Wmp 10 dec2012


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Wmp 10 dec2012

  1. 1. 2012 Weekly Markets10th, n PerspectivesDecember For important disclosures, refer to the Disclosure Section, located at the end of this report.
  2. 2. Weekly SummaryEquity markets traded on a risk-on mode over the In the US, fiscal cliff negotiations are ongoing. Inlast week. The Shanghai composite rose more than terms of data, the week started with a4%, but remains one of the worst performing markets disappointing US ISM number (49.5 vs. 51.4since the beginning of the year. expected) and ended with the unemployment rate falling to a near five-year low of 7.7%.At last week’s ECB press conference, President Draghisaid that the ECB had a discussion on rates which This weeks two-day FOMC meeting, whichincluded the topic of negative deposit rates. concludes on Wednesday, will probably dominateMoreover, the ECB cut 2013 GDP growth forecasts to - the markets. Investors expect the Fed to replace0.3% (from +0.5% previously). its expiring Operation Twist with an expansion of its QE purchases.The ECOFIN meeting ended without much progresson EU bank supervision. Spain will receive €39.5bn in However, US advanced retail sales, flashbank recap funds from the EU by mid-December. The manufacturing PMI for China, and Euro area flashmuch-awaited details of Greece’s buyback were also PMIs should also be closely watched.announced. In Portugal, Jerónimo Martins will holdThe Bundesbank cut German 2013 GDP growth tomorrow its Investor’s Day. Given the GDPforecast from 1.6% to 0.4%. 2012 GDP is expected to slowdown in Poland and the tough macrogrow 0.7%. Both the RBA (Australia) and the PNB environment in Portugal, investors will look for(Poland) cut interest rates over the last week. further visibility and an update on targets.
  3. 3. Portugal: Q3 2012 GDP fall 3.5% Portugal: Exports up 3.4% andy/y imports down by 0.6%• The Portuguese real GDP fell 3.5% y/y in Q3 • Exports of goods increased by 3.4% and imports 2012, a downward revision of 0.1 p.p. when of goods decreased by 0.6% in the quarter ended compared with the flash estimate; in October 2012, when compared with the same• Domestic demand recorded a less negative period last year; contribution for the y/y change rate of GDP (- • The deficit of the trade balance decreased by 7.4% vs. -8.7% in Q2 2012); €441.4mn. The coverage rate stood at 76.9%, a 3• The positive contribution of net external p.p improvement, when compared with the demand decreased to 3.9 p.p. (5.6 p.p. in the coverage ratio of the period August to October previous quarter), reflecting a lower reduction 2011. of Imports and a deceleration of Exports.Decomposition of GDP change rate (volume) Year-on-Year change rate (%) Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012Domestic Demand -5.2 -9.9 -6.8 -8.3 -7.1Exports 6.1 6.2 8.2 3.7 1.7Imports -4.4 -13.4 -5.4 -10.8 -8.2GDP -1.8 -3.1 -2.3 -3.1 -3.5 Contributes to GDP change rate (p.p.) Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012Domestic Demand -5.6 -10.7 -7.2 -8.7 -7.4External Demand 3.8 7.7 4.9 5.6 3.9GDP -1.8 -3.1 -2.3 -3.1 -3.5Source: Statistical Office of Portugal Source: Statistical Office of Portugal
  4. 4. Euro-zone: Domestic Demand Greece’s debt buyback allowsvs. Net Trade some debt relief• The detailed Q3 2012 GDP release confirmed • €10bn of six-month EFSF notes will be used for the that the Euro-zone economy contracted by debt buyback. A Dutch auction process was 0.1% q/q; concluded Friday for each of the 20 series of• Having fallen in the previous three quarters (- outstanding new GGBs, with the average price of all 0.4% q/q, -0.3% q/q and -0.5% q/q, in Q2 2012, bonds being between €32.12 and €34.1; Q1 2012 and Q4 2012 respectively), household • If successful, this could