The Intelligent Investor

20 January 2011

U.K.
The Economic Monitor Series. Free Edition.

INSIDE THE REPORT MARKETS AT A GLANCE

 Stock recommendations and price targets from top brokerage
firms
 Analysis and views on UK Manufacturing recovery, EasyJet
share price and St James's Place's FUM
 Economic Indicator Watch
 Important Events Scheduled on January 21
Economic Events & Indicators
 ICFR conference at London Business School
 Weaker commodity stocks dragged Britain's top share index lower,
after data from China heightened the potential for further
monetary tightening by the world's most voracious consumer of
raw materials. The FTSE 100 was down 86.08 points, or 1.4 percent,
at 5,890.62.
 British government bonds fell, lifting 10-year gilt yields to their
highest level since May 2010, after strong U.S. data added to
negative sentiment present earlier in the session. The yield on ten-
year gilts rose over 7 basis points to hit a high of 3.707 percent,
its highest since May 2010.
 Sterling was down 0.2 percent against the dollar at $1.5955, off a
high of $1.6010, with traders saying it struggled above $1.60, as it
ran into offers around the session highs.

 Christine Lagarde speaks at Franco-British colloquium
 Retail sales (December)
 Bank of England capital issuance (December)
 BoE Trends in Lending report (Q4)
 CML mortgage lending figures (December)
 Gold prices extended early losses to fall below $1,350 an ounce,
hitting their lowest in two months, as the euro surrendered gains
to turn negative versus the dollar, and as investment demand
waned. Spot gold fell as low as $1,342.65 an ounce.
 Oil prices fell by more than $2 to below $89 per barrel for the first
time in 10 days, as concerns about high U.S. inventories and
Chinese inflation outweighed positive U.S. jobless data. ICE Brent
future for March were down by $1.90 at $96.26 per barrel.

Corporate Events STOCK INDICES

INDEX LAST CHNG % CHNG
 Close Brothers Group and Lupus Capital pre-close
FTSE 100* 5867.91 -108.79 -1.82
trading update
FTSE Tech Mark 100* 2114.97 -33.56 -1.56
 BlueBay Asset Management trading statement FTSE Eurofirst 300* 1139.82 -12.66 -1.10

DAX* 7024.27 -58.49 -0.83

Breaking News
CAC 40* 3964.84 -11.87 -0.3

 January CBI factory orders fall Stoxx Europe 600 279.48 -3.24 -1.15

* CLOSING VALUES
 Floods hit coal output at BHP

 EasyJet hit by high fuel prices CURRENCIES

INDEX LAST PRIOR
 AB Foods sees slowdown in sugar profits
Euro (EUR/USD) 1.3439 1.3472
 Invensys reports unchanged Q3 profits UK Pound (GBP/USD) 1.587 1.5988

 London & Stamford cautious on property prices Japanese Yen (USD/JPY) 83 82.05

All prices are at 11:57 AM EST

 Bridgepoint sells stake in Safestore
FUTURES
 NCC Group H1 profits rise
LAST CHANGE

Crude Oil 88.37 -2.49

Natural Gas (Mar) 4.617 0.041

Gold, (Feb) 1348 -22.2

Copper (Mar) 426.95 -10.05

All prices are at 11:46 AM EST

The Intelligent Investor - U.K.

ANALYSIS AND VIEWS

UK manufacturing recovery well on track: CBI

By IBTimes

The recovery in UK manufacturing is well on track, driven primarily by export orders, the Confederation of British Industry (CBI) said on Thursday.

The CBI survey showed that output expectations balance rose from +13 to +17, a level consistent with quarterly growth in manufacturing output of
over 2 percent, while manufacturers raised output prices markedly during the last quarter.

"January’s CBI Industrial Trends Survey suggests that the manufacturing sector has continued to recover at a brisk pace," UK Economist at Capital
Economics Samuel Tombs said in a note.

In line with the strengthening in orders and output, sentiment has also improved, the survey found. A balance of +7 percent of firms said that they
are more optimistic about the business situation than three months ago, while +18 percent were more optimistic regarding export prospects for the
year ahead.

