EUROZONE MINISTERS AT G20:
WE WILL STRENGTHEN THE STATE-SAVING FUND
During the G20 meeting underway in Washington, eurozone ministers promised a strong response to the crisis and debt risk. The promise is to rapidly implement and further strengthen the bailout fund to deal with the sovereign risk that is affecting the whole area and throwing financial stability into crisis. Futures point to a positive market response to the eurozone announcement.
ASIA, THE LANDSLIDE OF PRICE LISTS DOESN'T STOP
CHINESE REAL ESTATE ALSO UNDER FIRE
The descent of Asian price lists is slowing down, but does not stop. The MSCI Asia Pacific index fell 1%, on the back of fresh losses for Hong Kong -1,9%. During the week, the Hang Seng price list fell by 8%. The technology giants are under fire: Lenovo and Foxconn, the iPad manufacturer, lose 4,8%. The descent of the Korean Kospi -4,8% is equally marked. and mining giants: Bhp Billiton loses 2,5% in Sydney, Aluminum Corporation of China sells 6,1%. Real estate stocks on the Shanghai Stock Exchange are down sharply. The Tokyo market is closed for holidays.
AFTER THE FED, WALL STREET SEES THE ABYSS: -3,5%
GOLD, DOLLAR AND BOND SUPERSTAR COLLAPSE
Wall Street day after was a nightmare. The Wall Street financial markets replicated the trend of the Asian and Old Continent stock markets, touching the ceiling of 500 points of loss for the Dow Jones just a few hours after the closing. In closing, the index fell by 3,5% with a deadweight loss of 391 points. The Standard & Poor's 500 does better, but not by much (-3,19%). The Nasdaq also fell by 3,25%. Only ten of Standard & Poor's 500 stocks finished in the plus sign. At the origin of the decline, which affected all ten sectors of the stock market, there is above all the shock caused by the alarm on the state of the economy launched by the Fed. In the statement of the central bank it is explicitly stated that "the exit from the crisis will still take years”.
The most optimistic (few) still hope for a third quantitative easing for November; the majority of operators, on the contrary, say they are convinced that the central bank has no more ammunition to spend. Either he keeps them in reserve in case the Greek situation worsens, or a devastating effect of the credit crunch is looming. In any case, the Twist operation has already produced a result: the ten-year Tbond has slipped to 1,72%. But no one so far has been tempted by the desire to leave the refuge of government bonds (albeit demoted by Standard & Poor's) to buy shares with an expected dividend 3-4 times higher.
Meanwhile, to signal the state of crisis of the real economy, there is the decline in crude oil, which has slipped to 80,30 dollars a barrel. Gold loses the most -3% at 1738 dollars an ounce. A surprising reaction for the safe haven par excellence. But only up to a certain point. Gold purchases were linked to the abundant liquidity in circulation until a few months ago. Now, faced with a sharp and violent fall in the money supply, hedge funds are selling gold. Meanwhile, the euro, in a black crisis, slipped against the dollar to the lows of the last 8 months at 1,342,
THE BTP/BUND SPREAD REMAINS ABOVE 400
THE BANK BOND MARKET COLLAPSES
The Btp/Bund spread reached a maximum of 413 points during the day, the highest figure ever. Then, only thanks to the interventions of the ECB, the gap narrowed down to 395. The phenomenon is not only linked to the increase in yields on the BTP 10, which fluctuated around 5,7% throughout the day, but to the rush of investors to buy the German Bunds whose yield, on the ten-year period, has fallen to 1,68%, an all-time low. The issues of the main Italian banks were traded at more or less the same level, without too many distinctions between institution and institution, in the area of 500 basis points (on the swap rate), or 50 basis points more than on the previous day.