allow outstanding Greek consumption was stable in Q3 2012. Investment debt to fall by a net €20bn; showed a smaller contraction (-0.7% q/q) than • German Chancellor hinted that Germany might one in Q2 2012 (-1.8% q/q) and Q1 2012 (-1.2% day consider forgiving some of its outstanding loans q/q); to Greece, if there is a substantial improvement in• Net trade made a positive contribution of 0.3%. the country’s fiscal performance. Components of GDP (%, y/y) Greek GDP and Economic Sentiment 12 5 15 115 8 10 105 5 4 0 0 95 0 -5 85 -4 -5 EC Economic Sentiment -10 Gross Fixed Capital Formation Indicator (LHS) 75 -8 Household Consumption -15 GDP (% y/y, RHS) Exports (RHS)-10 -20 65 -12 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Source: Eurostat Source: National Statistical Service of Greece and European Commission
  5. 5. ECB reduces again its 2013 GDP Bundesbank cuts German growthgrowth forecast forecast• President Draghi repeated that the ECB is ready • The Bundesbank cut 2013 GDP growth forecast to start buying bonds through its Outright from 1.6% to 0.4%. 2012 GDP is expected to Monetary Transactions programme; grow 0.7%;• He did not mention additional forms of policy • The bank is also forecasting lower inflation. support such as quantitative easing. But, a Inflation is expected to fall from 2.1% this year further interest rate cut as been discussed; to 1.5% in 2013. Unemployment should rise• The bank has become gloomier about the growth slightly to 7.2% in 2013, from 6.8% this year; outlook. The mid–points of its latest staff • German industrial production fell 2.6% m/m in forecasts imply that GDP will fall by 0.5% in 2012 October, much weaker than the consensus and a further 0.3% in 2013, before rising by 1.4% forecast of -0.5%. in 2014; German Industrial Production and manufacturing PMI 75 Industrial Production (% y/y, RHS) 25 Manufacturing PMI (Adv. 2 months, LHS) 65 15 55 5 45 -5 35 -15 25 -25 2005 2006 2007 2008 2009 2010 2011 2012 2013Source: European Central Bank Source: Bloomberg
  6. 6. UK fiscal watchdog revises down US unemployment rate declinesGDP growth forecast to 7.7%• The UK Autumn Fiscal Statement was released. • Non-farm payroll employment increased by Public Sector Net Debt is now expected to peak 146,000 in November. However, the gains in at 77.9% of GDP in 2015/16, a year later than the September and October were revised down by a previous prediction that it would peak at 76.3% total of 49,000; of GDP in 2014/15; • The unemployment rate declined to a near five-• The Office for Budget Responsibilitys GDP year low of 7.7%, from 7.9%; forecasts were revised down to -0.1% in 2012 • The monthly gains in payroll employment have (from 0.8%), 1.2% in 2013 (from 2%), 2% in 2014 been increasing since the middle of the year; (from 2.7%), 2.3% in 2015 (from 3%) and 2.7% in • The BLS reported that there was no significant 2016 (from 3%); impact from Hurricane Sandy on the jobs• The UK Debt Management Office intends to report. start issuing new super-long dated (50-60 year) Gilts from next year. Office for Budget Responsibilitys latest GDP US Employment Report 3.0 Forecast (%) 2.7 2.8 2.5 2.3 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 2.0 2.0 Unemployment rate (%) 8.1 8.2 8.2 8.3 8.1 7.8 7.9 7.7 1.5 1.2 Change in Non-Farm Payrolls (000s) 68 87 45 181 192 132 138 146 0.9 1.0 Average Hourly Earnings (%, y/y) 1.9 1.8 2 1.7 1.7 1.9 1.6 1.7 0.5 0.0 Average Weekly Hours Worked 34.5 34.4 34.5 34.4 34.4 34.4 34.4 34.4 -0.1 -0.5 Source: Bureau of Labor Statistics 2011 2012 2013 2014 2015 2016 2017 Source: OBR’s Economic and Fiscal Outlook, December 2012
