The euro slips to a 20-month low, at 1,0546 against the dollar, worse than after Brexit. Asian stocks down. Beacon lit on the spread and on Piazza Affari, waiting for an opening that promises to be dramatic, especially for the banking sector. These are the moods of the financial markets after the crushing victory of the NO in the Italian referendum, destined to accentuate the pressure on the euro and on the eurozone, but also to complicate the road to capital increases for Italian banks, starting with Monte Paschi.
IN SIGHT THE BURDEN SHARING IN SIENA
Already in the morning the top management of the bank will meet with JP Morgan and Mediobanca, engaged in the search for new investors. In the (probable) case that Qatar's entry and the interested US funds vanish, it is more than possible that the advisors will throw in the towel. Thus the path of recourse to public intervention becomes concrete which, according to EU rules, provides for burden sharing, ie the cut in the nominal value of the securities to be paid by shareholders and bondholders. A dramatic outcome, a very bad omen for Italian savers, who hold over 170 billion in bonds from Italian banks. Without forgetting the effect on public debt, which is already well beyond the threshold of 133% of GDP.
Meanwhile, the safety net developed by the ECB to cushion the impact of the Italian crisis on BTPs is already kicking off, destined to once again cross the threshold of yields above 2%. The European Central Bank can concentrate the monthly interventions envisaged by the QE on Italian securities (12 billion, i.e. 18% of its potential) in these days, pending the measures that will be adopted by the directorate next Thursday, which will extend the terms of the Quantitative Easing. It helps that the Treasury has wrapped up fundraising for the current year. But the markets are already looking to 2017, a very hot year on the electoral front (France, Germany and Holland). The representative relief from the defeat of the far right in Austria lasted only a few hours.
INTERMONTE: FOCUS ON EXPORT-ORIENTED STOCKS
It will be a bit hot throughout Piazza Affari, resigned to the rain of sales on bank stocks, even if we start from very sacrificed levels. Over the weekend, Intermonte experts suggested, in the event of a victory for the NO, to focus on companies operating above all on foreign markets with a strong exposure to the dollar. Avoid banks and utilities. The recommended portfolio includes Moncler, Stm, Ferrari, FiatChrysler, CnhIndustrial, Saipem, Ima, Recordati and Campari.
ASIAN EXCHANGES DOWN, OIL DOWN
The euro trades at 1,057, recovering slightly from the overnight lows, but below Friday's prices (1,066).
The Tokyo Stock Exchange is starting to close down by 0,7%. Hong Kong -0,8% and Shanghai -1,2%. Seoul -0,3% and Mumbai -0,1%.
Gold is flat and Brent oil loses 0,7% to 54,1 dollars a barrel.
THE ECB EXTENDS QE. BREXIT IN COURT
The post-referendum period is destined to absorb general attention. But there are other reasons of interest. The European Central Bank will experience one of the most delicate and important days of the Draghi management on Thursday 8 December. The directorate will have to decide whether or not to extend the securities purchase program (the so-called Qe) by six months, until next September 2017, after the French presidential elections, the decisive step for the very existence of the euro area.
The discussion will also concern the dimensions of the plan: confirming the 80 billion euros per month, or proceeding with a partial reduction (the so-called tapering) to 60 billion. In the first case, at the end of the purchase cycle, the ECB will receive public securities for 2.400 billion euros, in the second case, 2.200 billion. According to a Reuters poll, the majority of experts (40 out of 54) expect the ECB to decide to extend the purchases without reducing the amount.
It will not be an easy choice: the recovery of the European economy, combined with the inflationary effects of the rise in oil prices, could suggest the start of tapering. But the political tensions within the Eurozone advise against changes that could be traumatic.
Today, a few hours after the polls in Italy and Austria close, the Eurogroup will meet in Brussels, an occasion for an initial assessment of the results, but which will have to deal officially with the complex and endless negotiations on the reforms requested of Greece as a source of a new tranche of aid. The Ecofin meeting will be held tomorrow. On the macro front, the Eurozone services PMI data was positive this morning.