"The upbeat tone of the survey therefore chimed with December’s encouraging CIPS [The Chartered Institute of Purchasing and Supply]
manufacturing survey and the strong official output data for November," said Tombs.

Ian McCafferty, CBI's chief economic adviser, said the manufacturing sector's recovery is firmly in place and looks set to continue.

"Production has been boosted this quarter by a strengthening in both domestic and overseas demand and, over the next three months, companies
expect further growth, driven by another rise in export orders."

ANALYSIS AND VIEWS

EasyJet share price plunges on FTSE 250 as snow and strikes costs airline £24 million
By IBTimes

Shares in EasyJet were down on the FTSE 250 in morning trading, despite the budget airline reporting a rise in revenue in the quarter ended 31
December 2010.

Total revenue in the period increased 7.5 per cent to £654 million, while the number of seats flown by the airline grew 7.7 per cent to 13.8 million.
Total revenue per seat was broadly flat at £47.48. The number of passengers carried increased 8.8 per cent to 11.9 million, with the majority of those
coming from outside Great Britain. Load factor, which shows the number of seats booked as a percentage of those available, increased 0.9 per cent
to 86.7 per cent.

EasyJet said that it lost £24 million in the period as a result of the snow and strike action, of which three quarters was attributed to the weather.
Despite this EasyJet said that it had a strong balance sheet worth £1.3 billion at the end of the period.

Carolyn McCall, Chief Executive of EasyJet, said, "Against a difficult economic backdrop aggravated by severe weather and ATC strike action, easyJet
was able to deliver a solid trading performance and grow total revenue by 7.5% to £654 million whilst improving its position in mainland Europe."

"EasyJet will always support its passengers when external events impact their journey but we call on governments to provide sensible legislation for
airport regulation and air traffic control. The severe snow disruption of the past two years also highlights the need for airports to invest in the
appropriate infrastructure to keep passengers moving."

ANALYSIS AND VIEWS

St James's Place says funds under management touches all time high
By IBTimes

British wealth management group St James's Place said 37 percent rise in new single investments boosted funds under management to an all time
high of 27 billion pounds ($43 billion).

For the 12 months ended Dec. 31, 2010, the group reported total single investments of 4.75 billion pounds from 3.46 billion pounds in 2009.

"New investments ..... coupled with the excellent retention of existing client funds and further growth in stock markets, have resulted in funds under
management reaching an all time high of 27 billion pounds," said chief executive David Bellamy.

The group said its focused approach of recruiting only the highest quality advisers into the Partnership will provide a good platform to deliver 15
percent to 20 percent per annum new business growth over the medium. For the year, Partnership numbers rose 6 percent to 1,552, the company
said.
The Intelligent Investor - U.K.

TOP STORIES

January CBI factory orders fall

Industrial trends survey conducted by the Confederation of British Industry showed that factory orders unexpectedly fell in January. CBI said that
the firms are still expecting to raise prices markedly in the coming months. The CBI's total order book balance fell to -16 this month from a 30-month
high of -3 in December while its quarterly data showed that firms expected their business situation to improve, with a business situation balance of
+7 from +2 in October. CBI chief economic advisor Ian McCafferty said the recovery in the manufacturing sector is firmly in place and looks set to
continue and manufacturers have come under intense pressure to pass on rising costs.

Floods hit coal output at BHP

The production and sales at BHP Billiton's coal mining operations would be hit for at least six more months, due to Australia's devastating floods.
The miner reported that its output in Queensland state fell by a third last quarter. BHP posted a 4 percent growth in its quarterly output of iron ore
from western Australia to record levels to meet rising demand in China that is driving spot prices for ore to nine-month peaks of close to $200 a
tonne.

EasyJet hit by high fuel prices

The budget airline EasyJet today said that higher fuel prices and uncertainty in the economic conditions would led to a tough 2011. Chief Executive
Carolyn McCall said that the economic outlook in Europe remains uncertain and the higher market price of fuel will hit the margins in the short-
term. EasyJet said that it lost £24 million in the period as a result of the snow and strike action. The airline reported rise in revenue in the quarter
ended 31 December 2010. Total revenue in the period increased 7.5 per cent to £654 million, while the number of seats flown by the airline grew 7.7
per cent to 13.8 million.

