Broker comments in the UK today. Compiled by Dow Jones Newswires Markets Desk, markets.eu@dowjones.com Contact us in London. +44-20-7842-9464 Markettalk.eu@dowjones.com 0954 GMT [Dow Jones] FinnCap initiates coverage of Scientific Digital Imaging (SDI.LN) with a 50p target. The company, which makes cameras, instruments and software used in life science research, is growing, profitable and undervalued compared to UK-listed peers like Axis-Shield (ASD.LN) or Andor Technology (AND.LN), says analyst Keith Redpath. Redpath adds that SDI has significant opportunities to grow through acquisition and has already demonstrated it can integrate purchases successfully. Shares +2.3% at 22p. Scientific Digital is a client of FinnCap. (jason.douglas@dowjones.com) Contact us in London. +44-20-7842-9464 Markettalk.eu@dowjones.com 0940 GMT [Dow Jones] BP's (BP) new deal to develop natural gas discoveries in deep water offshore Egypt is positive for the company as it struggles to rebuild its reputation after the Gulf of Mexico oil spill, says NCB Stockbrokers analyst Peter Hutton. "It shows it's business as normal elsewhere in the world and other areas are still signing them to do deep water," he says. However, there was never much real danger that countries like Egypt or Libya would abandon long-standing relations with BP, he adds. Gives hold rating, 420 pence target. Shares -2.4% at 397p. (james.herron@dowjones.com) 0939 GMT [Dow Jones] The euro may be slipping against the USD, but it continues to head higher on the crosses Monday. EUR/CHF just printed a near four week high of 1.3625, EUR/GBP a seven week high of 0.8482, and EUR/JPY has added over 150 sen from the day's 111.43 low. EUR/USD trades at 1.2954, within the day's range of 1.2992-1.2871. (gary.stride@dowjones.com) 0936 GMT [Dow Jones] Pakistan shares rise, helped by oil and cement shares, as benchmark KSE-100 index +0.8% at 10,243.90. "Buying from foreign funds and local financial institutions has provided upside to the index," says local dealer. Adds foreign buying last week amounted to $5.7 million in local equity markets, aiding sentiment. "Buying has been spurred on hopes that the stock market regulator would soon allow investors to buy shares using funds borrowed from financial institutions," says local analyst; notes, Karachi Stock Exchange officials have proposed new financing product for investors to enable such transactions, adds equity markets have not had any financing product since over 12 months and all deals have been executed on cash basis. Pakistan State Oil (PSO.KA) +0.7% at PKR267.85, Lucky Cement (LUCK.KA) +1.9% at PKR69.50. (djn.in@dowjones.com) 0934 GMT [Dow Jones] THB/USD higher at 32.285 vs 32.225 late Friday in thin volume as disappointing U.S. economic data, Wall Street's sharp decline Friday hurt risk-sensitive Asian units, says Bangkok-based dealers. "Demand from importers, particularly gold traders, was spotted this morning," he adds. Investors cautious after Ireland's credit rating downgraded by Moody's on rising debt burden, weak growth outlook, high cost of rebuilding banking system. Investors also keeping close eye on results of euro-zone banks' stress tests due Friday. Resistance tipped at 32.32, support at 32.20. (oranan.paweewun@dowjones.com) 0931 GMT [Dow Jones] The latest IMM speculative positioning data shows a 180-degree turnaround in JPY since May, notes Danske Bank. After being net short JPY to the tune of 45% of open interest, speculators are now net long of 35% of open interest. Says as the JPY rises so does the probability of BOJ intervention, which only amplifies the downside risks on JPY that already exists from positioning. USD/JPY now at 87.03. (gary.stride@dowjones.com) 0930 GMT [Dow Jones] Indonesia shares end down 0.6% at 2975.572 in moderate volume as weak IDR, losses in most regional markets prompt foreign investors to take profit, traders say. Still, benchmark index off intraday low of 2952.528; "bargain-buying by some local institutional funds lifted the main index from its lows," says trader at First Asia Capital. Traders tip shares to rebound tomorrow as 1H earnings season kicks off soon; companies expected to report strong results. Tip resistance at 3000 Tuesday. Among decliners: Bank Mandiri (BMRI.JK) down 1.6% at IDR6,000 but off IDR5,900 low, Bank Rakyat (BBRI.JK) down 1.0% at IDR9,750, while cement maker Semen Gresik (SMGR.JK) down 1.1% at IDR9,300. (edhi.pranasidhi@dowjones.com) 0924 GMT [Dow Jones] Nomura sees no significant fiscal action from Hungary before local council elections in October, but the government will then have already missed this year's deficit target of 3.8% of GDP "with all but certainty." The government will also be late trying after the local elections to get back on board with the IMF/EU, it adds. The IMF/EU delegation suspended talks with Hungary Saturday without