MARKETS IN HOLD AWAITING AID TO SPAIN. SLOW START IN ASIA. AND CHINA RELOCALIZES
A slow start to financial week in Asia. In Tokyo, the Nikkei 225 is starting to close down: -0,4%, while tensions with Beijing remain high. Canon has decided to extend the closure of its Chinese plants by one week. Hong Kong also down -0,05%.
Only the Shanghai Stock Exchange +0,4% marks a modest rise, linked to the rumor that the authorities are ready to take the field with concrete measures in favor of the market if the Shanghai composite index (today at 2.032) were to slip below quota 2.000. Meanwhile, as the signs of an economic slowdown multiply, shocking news arrives. Foxconn, the iPhone and iPad factory has decided to relocate production to Brazil: too many protests and strikes in the "suicide factory".
After the season of great watering of liquidity, from the ECB to the Fed via the Bank of England and the Bank of Japan, the markets are now hoping for the initiative of the Chinese monetary authorities (and Australia, which will cut rates on October 2nd ). But much will depend on the choices of Europe, marked by the disagreements between France and Germany on the banking union, which emerged at the Ludwigshafen summit. Here are the next events:
a) Over the weekend, the German press revealed that Greece's finances revealed new flaws: the "gap" measured by the troika mission is close to 20 billion. Even on Athens, on the occasion of the Franco-German summit, a difference of opinion was expressed between Berlin and Paris, willing to offer more time to Prime Minister Antonis Samaras.
b) Meanwhile, Wolfgang Schaueble is finalizing the technical modalities of the ESM, the fund to save states, to be presented to the Bundestag by 8 October. We are once again talking about the possibility of foreseeing a leverage effect capable of multiplying the firepower of the ESM up to 2.000 billion. The opposition of the Bundesbank is obvious.
c) Spain's real needs and the conditions required to trigger the ECB's anti-spread shield should clearly emerge this week. On Friday, the rumors about the reforms that the Spanish government is preparing to launch (primarily the increase in the retirement age) were well received by investors, who judge them as a preparatory step for the ECB's request for intervention on the government bond market . Strong rise in the Madrid Stock Exchange, up 2,5%.
d) In this context, between tomorrow and Thursday, Italy aims to place bonds for an amount between 19,5 and 23 billion: on Tuesday between 3 and 4 billion in zero coupons will be offered and between 750 million 1,5 billion of BtpEi securities. Zero coupons are among the securities covered by the ECB purchasing umbrella. On Wednesday it will be the turn of the six-month BoTs for an amount of 9 billion (against 8,5 billion maturing). Lastly, on Thursday the Treasury will close with the auction of BTPs at 5 and 10 billion for a total amount of between 5 and 8 billion.
The stock market rally from July onwards mainly involved the banking sector (about 5% of earnings in Italy and Spain) but also some companies already targeted by the crisis: Nokia +44% and Iberdrola +42%, head the list of increases .
On Friday, in the wake of the rumors arriving from Madrid, the hikes were widespread in all sectors. The banks have recovered after the descent on the eve : MontePaschi rose by 4,1%, Ubi + 2,2% Banco Popolare + 3% People of Emilia + 0,9% Unicredit + 0,8%.
Effervescent Understanding +2,5%. Over the weekend, Sergio Chiamparino, president of the Compagnia di San Paolo, and Giuseppe Guzzetti, head of the Cariplo Foundation, met. The two major shareholders of the bank addressed the various dossiers open in view of the spring deadlines, first of all the renewals of the top management and supervisory boards.
Mediobanca it rose by 3,2%, rebounding after the first negative reactions to the year-end data. Positive changes for insurance companies: Generali +0,7% (Petr Kellner is running out of sales) Mediolanum +2,5%. Well Fondiaria +1,7% and Unipol + 1,5%.
Axa has entrusted Unicredit and Credit Suisse with the mandate to formalize the proposal to purchase the assets that the new Fonsai-Unipol pole, at the request of the antitrust, will have to put up for sale. The auction will concern a total of prizes between 1,5 and 2 billion (value of the operation between 600 and 700 million). Axa will probably have to face competition from Allianz, Cattolica and Zurch as well as that of the US company Liberty International.
Spotlight on Fiat after Saturday's long summit at Palazzo Chigi. In a note, Lingotto and the government have undertaken to work together to strengthen "the company's competitive capacity", also with a working group at the Ministry of Economic Development which will identify "the tools to further strengthen the export strategies of the sector automotive".
Fiat also undertook with the executive "to safeguard the group's industrial presence in Italy, also thanks to the financial security deriving above all from non-European activities" and to "invest in Italy, at the right time, in the development of new products to take full advantage of the recovery of the European market”. The reactions of the trade unions are skeptical. Many criticisms coming from parties, already in the pre-electoral climate.
At the end of the week, still to be reported:
Oilmen reacted to the oil rebound: Eni + 1,7% Saipem+ 1,3% Telecom Italy earned 2,7%.
This morning at 12, the non-binding offers for Ti Media expire and will then be examined by the Telecom Italia board of directors on 27 September. There are four remaining suitors: Cairo Communication, 3 Italia of Hutchison Whampoa, the Germans of Rtl of the Bertelsmann group and the American Discovery Channel, a public company born from a spin off of the tycoon John Malone's holding company.
Good upside of Terna, which rose 1,7% after Nomura included it in the list of the top 5 European utilities. In the same list there is Snam rise of 0,9%. Rcs it closed up 2,7%.
