Equities weak to begin week - A 5% drop in shares of Manulife Financial Corp

Publie le 22 novembre 2010
(http://ca.news.finance.yahoo.com/s/22112010/61/equities-weak-begin-week.html)

A 5% drop in shares of Manulife Financial Corp also weighed on financials after Citigroup downgraded the insurance giant's rating to "sell", due to a weak outlook for its U.S. operations and the risk of dilution in any further equity raising required to pay down its debt.

Manulife shares fell 71 cents to $14.64 in morning trading.

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UPDATE 1-Citigroup downgrades Manulife to sell-- by Thomson Reuters

* Cuts price target to C$15 from C$22

* Bullish on Asian franchise, skeptical on US

Nov 22 (Reuters) - Citigroup downgraded Manulife Financial Corp by two notches to "sell," citing weak outlook for its U.S. operation and the risk of dilution from further equity issuance.

Canada's largest insurer, which owns U.S.-based John Hancock, has a high level of uncertainty around future earnings progression and capitalization, Citigroup said.

"While we remain very bullish about the Asian franchise with its above average growth potential and continue to expect solid sustainable gains from the domestic Canadian business, the outlook for the U.S. John Hancock operations is a very different matter," the brokerage said in a note to clients.

The brokerage expressed confidence in Manulife's new CEO Don Guloien, but said the pace of the turnaround and the final outcome in terms of return on equity has considerable risks.

On Nov. 4, Manulife reported a fivefold increase in its third-quarter loss due to C$3 billion in charges and a writedown, but the company's shares rose 10 percent as the loss was not as big as expected.

The Toronto-based company's shares were trading down 3 percent at C$14.87 on Monday on the Toronto Stock Exchange. (Reporting by Aftab Ahmed in Bangalore; Editing by Don Sebastian) (aftab.ahmed@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: aftab.ahmed.reuters.com@reuters.net))