Evergrande's default is approaching, but Beijing is silent. Thanks to the closure of the stock exchanges for the holidays, the government has chosen the path of silence: the word Evergrande is not mentioned in any official speech of the day, the newspapers avoid giving voice to the protests of bondholders and duped small owners. However, the strategy of silence is not enough to stop the hemorrhaging of the share price (-4% in Hong Kong after -10,2% yesterday) or to move the authorities. Indeed, S&P takes it for granted that, at least for now, the government is not afraid of a systemic crisis. Therefore, barring surprises, Xi's line does not change: the house is for living, not for speculation. So whoever made a mistake pays. It will be seen whether this position will hold up to the reopening of the lists and to the default expected for Thursday.
For now, we must take note of the fact that the Chinese brick crisis has provoked more violent reactions around the world than in the Celestial Empire. The lists left 2.200 billion dollars on the ground on the world's stock exchanges compared to the highs reached on 6 September (97 trillion). Wall Street, where the fear index rose 20%, was no exception.
MORGAN STANLEY DOESN'T RULE OUT A 20% DROP
Morgan Stanley stressed that it did not rule out "the worst case": a 20% drop in the stock market, capable of compromising the Bull's season. It is with this sword of Damocles that the seven voting members of the Fomc, the bankers of the Fed who decide on rates, will enter the conclave in a few hours to announce tomorrow evening the times and modalities of the tapering (from November) and of the increase in rates (to end 2023). Unless the Chinese tile falls on the bankers' heads.
Stock exchanges quieter this morning in Asia. Tokyo has reopened after closing for holidays: the Nikkei index loses 1,9%. Sydney's S&P ASX 200 is at par. The lists of China and South Korea are still closed.
Hong Kong's Hang Seng is down slightly as downward pressure on real estate companies eases after a hectic day, with trading volumes 14x above average. The builders' association has ensured that it is collaborating as usual with public authorities on low-cost housing and low-income housing construction programmes. A singular statement, given that prices have grown three-fold in the last five years.
GOLDMAN SACHS DISCOVERS THE INDIAN STOCK
India's stock is up 0,3%, from -0,9% yesterday. In a report released tonight, Goldman Sachs predicts a great future for the Mumbai stock exchange. As a result of the very strong influx of foreign capital into the high-tech industry sectors, the capitalization of the list could grow up to 5.000 billion dollars, a value that would take it to fifth place in the world. Indian start-ups have raised $20 billion since the beginning of the year.
BLACK SEAT FOR NEW YORK, BONDS STABLE BEFORE FED
Wall Street futures recover this morning after the most violent storm in recent months. The S&P (-1,7%) and the Nasdaq (-2,19%) had their worst session since May 12. For the Dow Jones (-1,78%) it is enough to go back to last July 19th.
The crisis doesn't seem to have hit the bond market or currencies that much. This morning the 1,33-year Treasury Note trades at a yield of 0,32%. The Bund appreciated by -4%, -0,71 basis points. No tension on the BTP, at XNUMX%.
Nothing happened to the euro dollar either, basically on Friday night's positions at 1,173.
THE DOLLAR RISES, GOLD FLAT
Minimal appreciation for gold, up 0,5% yesterday, but a readjustment to 1.761 dollars an ounce is underway this morning. In short, the thesis seems to prevail that Evergrande, however important it may be, will not be able to have the impact of Lehman Brothers.
EUROPE YESTERDAY IN DEEP RED, GERMAN PRICES GO UP
At the European opening, the downturn coming from Asia took over immediately, with futures heavily down even before the opening. The movement was led by the auto sectors, natural resources and obviously the banks, the main vehicle of transmission of the contagion since ever. To complete the picture, the dollar in money and yields fell at the start of the week marked by the meeting of a dozen central banks. Who knows if the impact of China will not induce the Fed to slow down the withdrawal of stimuli. The increase in German producer prices (+12% per year, +1,5% per month against estimates of +0,8%) took a back seat. According to the federal statistical office Destatis, the increase is largely attributable to the trend in energy prices, which, in the month, marked a leap of 3,3% over the previous month and of 24% over the same month of 2020. Thus the thesis of the only temporary increase in prices holds up. But for how long?