reaching an agreement. Nomura also expects Hungary's efforts to meet the budget deficit target of below 3% of GDP in 2011 to be an "uphill struggle." (veronika.gulyas@dowjones.com) 0914 GMT [Dow Jones] If the EUR/HUF rate moves above 290 this week, Hungary's central bank may intervene to protect the HUF, Nomura says. Should EUR/HUF rise above 310-315, the central bank is likely to raise interest rates from the current 5.25%, Nomura adds. The IMF/EU left Hungary earlier than planned and without a deal Saturday. EUR/HUF is 288.72 from 289.03 early morning. Nomura warns that a CHF rally vs the HUF means a "double whammy" for Hungarian households, which mostly have CHF-based debt. Adds a crisis could be good for Hungary on the long run, "bringing politicians back to the straight and narrow." Recommends staying short in Hungarian assets. (veronika.gulyas@dowjones.com) 0913 GMT [Dow Jones] India interest rate swaps see slight receiving interest across curve, reflecting lower government bond yields, says dealer with private bank. Adds, swaps falling on signs of liquidity trickling back into banking system, while bond yields fall as no federal government debt sale scheduled this week. 1-year OIS rate at 5.75%/5.79% vs 5.77%/5.81% last close, 5-year OIS rate at 6.81%/6.85% vs 6.83%/6.86% last close. "A rate hike at RBI's policy meeting (on July 27) is already priced in and swaps will likely move in a tight range," dealer says. Tips 1-year OIS in 5.70%-5.85% range, 5-year OIS in 6.78%/6.88% range till RBI policy meeting. RBI Friday decided to extend second daily liquidity auction facility till July 30 to help banks manage liquidity better. (khushita.vasant@dowjones.com) 0907 GMT [Dow Jones] KLCI ends down 0.3% at 1333.35, in line with weaker regional bourses. "The profit taking is not a surpise but trading volume is healthy, and the index staying above 1326 (10-day moving average) gives it a good base to rise further this week," says dealer. Maybank IB Research says chart signals still positive with KLCI having potential to test 1349 in coming weeks. Market breadth turns marginally positive late with advancers beating decliners 327 to 319. Among actives, Titan (5103.KU) +18.4% at MYR2.19, Time (4456.KU) +4.4% at MYR0.475, Scomi (7158.KU) +3.7% at MYR0.425, UEM Land (5148.KU) +3.8% at MYR1.62, JCY (5161.KU) down 2.0% at MYR1.48, Berjaya Corp (3395.KU) down 1.7% at MYR1.14. (kwan-por.lee@dowjones.com) 0901 GMT [Dow Jones] China onshore IRS down, tracking lower U.S. Treasury yields after weaker-than-expected U.S. consumer-sentiment report Friday. 1-year down 3 bps at 2.03%-2.13%, 5-year down 6 bps at 2.72%-2.82%, 1-to-5-year spread 3 bps narrower at 71 bps. Shanghai-based local bank trader says swaps can fall more as concerns over strength in U.S. economic recovery persist. "If the U.S. economy is facing a double-dip (recession), China's market will also suffer." China PBOC Vice Gov. Du Jinfu says inflation pressures have eased in China, also weighing on rates. (wynne.wang@dowjones.com) 0851 GMT [Dow Jones] The dollar is mixed nudging slightly higher against the JPY as equities recover from a shaky start and risk appetite returns. The pound is a little firmer for much the same reason although the big mover of the session has been the euro which has bounced sharply from its lows seen after Moody's one notch downgrade of Ireland. The euro is up at $1.2970, the pound is up at 1.5317 and the dollar is up at Y86.91. (gary.stride@dowjones.com) 0940 GMT [Dow Jones] BP's (BP) new deal to develop natural gas discoveries in deep water offshore Egypt is positive for the company as it struggles to rebuild its reputation after the Gulf of Mexico oil spill, says NCB Stockbrokers analyst Peter Hutton. "It shows it's business as normal elsewhere in the world and other areas are still signing them to do deep water," he says. However, there was never much real danger that countries like Egypt or Libya would abandon long-standing relations with BP, he adds. Gives hold rating, 420 pence target. Shares -2.4% at 397p. (james.herron@dowjones.com) 0858 GMT [Dow Jones] A deal between GDF Suez (GSZ.FR) and International Power (IPR.LN) would makes sense for GDF Suez assuming the price was not exorbitant, says UBS analyst Per Lekander. The deal would mainly involve operating power plants in emerging markets, which is one of the few areas of real growth, Lekander says. He says a deal would clearly be earnings-accretive for GDF Suez, so long as the price were within reason. International Power rated neutral, 320p target; GDF Suez rated buy, EUR28.5 target. GDF Suez shares +1.3% at EUR24.64, International Power +8.6% at 344p. (william.horobin@dowjones.com) Contact us in London. +44-20-7842-9464 Markettalk.eu@dowjones.com (MORE TO FOLLOW) Dow Jones Newswires July 19, 2010 05:54 ET (09:54 GMT)
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