ThyssenKrupp $14 billion sale plan flags consolidation

ThyssenKrupp $14 billion sale plan flags consolidation

Stock Market Predictions

FRANKFURT (Global Markets) - ThyssenKrupp (TKAG.DE) shares jumped on Friday after the German steelmaker unveiled a 10 billion euro ($14 billion) divestment plan that could spur consolidation in Europe's overcrowded stainless steel sector.

The restructuring will include a spin-off of the company's stainless steel division and aims to help ThyssenKrupp pay down debt and focus on its engineering business.

Analysts had expected a shake-up since the company's new Chief Executive Heinrich Hiesinger took over early this year.

But the scope of the revamp was more far-reaching than anticipated by the market.

"More surprising is the considered spin-off of Stainless Global, opening up strategic partnerships with former ArcelorMittal stainless unit Aperam or Finland-based Outokumpu," Equinet analyst Stefan Freudenreich said.

ThyssenKrupp shares jumped 7.1 percent to 31.955 euros by 0908 GMT, outpacing a 0.5 percent gain by Germany's DAX index .GDAXI.

ThyssenKrupp's stainless business is Europe's biggest with almost 3 million tonnes of output and annual sales of 5.9 billion euros. The company will examine all options for continuing the business outside the group.

"The main target is clearly to bring down debt levels," DZ Bank analyst Dirk Schlamp said.

Analysts have previously called for divestments at ThyssenKrupp, a lumbering giant that has piled up debts of 5.8 billion euros related to mammoth plants it has built in the United States and Brazil.

Analysts expect Hiesinger -- the company's first CEO who has no steel background -- to strengthen the non-steel sectors, including elevators and other technology-related activities, whose strong performance has offset start-up losses at its Steel Americas division.

Analysts estimate that the non-steel activities, which they see contributing around 70 percent to group's total value, were main growth drivers in the fiscal second quarter to end-March, along with European carbon steel operations and the global stainless business.

ThyssenKrupp is due to report quarterly results on May 13 and is expected to show its second-quarter earnings were boosted by higher steel prices and a booming German automotive industry.

OVERCAPACITY IN STAINLESS

Europe's stainless steel sector has long suffered from overcapacity and volatility. ThyssenKrupp and its rivals sounded out possible consolidation in the sector in 2009, but Germany's biggest steelmaker opted for a stand-alone strategy.

It then launched a restructuring that included a shutdown of one of its German stainless factories last year and brought forward production plans of a new stainless plant in Alabama.

Analysts have said a natural partner for ThyssenKrupp could be Outokumpu (OUT1V.HE) because the Finnish rival has a strong presence in northern Europe and the German firm is absent there.

They also have said the German company would have a clash of culture with ArcelorMittal, while No.1 stainless steel producer Acerinox (ACX.MC) is not keen to acquire assets in Europe.

This year, global steel market leader ArcelorMittal (ISPA.AS) spun off its stainless steel division, Aperam (APAM.AS) and listed it on the stock exchange, prompting speculation about possible consolidation.

Aperam will kick off a raft of steel-industry earnings next week, reporting quarterly results on Tuesday. ArcelorMittal itself follows on Wednesday, Germany's second-biggest steelmaker Salzgitter (SZGG.DE) on Thursday and ThyssenKrupp on Friday.

(Editing by Dan Lalor and Jane Merriman)

($1=0.7158 euros)

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Why stock market predictions are so often misses the

Why stock market predictions are so often misses the?
What was the oracle in ancient times , which is now the expert. To find out what happens to the economy or the stock exchanges, we rely on the knowledge of modern prophets : On Financial Market researchers , analysts and fund managers – even on those who earn their money by watching the markets.

Success makes arrogant
But how accurate are the stock market predictions of the experts? Three researchers from Germany and wanted to know Canada and compared with the old estimates of future actual values.

Cause of their study are insights from psychology : " Most people are often over- confident and to the precision of their knowledge , "write Richard Deaves ( McMaster University, Ontario ), Erik Lueders and Michael Schröder (both: ZEW Mannheim) in their study, the forthcoming in the Journal of Economic Behavior & Organization "appears. But the same goes for professional financial prophet? This question has been no research team investigated.

For its test of reality , the three scientists used the forecasts on the future development of the German stock index ( DAX ), which are requested in the same questionnaire. The expert estimates of future economic development proved to be asked for the study as too crude – the ZEW only be a basic assessment of the development: Is it up , down, or is all the same?

The DAX forecasts on the other hand much more concrete : So the experts have to specify a precise margin, are the likely the stock after half a year in their opinion is .

Hardly a respondent is the test oracle
The interesting thing : The width of the margin to select the respondents themselves . An interval of 1000 Dax – points is just as possible as one of ten. Who was more uncertain , then, how many points are in the index six months later, would , could simply indicate a greater margin – and thus in the end maybe even be right .

Nevertheless, a respondent could barely pass the test oracle : The vast majority of Dax true value was at most only seven out of ten estimates the assumed interval. 40 percent met even only a maximum of every second time the mark.

