (Nationalised Bank Northern Rock ) Investments plans to raise 2-3 billion pounds ($3.1-$4.6 billion) from top institutions to buy assets from bailed-out lenders. According to its chairman Peter Levene the venture targets 600 branches that Lloyds Banking Group has been ordered to sell to comply with European state aid rules. It has raised 50 million pounds from a stock market listing in August, and aims to tap investors for a further 2-3 billion pounds to fund acquisitions about a year from now.

Hilton Food H1 profits rise on strong volumes
Meat-packaging firm Hilton Food Group announced a rise of 12 percent in first-half pretax profit, lifted by improved volumes in central Europe. The company expects to meet its forecasts for fiscal 2010 and looks for new opportunities for further expansion. The company expects feed ingredient and meat prices to rise in the second half. The company’s H1 pretax profit rose to 11.5 million pounds ($17.7 million) from 10.4 million pounds last year. Revenue rose 5 percent to 449.9 million pounds, while volumes rose 11 percent to 102,688 tonnes. Volumes in central Europe jumped 45 percent. It raised its interim dividend by 8 percent to 2.8 pence.

BP resumes drilling on Gulf relief well
BP, has restarted drilling on a relief well as part of the last step to plugging permanently its broken Macondo oil well in the Gulf of Mexico. The relief well has had been on hold for several weeks as BP took other steps to kill the well that blew out on April 20, leading to an explosion aboard the Deepwater Horizon drilling rig that killed 11 men. The subsequent leak ejected more than 4 million barrels of oil into the sea.

Debenhams sees rise in annual profits
Britain's No.2 department store group, Debenhams expects its annual profit to be slightly higher than analysts' average forecast, boosted by a rise in fourth-quarter sales and higher profit margins. The group, said its profit before tax and one-off items for the year ended August 28 would be in the region of 150 million pounds ($231 million). That would be up about 20 percent from the year before and just ahead of analysts' average forecast of 147 million pounds, according to Thomson Reuters estimates.

THE ECONOMIC MONITOR - U.K.
ECONOMY NEWS REGULATORY NEWS (contd…)

U.K. August house price index falls: RICS
U.K. house prices dropped to lowest since May 2009 in August, according to the survey from Royal Institution of Chartered Surveyors. RICS house price index fell to -32 from -8, the sharpest one-month fall since June 2004, and newly-agreed sales suffered their biggest fall in two years. Mortgage lender Nationwide last month reported decline in house prices since February, while the Halifax survey showed a rise.

Most sufferers still not authorized to sue: BP
BP and its partners said that thousands of fishermen, seafood processors, restaurants, hotel owners and others do not have the right to sue over the gulf spill, according to court’s document. The document, part of the defense team's proposal, said the majority of alleged victims who brought about 400 lawsuits must first take their claims to a $20 billion fund established by BP.

U.K. consumer confidence rises in August
British consumer confidence rose in August after falling for three continuous months on growing optimism in consumers about the outlook for the economy, according to the data from Nationwide building society. The consumer confidence indicator rose to 61 in August from a 14month low of 56 in July. The index remains below the long-run average of 83 and February's two-year high of 84. Britain's economy grew by 1.2 percent in the second quarter.

U.K, Brazil to sign defence agreement
Britain and Brazil will sign a defence agreement. which the U.K. government consider a path for a multi-billion dollar contract for BAE systems, which will supply vessels to Brazil's navy, according to media reports. The BAE deal could be worth up to 2.9 billion pounds if the vessels were built in the U.K. The report said the six patrol boats, costing about 60-80 million pounds each, would likely be used for surveillance and deterrence at Brazil's offshore oil fields.

U.K. annual inflation unchanged
British consumer prices rose 3.1 percent in August compared to the same month last year, staying at same level of inflation rate that of July, according to the report from Office for National Statistics. Compared to July, CPI rose 0.5%. Economists surveyed by Dow Jones Newswires had forecast a 0.4% monthly rise and a 3% annual increase. Inflation remains above the Bank of England's 2% annual target.

ECONOMIC INDICATOR WATCH

U.K. Average Earnings (July)
Forecast: 1.7% Prior: 1.3%
The figures for average earnings including and excluding bonus will be released at Local/GMT/ET 0930/0830/0430. It is a key short-term indicator of how levels of pay are changing within the U.K. economy. The earnings annual growth rate for total pay (including bonuses) was 1.3 per cent for the three months to June 2010, down from 2.7 per cent for the three months to May. The earnings annual growth rate for regular pay (excluding bonuses) was 1.6 per cent for the three months to June 2010, down from 1.8 per cent for the three months to May.

U.K. house prices rises in July
Britain house prices rose 8.4 percent on the year in July, down from a 9.9 percent gain in June, according to government data by the Department for Communities and Local Government. House prices fell 0.3 percent on the month, after gain of 0.4 percent in June.

