China will no longer defend its 7% growth target “to the death”. This was said by Premier Li Kequiang on the eve of the opening of the Communist Party Plenum which will meet this morning to discuss and approve the five-year plan to 2020, the key step in understanding the direction of the second largest economy on the planet.
Meanwhile, Asian markets are reacting to an upward trend after Beijing cut its discount rate for the sixth in the last year. Shanghai rose by around 0,7% together with Shenzhen (+0,6%). Hong Kong (+0,2%) and the stock exchanges in the southern hemisphere also did well.
The Chinese central bank has so far managed to contain capital outflows and, consequently, a further decline in the yuan. The Chinese currency's entry into the IMF's reserve currency club remains a primary objective for Xi Jingping, who is determined to accelerate the transformation of the economy from an industrial model to a service model.
TOYOYA PASSES VOLKSWAGEN. AND LAUNCH THE HYDROGEN CAR
The most solid stock exchange this morning is Tokyo (+1,1%) driven by some brilliant quarterly results: Hitachi +7,4%, Panasonic +6,9%. But to set the tone for the Rising Sun's economy is the news that Toyota snatched the world sales record from Volkswagen in the third quarter: 6749 million units against 7,43. Even more important, the Japanese group has consolidated its technological leadership in the world of four wheels: Mirai (which in Japanese means future) is born, the hydrogen car, zero emissions, performance in line with hybrid engines. The cost, for now, is prohibitive, in the order of 60 thousand euros, and the network of distributors needs to be built. But Toyota are convinced that the era of traditional engines is winding down: in 2050 the Japanese company will no longer produce diesel or petrol engines.
THE MARKETS BET ON YELLEN COLOMBA. APPLE GIVES THE NUMBERS
Only 6% of economists are convinced that the Fed could surprisely announce a rate hike Wednesday evening, at the end of the meeting of the monetary committee. But the final statement of the summit is nonetheless anxiously awaited: the American Central Bank, after the expansive tone introduced by Mario Draghi and the cut in the Chinese discount rate, will have to offer more precise indications to the markets: rate increase in December or new postponement, after realizing that deflation is an increasingly real threat?
This is not the only highlight of the week. On Friday, the Bank of Japan will decide whether to join the war against negative inflation by increasing its asset purchases on the market. Meanwhile, Wall Street is busy with a new wave of VIP quarterly reports. On Tuesday evening, in the evening markets, Apple will take the field, followed the next day by Facebook. The market is also awaiting the impact of the accounts of the big energy companies after the new fall in energy prices.
MILAN IS RUNNING AGAIN: +19,5% IN 2015. TODAY A BRAKED START
Europe restarts after a sprint week: Mario Draghi's whip has silenced the Cassandres who certainly predicted a negative October for stock lists. On the political front, the success of the anti-EU conservative party in the Polish elections should be noted. Futures this morning signal a mixed start for the Old Continent: Paris is on positive ground, London and Frankfurt are down.
With Friday's rise (+0,5%), the FtseMib index of Piazza Affari rose by 1,8% during the week, bringing the performance since the beginning of the year to +19,5%, ahead of Paris +15,23 ,10,09% and Frankfurt +10%. In Milan, the best blue chips were: Azimut +9%, Telecom Italia +7%, Moncler+ 6%, Enel Green Power +5,7% and Cnh Industrial +6,2%. At the bottom of the ranking is Tenaris -6,1%, Banca Pop.Milano -3,6%, Pop.Emilia -2,5%, Fiat Chrysler -1,6% and Saipem -XNUMX
The overall index of the European Stock Exchanges, Stoxx600, gained 3,9% during the week and the performance since the beginning of the year is +10%. Wall Street is also making progress (+2,1%) despite the accumulation of negative factors: the strengthening of the dollar (the euro stood at 1,10 with the goal of parity with the US currency at hand), the decline in Treasury yields and many mixed quarterly reports (with the exception of the tech giants). But the expectation that the Fed will postpone its rate hike is enough to buoy the mood for now.
