Storm warnings on the markets greet the start of the week of the US rate hike. Stock lists are down, starting with Japan. In the middle of the session, the Nikkei index dropped 2,5%, despite the good news coming from the Tankan index, a thermometer of business confidence. But the prospect of an intervention by the Central Bank on the occasion of Friday's meeting is fading away.
Sydney also ends up below 2%. Hong Kong is also down (-1,4%) which is affected by the merger between the main maritime transport companies in Beijing: the shares of the four companies involved lose more than 20%.
In the meantime, Guo Guangchan's mystery, the Chinese Warren Buffet, has returned. The tycoon who disappeared on Friday reappeared this morning at an employee meeting. In recent days Guo has "collaborated" with the authorities on various judicial fronts. Shares in his company, Fosun International, suspended on Friday, opened 18% lower before recovering -10%.
FED EFFECT: BEIJING DEVALUES THE YUAN
MILAN REDUCES 2015 EARNINGS BY 10,5%
The markets are thus positioning themselves in view of the announcement which will arrive shortly before 20 on Wednesday 16, the time of the historic press conference of Fed chair Janet Yellen, who will have the honor of illustrating the strategy of the American Central Bank underpinning the first US rate hike since 2006.
The first reaction comes from China. In fact, the decline of the yuan continues, set at 6,3550 (-0,21%) at the lowest level against the dollar since 2010. Beijing's currency policy, reads a note from the Central Bank, from now on will look at a basket of reference currencies and not just the dollar.
The US currency traded this morning at 1,1095 against the euro. Emerging currencies are already reeling, even if the South African rand recovered (+3,6%) this morning, after Friday's collapse. Colombian and Mexican pesos are also down.
Oil is increasingly weak: Brent is 37,60 dollars, while WTI slips to 35,39, the lowest quotation since February 2009. Both types of crude oil lost 10% during the week and ended up at quotations that did not touch from January 2009. The International Energy Agency forecasts that crude oil will only be able to go back to 80 dollars in 2020.
Stock lists restart after a difficult week. In New York, the Standard & Poor's index fell by 3,5%, the worst performance since last August 21st. The Dow Jones fell 3,3%, the Nasdaq 4,1%. It also went badly for the Old Continent: the overall index of the Stoxx600 European Stock Exchanges fell by 4% and the gain from the beginning of the year was reduced to +3,8%.
In Milan, the FtseMib index lost 4,5% in five sessions (Friday -1,8%), reducing the performance since the beginning of the year to +10,5%. Only Atlantia (-0,15%) was able to contain the decline below 1%. In addition to the heavy opinion of the market on the banking sector, Stm (-8,2%) which today will pay the quarterly dividend (0,1 dollars) and Mediaset (-7,50%) have come under fire.
MPS AND POPULAR, RECOVERY TESTS
There are two dominant themes of the Italian financial week, which promises to be very little Christmassy: banks, especially Monte Paschi and Popolari, and Telecom Italia. The bank game is destined to hold court again this week. It is a matter of verifying to what extent the executive's response to the problems triggered by the bank-saving decree will be able to restore confidence in the markets after last week's rejection.
The highest price was paid by Monte Paschi (-13%), also affected by the exit of Btg Pactual. Banco Popolare (-8,3%) and Bper (-8,2%) were also bad. The significant drop on the market in the value of the issues of the 79 subordinated bonds issued by Italian banks also weighed heavily: four MPS bonds recorded drops between 5,5 and 9,7%.
The most delicate front, once again, remains that of Siena, engaged in the increasingly problematic hunt for a partner. The value attributed to the non-performing loans of Banca Marche and of the other institutions involved in the Treasury rescue project, valued at 20 per cent of the nominal, contributes to complicating the matter: if the problem loans of MPS (47,5 billion, 24,3 at net of adjustments) were treated in the same way, new heavy capital losses would emerge.
TELECOM ITALIA, BOLLORE' OPENS HOSTILITIES
Piazza Affari's attention will also be focused on Telecom Italia, on the eve of tomorrow's shareholders' meeting which has now taken on the flavor of a key step for the former incumbent of the Italian telecommunications companies. Up for grabs is not only the entry of 4 Vivendi representatives on the board, which are opposed by Italian and foreign funds on the recommendation of the main proxy fighters, but the very future of the group.
Vivendi announced on Friday evening that it was abstaining from the vote on the conversion of savings into ordinary shares, a choice which is equivalent to a vote against. The choice is serious, the reasons even more serious: 1) the conditions are not sufficient, starting from the adjustment of 9,5 euros; 2) failure to respect the rights of ordinary shareholders, subjected to heavy dilution; 3) such an important decision should be taken by a board of directors that "best" represents the shareholders.
A stance that aroused the inevitable response of the board of directors who claimed the correctness of the decision taken by the top management assisted by Citi and Equita. At this point, barring an improbable last-minute agreement, both Vivendi's request to join the board and the conversion of savings shares could be rejected tomorrow. The immediate consequence will be the rush to resell the savings bonds accumulated in recent weeks (more or less a billion shares subject to arbitrage). A violent fall in stocks is inevitable.
PININFARINA INDIANA, MARCHIONNE HOLDS BACK ON GM
Week of novelties also for the automotive sector. In Italy, the agreement for the sale of Pininfarina to the Indian group Mahindra will finally be signed, which will invest 150 million euros to refinance the debt and fresh investments.
In the meantime, the market's opinion on the agreement reached on Friday on Renault-Nissan is awaited. The Japanese shareholders have accepted that Paris will increase its influence over Renault thanks to the Fleurange law. But the Japanese have obtained a guarantee that French rights to Nissan can lapse if Renault exceeds 25% of the votes in Nissan. Furthermore, Paris renounces exercising its rights in the "non-strategic" decisions of the Japanese partner.
Sergio Marchionne, on the occasion of the delivery of the prize to "Turin of the year" to Gianluigi Gabetti ("the closest friend I have despite the age difference") reiterated the panorama of the four wheels can only foresee the creation of mergers, which will see FCA as the protagonist but without forcing the plans of others with hostile expansions. For now, he added, the goal is to "carry the plan forward, hit all the 2018 targets that remain unchanged despite the Ferrari split".