In a second study the researchers were able to demonstrate to the financial experts a typical human trait : to make success self-confidence , caution against failures . they were correct with their predictions in the previous time, then reduced the respondents the margin at the next attempt at about five percent.

they were wrong, they increased the interval by a similar amount – probably to the danger of a renewed insult reduced. The crucial question, the researchers went about was: experts with long experience better? "If they are able to learn from their successes and failures , they would have the time to make really accurate forecasts " , the researchers suspect .

But curiously, their analysis showed just the opposite : three additional years of professional experience, the forecasts deteriorate measured by an average of over one percent , noted the authors. Perhaps the motivation is to deliver good performance, with experienced veterans simply are not as big as the presumption of Deaves , Luders , and Schroder.

Experience therefore not protected against errors , but makes it more likely. Conversely, this means that true professionals do not have to be old.

For additional you can also read - Can You Dominate Your Retirement?

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Commerzbank turns off money tap after Q3 Greece hit

Commerzbank turns off money tap after Q3 Greece hit

Stock Market Predictions

FRANKFURT (Global Markets) - Germany's second-largest lender Commerzbank (CBKG.DE) will refuse loans which don't help Germany or Poland, as the euro zone crisis makes European banks more protectionist in choosing between writing new business and meeting stringent capital requirements.

"We are not doing business which is not to the benefit of Germany or Poland," Chief Financial Officer Eric Strutz told analysts on a conference call discussing third-quarter earnings on Friday. "We have to focus on supporting the German economy as other banks pull out."

Commerzbank's retrenchment to its home turf shows that even Europe's largest economy, which has been relatively sheltered from the euro zone crisis, is feeling the heat. Survey data on Friday showed that private sector activity in the euro zone shrank at the fastest pace in 28 months.

Commerzbank, which is 25 percent owned by the State, is accelerating the pullback from euro zone nations and cutting risky assets to avoid another state bailout after a 798 million euros ($1.10 billion) impairment on Greek assets pushed it to a third-quarter operating loss.

Having cut exposure to indebted euro zone countries by more than 20 percent to 13 billion euros, including a 52 percent haircut on Greek debt, the Frankfurt-based lender said it would continue reducing its public sector debt in Portugal, Italy, Spain, Ireland and Greece, mirroring a similar move made by French rival BNP Paribas (BNPP.PA).

"When resources are tight you shrink back to your strongest footprint. Other banks face similar choices," said Keefe Bruyette & Woods analyst Matthew Clark.

On Friday it emerged that Royal Bank of Scotland (RBS.L) reduced the number of non-core real estate loans by 2.3 billion pounds ($3.7 billion) during the third quarter.

Euro zone banks have shed risky assets to avoid underpinning their loan books with more capital as demanded by the European Banking Authority.

European banks must raise 243 billion euros to achieve a core tier one capital ratio of 9 percent using a more stringent definition of capital, J.P. Morgan analysts said in an October 19 note.

Commerzbank said it had a core tier one ratio of 9.4 percent at the end of September and needs to raise 2.9 billion euros to meet tougher capital requirements set out by the European bank regulators.

"We can meet the required capital ratio by, for example, reducing risk assets in non-core areas, selling non-strategic assets or by means of retained earnings and we do not intend to tap new state funds," Commerzbank said.

Commerzbank will keep its Eastern European BRE Bank unit and its online arm comdirect but may sell other units as it seeks to cut risky assets by a further 30 billion euros. Its property financing unit Eurohypo will also stop taking new business, the bank said.

EURO ZONE STILL A WORRY

"The outlook for the current year and 2012 is subdued," the company said in its report, citing the risk of escalation of the European sovereign debt crisis and stricter capital requirement for the industry.

In a conference call with analysts, finance chief Strutz was more forthright, saying efforts to resolve the euro zone crisis need to be intensified, "We have now had 18 summits. The last ones were more encouraging that the first 15. But I feel we will have more summits."

The whole stability of Europe depends on "whether Italy gets its act together," he said, citing a key economy seen vulnerable to contagion.

The lender's exposure to the country was 14.3 billion euros at the end of September, 7.9 billion of which in sovereign debt.

The lender was also forced to drop its 2012 profit target.

"We continue to be committed to our original operating profit target of 4 billion euros for the group but, on account of the market environment, we will be unable to reach this target next year," Chief Executive Martin Blessing said.

Its shares fell 6.05 percent to 1.64 euros at 1353 GMT, as the STOXX Europe 600 Bank index .SX7P fell 1.9 percent.

The third-quarter operating loss of 855 million euros compared with a year-earlier profit of 116 million was worse than the 683 million euros loss estimated in a Global Markets poll as investment banking income wilted.

Even the lender's core business of lending to German mid-sized companies failed to impress. "Q3 results were weaker than expected, particularly performance in the core bank was disappointing," Equinet analyst Philipp Haessler said.

($1=0.728 Euros)

(Additional reporting by Christoph Steitz and Sarah Marsh; Editing by Hans-Juergen Peters and Helen Massy-Beresford)

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