TREASURY AUCTIONS FROM TOMORROW: NEW RECORDS IN SIGHT
The most significant rally of the week concerns BTPs: following indications from Draghi, the 1,49-year yield fell to 1,60%, from 95% on the previous Friday. The spread with the German Bund slipped to XNUMX basis points, the lowest since last spring. Meanwhile, the two-year BTPs have fallen into negative territory.
The Treasury auctions at the end of the month will be held in this climate: the Ministry of the Economy and Finance has announced that it will offer 27-month CTZs for 24 billion euro in the October 1,75 auction. On the other hand, the already planned auction of the BTP-i will not be held. Appointments WITH 5-month Bots (tomorrow) and with 10- and XNUMX-year BTPs will follow.
The international agency Fitch confirmed Italy's rating at BBB+. The outlook also remains stable. But, warns the company, "Italian debt is expected to remain above 120% until the end of the decade, leaving Italy highly exposed to potential adverse shocks."
PIAZZA AFFARI PREPARES THE CELEBRATION FOR THE ITALIAN POSTAL
Everything is ready for the debut tomorrow in Piazza Affari of Poste Italiane. The price of the IPO was set at 6,75 euros per share, half the fork between 6 and 7,5 euros. At these values, Poste Italiane's capitalization amounts to 8,8 billion, while the demand for securities stood at 3,3 times the global offer considering the entire narrow range of 6,5-6,75 euros indicated by the consortium of placers . The institutional placement, which concerns 317,1 million shares equal to 70% of the total, was covered 3,6 times while the part aimed at the general public (135,9 million shares) received an amount of orders equal to 2,85 .330 times by over XNUMX retail investors.
Unsatisfied demand from funds and institutional investors could contribute to favoring a positive debut: the number of requests is high (over 700 million securities) which are not satisfied because they are just under 6,75 euro. But it should not be forgotten that the final price has remained far from the maximum. It is possible that the minimum lot size for retail will be reduced to 250 shares per applicant.
UNDER THE GLASS, THE ACCOUNTS OF SAIPEM, FIAT CHRYSLER, CNH, ENI AND STM
Tuesday will also be the key date for Saipem's recovery plan. The CEO Stefano Cao, after the board meeting, will present in London the approximately 8 billion plan for the oil services company which will leave the scope of consolidation of Eni with the entry of Fondo Strategico Italiano. The intervention will be divided between the 4,5-5 billion of capital increase and the 3-3,5 billion of refinancing. It remains to be understood whether the increase will pass from a sale of a share from ENI to FSI or if the path of the sale of the option rights that belong to the six-legged dog to the subsidiary of Cdp will be chosen.
Great expectations for the quarterly accounts of FiatChrysler scheduled for Thursday 29: the amount of debts and the trend in South America under the lens. But also the effect of exchange rates on results and the positive trend in Europe.
TELECOM IN RALLYE. THURSDAY UNICREDIT VERDICT ON THE BULGARELLA CASE
In the spotlight Telecom Italia, the most purchased stock in Friday's session. Prices were driven by the Orange rally +8%, closely followed by the other telecommunications companies. But, even more important is the new leap forward in the shareholding structure of the former Italian incumbent of Vivendi, which rose to 20,03%. Then the reaction of the markets to Enel's plan for the development of ultra-broadband must be followed: we think about a o more newco owned by the electricity group, telecommunications operators and financial investors. Unicredit's decision on the "Bulgarella case" is approaching, involving the vice president Fabrizio Palenzona and the two managers Massimiliano Fossati, chief financial officer, and Alessandro Cataldo, head of investment banking Italy.
The internal audit did not identify any infringements of the internal code regarding the recovery plan of Bulgarella, under investigation for relations with Matteo Messina Denato. But heavy reputational damage remains to be borne by the institution on the eve of delicate appointments to be examined by the board on November 11: the braying of the staff, above all. Hence the choice to convene a board of directors dedicated to the matter for the next few days. Meanwhile, the governance committee chaired by Luca Cordero di Montezemolo could restrict the rules on relations between managers and directors.