The market also reacts with sales to the ECB's decision to take precautions, halving from 10 to 5% the share of senior bank bonds accepted as collateral to guarantee loans granted to credit institutions. The bank bond market, meanwhile, has plummeted towards zero. So far, deals worth 2,6 billion have been announced in September against 6,2 billion in August. In January, the richest month for funding, placements totaled 65,55 billion
PARIS ON THE KNEES: SOCGEN AND AGRICOLE LOSE 9%
BPM TAKES FLIGHT, WAR OF WAR OVER GOVERNANCE
The storm spared no one. Piazza Affari closed with a drop of 4,52%. Better than Frankfurt -4,96% and, above all, Paris -5,25% conditioned by the landslide of the Socgen and Crédit Agricole which left more than 9% on the ground. Baudoin Prot, CEO of the Société, sends a vigorous letter of denial to the Financial Times which had revealed a mission to the Middle East to raise capital in and around Abu Dhabi. “We are not looking for money – he writes – our capital is adequate”.
But the market doesn't believe him. No one dares to contest the alarm raised by Christine Lagarde, the new director general of the IMF, who was the first to underline the need to intervene on the capital of the large European system banks. To have a buffer of 5% against investments in government bonds in the euro area, German credit institutions need capital injections of 127 billion euros, according to research by a specialized institution in Berlin. Intesa held up excellently -1,5% and Mediobanca -0,06% after the downgrading of Standard & Poor's. Massive loss for Unicredit -6,23% and Banca Mps -5,7%.
The European Union, on the basis of last summer's stress tests, has requested the capital increase of 16 institutions, including Banco Popolare. No French bank appears on the list, now "outdated". The securities of Banca Popolare di Milano go against the tide +4,48%. The air of battle is sniffing for the new governance of Piazza Meda. The national trade unions have expressed their support for the entry of Matteo Arpe as managing director.
On the contrary, the president Massimo Ponzellini together with a part of the internal unions is looking for other possible partners, including Andrea Bonomi's Investindustrial. On the governance front, Tuesday's board will have to deal with a largely revised draft compared to the one already advocated by Ponzellini, after the findings of the Bank of Italy. Oil products are also down (Stoxx in the sector -3,8%). Tenaris drops 8,87%, Eni drops 5,28%, Saipem -8,11%.
MEDIASET AND L'ESPRESSO FIGHT FOR THE BLACK JERSEY
EDISON; A2A FREEZES THE ZUCCOLI AWARD, DECISION POSTPONED
In Milan, the discounts are spread across the entire price list. Among the greatest losses are those of Fiat -4,55%, Fiat Industrial -5,73 and the parent company Exor -6,41%. Heavy losses also for Pirelli -5,4% and Prysmian -4,4%. Heavy fall of Mediaset -6,98%. But the flagship of the group headed by the prime minister loses less than its enemy L'Espresso -7,41% to a new low for the year. Even Mondadori -4% loses hits on a par with TiMedia -3%. Cairo Communications did not close in positive territory either (-0,56%) despite having announced strong growth in revenue thanks to La7.
The Italian proposal for Edison, to be submitted for comparison with Edf, does not yet exist. New meetings of A2A's supervisory and management boards will be needed, scheduled for September 27 and 28 respectively to decide whether to bet on the March agreement or on the Zuccoli award, ie the purchase of all of Edipower. The operation would be financed by A2A, without asking for "help" from Acea or a phantom Italian consortium. But the proposal encounters strong perplexities both from the other Delmi shareholders and from the mayor of Milan, Giuliano Pisapia, i.e. one of the reference shareholders of A2A. Also next week there will be a meeting between Minister Paolo Romani and Henri Proglio, CEO of EDF.
SEAT REJECTS THE BONHOLDERS' PROPOSAL
SANITIZATION SQUEEZES 75 MILLION FROM BANKS
Black smoke for Seat. The proposal of the bondholders on a possible debt-equity swap has for now been rejected by the private equity firms which own the controlling stake. Negotiations are ongoing and involve the 1,3 billion euro bond, due to mature in March 2014. Bondholders propose to swap bonds for 1 billion in shares and leave bonds for 300 million intact, extending the maturity after 2017 and raising the coupon above the current threshold of 8%. The credit crunch is valid, but not for everyone. Risanamento's board of directors resolved to sign a contract with Intesa Sanpaolo, Unicredit, Banca Monte dei Paschi di Siena, Banco Popolare and Banca Popolare di Milano for an unsecured credit line for a maximum amount of 75,8 million euro. Not a little, given the liquidity situation afflicting banks.
