Next Thursday at 14 pm it will be known whether Monte Paschi will be in a position to remain standing with private capital or whether recourse to the state will be necessary. More or less within the same date, the "banking plan" could be launched, ie the decree that intends to address the most urgent issues of the credit system, starting from the needs of capital up to the launch of a market for non-performing loans. Hot topical issues which the governor Ignazio Visco will not be able to ignore, on the sidelines of the lectio magistralis which he will hold this afternoon at the University of Naples which will award him an honorary degree in "Statistical Sciences for Decisions". Not only for this reason the week that begins today in Piazza Affari risks having a very little Christmas character. In fact, the pressing of the capital arriving from Paris on some blue chips continues, from Mediaset, for which Fininvest has for now indignantly rejected the proposal for negotiations advanced by Vivendi, to Generali which, despite the denials, seems to be the subject of a triangulation via Allianz which it could end with an offer from Axa.
WEAK TOKYO AWAITING RATES DECISIONS
After the pyrotechnic preview of the Trump era, the markets are looking for new balances following the increase in rates and the strong advance of the dollar. In the five weeks since the vote in the US, the Dow Jones index has risen by 8,3%, marking the warmest welcome that Wall Street has ever given to a new president elected since 1900 to today. But now the idea is gaining ground on Wall Street that a lull in the Bull march would not be despised. Furthermore, after the sharp rise in yields, T-bonds are competing with Wall Street dividends: the 2,6-year bond yields 2,07% against 500% of the average dividend of the S&P XNUMX.
The most important appointment concerns the press conference that the governor of the Japanese central bank, Haruhiko Kuroda, will hold tomorrow at the end of the last meeting of 2016. A change of course with respect to the zero interest rate policy is not foreseen, but neither is it excluded a surprise, given the recovery in consumption: in November, meanwhile, Japan overtook China for the amount of foreign exchange reserves in dollars. At least this is the estimate of Goldman Sachs, which calculates the outflow of capital from China at 70 billion a month to curb the devaluation of the yuan.
OIL ON THE RISE, YELLEN AND WEIDMANN SPEAK TODAY
Beijing's decision to return to the US the drone captured last week over the skies of the China Sea has meanwhile removed the threat of a dangerous escalation in one of the hot spots on the geopolitical map. This morning Tokyo (-0,2%) slows down after hitting the new high of the year on Friday. Nintendo's shares are down sharply (-4,8%) after the disappointing debut of the new version of Super Mario, the flagship game of the videogame giant. Oil prices consolidate: Brent trades at 55,63 dollars a barrel, Wti at 52.
Central bankers will hold the scene today. Janet Yellen will speak on the state of the job market tonight in Baltimore. You will be the occasion to have further confirmation, after the Fed meeting, of the rapid improvement. Jens Weidmann's tone is probably much more polemical: today the president of the Bundesbank will speak in a meeting entitled “The future of the Monetary Union and some comments on the German situation”. The last Economic Bulletin of the ECB for 2016 will be released on Thursday. The central banks of Sweden, Hungary and Turkey will also meet during the day, as they grapple with the sharp deterioration of the economy.
COUPON FOR STM, PIAZZA AFARI (+3,9%) THE BEST EXCHANGE
In Piazza Affari, the detachment of the Stmicroelectronics advance dividend (+4,4% in the last week) should be reported this morning. The ordinary meeting of the Sole 24 Ore is scheduled for Thursday. In five sessions, the FtseMib index gained 3,9%, the best performance among stock exchanges worldwide, reducing the loss since the beginning of the year to -11%. The other markets are much less free-range; Paris gained 1,4%, Frankfurt +1,7%, Wall Street S&P500 +0,1% and Dow Jones +0,6%.
THE MPS INCREASE STARTS, FOUR DAYS TO HOPE
There are many warm fronts. Monte Paschi's 5 billion euro capital increase formally opens this morning (+7,3% last week). The operation goes hand in hand with the conversion into shares of the subordinated bonds held by retail which will close at 14pm next Wednesday. The approximately 40 bondholders who hold 2,1 billion bonds are given the opportunity to convert their securities into newly minted shares. The prediction is that the proposal will be accepted by about 40% of the public. After the closing of this operation, another 24 hours are expected for private investors to join, including the Qatari fund, who will probably move only after knowing the outcome of the conversion.
At the end of the bookbuilding, the issue price will be fixed, which will be unlikely to deviate from the minimum (1 euro). Today we will know something more after the council convened in Milan. But the uncertainty is destined to last until the end: it is not excluded that the Treasury could proceed with a precautionary recapitalization which could then flow into the forced conversion.
BANKS IN THE LEGEND, UBI AND UNICREDIT AT THE TOP
In the meantime, the market's interest in banks continues to reawaken. The leap in the Unicredit share (+14,8%) after the management officially announced a 13 billion euro capital increase is emblematic. Ubi, in view of the good banks operation, achieved a gain of 11%. Banco Popolare +7,7%, Pop.Milan +7,5%, Pop.Emilia +5,9%, Mediobanca +4,8%. The best of Europe's big banks, DeutscheBank, gained 5,6% for the week.
MEDIASET, THE BATTLE IN THE COURT IS UNDERWAY
After the blitz that brought Vivendi to 20% of the capital of Mediaset (+29% during the week) the war of position has now begun. On the Fininvest front, the possibility of an agreement with Vincent Bolloré is denied. Moreover, despite the conciliatory tone expressed in the meeting with the Minister of Economic Development Carlo Calenda, the CEO of Vivendi Arnaud de Puyfontaine did not rule out the hypothesis of the takeover bid, limiting himself to a laconic "no comment" and noting that " however” the French group would have “the possibility of doing it”. The match, pending possible interventions by the authorities and politics, moves today to the Court.
Telecom Italia, controlled by Vivendi, rose by 5,8% in a week in which the European Stoxx index of the telecommunications sector gained 2,5% (the French Orange +3,7%).
GENERALI, AXA AND ALLIANZ HUNT THE LION
The market's expectations for Generali stock are no less, +2,8% on Friday after the rumors about contacts in progress to sell the company's French assets (value 5,7 billion euros) to Allianz. If the operation goes through, Generali would become the ideal prey for Axa, which would no longer have Antitrust ties in France.
Generali France generates around 15% of the group's premiums and operating profit and has so far been considered of strategic importance. It currently has a low profitability problem, and in fact country manager Eric Lombard has embarked on a major restructuring. The latest data from Generali France show a combined ratio of 100% in the Non-Life business, decidedly lackluster compared to 93% for the entire Generali group (the lower the combined ratio, the more efficient the company). For Allianz, the acquisition of Generali France could be an interesting investment opportunity within an industrial plan which envisages an average annual growth in earnings per share of 5%.
From an industrial point of view, the merger between Axa and Generali would make sense: the first European insurer with strong cost synergies would be created. The joint presence of the two groups in asset management would also become very strong. But Generali is one of the few Italian financial players of international stature with a mass of total investments equal to around 500 billion euros, a good part of which invested in Italian government bonds. In the event of a merger with Axa, the center of gravity of this reality would move towards Paris: the Leone group capitalizes on the Stock Exchange 22,9 billion, Axa 58,8 billion.
