GERMANY FREEZES THE PRICE LISTS
DIFFICULT TO AGREE ON OCTOBER 23rd
Yet another cold shower has arrived from Germany and the markets have never recovered, also thanks to the negative start of Wall Street. Starting off sharply up (even up to 2%), the lists wiped out the gains around 13pm today and then plunged into deep red. The Ftse Mib closed down by 2,30%, the Dax by 1,81%, the Cac by 1,61% and the Ftse 100 by 0,54%. The spread between Btp and Bund also rises to 360 from 350. And the banks are back in the sights, starting with Dexia which is sinking (-16,71%).
The reaction is linked to the declarations of the Finance Minister of Germany, Wolfgang Schäuble: a final decision on the Eurozone rescue program will not arrive on October 23rd. Even Chancellor Angela Merkel, through her spokesman, warned against too optimistic expectations: to reach an agreement on the anti-crisis package, a long process is needed and it is an "impossible dream" to hope that the next European meeting will lead to the resolution of all the problems of the debt crisis. Finally, also the French Christian Noyer, the exponent of the ECB and governor of the Bank of France, increased the climate of uncertainty underlining that it could be "unrealistic to expect an increase in the EFSF state-saving fund" even if he said he was willing to study the lever mechanism.
GREECE, TOWARDS 50% HAIRCUT
BERLIN STUDYING SEPARATION OF INVESTMENT AND COMMERCIAL BANKS
In the morning, the sentiments of the price lists were supported by the expectations that Europe will be able to quickly develop a concrete plan to deal with the crisis after the ultimatum arrived from the G20. No postponement is allowed anymore, the representatives of the USA, Great Britain and Canada repeated: the plans for the strengthening of the banking system and for the consolidation of the sovereign debt must be ready for the European summit on Sunday 23 October to then be examined of the G 20 of 3-4 November in Cannes.
On the table is the recapitalization of banks (50 are the systemically important banks identified by the G20), the expansion and role of the EFSF bailout fund (which currently has a capacity of around 440 billion) and the plan to avoid the default of the Greece. On this front, the orientation that emerged from France and Germany is to increase the share to be paid by individuals, i.e. banks, the famous haircut (cutting) on loans which could reach 50% from the initial 21% while the Troika today said confident about the release of the last 8 billion tranche of the first aid package. To convince the banks to accept a cut of this size, the German government would be making use of the mediation of the managing director of Deutsche Bank, Josef Ackermann, according to reports from the tabloid Bild.
Meanwhile Germany, according to the Handelsblatt newspaper, is studying the separation between commercial and investment banks.
THE MANUFACTURING INDEX IN THE USA FALLS
CITIGROUP BEATS EXPECTATIONS
However, there are new fears on the front of the economic recovery. In its monthly bulletin the Bundesbank states: "Germany's growth prospects have worsened with firms cutting their estimates and with foreign orders declining". Little reassuring data also arrived in the afternoon on the American manufacturing industry: the New York Fed index for the sector recorded a sharp contraction in October of 8,48 points against expectations of 4. In line with expectations, the weak industrial production growth in September improving by 0,2%, capacity utilization also improves to 77,4% in September (August, revised 77,3%; expected 77,5%).
Some positive notes that do not help the sector, however, come from the banking giant Citigroup (+0,76%) which closed the third quarter with a net profit of 3,8 billion dollars, beating analysts' expectations. Revenues also did better than expected, reaching 20,8 billion against expectations for 19,25 billion. On Wall Street, the Dow Jones is down by 1,13% and the Nasdaq by 0,61%. Highlights on the European price lists today is Philips, which runs after quarterly results above expectations and the announcement of cuts for 4.500 seats due to margins that have fallen by 50% compared to a year ago. However, the stock then closed down by 1,89% in the wake of the sales which hit the price lists. The euro is back below the 1,38 area, down from the highs above 1,39 reached this morning and WTI oil also retraces to just below 87 dollars a barrel.
INTESA AND UNICREDIT COLLAPSE
BPM: BANKITALIA IMPOSES CHANGES TO GOVERNANCE
The good accounts of Citigroup have not revived the banking sector. In Europe, banks are once again suffering from the Greek debt crisis and liquidity risks, while the sector in Italy is also feeling the effects of the new widening of the spread between Btp and bund to 370 basis points from 350 at the start of the day. Unicredit and Intesa collapse with a thud of 6,12% and 5,32% respectively. On Piazza Cordusio Nomura confirmed the buy recommendation. Banco Popolare sells 4,84% Bpm was also affected by the sales after Bankitalia approved the new statute but imposed some changes to governance including the increase in voting proxies from three to five, the elimination for the board of management of the obligation to comply with the binding opinions of the supervisory board on certain matters.
Andrea Bonomi at the head of Investindustrial also spoke during the day: his list is in the running for the Supervisory Board. “If we're not on the Adventure Management board it's over,” he said. Piazza Meda enters the hot week before the shareholders' meeting on Saturday 22 October for the appointment of the new Supervisory Board, tomorrow the board of directors dedicated to the "easy careers" dossier is held, in particular on the documentation that BPM must present at the request of Consob regarding the appointments made in the last 5 years.
DIASORIN DISAPPOINTS INVESTORS
THE MARKETS DO NOT STOP SAIPEM
Diasorin was suspended downwards and closed down by 10,09% after the downward revision of the estimates for 2011 and an industrial plan which disappointed investors. Among the worst are Finmeccanica (-4,89%) which in the morning tried to resist Goldman Sachs' cut of the target price to 4,5 euros from 5,5 and recommended a sell recommendation. Despite the wave of sales that hit all the European stock exchanges, Saipem continued to run in Piazza Affari, closing up 3,20% thanks to new contracts for 1,5 billion dollars. Parmalat also recovers (+3,36%, best title in the final) and the Bper awakens (+0,56%) which in recent weeks has often remained at the bottom of the list.
MAFFEI SUSPENDED AWAITING COMMUNICATION
INDUSTRIE SHINES ON THE STAR
Borsa Italiana has communicated that the ordinary shares of the Minerali Maffei Group are suspended from trading for today's session pending a press release. Various Star companies closed the difficult session with decisive increases: Dmt +9,31%, Cobra +4,06% and Prima Industrie +7,31%. The latter runs in the wake of the declarations of CEO Gianfranco Carbonato on the joint venture created in Shanghai: for the production of laser machines for the domestic market. “We are studying the possibility of listing the joint venture on the Shanghai Stock Exchange,” he said.