AB Foods sees slowdown in sugar profits

Associated British Foods said that bad weather conditions on sugar beet, still to be processed, will hit the sugar profits this year. AB Foods' shares
fell in early trading overshadowing a 10 percent rise in group first-quarter sales led by strong performance. AB Foods Finance Director John Bason
said: "Sugar profit growth this year will slow. The prolonged freeze before Christmas and the warm temperature over the last few weeks will have an
impact on profits.”

Invensys reports unchanged Q3 profits

U.K engineer, Invensys reported its operating profit in the last three months to be unchanged from a year ago on its squeezed industrial automation
(IOM) margins and the weak domestic appliance market. The firm still expects to deliver improved performance for the full year. Invensys said its
automation systems division reported strong order growth in the three months to end-December, due to recovery in global industrial and its rail
division delivered a good performance in both revenue growth and operating profits.

London & Stamford cautious on property prices

London & Stamford Property continues to look for the deals with attractive equity and total returns for its 1 billion pounds ($1.6 billion) pot for
investments. The firm remains cautious of asset prices and said relatively few prime assets are coming to market. Chief Executive Patrick Vaughan
said that market conditions will continue to create opportunities for property investments with attractive equity yields and total .

Bridgepoint sells stake in Safestore

The largest shareholder of self-storage retailer, Safestore Holdings, the PE firm Bridgepoint Capital has sold its entire stake in the company.
Bridgepoint sold its 17.9 percent stake, or 33.7 million shares, at 135 pence apiece. Bridgepoint Capital, which owned 34.9 percent of the company,
sold about half its stake in March 2010.

NCC Group H1 profits rise

NCC Group, the computer-security firm today reported rise in its first-half profit, helped by a recent acquisition. The firm remains confident of a
strong second-half to be in line with market expectations. The company’s adjusted pretax profit from continuing operations was 7.4 million pounds
($11.83 million) compared with 5.9 million pounds in the year-ago period while revenue from continuing operations for the period ended November
30 rose 49 percent to 33 million pounds. The company's assurance division, which accounts for 64 percent of total revenue, saw an 86 percent rise in
revenue and raised its interim dividend by 19 percent to 4.15 pence.
The Intelligent Investor - U.K.

ECONOMIC INDICATOR WATCH ON JAN 20, 2011

Retail sales (mm, December)

Forecast: -0.3 % , Prior: 0.3%

Retail sales (yy)

Forecast: 0.9%, Prior: 1.1%

Sales ex-fuel (mm)

Forecast: -0.5%, Prior: 0.3%

Sales ex-fuel (yy)

Forecast: 1.3%, Prior: 1.8%
Office for National Statistics is due to release its retail sales figure for the month of December on Friday, Jan 21 at 0930 GMT. December month is
forecasted to decline as heavy snow and ice deterred shoppers from venturing out and forced some shops to close. With roads in many parts of the
country impassable, even on-line retailers are likely to have taken a hit.

Internet sales accounted for 10.5 percent of all sales, the highest proportion on record and versus 7.9 percent a year ago. The ONS said there was
anecdotal evidence that shoppers were browsing for goods in stores before purchasing on the internet.

CML Mortgage Lending Figures (December)

The Council of Mortgage Lenders (CML) is due to release its mortgage lending figures for the month of December at 0930 Local /0930 GMT /0430
ET. For the month of November, the mortgage lending remained weak. CML however remained positive on December figures, saying that
November figures were low as prospective buyers opt to wait until the New Year to purchase a home. The number of loans approved for those
buying a new home remained flat at 44,000 during the month – a 15% fall on November 2009 levels – when buyers were rushing to beat the end of
the stamp duty holiday. There was a small rise of 4% in the number of people remortgaging during in November as compared with October. CML
said that previous figures shows a marginal increase in the number of first-time buyers entering the market, with those getting onto the property
ladder typically borrowing 80% of the value of their property.

