Market opening: The FTSE-100 is expected to start the session around 52-points higher this morning.
New York: Wall Street ended in the red after a rout in China’s stock markets. Moreover, increased geopolitical tensions in the Middle East hurt investor sentiment. The S&P 500 fell 1.5%, with the financial sector losing the most.
Asia: Equities are trading lower, as investors remained concerned over slowdown in China’s economy. The People’s Bank of China infused ¥130bn to stabilise China’s markets. The Nikkei 225 declined 0.4%, while the Hang Seng was trading 0.7% down at 7:00 am.
Continental Europe: Markets closed in the negative territory amid large sell-off in China’s market. Furthermore, rising tensions between Iran and Saudi Arabia weighed on investor sentiment. Germany’s DAX and France’s CAC 40 shed 4.3% and 2.5%, respectively.
Crude Oil: Yesterday, WTI and Brent prices decreased 0.8% and 0.2%, respectively. The spread between the two varieties stood at US$0.5 per barrel.
UK small caps: The FTSE AIM All-Share index closed 0.42% lower yesterday at 735.71
Manufacturing growth in UK slows in December
As per Markit, the UK Purchasing Managers’ Index (PMI) fell to 51.9 in December from 52.5 in November, the lowest in the last three months. The manufacturing sector failed to contribute to the country’s growth in the first three quarters of 2015, with the services sector driving the UK’s economic recovery.
Great Western Mining Corporation (LON:GWMO) – Speculative Buy
Great Western Mining Corporation (GWMC), the mineral exploration company focused on copper, gold and silver deposits in south-western Nevada announced yesterday that the Nevada Bureau of Mining Regulation and Reclamation (BMRR) has approved the reclamation permit for the company’s Target 4 exploration project (M4). Following statutory appeal under the Nevada Administrative Code the permit became effective on 2 January 2016.
Our view: GWMC has cleared an important hurdle for continued exploration on its M4 project. With the final approval in place management can commence drilling on the M4 target. The company also has a drilling permit in place for its M2 target where results have shown favourable geology for iron oxide copper-gold IOCG mineralisation. As such, we maintain a Speculative Buy on the Stock.
Beaufort Securities acts as corporate broker to Great Western Mining Corporation PLC
StratMin Global Resources (LON:STGR) – Speculative Buy
StratMin Global Resources, the graphite production and exploration company with assets in Madagascar, announced yesterday the completion of the first tranche funding from ASX listed Base Metals of £0.5m under the investment agreement announced 2 September 2015. Completion of the first tranche gives Bass Metals a 6.5% interest in Graphmada Mauritius with StratMin holding the balance and completion of the second tranche of £1.5m by 31 March 2016 will give a 25% interest. The Base Metal’s funding has allowed StratMin to make a number of plant and machinery improvements at the Loharano operation. In addition, StratMin has ordered a new diesel generator power supply which will enable reliable power supply for the increased demand due to the production expansion that occurred over the previous quarter.
Our view: We are encouraged with the continued commitment of Bass Metals. The funds received from the second Tranches will allow StratMin to continue to progress the expansion of Loharano operations. The investment agreement with Bass Metals has greatly reduced the financing risk for StratMin and we look forward to further updates from the Loharano operation. As such, we maintain our Speculative Buy on the stock.
Beaufort Securities acts as corporate broker to StratMin Global Resources plc
Evgen Pharma plc, the clinical stage drug development company focused on the treatment of cancer and neurological conditions, is pleased to announce the appointment of Dr Hamina J Patel MB BCh MSc MRCPI as Chief Medical Officer. Dr Patel is a pharmaceutical executive with more than 15 years industry experience, leading global cross functional teams in the development and commercialisation of drugs primarily within the field of oncology. She was previously Director of Drug Development specialising in Oncology, at Johnson and Johnson, where she helped to build a broad and differentiated portfolio of indications. During this time, Dr Patel was also instrumental in the success of a new indication (the second-line treatment of mantle cell lymphoma) based on a Phase II clinical study.
