Greek crisis, fears for the resilience of the Chinese economy and the prospect of a maximum fine for the banks involved in the investigation into the manipulation of exchange rates. There are various factors that have slowed down share prices almost everywhere at the start of the week. Tokyo is down by 0,3%, weak stock markets in the Asia Pacific area. The spotlight is focused on the Chinese GDP estimates due tomorrow.
Negative ending yesterday on Wall Street: the Dow Jones index lost 0,47%, the S&P 500 0,44% and the Nasdaq 0,2%. This week, perhaps as early as today, five Big Banks (JP Morgan, Citigroup, Rbs, Barclays and Ubs) will plead guilty in front of the judge in the lawsuit brought by the US Department of Justice for manipulation on the foreign exchange market. It is the first time in decades that the US giants have chosen to admit guilt to reduce the impact, however billionaire, of the sanctions.
VEGAS (CONSOB): BEWARE OF THE BUBBLE RISK
Contrasted day for the EU Stock Exchanges, coinciding with the Eurogroup dedicated to the Greek crisis. Piazza Affari closed an adjustment session in parity after the strong rise on Friday. The FtseMib index finished unchanged, while the other European Stock Exchanges recorded a decline: Paris fell by 1,3%, Frankfurt -0,3%, Madrid -0,1%.
In the annual meeting with the financial markets, the president of Consob Giuseppe Vegas underlined that "the enormous liquidity that flowed onto the stock markets helped to suddenly raise the value of share prices". Therefore it exists the risk of the formation of “speculative bubbles”.
GREECE, NEED FOR AN AGREEMENT AT THE END OF JUNE
Athens will today pay 750 million euros into the coffers of the Monetary Fund. "Greece respects its obligations, as always," said Minister Yannis Vroufakis. But an agreement to unblock the situation once and for all did not come from the Eurogroup summit. And so the final communiqué of the summit, after registering "the progress made so far with favour", as explained in the joint note on the negotiations between Athens and the ECB, the IMF and the European Commission, signals that "time and effort are still needed to bridge the gap on questions still open”, The end of the negotiations is foreseen at the end of June.
At the end of today's meeting, the president of the Eurogroup, Jeroen Dijsselbloem, criticized the possibility that Greece could hold a referendum on a new agreement with international creditors: the IMF, the ECB and the European Commission. German Finance Minister Wolfgang Schaeuble showed openness to popular consultation.
TREASURY AUCTIONS UNDERWAY: TODAY IT'S THE TURN OF ANNUAL BOTS
After the most turbulent week in the bond markets, the mid-month Treasury auctions kick off today. We begin with the placement of the annual Bot offered for 6,5 billion against the 7,15 billion due. The bond's yield on the gray market fluctuated yesterday between 0,03% and 0,05% while at the last placement in mid-April the bond was assigned a yield of 0,013%, a new all-time low. Wednesday will be the turn of the medium-long term auction with the Treasury ready to offer between 5,5 and 7 billion BTPs at 3, 7, 15 and 30 years. The ten-year BTP was traded yesterday at a yield of 1,75%, for a spread of 117 bp.
INTESA DOUBLES PROFITS. MPS INCREASE FROM MAY 28
The better performance of Milan compared to the other European Stock Exchanges is linked to the push of the banking sector which, after the initial declines, was pushed upwards by the brilliant quarterly results of Intesa Sanpaolo (+1,9%). The net result doubled in the first quarter to 1.064 million euros, the highest figure since the first quarter of 2009. The consensus of analysts was expecting a growing profit but up to 630 million. Confirmed the commitment to distribute cash dividends for 2015 for 2 billion euro and the capital solidity with a Cet1 of 13,2%.
Monte Paschi is also doing well after some ups and downs (+1,52%) after the solid quarterly report and the update of the business plan which envisages that the bank will achieve a net profit of 880 million euros and a Cet1 ratio of 12% in 2018, in addition to the closure of 350 branches. The institution is open to mergers and acquisitions. The capital increase of Monte dei Paschi di Siena will begin after the authorization of the ECB, probably on May 28th.
The rest of the sector is more contrasted. Unicredit closed down by 0,2%, Ubi -0,1%, Pop.Milano +0,4%. Closing down for Pop.Emilia (-2%). Banco Popolare scored +0,07% to 14,45 euros after the statements of CEO Pier Francesco Saviotti on the ongoing talks in view of a possible merger with another institution.
FINECOBANK BOOM, MANAGED WELL
In great evidence FinecoBank: + 2,7%, to 6,77 euros. The group closed the first quarter with profits up 29,4% to 47,8 million euro compared to the 36,9 million recorded in the first quarter of 2014 (+17,6% compared to the fourth quarter of 2014), mainly thanks the increase in net commissions and the trading result. Strong recovery of asset management securities. Mediolanum +2%, Azimuth +1,9%, Soul +1,5%. Insurance companies are down: Generali -0,8%, UnipolSai -0,4%.
“TURKISH THINGS” FOR SAIPEM, HIGHEST SINCE NOVEMBER
It was Saipem's day: +3,4% to 12,66 euros, the highest since last November. In fact, yesterday the "wound" of December was healed when Moscow decided to cancel the orders related to the SouthStream gas pipeline. The consortium has in fact asked the Italian oil services company to restart the works for the infrastructure destined for the alternative project, the Turkish Stream. The project's contribution to 2015 revenues is estimated at around 1,8 billion euros.
Analysts have already done the initial calculations: assuming an EBIT margin of 15%, the contribution at EBIT level should be around 270 million euros, equal to 30% of the expected 2015 EBIT. “For 2015/2016, our estimates incorporate a contribution of 1/0,95 billion euros respectively from South Stream, with a gross margin of 20%, 200/190 million”, write the Equita analysts.
Tenaris rose by 0,3%, Eni -0,8%. Saras also stands out (+3,1%): the chances of an offer by the Russian Rosneft for the majority stake are increasing. For Mediobanca Securities (outperform, Tp 2,34 euro) the accounts for the first three months of 2015 will be a "turning point".
ENEL HYPOTHESIS ON BROADBAND, TELECOM GETTING A SHOCK
The negative note concerns the heavy decline of Telecom Italia (-1,7%) under the pressure of the plan, substantially confirmed by Prime Minister Matteo Renzi ("but it is not up to the government to make industrial plans") to involve Enel in the construction of the broadband network wide, starting from the electricity grid.
Enel fell by 0,5%. There is "willingness and interest" on the part of the group in the project to put the network infrastructure as a common factor in order to enhance it with the laying of optical fiber as long as adequate remuneration is ensured. But there is instead no interest from the electricity group in entering the TLC business.
EXOR STRENGTHENS THE CASE IN VIEW OF THE ASSAULT ON PARTNER RE
Exor marks a slight increase of 0,1% after signing the agreement for sell Cushman & Wakefield to DTZ (Tpg Capital) for a total Enterprise value of 2 billion dollars. For Exor (it owns 65%) the proceeds from the sale amount to 1,278 billion, which determine a capital gain of 722 million. Today the board of directors of the financial company will examine a possible relaunch on Partner. Re in view of the shareholders' meeting of the reinsurance group. The board rejected the offer of 6,4 billion from the leader of the Agnelli group.
FiatChrysler loses 0,3%. Among other industrialists, Finmeccanica +0,3% and StM +0,1% rose. Good rise for Prysmian (+1,7%): the cable company recorded the promotion by Morgan Stanley which raised the target price to 22,5 euros from 21 euros. Buzzi loses 0,9%, Italcementi -2,3%.