  7. 7. US: ISM data for November - US consumer sentiment drops inIndustry down… Services up… December• The ISM manufacturing headline index fell from • The University of Michigan consumer sentiment 51.7 in October to a three-year low of 49.5 in index’s headline fell to 74.5 in the preliminary November. Was the fall explained by the December report; temporary effects of storm Sandy? • It appears that concerns and uncertainty related to• Both the new orders index (50.3 vs. 54.2) and the fiscal cliff weighed on consumer sentiment the employment index (48.4 vs. 52.1) fell; during the month;• The US ISM non-manufacturing index rose in • Sentiment regarding government economic policy, November to an eight-month high of 54.7. It expectations for unemployment, and income seems to suggest that activity in the services expectations all weakened; sector has not been hit by fiscal cliff concerns. • The survey also reported increases in consumer ISM Manufacturing Index and GDP Growth inflation expectations. 62 5 58 4 University of Michigan sentiment index 3 54 Prelim. 2 1 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 50 46 0 Consumer sentiment 79.3 73.2 72.3 74.3 78.3 82.6 82.7 74.5 -1 Current conditions 87.2 81.5 82.7 88.7 85.7 88.1 90.7 89.9 42 -2 ISM Manufacturing -3 Expectations 74.3 67.8 65.6 65.1 73.5 79.0 77.6 64.6 38 Index (Adv 1qtr, LHS) -4 Median 1-year-ahead inflation expectations 3.0 3.1 3.0 3.6 3.3 3.1 3.1 3.3 34 GDP (% y/y, RHS) -5 Median 5-year-ahead inflation expectations 2.7 2.8 2.7 3.0 2.8 2.7 2.8 2.9 30 -6 Home buying conditions 160 159 157 157 165 155 162 158 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: University of MichiganSource: ISM Institute; Bureau of Economic Analysis
  8. 8. Australia: RBA cuts 25bp. Poland: a 25bp cut was announced.Further cuts are possible Another cut in January is possible• The RBA cut the cash rate by 25bp to 3%; • The Polish MPC cut rates again by 25bp, as expected• The statement attached to the decision by the market; doesn’t seem to signal that the RBAs easing • The reasons for the cut were expectations of growth cycle is complete. It mentions that remaining below potential in the medium term, the “commodity prices for Australia remain risk that inflation may fall below the target in the significantly lower than earlier in the year“ medium term, slowing credit growth, and worries and “inflation remains relatively benign and about a sharp slowdown in domestic consumption consistent with target”; dynamics;• The next meeting will be held in February • The statement repeated that the MPC will cut more 2013. RBA will probably follow closely if the incoming data confirms a growth slowdown indicators in the non-mining economy. and the risk of inflation pressures stays limited. 5.0 8% RBA Overnight Cash Rate Target NBP base rate (%) 7% 4.6 6% 4.25 4.2 5% 3.8 4% 3.4 3% 2% 3.0 2008 2009 2010 2011 2012 2009 2010 2011 2012 2013Source: Bloomberg Source: National Bank of Poland
  9. 9. PSI20 weekly review• ZON (ZON PL) and Sonaecom (SNC PL) rose 6.15% and 2.97%, respectively, amid further speculation that both companies could merge. We continue to believe that a merger could allow material cost sinergies and provide a more credible competitor to Portugal Telecom (PTC PL);• EDP Renovaveis (EDPR PL) and Energias de Portugal (EDP) rose 5.66% and 8.12% over last week, respectively. EDP Renovaveis has commissioned its first wind farm in Italy. China Three Gorges, EDPs largest shareholder with a 21.35% stake, reaffirmed its interest in reinforcing its current stake by acquiring the 4.14% that the Portuguese state still owns in EDP. EDP Renováveis expects the first deal with CTG until year-end;• Galp (GALP PL) fell 0.38%, underperforming the Portuguese Benchmark PSI 20 (3.42%). The company announced new natural gas discoveries in Mozambique, which represents another resource upgrade for Area4;• Portugal Telecom (PTC PL) rose 0.36% over the week. Societe General (GLE FP) now holds a long position of more than 2% of the company. The stake is the result of the transaction of a cash settled equity linked swap. Source: Bloomberg
