Barclays Share News (BARC)

* European shares slide 0.2%
* In focus this week: US-China trade, big US banks earnings
* FTSE 100 rallies on sterling weakness
* Asian shares rise to 19-month highs

Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
stocks reporters and anchored today by Danilo Masoni. Reach him on Messenger to share your
thoughts on market moves: rm://danilo.masoni.thomsonreuters.com@reuters.net

"CORPORATE INEQUALITY" AND THE RISK OF A SHARP DECLINE (1421 GMT)
Morgan Stanley says 'corporate inequality' is so wide in the U.S. that the top five
companies (Apple, Amazon, Alphabet, Microsoft, Facebook) make up for a staggering 18% of the S&P
500 even if their profits haven't kept up pace with their share price.
"This income/market cap divergence looks likely to continue over the near term, given the
Fed’s expected balance sheet expansion through April. More importantly, if we’re right, these
companies will then need to deliver on the income side of the inequality divide or risk a sharp
decline in price."
Here's a Morgan Stanley chart on the corporate inequality:


Meanwhile, another inequality in stock market performances can be seen in small caps, in
which Morgan Stanley has been underweight since July 2018.
While corporate profits shrunk through 2018-19 due to rising labour costs, the S&P 500
soared to record highs. Small caps meanwhile were lagging far behind as they could not bite the
bullet.
Morgan Stanley says small-caps can't offset high labour costs with tech "as easily as large
caps", nor do they have the same access to the low cost of capital.
Here's a chart showing how small caps underperformed as labour costs soared:


(Thyagaraju Adinarayan)
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"LET'S UNLEASH BRITAIN'S POTENTIAL" (1127 GMT)
Boris Johnson's election campaign slogan did win him votes but the burst of optimism in
markets right after did not last long as investors balked at the uncertainty around the terms of
Britain's divorce with the EU.
UK midcaps and the pound consolidated after the post-election surge on worries over
how the UK would possibly get a trade deal done by the end of this year.
But JPMorgan believes investors should not miss the opportunity of picking up midcap stocks,
exposed to the local economy, pointing to a possibility of a "near-term, though probably
short-lived, step-up in business and consumer confidence" in the coming months.
Last week, lawmakers approved legislation which will allow Britain to leave the European
Union on Jan. 31 with an exit deal. Johnson has promised to use an 11-month transition period to
negotiate a deal that will define terms between the world's fifth-largest economy and its
biggest trading partner.
"Uncertainties around the UK's future relationship with the EU and its trading arrangements
with the rest of the world very much remain, but the country now has a clearer sense of
direction and that seems likely to create short-term positivity," JPM says.
Among midcaps which stocks are attractive? Citing valuations JPM says its key picks for 2020
are Cineworld, Clarkson and GVC.
The bank has downgraded HomeServe and pub stocks Marston’s and Mitchells &
Butlers to "neutral" from "overweight" citing their recent run higher.

(Thyagaraju Adinarayan)
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EUROPEAN IBS: WHAT'S IN STORE FOR Q4 (1037 GMT)
The earnings season starts this week with big US banks reporting their numbers and while
those will be closely watched for any readacross, Q4 for European investment banks isn't
expected to be that bad even though volumes were mostly lower.
"Q4 19 was characterized by buoyant equity markets, tightening credit spread, and generally
unimpressive volumes," UBS analysts say.
"At the same time, y/y base effects are supportive as the last quarter of 2018 was hit by
erratic volatility and the credit-driven risk-off sentiment led to a very weak quarter in terms
of trading and investment banking revenues," they add.
In terms of forecast, that means global FICC and equities revenues are expected to have
risen by 39% and 25% respectively compared to a year earlier. Investment banking revenues
however are seen down 8% as M&A volumes fell.
All in all, UBS expects European IBs to have regained some market shares in the quarter.
In their FICC market share is seen at 22.7% from 20.9% in the previous quarter, equities is
seen rising to 18.4% from 16.7%, but investment banking is seen falling to 13.9% from 14.6%,
according to UBS calculations combining Barclays, BNP Paribas, CS,
DB and Societe Generale.

(Danilo Masoni)
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OPENING SNAPSHOT: SUBDUED (0837 GMT)
It's a rather subdued start of the week ahead of signing of an initial trade deal between
China and the US. The STOXX 600 is trading at par in early deals, while sub-sectors are
moving between a 0.5% gain and a fall of 0.3%.
But under the surface there are some big movers:
Pennon Group is soaring 9% to the top of the STOXX on a report in The Telegraph
saying that private equity firm KKR had made a surprise 4 bln pounds bid for its Viridor unit.
A strong earnings update and positive broker reactions is lifting Belgian drugmaker UCB
, up more than 3%, while Wirecard is rising 2.9% after the appointment of a new
chairman.
On the downside are cable maker Prysmian, down 2.7% after a failure of the
Westernlink submarine cable, while Renault is down 2.6% after the FT reported that
Nissan executives have stepped up planning for a potential split from the French carmaker.
Here's your opening snapshot:
(Danilo Masoni)
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(Danilo Masoni)
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WHAT'S ON OUR RADAR AT THE OPEN (0754 GMT)
European shares are expected to steady below recent record highs ahead of the signing of an
initial China-U.S. trade deal on Wednesday and with big U.S. banks starting the Q4 reporting
season later this week. Futures on main European benchmarks were trading flat.
On the corporate front, there was some M&A-related news-flow over the weekend for the auto
sector, while global automakers sounded cautious about their prospective sales in China's
vehicle market this year.
The FT reported that Nissan executives have stepped up planning for potential split from
Renault, while the Peugeot family said it aimed to increase its stake in the new
carmaker resulting from PSA and Fiat Chrysler's merger as soon as possible.
Aston Martin shares were expected to extend Friday’s bounce on news that China’s
Geely < 0175.HK> is in talks about taking a stake in the battered luxury carmaker.
Industrial conglomerate Thyssenkrupp was expected to rise more than 1% after the
FT said it has stepped up efforts to sell its Industrial Solutions unit, which builds plants and
industrial sites.
In earnings, one dealer sees William Hill rising 4% at the open after the British
bookmaker said it expects 2019 profit to be ahead of its and analysts' estimates, powered by
favourable sporting results in December, while UCB is seen opening up 3% after the
Belgian drugmaker raised its revenue and earnings per share guidance for 2019.
MorphoSys was up more than 6% in early trade, boosted by a licencing deal with
Incyte that envisages an equity investment in the German drug maker.

Other stock movers:
Airbus net orders rise but lag behind deliveries in 2019;
Board member overseeing Wirecard audit elected chairman;
Italy's Prysmian says Western Link submarine power cable currently unavailable
;
Spirent Says It Expects To Exceed Market View For FY Profit;
Savills Sees Underlying Results For 2019 At Upper End Of Its View
(Danilo Masoni)
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MORNING CALL: FLAT, WAITING FOR TRADE DEAL SIGNING (0627 GMT)
European shares are expected to start the week little changed with investors awaiting the
signing of the Phase 1 trade deal between the United States and China on Wednesday.
Spreadbetters at IG expect London's FTSE to open 6 points higher at 7,594, Frankfurt's DAX
to open 10 points higher at 13,494, and Paris' CAC to open 5 points lower at 6,032.
Over in Asia, shares managed to rise to new 19-month highs with the MSCI's broadest index of
Asia-Pacific shares outside Japan last 0.6% higher.
(Danilo Masoni)
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(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)