Source: Office of National Statistics

Government not to gain from oil price rise: OBR
Office for Budget Responsibility said in a statement that provisional rise in the oil price would have a minor effect on the U.K. public finances but a permanent rise would create a loss. Finance minister George Osborne had charged the new fiscal watchdog to report on the effect of oil price fluctuations on the public finances. The OBR said that there was almost zero impact on the public finances if oil prices rose temporarily. Higher pump prices would reduce demand for fuel, it said. In addition, inflation would push up the indexation of tax thresholds, benefits, public service pensions and index -linked gilts.

Claimant Count Rate (Au
Forecast: -3.0k Prior: -3.8k
The Office of National Statistics will release Claimant Count Rate figures which is a monthly measure of unemployment in the U.K. It indicates the health of the U.K. labor market. If the rate is up, it indicates a lack of expansion within the U.K. labor market, while it indicates economic expansion and could spark inflationary pressures if the rate is down. The claimant count unemployment rate was stable at 4.5% in July. The data showed that the number of people claiming unemployment benefit fell by 3,800 in July.

Source: Office of National Statistics

ILO Unemployment Rate
Forecast: 7.8% Prior: 7.8%
The Office of National Statistics will release figures for ILO unemployment rate, which is the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the U.K. Economy. If the rate is up, it indicates a lack of expansion within the U.K. labor market. As a result, a rise leads to weaken the U.K. economy. ILO-defined unemployment in April to June was 2.46 million (7.8%) down by 49,000 on the previous quarter but up 23,000 from a year previously. There was also a rise in employment, with the number of people in work rising by 184,000 in the three months to June.

REGULATORY NEWS

FDA sets committee for Glaxo-Human Genome’s drug
A panel advising the U.S. Food and Drug Administration will discuss GlaxoSmithKline and Human Genome Sciences' experimental lupus drug Benlysta on November 16. Glaxo and biopharmaceutical company Human Genome are co-developing the drug. Lupus is a complex disease that causes the immune system to attack the body's own tissue and organs. Benlysta, if approved, would be the first new drug for systemic lupus in 50 years.

Source: Office of National Statistics

THE ECONOMIC MONITOR - U.K.
MARKET BRIEFING

Britain's leading shares edged higher, matching modest gains on Wall Street following above-forecast U.S. retail sales data, with commodity issues standing out. At the close, the FTSE 100 was up 1.88 points, or 0.1 percent, at 5,567.41, marginally extending Monday's four-month closing high. Heavyweight miners posted the best gains, with Randgold Resources and Fresnillo up 2.8 percent and 2.6 percent respectively, as gold hit a record high and copper pared losses as better-than-expected U.S. retail sales data boosted demand expectations. Crude prices also benefited oil issues, with Essar Energy the top FTSE 100 gainer, up 3.8 percent. U.S. blue chips were 0.3 percent higher by London's close, with the above-forecast August retail sales numbers helping allay fears over a double-dip recession. Sterling rose against a broadly weaker dollar, aided by stubborn U.K. inflation data which raised speculation that the Bank of England would hold off from extending quantitative easing in the near term. But a weak reading of U.K. house prices highlighted structural weaknesses within the UK economy which, combined with austerity measures, were set to dampen upward pressures on prices and wages in the medium term. At 1457 GMT, sterling was trading up around 0.5 percent versus a broadly weaker dollar at $1.5505, with traders reporting demand from leveraged accounts on the break of $1.5500. The euro rose 0.2 percent to 83.70 pence, after finding good support from buy orders in the 83.30 region. Further demand was reported at 82.90. British gilt futures rose around half a point in choppy trade, taking their cue from an unexpectedly weak German sentiment survey and brushing off U.K. and U.S. data that looked bond-negative. U.S. retail sales rose by a bigger-than-expected 0.4 percent in August, with ex-cars sales rising twice as fast as expected. But aside from a short-lived flurry of activity, the figures had little impact on bond prices, which resumed an ascent triggered earlier in the day by a sharp fall in the German ZEW survey. By 1321 GMT, December gilt future were 53 ticks up at 123.12, off a session high of 123.31 struck after the German data, but 10 ticks higher than before the U.S. figures. In the cash market, the yield on ten-year gilts was 5 basis points down at 3.065 percent, widening the spread against Bunds by around half a basis point to 69 basis points. Oil remained below Monday's one-month high, with traders reluctant to take strong positions ahead of eagerly awaited inventory numbers. U.S. crude for October was trading close to Monday's closing price in early U.S. trading. It was at $77.27 at 1414 GMT, 8 cents up on Monday's close, but well below Monday's intraday peak of $78.04, the highest value since August 11. Prices had surged on Monday as the shutdown of the biggest Canada-U.S. pipeline, run by Calgary-based pipeline giant Enbridge, continued. At 0628 GMT, ICE Brent inched 2 cents higher to $79.05. Gold hit record highs above $1,270 an ounce in its biggest one-day rally in four months, as the U.S. dollar declined broadly after upbeat data failed to convince investors to shift into risk-linked assets. Gold is now on course for a 15 percent gain in 2010, fuelled largely by investor nervousness that stemmed from the fallout from the euro zone debt crisis and from economic data that has suggested global economic growth may be losing momentum. Spot gold was at $1,269.65 an ounce by 1515 GMT, up from $1,245.25 the day before, having hit a record high of $1,271.20 earlier in the session. U.S. gold futures for December delivery were last up $24.3 an ounce at $1,271.20.