CDS INDEXES TAKE FLIGHT, SHIELD AGAINST DEFAULTS
Credit Default Swap indices measuring the cost of default insurance for European corporate bonds rose to their highest since late May, driven by a combination of global risk aversion and monthly changes in benchmark constituents. The iTraxx European Crossover Index, which measures the cost of exposure to a basket of sub-investment-grade European companies, rose by as much as 27 basis points to 253, its highest level since late May. The iTraxx Europe index, which measures the cost of default insurance on investment-grade corporate bonds, rose seven basis points to 51, again its highest since late May. Both indices post the biggest one-day jump since mid-March
PIAZZA AFFARI (-2,57%) THE WORST STOCK EXCHANGE
Piazza Affari is the worst stock exchange in the Old Continent: -2,57%, and it clings to the 25 points by a hair (25.048 points). The situation of the other lists is less serious: London -0,85%; Paris -1,74%; Amsterdam -1,42%; Madrid -1,16%.
BITTER DEBUT OF THE NEW DAX (-2,34%)
Frankfurt loses 2,34% on the opening day of the new Dax (the index of the most capitalized stocks) to 40 stocks from the previous 30. The collapse of Deutsche Bank (-7,51%) is striking, but the shares of car manufacturers are also hurting in a sector under pressure at a continental level due to the news of an investigation in the USA on about 30 million cars produced from various brands, all equipped with airbags from the Japanese manufacturer Takata, which are potentially defective.
Meanwhile, a consortium led by Volkswagen has presented in France a proposal to acquire the rental company Europcar for 2,9 billion euros.
BUT LUFTHANSA AND AIR FRANCE-KLM ARE RETURNING
Instead, Lufthansa (+6,27%) goes into orbit, which estimates it will raise 2,14 billion euros (2,51 billion dollars) to repay part of a state bailout that the main German airline received during the crisis coronavirus.
Air France-KLM also flies (+5,3%) celebrating the US decision to reopen the borders to travelers arriving from Europe.
THE SPREAD RETURNS TO 103, BTP YIELD AT 0,72%
The gap between the BTP and the Bund widens again to 103 points. It is the effect of the recovery of risk aversion unleashed by the Evergrande crisis which favors the inflow on German paper and on American T bonds. The yield of the ten-year BTP grows to +0,72%.
BOSA, THE WORST SESSION SINCE JULY 19
Piazza Affari recorded its worst session since last July 19th. All the blue chips closed with a negative sign, with the exception of A2A (+0,03%), Amplifon (+0,56%) and Terna (+0,31%). The utilities are awaiting the government's decision on bills.
BANKS UNDER FIRE, BPM -4,5%
The Bear has hit the banks in particular. Banco Bpm sells 4,5% after CEO Giuseppe Castagna said that at the moment there are no conditions for a combination and confirmed that he will present the new industrial plan by November.
Similar drop for Unicredit (-4,1%), awaiting news on the complex negotiated with Mps (-2,1%).
Among the other M&A candidate banks, Bper lost 4,8% and Carige, on the day of entry into the Mid Cap index, sank by more than 5%.
STELLANTIS IN THE SIGHT, ALSO STOPPING CNH INDUSTRIAL
In the sights, as in the rest of Europe, the automotive sector. Stellantis loses 4,47%, Cnh Industrial 3,2%, Ferrari 1,8%.
ENI AND STM DOWN AFTER THE DIVIDEND
Energy down. Eni -1% on the day of payment of the coupon advance. Stm also bucked the trend (-1,63%), which paid the second installment of the dividend.
FNM +5,8% AFTER PLAN
Autogrill makes a leap of 4,2%. Purchases on Tiscali (+0,5%) which announced a new strategic plan to 2024. Acea did well (+0,4%) after the positive assessments of analysts on the acquisition of 65% of Deco. Gas Plus still rips (+15,1%) on the highs since the end of January 2016. Fnm closes the session with a rise of 5,81% after the presentation of the business plan. Equita sim today raised its recommendation from hold to buy, with a target price of 0,9 euro. The 2025 EBITDA targets are "in line with estimates" and the dividend policy is supportive, the analysts explained.