  10. 10. Last week’s market highlights 21• GDF Suez (GSZ FP) provided a strategic update. The 20 GDF Suez Share Price (€) company reiterated its policy to maintain or grow the 19 dividend (2012 dividend at €1.5/share was confirmed). 18 However, GDF Suez said that earnings will fall 17% in 17 2013 and remain flat in 2014. In order to strenghten its 16 15 balance sheet, the company intends to make further 15.21 14 asset sales (c. €2.5bn), cut annual capex and implement a Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 cost reduction programme. More visibility on earnings growth post 2014 will probably be needed for the stock to perform;• Deutsche Telekom (DTE GY) presented a new set of 2013-15 targets. Higher levels of investment in the German and US markets were announced. In order to protect the balance sheet, 2013 and 2014 dividends will 50 be cut to €0.50 and an option for investors to take the Freeport McMoRan Share Price ($) dividend in stock rather than cash will be introduced; 45• Freeport McMoRan (FCX US) fell 18.5% over last week. 40 The company has signed merger agreements under 35 which it will acquire Plains Exploration (PXP US) for 30 31.7 $6.9bn in cash and stock and McMoRan Exploration 25 (MMR US) for $3.4bn in cash. Jan-12 Mar- 12 May-12 Jul-12 Sep-12 Nov-12 Source: Bloomberg
  11. 11. What we are watching this week: CALENDAR - Event Country Date Hour (GMT) Survey Prior• In Europe, the key developments China CPI and PPI (Nov) China 9-Dec n.a. n.a. n.a. China ind prod and retail sales (Nov) China 9-Dec n.a. n.a. n.a. this week are likely to be politically Exports y/y (Nov) Imports y/y (Nov) China China 10-Dec 10-Dec n.a. n.a. 9.0% 2.0% 11.6% 2.4% focused. On Thursday and Friday CBR monetary policy meeting Bank of Englands Mervyn King speech Russia UK 10-Dec 10-Dec n.a. n.a. n.a. n.a. n.a. n.a. (Dec 13th, 14th), EU leaders will Bank of France Bus. Sentiment Industrial Production y/y France France 10-Dec 10-Dec 07:45 07:45 92 -2.3% 92 -2.5% meet to discuss a roadmap to ZEW Survey (Current Situation) (Dec) ZEW Survey (Econ. Sentiment) (Dec) Germany Germany 11-Dec 11-Dec 10:00 10:00 6.0 -11.5 5.4 -15.7 Trade Balance (Nov) US 11-Dec 13:30 -$42.7B -$41.5B gradually set up a better Machinery Orders y/y (Oct) Japan 11-Dec 23:50 -5.0% -7.8% Consumer Price Index y/y Germany 12-Dec 07:00 1.9% 1.9% functioning economic and Consumer Price Index y/y France 12-Dec 07:45 1.6% 1.9% ILO Unemployment Rate (Nov) UK 12-Dec 09:30 7.8% 7.8% monetary union. On Wednesday Euro-Zone Ind. Prod. y/y EU finance ministers meet on Banking Supervision Euro-Zone Europe 12-Dec 12-Dec 10:00 n.a. -2.4% n.a. -2.3% n.a. (Dec 12th), EU finance ministers FOMC Rate Decision Bank of Korea Monetary Policy Committee Meeting US South Korea 12-Dec 13-Dec 17:30 01:00 0.3% 2.75% 0.3% 2.75% meet to discuss the single Consumer Price Index y/y Eurogroup finance ministers meet for talks on Greece and Cyprus Spain Euro-Zone 13-Dec 13-Dec 08:00 n.a. 2.9% n.a. 2.9% n.a. supervisory mechanism, and on Advance Retail Sales (Nov) Retail Sales Less Autos (Nov) US US 13-Dec 13-Dec 13:30 13:30 0.4% 0.0% -0.3% 0.0% Thursday (Dec 13th), euro area Producer Price Index (YoY) PPI Ex Food & Energy (YoY) US US 13-Dec 13-Dec 13:30 13:30 1.8% 2.2% 2.3% 2.1% EU summnit (two days) Europe 13-Dec n.a. n.a. n.a. finance ministers will discuss the Initial Jobless Claims US 13-Dec 13:30 370K 370K Continuing Claims US 13-Dec 13:30 3215K 3205K results of the Greek buy back; SNB policy Decision HSBC Flash Manufacturing PMI Switzerland China 13-Dec 14-Dec n.a. 01:45 n.a. n.a. n.a. 50.5• In terms of data, the focus will be PMI Manufacturing (Dec) PMI Services (Dec) France France 14-Dec 14-Dec 08:00 08:00 44.9 46.0 44.5 45.8 on the flash PMIs for December; PMI Manufacturing (Dec) PMI Services (Dec) Germany Germany 14-Dec 14-Dec 08:30 08:30 47.3 50.0 46.8 49.7• In the US, this weeks two-day PMI Manufacturing (Dec) PMI Composite (Dec) Euro-Zone Euro-Zone 14-Dec 14-Dec 09:00 09:00 46.6 46.9 46.2 46.5 PMI Services (Dec) Euro-Zone 14-Dec 09:00 47.0 46.7 FOMC meeting will probably WPI Inflation (Nov) India 14-Dec n.a. n.a. n.a. Tankan business conditions DI (Dec) Japan 14-Dec n.a. n.a. n.a. dominate the markets; Euro-Zone CPI y/y Euro-Zone 14-Dec 10:00 2.2% n.a. Consumer Price Index y/y (Nov) US 14-Dec 13:30 1.9% 2.2%• HSBC Flash Manufacturing PMI for CPI Ex Food & Energy y/y (Nov) Markit US PMI Preliminary US US 14-Dec 14-Dec 13:30 13:58 2.0% 52.0 2.0% 52.4 China will be released Friday. Industrial Production Capacity Utilization US US 14-Dec 14-Dec 14:15 14:15 0.2% 78.0% -0.4% 77.8% Japanese general elections Japan 16-Dec n.a. n.a. n.a.
  12. 12. Next Week Preview: Economics US Retail Sales (% m/m)• US retail sales for November will be released 1.5 1.3 1.2 Thursday, 13th December (13:00 GMT). In October, 1.0 0.9 retail sales were depressed by Hurricane Sandy. A 1.0 0.7 0.8 bounce back will now probably occur, driven by a 0.5 rebound in auto and building materials; 0.0• US consumer prices are due Friday, 12th December 0.0 (13:30 GMT). The recent fall in gasoline prices will -0.5 -0.3 probably keep headline CPI inflation rate below the Retail Sales Core Retail Sales (Less Autos) -0.7 Fed’s 2% target. However, the housing cost -1.0 -0.8 components are expected to continue rising, Jun-12 Source: Bloomberg Jul-12 Aug-12 Sep-12 Oct-12 reflecting the strengh of recovery in real estate; Euro-zone PMI Surveys• UK labor statistics will be released Wednesday, 12th 62 62 December (9:30 GMT). After the 10k increase in the 58 Manufacturing 58 Composite claimant count in October, the November data will Services be important to see if we have reached a turning 54 54 point in labor market momentum; 50 50• Euro area flash PMIs are due Friday, 14th December (8:58 GMT). Given the stabilization of economic 46 46 indicators outside Europe, Euro area PMIs could 42 42 advance a bit in December. 2010 2011 2012 2013 Source: Bloomberg
  13. 13. Next Week Preview: FOMC Meeting and EU leaders meetingFED: More QE on the way? Euro politics are back on the agenda• The Fed doesn´t seem to have much more short- • EU leaders will meet on Dec 13th and Dec 14th to term Treasury securities to sell. The Fed is likely to discuss a roadmap (with three stages of announce the replacement of its expiring integration) towards a better functioning financial, Operation Twist at the end of the FOMC meeting budgetary and economic policy framework. that concludes on Wednesday; However, there is a difficult road ahead. Solidarity• The focus will also be in a possible announcement and control mechanisms will probably require that the Fed will adopt numerical thresholds for changes to the EU treaties. With the German its guidance on how long its short-term rates will federal election next year, bold moves are not remain at current low levels. Fed officials will also expected and tough decisions will likely take place disclose an update on their economic forecasts. later on; • On Dec 12th, EU finance ministers will discuss the legal framework on the single supervisory mechanism, an important step towards a full banking union; • On Dec 13th, euro area finance ministers will discuss the results of the Greek debt buyback, which will determine if the tranches of aid can be released. The aid package to Cyprus could also be discussed, as the audit to the local banking sectorSource: Federal Reserve will reveal how much money the country needs.