Bank of England Capital Issuance (December)

Bank of England will release its figures on capital issuance for the month of December at 0930 Local /0930 GMT /0430 ET. For the month of
November gross capital issues by UK residents totaled £38.4 billion in November 2010, £33.4 billion lower than in October. Net capital issuance by
UK residents totaled -£9.3 billion in November 2010, £10.9 billion lower than in October.

BoE Trends in Lending (Q4)

Bank of England will release its report on the trends of net lending to UK businesses for fourth quarter at 0930 Local /0930 GMT /0430 ET. Lenders
in the Bank of England’s Credit Conditions Survey in 2010 Q3 stated that demand for credit was broadly unchanged for medium and large
businesses, though it had fallen for small businesses. Official data covering lending by all UK-resident banks and building societies indicated that the
stock of lending to businesses increased by £0.3 billion in August, the first positive figure since February 2010. The annual rate of growth of corporate
lending remained negative.

Data from the major UK lenders indicated that net lending to businesses weakened in September. Gross mortgage approvals for house purchase
declined slightly in September according to data from the major UK lenders. The flow of net consumer credit was slightly negative in August and the
annual growth rate of the stock of lending remained close to zero. According to the Credit Conditions Survey, household demand for total
consumer credit fell in 2010 Q3. The availability of unsecured credit was reported to be broadly unchanged in 2010 Q3, but was expected to
increase in Q4.
The Intelligent Investor - U.K.

THE NEXT TRADING DAY

Economic Events
 ICFR conference at London Business School (DAY 1). Featuring- Bank of France Deputy Governor Jean-Pierre Landau, Swiss National
Bank Deputy Governor Thomas Jordan and Others.

 French Economy Minister Christine Lagarde speaks at Franco-British colloquium on the construction of Europe at 1900.

Company Events

Close Brothers Group, the British investment bank, will release its pre-close trading update. The company recently appointed Geoffrey Howe as an
independent non-executive director of the company with effect from 4 January, 2011. The group is confident that it will deliver a satisfactory
performance for the full year. Total funds under management increased 14 percent to 8.5 billion pounds ($13.5 billion) in the firm’s first quarter
ending October 31, while its asset management division made a quarterly loss. The company’s loan book grew 7 percent to 3.1 billion pounds in the
quarter.

British building materials firm, Lupus Capital, will release its pre-close trading update. The company forecast full-year results ahead of current
expectations, after it posted a 68 percent rise in first-half pre-tax profit. It reported continued improvement in gross and net margins and had an
encouraging first half, with sales and operating profits outperforming the significantly depressed prior year levels and with improvements to both
gross and net margins. Its group sales were at £133.2 million (2009: £117.0 million), an increase of £16.2 million or 14 percent. Gross profit margins in
the period improved to 35.0 percent reflecting the focus on recovery of cost input prices and changes in mix of products sold.

The Board remains cautiously optimistic about the overall prospects for the Group for the full year, and expects to report results for the year ahead of
current expectations.

BlueBay Asset Management, a U.K based asset manager specializing in fixed income and alternate investment products, will release its trading
statement on 21 Jan 2011. Royal Bank of Canada, or RBC, in December announced that it has completed the acquisition of BlueBay Asset
Management.

Disclaimer - All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do
not guarantee the accuracy or completeness of this report. This is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. This
document is provided for information purposes only and should not be construed as an offer or solicitation for investment. This document has not been prepared in
accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the
dissemination of investment research. It may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report.
Past performance is not necessarily a guide to future performance.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING PREV CLOSE

Evolution Securities

Aberdeen Asset Management Cuts to add from buy Add 225p

BHP Billiton Raises price target to 2700p from 2285p -- 2470p
Natixis
Petrofac Raises to buy from neutral Buy 1616p
BP Raises price target to 500p from 440p Neutral 506p
Royal Dutch Shell Raises price target to 2350p from 2250p Buy 2138.5p
Disclaimer: The views and investment tips expressed by investment experts are their own, and not that of IBTimes or its management. We advise users to check with certified experts before
taking any investment decisions.

This report is produced by

International Business Times
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