Il No to Europe won. At 5 this morning, Italian time, the BBC announced that the "Leave" comes out of the polls with a large advantage: 40 no against 52 yes. London, Liverpool and Glasgow voted in favor of "Remain", while the "No" vote prevailed in deep England, from the countryside to the working class strongholds of Nottingham, Coventry and Sheffield. Nigel Farage, leader of the UK independence party, has already proclaimed “Indepence Day”.
MARKETS COLLAPSE: LONDON TOWARDS -7% OPENING
The reaction of the financial markets was also immediate, starting with the City, which followed the outcome of the vote with dismay. In less than 20 minutes, the pound plunged from the highs at the end of the day to 1,48 against the dollar and 1,40, to then fall again below 1,35 euros, with a drop of 11,4%, deeper than the one accused in October 2008 (-6,5%) at the beginning of the Lehman crisis and on Black Wednesday of '92 (-4,9%).
The collapse of the pound has affected all financial markets. At the opening of Hong Kong, the British currency was immediately traded below 1,40 against the dollar. But things went much worse against the yen, the ultimate refuge currency which gains 13%. The euro is also gaining positions on the British currency. The single currency trades at 1,116 against the dollar, from 1,138 yesterday.
The reaction of Asian stock markets was immediate, open at the time of the shock verdict: the Tokyo Stock Exchange opened at -8%, it takes less than 100 yen to buy a dollar. The Nikkei index loses 3% and that of Hong Kong 3,3%, the companies also listed in London fall down on this list. The future of the FTSE 100 index marks a decline of 7%.
Wall Street futures are currently signaling a sharply bearish start to trading. Futures on American indices also fell sharply: -3,5% futures on the S&P index compared to yesterday's close. Risk appetite is falling: the yield on the ten-year bond of the United States fell to 1,54%, from 1,72% yesterday.
Gold rose sharply to 1,326 dollars an ounce against the dollar, the highest for two years. The Btp-Bund spread jumps to 185 basis points at the opening.
LONDON'S TRIPLE A AT RISK. EU UNDER PRESSURE
And now? The City now expects the rating downgrade of the United Kingdom, now triple A, as anticipated by Moritz Kraemer, number one in the division that follows the sovereign ratings of the agency Standard & Poor's. "If Great Britain decides for Brexit - he said in an interview with Bild - the rating would be revised downwards within a short period of time".
But what is worrying are the long-term reactions on both London and Brussels. "For the European Union - writes the New York Times this morning - the result is a disaster that raises doubts about the cohesion and future of a bloc that grew up on the basis of the principles of liberal values and on the sharing of common responsibilities within NATO" .
In particular, the German management of Europe enters into crisis. “If a historically rational population chooses to harm itself in order to leave the Union – wrote Alssandro Fugnoli – it means that the capacity of this Europe to make itself hated is even greater than what was thought. And this is a German-driven Europe”.
PARLIAMENT'S VOTE IN OCTOBER, CENTRAL BANKS INTO ACTION
Fugnoli himself wrote in recent days that “in the days after Brexit we will see great prudence on the part of everyone. The consultative nature of the referendum and the fact that Parliament will approve the exit only in October will be noted. From that moment, for two years, everything will remain exactly as it is today. In short, an attempt will be made to minimize… In the event of Brexit, the central banks will work at full speed to keep the dollar calm, on which the Fed has already just thrown plenty of cold water by definitively shelving its ambitious rate hike plan, a decision of great reach. The ECB, by purchasing corporates, will continue to push the markets towards the most fragile debtors, the Stock Exchanges and Treasuries. The Bank of Japan, by not acting now, will help calm the dollar and prepare the ground for particularly aggressive measures next month”.
WRONG POLLS, YESTERDAY LISTS TO THE STARS
The shock of the financial markets is made all the more violent by the clamorous forecast errors of the day before: all the lists gave the affirmation of Remain as almost certain in the wake of the latest polls. Wall Street had closed its doors with gains around the percentage point. Europe is no less euphoric.
Milan had done best of all: in Piazza Affari the FtseMib index had jumped up by 3,7% just from 18 (17.966 points). On the European stock exchanges, the best stocks of the day were banks (Stoxx of the sector +2,2%) and car manufacturers (+2,1%).
AFTER THE RECOVERY, BANKS AGAIN IN THE VIEWFINDER TODAY
In short, all the financial signals had moved in favor of Remain, including the yield of the BTP, which fell to 1,39% from 1,43%. The financial report of yesterday's session, at this point, risks having only historical value. Today the markets, including the Milan Stock Exchange, will experience another reality. In particular, the banks will come under fire again, yesterday in great shape throughout Europe (Eurostoxx Banks +3,5%), Italy in the lead.
Among the best stocks, Banco Popolare (+6,4%) on the wave of the success of the capital increase up to 1 billion which ended with 99,4% participation, for a countervalue of 990,1 million EUR. Banca Popolare di Milano +5,6%. For the second day in a row, Ubi Banca was the best blue chip, with a 9,5% increase which brings the price to 3,2480 euros. In just six sessions, the stock gained more than 30%, reacting convinced by the lows of the last 14 years. The bank will present the new industrial plan on Monday which could provide for the closure of 290 branches, half immediately and the other part between now and 2020.
Unicredit also did very well (+7,2% to 2,7220 euros). The institute would have probed the Polish government in view of a possible sale of 50% of Pekao Bank, the country's second largest bank. Meanwhile, the candidacy of Fabio Innocenzi, now head of UBS Italia as future CEO, took off. Mediobanca (+6,2%), Intesa (+4,9%) and Monte Paschi (+3,9%) also rose sharply.
The negative note concerned the (predictable) flop of the Veneto Banca increase. The Montebelluna institute has communicated the results of the one billion recapitalization requested by the ECB: subscriptions have reached just 2,22% of the offer, equal to 22,2 million euros, The unsubscribed amounts to 977,7 million . It is obvious that the Atlante Fund will have to subscribe the entire amount.
The performance of managed savings was lively: Banca Generali +2,6%, Banca Mediolanum +3,2% and FinecoBank +3%. Azimut closes up 3,3%. According to the Financial Times, the authority of the Financial Stability Board (FSB) is studying the introduction of control measures in the Asset Management sector to prevent the creation of situations of systemic risk. Insurers are galloping: UnipolSai +4,2%, Generali +4,2%.
BREXIT AFFECTS AUTO, MEDIA AND ENERGY
A very positive day also for industrialists. CNH Industrial rose 4,3% on the day of the release of commercial vehicle sales data in Europe. Leonardo Finmeccanica +3,3%. Atlantia +3,6%: Berenberg communicated that he had started hedging with a Buy rating and a target price of 31 euros.
Telecom Italia is growing (+4,7%). Among the media, Mediaset did very well (+5,5%): Kepler Cheuvreux analysts confirmed their expectations on the stock by reiterating the buy rating and the target price of 5 euros, in light of the group's solid position within the advertising market Italian.
Also rising for oil & gas, on the day of presentation of the "Green Act", the law decree relating to strategies on renewables (with the allocation of 9 billion over the next 20 years). Enel (+2,46%) and Eni (+3,26%) are working around the hypothesis of a joint venture in which Terna (+1,76%) could play a key role.
