EUROZONE, ESM AT THE START. CHINA DOWN ONE MONTH FROM THE CONGRESS. MILAN: TAKEOVER OFFER FOR MARCOLIN. LONDON, INVESCO NO TO EADS
It will be Europe week again. We start with the Eurogroup this morning, we move on to the bilateral summits (Mariano Rajoy visiting Paris, the expected confrontation between Greece and Germany), awaiting the request for help from Spain and a new lifeline for Athens. Meanwhile, the Italian government is speeding up its "homework" to present itself at the next European summit with a multi-point plan to boost competitiveness. From today to next week's summit there will be no shortage of surprises, especially on the government bond front.
Italy, however, does not hesitate to face the markets at 360 degrees: between Wednesday and Thursday the Treasury will offer bonds for 16-17 billion. The day after tomorrow, 3 and 12-month BOTs will be offered for 11 billion (against a total of 7,7 billion maturing), Thursday will be the turn of 3- and 15-year BTPs. One way to evaluate the approval of Italian emissions, in the very short and very long term, in a moment of great uncertainty about Madrid's moves.
The Europe dossier conditioned the launch of stock exchanges in Asia. Only Tokyo rose +0,44%, while the rest of the continent was in the red, waiting for good news from the EU, the main customers of Korea and China. In Hong Kong the index marks -0,63%. Gold (1733 dollars an ounce) is weak for oil below 90 dollars.
The Chinese stock exchanges have resumed activity after the traditional holiday week. The price/earnings ratio of the Shanghai stock market, notes Bloomberg, is the lowest since 1997. But the data does not fuel optimism: in a month the Party Congress will open which, after ten years, will mark the relay race at the top of the State. It is unlikely that significant moves by the central bank or the government will arrive in these thirty days. Furthermore, reports the World Bank, Chinese growth will be the lowest in the last 11 years.
Meanwhile, new reports of strikes and worker protests are arriving from Foxconn: the pace imposed by accelerated delivery (and quality tests) for the iPhone 5 are putting a strain on the governance of the largest factory on the planet.
In any case, today is a historic day for Europe: this morning, in Luxembourg, the new permanent stability mechanism (ESM) is inaugurated, albeit in the "slim" version wanted by the Nordic partners. The member States will pay the first two quotas (out of five) of the share capital, for an amount of 32 billion. For Italy, the first tranche involves a payment of 5,6 billion, the same as the second for 2013, while when fully operational, by 2014, the total commitment will be 14 billion. The ESM, like the EFSF, will operate through funds raised on the market. The theoretical firepower for the current year will be 200 billion. When fully operational, the ESM will have an intervention potential of 500 billion, less than the 2.000 billion needed, according to the theses of the IMF (and of France and Italy).
In parallel, the effort of the EFSF will continue in aid of Greece, Portugal and Ireland, countries which are denied access to the market. Meanwhile, German Chancellor Angela Merkel's visit to Athens is announced on Tuesday to lend her support to the government of Antonis Samaras: the Greek premier told the German press that without aid, Athens has the money to get by until November and he evoked the image of the collapse of the Weimar republic, an image to which public opinion across the Rhine is always sensitive. However, Merkel's visit should silence the debate on a possible Greek exit from the Eurozone.
The Bae-Eads match enters its crucial phase. This morning, anticipates the Financial Times, the giant Invesco Perpetual, the first shareholder with 13% of Bae Systems will express its opposition to the integration project with the European group. The reservations concern the modalities of the 35 billion euro operation, which, according to the managers, would have a negative impact on the shareholders. The fund has already recruited M&A specialist Ondra Partners to join the fray.
On Friday, the European stock exchanges closed on a high note. Frankfurt gained 1,3%, Paris 1,6% and London 0,7%. Leap of Athens (+5%) also following the rumors about an imminent merger between National Bank of Greece, the first bank in the country, and its local competitor Eurobank Ergasias.
Equity markets picked up pace after the release of employment data in the United States: in September, unemployment unexpectedly fell to 7,8%, on the levels of the beginning of 2009 from 8,1% compared to an expectation of a rise to 8,2%. To follow today the reaction of Piazza Affari to the denial of Parmalat +4,1% at the weekend after Il Sole 24 Ore had anticipated that the Besnier family could proceed with the delisting of the company. The news was flatly denied.
Spotlight on the galaxy Pirelli (last Friday +2,2%). By Thursday the board of Prelios, a subsidiary of Camfin like the share of Bicocca, will have to rule on the purchase proposals received: that of Feidos (Massimo Caputi) and the American Fortress whose lawyers will meet today and tomorrow with the creditor banks.
But the most delicate appointment remains the summit, between tomorrow and Wednesday, between Marco Tronchetti Provera and Vittorio Malacalza, after the split in gpi, the safe that controls Camfin and cascade Pirelli. The assembly gave the go-ahead for a capital increase up to a maximum of 45 million, intended to pay off the debt of the GPI with the banks (which amounts to 41 million). The shareholders Marco Tronchetti Provera, Alberto Pirelli and Massimo Moratti voted in favour, while the Malacalza family (shareholder with 31% of the unlisted holding) voted against. For the group of Genoese entrepreneurs, Gpi should have promoted a capital increase of 110 million, to provide the unlisted holding with the necessary resources with which to face the 132 million in liabilities that Camfin will have to repay to the banks by the end of the year.
The meeting will serve to evaluate the possibility of a compromise pending the denunciation of the pact in January, in view of the break in next July. Marco Tronchetti Provera is in talks with the Bonomi group as a possible alternative partner to Malacalza. He threatens a robust legal offensive.
Great buzz around Marcolin, the third power of made in Italy eyewear after the battleship Luxottica and Safilo, now controlled by private equity. This could also be the fate of Marcolin if the family, 30% strong, accepts the offer of the private fund Pai Partners, already a protagonist in the Stock Exchange of the Saeco and Coin operations. Pai, assisted by Mediobanca, however, will have to move in full harmony with the brothers Della Valle (Diego and Andrea both own a 20% stake) and with Renzo Rosso of Diesel. It is probable that Della Valle will remain a minority shareholder but control should change hands, therefore Pai would be ready to launch a tender offer to withdraw the stock from the market.
Rumors are growing about the spin-off of the network, Telecom Italy tries to confirm the brilliant behavior of the weekend: +3,8%. But the negotiation with the CDP, starting from the asset evaluation process, promises to be "long and complex" as stated by CEO Marco Patuano.
