For Immediate
Release
Chicago, IL – May 17, 2012 –
Zacks.com announces the list of stocks featured in the Analyst
Blog. Every day the Zacks Equity Research analysts discuss the
latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include NYSE Euronext
Inc. (NYX), CME Group Inc. (CME),
IntercontinentalExchange Inc. (ICE), JP
Morgan Chase & Co. (JPM) and Goldman Sachs
Group Inc. (GS).
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Here are highlights from
Wednesday’s Analyst Blog:
NYSE Pushed Off LME
Bid
The Financial Times reported that
the US derivative exchange giant – NYSE Euronext
Inc. (NYX) has been pushed out of the London Metal
Exchange (LME) buyout battle owing to its low bid price.
However, other potential buyers –
Hong Kong Stock Exchange, CME Group Inc. (CME) and
IntercontinentalExchange Inc. (ICE) – are still
running neck-to-neck in the race. While NYSE’s bid was valued at
£800 million ($1.28 billion), the other three bidders have
reportedly made biddings worth over £1.0 billion
Founded in 1877, LME is the world's
largest futures exchange, which offers futures and options
contracts on base and other metals, which include aluminium,
aluminium alloy, NASAAC (North American Special Aluminium Alloy),
cobalt, copper, lead, molybdenum, nickel, steel billet, tin and
zinc.
LME is owned by 93 members, the
top-most shareholders being JP Morgan Chase &
Co. (JPM) and Goldman Sachs Group Inc.
(GS) with 10.9% and 9.5% stakes. LME is also one of the last
member-owned exchanges in the world wherein trading is conducted
through the open-outcry system in the ring by the ring dealing
members. In addition to the 12 companies who have exclusive rights
to trade in the ring, around 100 companies are involved in the LME
in total.
As the LME offers contracts with
daily expiry dates of up to three months from the trade date, along
with longer-dated contracts up to 123 months, it also allows for
cash trading. Furthermore, it offers hedging, worldwide reference
pricing and the option of physical delivery to settle
contracts.
Accordingly, the preliminary bid
for LME started in September last year and was closed in February
this year. While LME is mulling over the right price and future of
the deal, the actual bid offers of the three remaining contestants
remain undisclosed.
Scope of Growth for
Derivative Giants
After the collapse of its merger
deal with Deutsche Boerse, NYSE had shown significant interest in
LME as this metal exchange’s business blends well with NYSE Liffe’s
soft and agricultural commodity derivative business. NYSE Liffe is
the former London International Financial Futures Exchange, which
trades coffee, sugar, cocoa and wheat futures. While LME and NYSE
Liffe already share the same storehouses for delivery of
commodities, the combined trades could be cleared at NYSE Liffe
Clear, which is currently at a nascent stage of growth. Hence, this
effort could have paved way for a new earnings opportunity, had the
deal materialized.
On the other hand, addition of LME
to CME’s basket could enhance its metals exchange, Comex. Hence,
the deal is also considered important for other derivative
exchanges, such as CME and IntercontinentalExchange, in order to
boost their competitive strength in Europe.
Besides, Hong Kong stock exchange
is desperately looking forward to the culmination of this deal so
that it can tap the volatile European markets to drive growth
momentum in the markets of China.
While the owners of LME are
apprehensive about safeguarding its business model, we believe the
complex structure of its futures contracts and its network of
registered warehouses could pose some issues in the business sale.
Nevertheless, given the gravity of the changing business dynamics
in this industry and the lucrative pricing of the bids, a final
outcome is expected soon.
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CME GROUP INC (CME): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
INTERCONTINENTL (ICE): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
NYSE EURONEXT (NYX): Free Stock Analysis Report
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