CAPIS Capital Institutional Services : Global Recap – 1/24/2017

Asian Headlines

Indices again closed mixed with small moves seen. Australia was the outperformer on strength in the mining sector. Japan slipped, led lower by Financials and Consumer Discretionary names, as President Trump yesterday moved on his promise to remove the US from the Trans-Pacific Partnership. In China, while Energy names buoyed the large-cap Shanghai index the Shenzhen fell on Telco weakness.

Japan's Nikkei Manufacturing PMI reading hit a 34 month high, coming in at 52.8 vs the prior reading of 52.4. Despite that indices fell on the day with the ¥ strengthening ever-so-slightly on the day. Toshiba slipped 3.4% with Sankei reporting the board may discuss restructuring soon. After the close it was reported that their nuclear-related writedown and earnings will be reported February 14th with investors not expected to love the results.

H-shares were slightly higher despite some solid gains in Consumer Staples, Telcos, and Energy names overnight. Making headlines overnight were comments from MSCI that noted the China may not be included in the MSCI if they continue to control outflows from the country. Nine Dragons +11.0% wrapped up gains post noting its expects NI for the 1H to rise 45% YoY. An analyst at Mega Secs said paper product prices are higher post capacity cuts in China amid pollution reduction efforts. Of interest, TTN noted some securities firms are putting together plans for a Shanghai-London connect program. Also, with the US move concerning the TPP, Taiwan is said to be seeking a free trade agreement with the US.

South Korea's Samsung Electronics +0.3% reported 4Q NI that was light of estimates but added the blended average sales prices of their products would rise in the 1Q. With that said the company sees high-end flexible OLED earnings up this year with the company to buy back and cancel 9.3T won-worth of shares.

European Headlines

On mixed PMI readings and a ruling by the UK Supreme Court calling for a parliamentary vote to trigger Brexit indices in Europe are up small today. In addition to the vote, the court ruled the country did not need to consult Scotland or Northern Ireland concerning the move. Italy and Sweden are outperformers with gains there up near a percent. Sector-wise basic resource names are up over 2% with Autos rallying over a percent. Telcos lead lower with BT Group down nearly 20%. Despite the small uptick in markets there are several notable laggards today:

BT Group is off over 18.0% today after noting it will triple its writedown in Italy to $661M on accounting irregularities. The cost of the internal audit alone was £145M with improper accounting practices concerning sales, purchases, factoring, and leasing uncovered. They also noted weakness in their home market citing Brexit. The firm is decreasing their 2016/17 rev and ebitda figures and said its sees 2017/18 adj ebitda to be broadly flat on the year.

EasyJet -9.0% saw revenues per seat slip over 8% in the 1Q but passenger growth rose by the same amount. In a statement the company said higher fuel costs and the weaker £ is leading to a reduction in earnings of £35M. Terrorism and expanded capacity at competitors has also weighed.

Switzerland's bakery retailer Aryzta is down 31.0% post the firm noting 1H adj eps 20% lower than expected adding rev growth in North America is down as well. They see a better 2H in NA but declined to give FY18 forecasts. Rising labor costs have also weighed on the bottom line.

To the upside, Rio Tinto +4.6% will sell its Coal & Allied unit to Australia's Yancoal for as much as $2.45B. Yancoal is 78% owned by China's Yanzhou Coal.

Market Prices and Macro Data

		Event		Survey	Actual	Prior	Revised
FI	1)	Unemployment Rate	Dec	-	7.90%	8.10%	-
FI	2)	PPI MoM	Dec	-	0.80%	0.60%	-
FI	3)	PPI YoY	Dec	-	2.40%	0.60%	-
FR	4)	Markit France Manufacturing PMI	Jan P	53.4	53.4	53.5	-
FR	5)	Markit France Services PMI	Jan P	53.2	53.9	52.9	-
FR	6)	Markit France Composite PMI	Jan P	53.2	53.8	53.1	-
GE	7)	Markit/BME Germany Manufacturing PMI	Jan P	55.4	56.5	55.6	-
GE	8)	Markit Germany Services PMI	Jan P	54.5	53.2	54.3	-
GE	9)	Markit/BME Germany Composite PMI	Jan P	55.3	54.7	55.2	-
EC	10)	Markit Eurozone Manufacturing PMI	Jan P	54.8	55.1	54.9	-
EC	11)	Markit Eurozone Services PMI	Jan P	53.8	53.6	53.7	-
EC	12)	Markit Eurozone Composite PMI	Jan P	54.5	54.3	54.4	-
IC	13)	Wage Index MoM	Dec	-	0.40%	0.30%	-
IC	14)	Wage Index YoY	Dec	-	9.10%	9.70%	-
UK	15)	Public Finances (PSNCR)	Dec	-	36.3b	13.5b	20.0b
UK	16)	Central Government NCR	Dec	-	19.3b	9.8b	-
UK	17)	Public Sector Net Borrowing	Dec	6.8b	6.4b	12.2b	10.8b
UK	18)	PSNB ex Banking Groups	Dec	6.7b	6.9b	12.6b	11.3b
FR	19)	Total Jobseekers	Dec	3450.0k	-	3447.0k	-
FR	20)	Jobseekers Net Change	Dec	-6.1	-	-31.8	-