CORPORATE RESULTS
DATE - 15/September/2010
COMPANY NAME EVENT Interim 2010 Preliminary 2010 Interim 2010 Interim Management Statement Trading Update Interim 2010 Interim 2010 Preliminary 2009/2010 Final results Final results

ECONOMIC CALENDAR
DATE WED 09/15 LST 1400 14:00 1400 THU 09/16 1400 1400 1530 FRI 09/17 MON 09/20 N/A 1400 INDICATOR Avg wk earnings 3mth yy Claimant count unem chng ILO unemployment rate Retail sales mm Retails sales yy CBI trends No major indicators Money Supply M4 F’CAST 1.7% -3.0k 7.8% 0.3% 2% -13 N/A -PRIOR 1.3% -3.8k 7.8% 1.1% 1.3% -14 N/A 0.4 %

French Connection Group
Galliford Try Next Photo-Me International RM Ideal Shopping Direct Fairpoint Group Avanti Communications Group Brooks Macdonald Galliford Try

THE ECONOMIC MONITOR - U.K.
NEXT TRADING DAY NEXT TRADING DAY (contd...)
Brooks Macdonald, an integrated wealth management company is expected to declare its final results at a full year profit of £35.676 per share, up from £22.2 per share in the previous year. Even company’s full year revenue is expected to show steep rise to stand at £32.08 million as compared to £20.45 million a year ago. The company had previously declared its cash dividend for its interim period. Few months back the company also acquired Braemar Group for a deal value of £3.87 million. Galliford Try, a housebuilding and construction company is expected to declare its final results, at a full year revenue of £1,204.11 million, down from £1,541.21 million in the previous year. Company is expected to report its net debt at a loss of £40.82 million, while its capital expenditure is expected at £5.64 million. Regenersis, a business support company is expected to announce its full year results at a profit (pre amortization) at £9.6 per share, down from £11.4 per share in the previous year. Company’s full year revenue is expected to rise to £117 million as compared to £102 million a year ago. Capital expenditure is expected to change slightly to £2 million. Unitech Corporate Parks, a retail estate company is expected to declare its interim results. Analysts expect the company full year profit at £0.74 per share, up from previous year loss of £0.81 per share. Company’s full year revenue is estimated to rise steeply to £33.97 million as compared to £10.5 million a year ago. Net debt is expected at a loss of £17.73 million. Fairpoint, a U.K. based financial advisor company is expected to declare its first half results, analysts expect the company to report its interim revenue at £13.99 million, while net debt at 4.1 million. Company’s full year profit is expected at £11.1 per share, while revenue is expected to rise to £30.95 million, from £27.95 million a year ago. Ideal Shopping Direct, a retail store company is expected to declare its first half results. Company’s full year profit is expected to rise steeply from £3.04 per share in the previous year to £12.43per share in the current year. Company’s revenue is also expected to rise steeply to £114.33 million as compared to £103.68 million a year ago.

Economic Events
Economists emerging market summit
The Emerging Markets Summit is an unrivalled opportunity to really uncover the true potential of new high growth economies. The Emerging Marketing summit in 2009 attracted attendance from over 40 countries with three heads of state, and over 73% of corporate attendees at director level or above. High-Profile Speakers at this Event Include U.K.'s Cabinet Minister for Business, Innovation & Skills Vince Cable, South Africa's Deputy President Kgalema Motlanthe, IADB President Luis Alberto Moreno and Brazil and Nigeria Central Bank Governors.

Corporate Events
Next is expected to reports its interim results and investors will be curious to know whether a spell of cooling in its sales has continued. After its successful share buyback, Next reported a £1.5 per cent decline in first-half sales in August, although this was offset by gains in gross margin. In its update for the six months to July 31, the company noted that consumer spending would be restrained” and that its outlook remained cautious. Analyst expect company’s interim profit to rise to 109.8 per share as compared to £81.1 per share a year ago. Revenue for the interim period is also expected to increase from £1,571.63 million in the previous year to £1,894.2 million in the current year. The consensus of analysts’ forecasts is for underlying pre-tax profits of £551m, from sales of £3.47bn. Full year profit and revenue is also expected to rise to £211.15 per share and £3,467.15 million respectively. Indus gas, an oil and gas exploration company is expected to reports its yearly results. Company is expected to report loss of £0.662 per share, while revenue is estimated to show slight fall. Capital expenditure is expected at £12.03 million.

This report is produced by International Business Times For questions or comments reach us at researchanalysis@ibtimes.com For more information about our products visit www.ibtimes.com © IBTimes 2010. All rights reserved.

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