  14. 14. Next Week Preview: Jerónimo Martins Investor’s DayWill it be a trigger for the stock disposable income is pressuring retail sales evolution. How is the company seeing theprice ? competition in the Portuguese retail market? Does• Jerónimo Martins will hold its Investor’s Day on the company expect its “LfL” to remain above that December 11st; of the market? What impact on profitability should• This should be an interesting event for investors. be expected from this positioning? Jerónimo Martins vs. DJ STOXX 600 Retail Index Given the GDP slowdown in Poland and the tough Jerónimo Martins Share Price 125 125 macro environment in Portugal, investors will look 120 1 Ja n 2012 = 100 DJ S TOXX 600 Retail Index 120 for further visibility and an update on targets; 115 115• JM’s “LfL” performance in Poland and possible 110 110 105 105 new targets in terms of new stores post-2015 100 100 could be an important part of the Q&A session; 95 95• Management could also give an update on the 90 Jan-12 Mar- 12 May-12 Jul-12 Sep-12 Nov-12 90 “Hebe” drugstore trials in Poland; Source: Bloomberg• Investors are also willing to ear more specific P/E 13 Est. DY 13 Est. EPS CAGR 11/13 Est. information on JM’s venture in Colombia. The Jerónimo Martins 19.5 2.7 17.4% company has already announced that 30 to 40 Metro 8.6 6.7 3.3% Ahold 9.7 4.8 5.6% stores should be opened in 2013. Will the Dia 14.9 3.1 46.5% company provide further targets? Carrefour Sainsbury (*) 13.6 10.9 3.1 5.1 0.46% 5.9%• A clarification on the company’s strategy in Morrison (*) 9.5 4.8 5.1% Tesco (*) 10.0 4.6 1.5% Portugal will also be closely watched. Declining (*) P/E 14 Est., DY 14 Est., and EPS CAGR 12/14 Est. were used Source: Bloomberg
  15. 15. Next Week Preview: European corporate events and Idea of the weekInditex to release Q3 results Is a weaker JPY still possible?• Inditex will report Q3 results Wednesday. The • The LDP, led by former prime minister Shinzo main driver should be “LFL”, after positive Abe, appears to be the front-runner in the early comments at the Q2 stage on current trading; stages of the current general election campaign.• ThyssenKrupp will release FY Results and hold an The LDP-led coalition (with coalition partner analyst meeting on Tuesday. Komeito) could control the lower house;Company th Sector Event • Japan’s December 16th election could result in aDecember 10Air France - KLm Airlines Investor Day significant shift in BoJ policies;December 11 th • A formal inflation target of 2-3% would be anDiageo Beverage North America PresentationThyssenKrupp Mining & Metals FY Results important step towards weakening the yen, butLufthansa Airlines Traffic Statistics the target’s credibility depends on the size ofJerónimo Martins Retail Investor DayWhitbread Leisure Goods & services Q3 Trading Statement asset purchases;Metso Industrial Equipment Capital Markets Day • As part of its election platform, the LDP wantsSerco Group General industrial Services Capital Markets DayDecember 12 th to establish a public-private investment fund forInditex Retail Q3 Results purchasing of foreign bonds that would help toFraport Industrial Transportation Traffic StatisticsImagination Tech Semiconductors H1 Results bring the currency down. The adoption of aCarillion Heavy Construction Q4 Trading Statement negative interest rate is also being discussed;Travis Perkins Retail Trading StatementDecember 13 th • Yen short positioning has built up considerablyPernod Ricard Beverage Americas Seminar in recent weeks. Nevertheless, a move on theWood Group Energy Trading Statement th USDJPY and EURUSD towards 84 and 110,December 14Fresenius Healthcare Providers Update on plans for biotech business respectively, seems possible.