Spotlights also on London: today the discussion on the appeal of the British government against the decision of the magistrates who established that the choice to leave the European Union requires, in addition to a referendum, begins at the English Supreme Court. The decision, which will be taken after the hearing of the government and the supporters of the appeal, is scheduled for Thursday 8.
OPEC TOWARDS AGREEMENT WITH RUSSIA. COUNTDOWN TO THE FED
On the 9th, however, in Doha the representatives of non-Opec producers, led by Russia, should sign an agreement with the cartel to cut production, in line with what was established at the meeting in Vienna. Since signing last Wednesday's agreement, Brent and WTI have jumped by more than 10%.
In the US, the countdown has already started for the decisions of the next Fed meeting on December 13-14, the first in the Trump era. Three members of the FOMC will speak today: Wiliam Dudley, president of the New York Fed, Charles Evans (Chicago) and James Bullard (Saint Louis). The rate hike is taken for granted (91% of the Bloomberg panel expect a rise), especially after the latest data on the labor market which signal unemployment down to 4,6%.
But operators are wondering about the modalities of the Central Bank's next interventions, after that since 8 November, the date of Trump's election, the rise in yields has caused a drop of 1.700 billion in bond prices. Another hot topic: the defense of market reforms in the face of the president's intentions to dismantle the rules promoted after the subprime crisis.
BUSINESS PLACE STARTS AGAIN AT -20%
After the vote, Piazza Affari presents itself to the resumption of trading after a week of discrete recoveries. Since the beginning of the year, the FtseMib index has suffered a loss of 20%, against -8,4% of the EuroStoxx 50 index. But in the last month, the main index of Piazza Affari gained 3%, against +0,4, 50% of the 163 European blue chip index. Even the Btp-Bund spread, which reached 186 basis points today, is at the lows of the last three weeks after the XNUMX basis points bet at the end of November. The movements of the last few days show that the fall in bonds all over the world is pushing enormous masses of liquidity towards the stock markets: it is unlikely that Piazza Affari will be able to take advantage of it, at least in the short term.
POPULARS TO DEAL WITH THE JUDGMENT OF THE COUNCIL OF STATE
The sentence of the Council of State which partially upheld the appeal of some shareholders against the Bank of Italy regulation governing the reform of cooperative banks on the transformation into joint stock companies will also weigh on the banks today. In particular, the effectiveness of the part of the regulation which allows banks to limit or exclude repayment with own funds to shareholders who have exercised their right of withdrawal. Ubi, the first to transform itself into a joint-stock company, has decided to partially redeem the shares for a value of 13,17 million euros against total requests for approximately 257,7 million.
It won't be an easy day for utilities, weighed down by the prospect of a rate hike. Enel can console itself with the Wall Street debut of Enel Americas. The company brings together the group's Latin American assets (with the exception of two Chilean subsidiaries), has just absorbed the Brazilian Celg (distribution) and is now planning investments of 5 billion euros.
ALERION, EOLO ENERGIA WILL HAVE TO LAUNCH THE TOTALITARY TENDER OFFER
Eolo Energia (Edison-F2i) was awarded control of Alerion. At the conclusion of the takeover bid, the consortium collected 7,54% of the capital, which added to the 31,287% already held, brought the total stake to 38,8%. On the other hand, the competitor Fri-El, which had already reached 28,18% through purchases made outside the market, raised 4,35% of the capital, in addition to the maximum limit set for the takeover bid (29,9%). . 1,72% of the capital will therefore be allotted.
However, the game is not over yet: Consob has in fact forced Edison and F2i to launch a new takeover bid, this time mandatory, on Alerion, as a result of the shareholders' agreement signed last November 30, when it communicated that it had risen above the 30 % and waived the 50% plus one share threshold to consider the offer. With the acquisition of Alerion, Edison-F2i would reach 850 megawatts installed, becoming the first Italian pole in wind energy, behind only Erg Renew, the current market leader with 1,1 gigawatts of installed capacity.
