Fenner PLC Share News (FENR)

LONDON, March 20 (Reuters) - Welcome to the home for real-time coverage of European equitymarkets brought to you by Reuters stocks reporters and anchored today by Danilo Masoni. Reachhim on Messenger to share your thoughts on market moves:danilo.masoni.thomsonreuters.com@reuters.net A TECH HEADACHE FOR ESG INVESTORS (1535 GMT) Investing in a stock like Facebook poses potential problems for ESG investors. Thisis exactly what Peter Michaelis, Liontrust’s Head of Sustainable Investment, found - he told usthey divested their holding in the tech giant in February this year from the Sustainable FutureGlobal Growth fund. "We've been looking at this over the past year and looking at some of those controversies tosee whether we should still be investing in them," Michaelis said, referring to the big U.S.tech stocks. "Our conclusion was that it made the Facebook proposition less certain and they wereunable to convince us that they were managing their negative impacts sufficiently well for us tocontinue investing," Michaelis added. "We believe that Facebook is going to be regulated as a media company, maybe not tomorrow,but at some point it will be, and that's going to add significant costs to their businessmodel," he said. Liontrust manages just over 3 billion pounds sterling of assets across equities and fixedincome in their Sustainable Future fund range. (Kit Rees) ***** EUROPE: OLD, BUT CAN STILL LEARN NEW TRICKS (1426 GMT) European firms are on average much older than those making up U.S. indices, notes Man GLG'schief investment officer. Europe also has many more regulated industries, while it has fewer ofthe fast-growing tech stocks responsible for much of the breakneck rally in global markets. Some 56 percent of the market cap of the S&P 500 is comprised of companies incorporatedafter 1981, while that figure is 33 percent for the DAX and 32 percent for the CAC 40. But, contrary to the adage that you can't teach an old dog new tricks, CIO Pierre-HenriFlamand reckons European indices hide opportunities. "While we don't believe just taking blind exposure to Europe is a good strategy, we wouldargue that ... there's potential to achieve compelling returns in these markets," he writes. "Given recent price movements, we believe it’s now worth looking within the European indicesto see whether there are firms that may have been dragged down because of their proximity toless well-run businesses." Indeed, Europe's valuations still look pretty attractive relative to world and U.S. stocks.Whether that's enough to attract more investors to Europe is a different question, clearly, asshorts on European stocks have been increasing. (Helen Reid) ***** TECH TROUBLES? GO DEFENSIVE (1356 GMT) Facebook's heavy share price drop has rekindled debate over the outlook for techstocks and while some believe the sector behind this long bull market is still not expensive(see CS post below), others think it's time to look more closely into defensive plays. Among them is Hildebrandt Tomas, director and senior portfolio manager at Evli InvestmentManagement in Helsinki. "Short term the Facebook news is broadly negative since it's about data security, whichcould be a growing issue. Facebook and others are also facing critique and pressure fromdifferent directions regarding their business practices. In general, the tech sector looksover-owned and priced for perfection, which should benefit other sectors," he said. "Trying to see a little bit further on, I think that the defensive sectors could benefitfrom this," he added. Hildebrandt said Evli was not making any investment switch given that the funds they'reinvested in were already tilted towards defensives. Facebook fell nearly 7 percent yesterday after reports that a political consultancy thatworked on Trump's 2016 campaign gained inappropriate access to data on 50 million of the socialnetwork's users. The stock was down again today after a report said the U.S. FTC isprobing it over whether it violated terms of a consent decree over its use of personal data. (Danilo Masoni) ***** DARK POOL TRADING UPDATE: BLOCKS AHOY!(1305 GMT) Just over a week on from the implementation of MiFID II's double volume caps limitingtrading in dark pools, it's still too early to draw any huge conclusions about shifts to marketstructure, but one thing is clear: block trading is on the up. The latest figures from trading technology firm Fidessa show block trading, as a percentageof total trading in the dark, surged up to 42 percent by the end of the first week of the newregime. Trading in large blocks of shares (whose size is determined as a percentage of averagedaily volume traded in that stock) is exempt from the dark pool caps, hence the spike. "This is a massive jump," says Christian Voigt, senior regulatory adviser at Fidessa. "I wasexpecting more of a smooth steady increase, up to 30 percent maybe, but it was much stronger." The 42 percent figure is a seven-fold increase from the proportion of block trading asrecently as January 2017. Of course, the figure is also flattered by an overall reduction indark pool trading as a result of MiFID II. "Part of dark trading has been very restricted, but the block part has been tradingconsistently," says Voigt. "What it tells us is some people are trying extra hard to do a blocktrade - they don't slice and dice anymore." There is, however, an upper limit to the proportion of block trades. These trades can bevery big, meaning not many investors have the capacity needed to put them through. As things begin to settle down and the market adjusts to the new rules, Voigt predicts blocktrading will end up representing more than 25 percent, but less than 70 percent, of totaltrading in the dark. (Helen Reid) ***** CHECKLIST FOR THE AGEING BULL (1216 GMT) Andrew Garthwaite and his team of strategists at Credit Suisse have nudged up their targetfor the MSCI AC World index to 624 points. In a note titled "Checklist for the ageing bull" theycite a series of positive factors - from global growth to monetary conditions - and say thateven though a number of preconditions for a market peak have occurred, each has an effectivecounter-argument. Here are the positives: * The breadth of global growth drives earnings revisions, which are consistent with strongermarkets. We forecast EPS growth this year of 10% in Europe and 17% in the US. * Monetary conditions are still loose while financial conditions and excess liquidity areneutral. * There have been very few signs of corporate excess (in terms of over-investment or M&A) orpositive 'new paradigm' thinking. * The sector that has led the market is not expensive (tech's P/E relative is close toaverage). Tech is the defining characteristic of this cycle. And the peak market conditions? Here are a few, including one on the Fed. * The current expansion is the second-longest in the post-war era; aside from 1987, all bearmarkets in the past 50 years have occurred against a backdrop of recession. For now, modelledrecession probabilities remain very low * Corporate debt-to-GDP is at previous peak. However, the free cash flow yield after buybackand dividends is positive, buybacks are earnings enhancing and still outperforming. * Our tactical indicators gave a sell signal in late January, but this was driven bysentiment surveys, and funds flow has not followed sentiment. Volatility usually picks up moreahead of a market peak. * Fed tightening. We expect the FOMC to raise rates 4 times this year. We would worry if theterm 'gradual' is dropped or r-star is revised up more than potential growth.(Danilo Masoni) ***** UK MID-CAPS: ACQUISITION TARGETS OF THE MONTH (1211 GMT) The rationale behind the two latest M&A moves, on Hammerson and Fenner, is quite different. The second French company swooping in on a UK mid-cap company in as many days, Michelin made a bid for Fenner late yesterday which has sent the engineering company'sshares up 26 percent. Hammerson yesterday rebuffed Klépierre's offer and also gained a handsome24 percent on the day. But the Fenner takeover is a very different animal to the (attempted) Hammersontakeover. Fenner's shares, even before today's surge, are up 240 percent over the past 24months. Hammerson meanwhile was wallowing at a 21-month low when Klepierre judged it was time tomake an offer. (see chart below) Clearly part of the reason is that UK real estate investment trusts (REITs) have been widelyseen as one of the best sectors to short if you're convinced a hard Brexit is coming.Engineering firms like Fenner, meanwhile, have an outward-facing business model and expertisemaking it, in many investors' eyes, a safer mid-cap bet even in the event of a hard Brexit. Michelin's offer places a hefty premium on Fenner even after its stellar performance,prompting analysts at Berenberg to criticise the deal valuation as too rich, though others atUBS say the deal valuation is in line with multiples paid for other UK engineers acquired inrecent years - in other words, Michelin isn't slapping a Brexit discount on the deal. So while Brexit risks have made some stocks, like Hammerson, more attractive to potentialbuyers - though the clear message yesterday was that the offer would have to be sweetened -there remain cyclical, export-oriented stocks in the UK mid-market which attract attentionwithout being hugely cheap. It's exactly this kind of takeover interest that many of the investors who've stuck with UKmid-cap stocks have been holding out for. (Helen Reid) EQUITIES WAVER AS FED COMES INTO VIEW (1010 GMT) As European shares dip in and out of negative territory, one of the big market focus pointsis the Fed's two-day policy meeting, at which the central bank is expected to raise rates forthe first time this year. Mike Bell, global market strategist at JPMorgan Asset Management, says there is a prettystrong chance of four rate rises this year. "A lot of the repricing has already taken place. You've seen bond yields move quite a bithigher this year," Bell says, adding that yields could see some slight further upside if the Fedshifts to be a little more hawkish. "I think equities can handle it as long as they don't start to signal that they areconcerned about inflation and signal more than four rate hikes this year," Bell adds. (Kit Rees) ******* OPENING SNAPSHOT: STOXX ATTEMPTS REBOUND (0840 GMT) European shares are trying to rebound following yesterday's sell-off, although there is notmuch conviction behind the gains and the STOXX 600 is up only 0.1 percent, havingfallen more than 1 percent in the previous session. Tech remains under pressure but the unloved media sector is gathering some support