  16. 16. Charts we are watching (I)• According to the Portuguese Statistical Office, 0.8 Sonae (SON PL) Share Price (€) adjusted by seasonality and calendar effects, food retail sales dropped by 2.6% y/y in October at current 0.7 0.664 prices (-1.7% ytd) and non-food retail sales (ex-fuel) dropped by 12.1% yoy (-11.0% ytd). Nevertheless, 0.6 Sonae (SON PL) rose 13.7% over last week and was the 0.5 best performer stock in the PSI 20 benchmark index. Notwithstanding the weak macro backdrop, the 0.4 company has been able to show a resilient performance in its food retail division. Moreover, 0.3 Sonae would also benefit in a M&A scenario Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Source: Bloomberg involving Sonaecom and ZON. 24 Repsol (REP SM) Share Price (€)• Repsol (REP SM) filed a US lawsuit to block Chevron 22 (CVX US)’s deal with Argentina’s YPF, in what represents the Spanish oil company’s legal response 20 to the loss of its asset in Argentina. Moreover, GDF 18 Suez (GSZ FP) said that it is studying the acquisition of 16 15.855 Repsol’s LNG assets. The divestment of the LNG 14 business should address most credit agency concerns. 12 But, Repsol’s future upstream growth will probably 10 be the main driver of its stock price. Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Source: Bloomberg
  17. 17. Charts we are watching (II)• Gemalto (GTO FP) will replace Alcatel-Lucent in the CAC Alcatel-Lucent (ALU FP) vs. Gemalto (GTO FP) 250 40. The change will be effective December 24th. Alcatel- Lucent as been in France’s benchmark stock index in the 200 last 25 years. Moreover, Gemalto will seek a secondary listing on the Amsterdam exchange in 2013. The 150 Gemalto company is also considering a listing in the US or Asia. Alcatel-Lucent Gemalto closed Friday at €74.59, the highest level since 100 the company’s listing in May 2004. Gemalto is strongly 50 positioned for several technology build-out cycles. 1 Jan 2011 = 100 However, the company will need to continue to execute 0 on product cycles and to show improved cash Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 conversion in order to justify continued Source: Bloomberg PSI 20 Yearly Price Changes (%) outperformance. 80 71 60• The Portuguese PSI 20 stock benchmark index has 43 40 33 recovered strongly from its 2012’s lows. The index is 24 25 30 16 13 13 16 down only 1% since the beginning of the year. 20 9 0 Portuguese stocks have been re-rated, reflecting the fall 0 -3 -1 in sovereign yields in Portugal since the highs posted in -20 -13 -10 January 2012, despite poor economic prospects. With -40 -25 -26 -28 valuation already reflecting challenges faced by the -60 -51 country, should we expect a further re-rating in 2013? 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Source: Bloomberg, 2012 reflects ytd change
  18. 18. Disclosure SectionThis research report is based on information obtained from sources which we believe to be credible and reliable, but isnot guaranteed as to accuracy or completeness. All the information contained herein is based upon informationavailable to the public.The recipient of this report must make its own independent assessment and decisions regarding any securities orfinancial instruments mentioned herein.This report is not, and should not be construed as an offer or a solicitation to buy or sell any securities or relatedfinancial instruments. The investment discussed or recommended in this report may be unsuitable for investorsdepending on their specific investment objectives and financial position.The material in this research report is general information intended for recipients who understand the risks associatedwith investment. It does not take account of whether an investment, course of action, or associated risks are suitablefor the recipient.Investors should seek financial advice regarding the appropriateness of investing in any securities or investmentstrategies discussed or recommended in this research report and should understand that the statements regardingfuture prospects may not be realized. Investors may receive back less than initially invested. Past performance is not aguarantee for future performance.Fincor – Sociedade Corretora, S.A. accepts no liability of any type for any indirect or direct loss arising from the use ofthis research report.Recommendations and opinions expressed are our current opinions as of the date referred on this research report.Current recommendations or opinions are subject to change as they depend on the evolution of the company or maybecome outdated as a consequence of changes in the environment.Fincor - Sociedade Corretora, S.A. provides services of reception, execution, and transmission of orders.
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