1. 2012
Weekly Markets
10th,
n Perspectives
December
For important disclosures, refer to the Disclosure Section, located at the end of this report.
2. Weekly Summary
Equity markets traded on a risk-on mode over the In the US, fiscal cliff negotiations are ongoing. In
last week. The Shanghai composite rose more than terms of data, the week started with a
4%, but remains one of the worst performing markets disappointing US ISM number (49.5 vs. 51.4
since 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 Draghi
said that the ECB had a discussion on rates which This week's two-day FOMC meeting, which
included the topic of negative deposit rates. concludes on Wednesday, will probably dominate
Moreover, the ECB cut 2013 GDP growth forecasts to - the markets. Investors expect the Fed to replace
0.3% (from +0.5% previously). its expiring Operation Twist with an expansion of
its QE purchases.
The ECOFIN meeting ended without much progress
on EU bank supervision. Spain will receive €39.5bn in However, US advanced retail sales, flash
bank recap funds from the EU by mid-December. The manufacturing PMI for China, and Euro area flash
much-awaited details of Greece’s buyback were also PMIs should also be closely watched.
announced.
In Portugal, Jerónimo Martins will hold
The Bundesbank cut German 2013 GDP growth tomorrow its Investor’s Day. Given the GDP
forecast from 1.6% to 0.4%. 2012 GDP is expected to slowdown in Poland and the tough macro
grow 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. Portugal: Q3 2012 GDP fall 3.5% Portugal: Exports up 3.4% and
y/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 2012
Domestic Demand -5.2 -9.9 -6.8 -8.3 -7.1
Exports 6.1 6.2 8.2 3.7 1.7
Imports -4.4 -13.4 -5.4 -10.8 -8.2
GDP -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 2012
Domestic Demand -5.6 -10.7 -7.2 -8.7 -7.4
External Demand 3.8 7.7 4.9 5.6 3.9
GDP -1.8 -3.1 -2.3 -3.1 -3.5
Source: Statistical Office of Portugal Source: Statistical Office of Portugal
4. Euro-zone: Domestic Demand Greece’s debt buyback allows
vs. 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 2013
Source: Eurostat Source: National Statistical Service of Greece and European Commission
5. ECB reduces again its 2013 GDP Bundesbank cuts German growth
growth 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 2013
Source: European Central Bank Source: Bloomberg
6. UK fiscal watchdog revises down US unemployment rate declines
GDP 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 Responsibility's 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 Responsibility's 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. US: ISM data for November - US consumer sentiment drops in
Industry 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 Michigan
Source: ISM Institute; Bureau of Economic Analysis
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 RBA's 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 2013
Source: Bloomberg Source: National Bank of Poland
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, EDP's 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. 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. 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 England's 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 week's 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. 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. Next Week Preview: FOMC Meeting and EU leaders meeting
FED: 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 sector
Source: Federal Reserve
will reveal how much money the country needs.
14. Next Week Preview: Jerónimo Martins Investor’s Day
Will it be a trigger for the stock disposable income is pressuring retail sales
evolution. How is the company seeing the
price ? 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. Next Week Preview: European corporate events and Idea of the week
Inditex 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 a
December 10
Air France - KLm Airlines Investor Day significant shift in BoJ policies;
December 11
th
• A formal inflation target of 2-3% would be an
Diageo Beverage North America Presentation
ThyssenKrupp Mining & Metals FY Results
important step towards weakening the yen, but
Lufthansa Airlines Traffic Statistics the target’s credibility depends on the size of
Jerónimo Martins Retail Investor Day
Whitbread Leisure Goods & services Q3 Trading Statement
asset purchases;
Metso Industrial Equipment Capital Markets Day • As part of its election platform, the LDP wants
Serco Group General industrial Services Capital Markets Day
December 12
th to establish a public-private investment fund for
Inditex Retail Q3 Results purchasing of foreign bonds that would help to
Fraport Industrial Transportation Traffic Statistics
Imagination Tech Semiconductors H1 Results
bring the currency down. The adoption of a
Carillion Heavy Construction Q4 Trading Statement negative interest rate is also being discussed;
Travis Perkins Retail Trading Statement
December 13
th • Yen short positioning has built up considerably
Pernod Ricard Beverage Americas Seminar in recent weeks. Nevertheless, a move on the
Wood Group Energy Trading Statement
th
USDJPY and EURUSD towards 84 and 110,
December 14
Fresenius Healthcare Providers Update on plans for biotech business respectively, seems possible.
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. 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
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