8th Sep 2015 06:38
LONDON (Alliance News) - Stocks in London are called to open higher on Tuesday after a report that China's exports declined by less than expected in August, while specialty insurer and reinsurer Amlin said it has agreed to be acquired by Mitsui Sumitomo Insurance.
IG says futures indicate the FTSE 100 to open higher at 6,100.0. The index closed up 0.5% at 6,074.52 on Monday.
Wall Street was closed Monday for Labor Day and will open again Tuesday.
In Asia, the Japanese Nikkei closed down 2.4%, the Hang Seng trades up 0.9% and the Shanghai Composite is up 0.8%.
China posted a trade surplus of USD60.24 billion in August, the National Customs Office said, well above forecasts for a surplus of USD48.0 billion and up from USD43.03 billion in July.
Exports were down 5.5% on year, also bettering expectations for a fall of 6.6% after tumbling 8.3% in the previous month. Imports skidded an annual 13.8% versus expectations for a fall of 7.9% and after dropping 8.1% a month earlier.
In yuan-denominated terms, exports fell 6.1% on year and imports plummeted 14.3% for a trade surplus of CNY368.03 billion.
After the release of weak export figures last month, the People's Bank of China devalued its currency on August 11 in an effort to support exports. The devaluation was the biggest one-day reduction in value in two decades.
As the central bank sold dollar to stabilize the yuan exchange rate, country's foreign exchange reserves declined by the most on record in August. Foreign exchange reserves fell by USD93.9 billion to USD3.56 trillion in August. The PBoC also cut its interest rates in August for the fifth time since last November and reduced the reserve ratio to support bank lending.
However, concerns still remain about the world's largest economy with the country's imports declining by much more than expected, signalling weak domestic demand.
Craig Erlam, senior market analyst at Oanda says the trade figures show that China is having difficulties in its attempts to transition from an export-driven economy to a consumer-driven one.
"The consumer just isn?t filling the void which is going to result in slower growth and challenging conditions for the government and central bank," Erlam adds.
In Japan, gross domestic product was upwardly revised for the second quarter of 2015, the Cabinet Office said, but the country's economy still fell into contraction, contracting 0.3% quarter-on-quarter. That's an upward revision from 0.4% decline in last month's preliminary reading, and it beat forecasts for 0.5% fall.
On a yearly basis, GDP contracted 1.2% - but that also was upwardly revised from the preliminary reading of 1.6% contraction, and it beat forecasts for 1.8% fall.
On the UK corporate front, Amlin said it has agreed to be acquired by Mitsui Sumitomo Insurance Co Ltd in a deal valuing the insurer at about GBP3.47 billion, as the wave of mergers and acquisitions continues across the industry.
Mitsui Sumitomo Insurance, which is owned by Japan's MS&AD Insurance Group Holdings Inc, will pay 670 pence per Amlin share. In addition, Amlin shareholder will be able to receive the insurer's 8.4 pence interim dividend declared last month.
The price tag is a 36% premium to Amlin's closing price on Monday and a 2.4 times multiple to the insurer's net tangible book value per share on a fully diluted basis of 275.2 pence at the end of June.
Whitbread reported a rise in sales in the first half of its financial year, boosted by growth in both its Premier Inn and Costa businesses, and it said it is on track to meet expectations for the full year.
The hotel and coffee shop operator said that total sales in the 24 weeks to August 13 grew 11.8%, or 3.9% on a like-for-like basis on the same period the year before. In the second quarter, total sales increased 11.1% and rose 3.3% on a like-for-like basis.
Hikma Pharmaceuticals said it has struck a deal to acquire Egypt-based EIMC United Pharmaceuticals for an undisclosed amount.
FTSE 100-listed Hikma said EIMC United specialises in oncology products and said the deal will strengthen its position in the Egyptian market and will add an attractive oncology and injectables pipeline to its portfolio, with the potential to add around 50 products by 2020.
RSA Insurance Group said it has signed contracts to sell its operations in Latin America to Suramericana, the insurance subsidiary of Colombia's Grupo de Inversiones Suramericana, for about GBP403.0 million in cash, the last of its larger businesses to be disposed of under a restructuring plan.
In a statement, RSA said that Zurich Insurance Group, which has shown interest in making a GBP5.6 billion takeover offer for its smaller rival, was made aware of the sale process. "This transaction is not conditional on the outcome of their possible offer for RSA," the company said.
Berkeley Group Holdings reiterated its earnings guidance as it said it has continued to expand its operations in its current financial year so far. The housebuilder, which will be promoted to the FTSE 100 later this month, said that since the start of its financial year at the start of May, it has continued to invest across its business, signing contracts to acquire five sites and investing further in order to hit its three-year earnings targets.
In the economic calendar, there are German and French trade balances at 0700 BST and 0745 BST, before eurozone GDP at 1000 BST. The US labor market conditions index is at 1500 BST and consumer credit is at 2000 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
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