Newsletter "Perspectivas Semanais" Fincor (17-21/09/2012


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Perspectivas de mercado para a semana de 17 a 21 de Setembro.

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Newsletter "Perspectivas Semanais" Fincor (17-21/09/2012

  1. 1. Weekly September 17th, 2012 .Fincor- Sociedade Corretora, S.A. provides services of reception, execution, and transmission of orders. The contents mentioned in this document do notconstitute (nor should they be interpreted as to form) any kind of counseling, or investment recommendation, or a record of our trading prices, or anoffer or solicitation to trade in any financial instrument. Fincor- Sociedade Corretora, S.A. will not accept any responsibility resulting from any use referring tosaid content or about any resulting effect that could have occurred.
  2. 2. Germany’s Constitutional Commitment – a word missingCourt the Greek dictionary-The Court approved the participation of the -Greece needs to implement additional austeritycountry on the funding of ESM, with a limit of measures of €11.5B. The Troika is evaluating its€190B. efforts and policies. Without its approval, Greece won’t receive the next aid.-For a bigger amount, it will have to approved onthe Parliament. -Negotiations aren’t over about the measures to take, as the Hellenic Government wants to smooth them.
  3. 3. Spain – a Bailout will be A Banking Union in Europe?needed to the Public Sector Guess who is opposing…-A previous bailout was asked for its Banking -The Finance Ministers of the Regions met inSystem. Now, Spain is expecting the results of the Nicosia, where the issue was discussed. The mainaudits to the Banks. divergences comes from France VS Germany – where the first intends to give permission to the-For the public sector the Government hasn’t took a Bailout Funds to rescue banks.decision. The Government is trying to gain timewhile the costs of funding are falling, due to theannouncement of the OMT by the ECB. 2Y Bond Yields: Spain7,00% 6,64%6,00%5,00%4,00%3,00%2,00% Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12
  4. 4. QE3 – I’m back!-The FED announced that its Committeeapproved QE3 in an 11-1 vote.-$40B of Mortgage Backed Securities (MBS) willbe bought monthly and on indefinitely period,until the economy starts giving signs ofrecovering.-FED’s Mandates are price stability andmaximum employment. Due to that it willfollow closely the latter. More boost measurescan be applied if the economy continuesgrowing at a slow pace.-Interest Rates will be maintained at these lowlevels until at least 2015. TWIST operation willcontinue at the same time of MBS.
  5. 5. US – Mixed economic data from the country U. Michigan Consumer Confidence Industrial Production MoM85 0,86% 0,82% 0,59% 0,68%80 0,48% 0,54% 74,3 0,21% 0,19% 0,14%75 0,03%706560 -0,60%55 -1,16%50
  6. 6. Innovation = Apple-The company launched last Wednesday in San Francisco the iPhone 5. A taller, thinner, with a faster chipthen the previous. Better features on your camera, a longer battery life and a 4G LTE will increase the datafunctioning of the phone. Will this launch be enough to sustain new rises on the stock’s price.
  7. 7. Rest of the world- Geopolitical tensions are rising-In the Arab World protests are growing againstthe US. The ambassador of the country in Libyawas assassinate.-Israel Prime Minister said Iran’s efforts todevelop a nuclear weapon is now at a “RedZone”.-Territorial dispute over the Senkaku Islands isincreasing tensions between China and Japan.
  8. 8. PortugalTroika Mission in the country was concluded:- Real GDP remains in line with projections. Real GDP should decline 3% in 2012 and 1% in 2013.- Exports are performing better than expected.- The deficit targets were revised to 5% of GDP (2012), 4,5% of GDP (2013) and 2,5% of GDP (2014), in order to ease the economic and social cost of fiscal adjustment.- Additional consolidation efforts are requiredThe Government presented new austerity measures. Some of them were:- Employees social security contributions will increase from 11% to 18%.- An increase in corporate taxes for large corporations and on the tax burden for wealthy individuals (No details).- An increase in the taxation over capital gains, from 25% to 26,5%.BCP Rights Issue:- The Rights started trading last Friday, and will continue until September 24th.
  9. 9. Weekly PreviewEurope From Europe we should continue be focused on the sovereign crisis in the region. We are still waiting for a report from Troika about Greece while it is negotiating measures of €11,5B. Spain is another important issue, while we markets expect that the country will have to ask for a bailout and we wait for the Audit Results to the Banking Sector. In Germany will be published the ZEW and PMI Manufacturing.US We should follow closely the Markets performance after the QE3. S&P500 is S&P500 already at levels unseen since 2007. Will this 1800 program bring any consequences to the 1600 Financial Markets? Manufacturing and real- 1400 1200 estate data will be published during the 1000 week. 800Rest of From China, we are still expecting new 600 400the stimulus measures for the economy. We 200 should follow closely the disputes betweenWorld the country and Japan and the Middle East. 0 J-93 J-95 J-97 J-98 J-99 J-01 J-02 J-03 J-05 J-06 J-07 J-09 J-10 J-11 J-92 J-94 J-96 J-00 J-04 J-08 J-12
  10. 10. Weekly PreviewMarket viewECB and FED actions reduced market risk premium, we remain positive for risk asset. Altough central banksare doing their jobs, there are still several risks for the markets that can prompt risk assets to fall. As PIMCO’sEl-Erian said, a Geopolitical conflict, the Fiscal Cliff in US, the sovereign crisis from Europe and an economicslowdown from China are the major risks. Vicious Cycle of Europe. We are currently on level 2. Put Call Ratio CBOE 2Y Government Bond Yields 1,2 7,00% 1 6,00% 5,00% 0,8 4,00% 0,6 Sprea d of 3,00% Spain over 0,4 Germa ny 2,00% 0,2 1,00% 0 1-3-12 2-3-12 3-3-12 4-3-12 5-3-12 6-3-12 7-3-12 8-3-12 9-3-12
  11. 11. Weekly Previewi) Ideas for the week: PortugalBES vs BCP: Reasons to buy:-Operations: BCP is the bank with the biggest retail operations in Portugal. As the Government presents newausterity measures and the outlook of the economy continues to deteriorate, the Bank should continue tobe pressed by the NPLs increase. Balance Sheet Ratios BCP BES Q1 2012 Q2 2012 Q1 2012 Q2 2012 NPL / Total Loans 9,3% 10,9% 6,8% 7,5% Source: Bloomberg-In a multiple valuation, BES continues to be more attractive then BCP, having an estimate Price-to-Book of0,3 for 2013 while BCP has 0,52.-Technical’s gives us a buy signal for BES and a sell for BCP.-Capital Increase: BES was the only Portuguese Bank that didn’t have to resort to a capital injection from thestate. There is the risk in BCP of the State becoming a reference Shareholder on the back of the capitalincrease (less likely) or CoCos (more likely). There is a lot of uncertainty in BCP regarding the currentshareholder structure and who is going to the capital increase. We think that it will be needed a stronginvestment from retail s or eventually new reference shareholders to fulfill the capital increase, which willplace a downward pressure over the rights price.