after theworld's third-biggest advertising group Publicis unveiled its latest strategy update. Financialswere also adding support ahead of tomorrow's widely expected rate hike. Here's your snapshot: (Danilo Masoni) ***** BREXIT TRANSITION DEAL: A "BUY" SIGNAL FOR UK EQUITIES? (0758 GMT) The transition deal announced in Brussels yesterday might only have removed part of theuncertainty around Britain's planned departure from the EU. But could this already be a turningpoint for UK equities? Investor surveys show London is the least appealing equity market in Europe and it's mostlyabout the economic uncertainty caused by Brexit. But to an income investor, the UK looks "incredibly attractive right now", says EdmundShing, head of equity derivative strategy at BNP Paribas. He contrasts gilt yields of 1.5percent with dividend yields on some UK oil companies of 6 percent. "I would argue that this (the transition deal) could potentially trigger people to reassesstheir views towards the FTSE 100 stocks, particularly as they are affected by currency, but moreimportantly they are affected by economic uncertainty," says Shing. He believes there is less reason for pessimism around UK large-cap stocks because they areless tied to the UK economy and, in any case, the UK economy is probably going to do slightlybetter than people previously thought - GDP forecasts are weak but inching higher. "So all things considered, (UK equities) might be a good long-term bet". More "glass half full" here from Fidelity International multi-asset portfolio manager BillMcQuaker: "A bad (Brexit) deal would still be negative for the economy - but with the status quo nowin place for at least another three years, and the UK traditionally a defensive market, UKequities might begin to look more attractive again,” says McQuaker. (Tom Pfeiffer) ***** WHAT YOU NEED TO KNOW BEFORE EUROPE'S OPEN (0745 GMT) European shares are seen rebounding slightly today with stock index futures pointing togains of around 0.3-0.4 percent. Tech and media stocks will continue to be a focus following yesterday's sell off in Facebookshares and reports about plans by the EU to impose a 3 percent tax on turnover of big digitalgroups such as Google and Facebook. Among TMTs, the world's third-biggest advertising groupPublicis released a new business plan it hopes will reverse sluggish growth and beef up marginsover the next three years, while a disappointing update from Oracle could put pressure on Germansoftware maker SAP. In M&A news, eyes on French tyre maker Michelin which said it plans to buy Britishengineering company Fenner for 1.2 billion pounds so that it can serve mining companies betterand benefit from an industry recovery. And here's an update on market-moving headlines: UK online grocer Ocado meets guidance for quarterly sales growth? 888 core earnings rise 12 pct BRIEF-Bellway says HY profit climbs 16.5 pct BRIEF-Fingerprint Cards says CFO to leave company in June British chipmaker IQE posts 18 pct rise in 2017 pretax profit Wood Group sees modest growth in core profit this year British builder Bellway's first-half profit rises 16.6 pct EnQuest 2017 core profit slightly above expectations Oracle revenue misses as cloud growth falls short of estimates (Danilo Masoni) ***** DAX, FTSE, CAC FUTURES ON THE UP (0707 GMT) Europe's top stock index futures have opened with gains of up to 0.5 percent, pointing to arebound following yesterday's sharp losses. On the macro front, today we have UK inflationfigures for February which are expected to soften, while in the U.S. the much-awaited FederalReserve meeting gets under way ahead of tomorrow's widely expected rate hike. Here's your futures snapshot: (Danilo Masoni) ***** EARLY MORNING EUROPEAN HEADLINE ROUND-UP (0653 GMT)France's Michelin bids for UK's Fenner in $1.7 bln mining movePublicis seeks to boost growth by going deeper into consultingRoche says Tecentriq, chemo cut risk of death in type of lung cancerFrance expects EU to get full exemption from U.S. tariffs: Le MaireUK trade minister optimistic about resolution over U.S. tariffsTrump says he is working to lower prescription drug pricesCarmakers' group warns of post-Brexit customs, approvals messCNH Industrial CEO Richard Tobin steps downLockheed wins $522 mln U.S. defense contract -PentagonMEDIA-Hershey is exploring a sale of British crisps brand Tyrrells - Sky NewsInnogy sticks to advertising strategy as break up loomsSweden's Vattenfall wins Dutch 700 MW offshore wind tenderVW to announce $340 million Tennessee investment to build new SUV -sourceMajority of French back selling state assets in Renault, Orange, PSA - poll (Danilo Masoni) ***** EUROPEAN SHARES SET FOR SLIGHT REBOUND (0621 GMT) Good morning and welcome back! After heavy losses in the previous session, especially for the UK's FTSE, further weigheddown by a stronger pound, European shares are set for a mild rebound today. Financial spreadbetters expect London's FTSE to open 27 points higher at 7,070, Frankfurt'sDAX to open 28 points higher at 12,245 and Paris' CAC to open 5 points higher at 5,228. Over in Asia, shares fell on Tuesday after investors took profits in high-flying U.S.technology shares on fears of stiffer regulation as Facebook came under fire following reportsit allowed improper access to user data. (Danilo Masoni) *****