Our view: This is an important and necessary appointment. Evgen is on course to commence two phase II clinical trials this year. This is the stage at which the Group needs to put together the right team with deep clinical experience in preparation for developing and implementing strategies for its indications. It also needs to sound out potential partnerships with a view to considering alliances capable of co-developing products and optimising pipeline potential. Dr Patel has an impressive industry track record and a breadth of relevant clinical experience, particularly given her key role with the successful filing, approval and commercial launch of a new indication for VELCADE in over 35 countries worldwide. As such, her appointment represents a key hire for Evgen while strengthening its core team. Therefore, we maintain our Speculative Buy rating on the stock.
Yesterday, Diageo announced the completion of the sale of its major wine interests, the US-based Chateau and Estate Wines and the UK-based Percy Fox, to Treasury Wine Estates. The company announced the sale of its assets on 14th October 2015.
Our view: This sale is in line with Diageo’s plan to focus on its core assets. The proceeds from the sale would be used by the company to reduce its borrowings. In the recent past, Diageo, Heineken and The Ohlthaver & List Group of Companies (the controlling shareholder of Namibia Breweries [NBL]) completed the restructuring of their respective joint ventures (JV) in South Africa and Namibia. This bodes well with the company’s plan to focus on core markets. Diageo recently sold its interest in Desnoes & Geddes (D&G) and Guinness Anchor Berhad (GAB) to Heineken and acquired additional shares in Guinness Ghana Breweries Limited (GGBL). Meanwhile, the company remains cautious in the emerging markets as weaker currencies could hamper margins. Diageo is undertaking focused brand-building initiatives that include innovative marketing techniques and an improved distribution platform. The company implemented several cost-saving and pricing measures to boost earnings and continues to make efforts to expand into new markets. In the light of the above argument, we maintain a Buy rating on the stock.
Yesterday, RSA Insurance Group (RSA) informed that it has completed the sale of its Italy-based business to ITAS Mutua following the receipt of regulatory approval.
Our view: The sale is part of the company’s strategic refocus programme. The company recently announced the sale of its entire shareholding (75%) in Intouch Insurance (RSA Russia) to Joint Stock Insurance Company BLAGOSOSTOYANIE for £5m, to be paid in cash. Meanwhile, the company inked an agreement with Nationwide Building Society to underwrite all of Nationwide’s home insurance products for five years starting from the spring of 2017. However, the insurance sector has of late suffered due to tough regulations and high competition, especially from non-traditional providers. In addition, Zurich Insurance’s decision to drop its proposed takeover bid of RSA was a setback to the latter. We would like to wait and see the company’s performance in the near future. For the time being, we maintain our Hold rating on the stock.
Germany manufacturing PMI
As per the data released by Markit, the final manufacturing PMI of Germany for December increased to 53.2 from 52.9 in November. This was better than the market expected reading of 53.0.
Eurozone manufacturing PMI
Manufacturing PMI for the Eurozone rose to 53.2 in December from 52.8 in November, final data from Markit showed yesterday. This was better than the market expectations of a reading of 53.1.
UK mortgage approvals
As per data from the Bank of England, mortgage approvals for house purchases rose to 70,410 in November from 69,867 in the previous month. The markets expected the approvals to fall to 69,800.
Consumer price index (CPI) in Germany fell 0.1% m-o-m in December, following a 0.1% increase in November, as per the initial estimates published by the Federal Statistics Office yesterday. The markets expected a 0.2% increase in prices. On y-o-y basis, prices increased 0.3% in December, after a 0.4% rise in November.
US manufacturing PMI
The final Markit PMI for the US stood at 51.2 in December, from 52.8 in November. The markets expected a reading of 51.1.
US ISM manufacturing
US manufacturing PMI fell to 48.2 in December from 48.6 in November, as per the Institute of Supply Management (ISM). Economists forecasted a reading of 49.0.