ZURICH | UBS analysts | In addition to setting out our thoughts by sub-sector (capex, mobile devices, semis), we outline themes and stock specific catalysts for 2015, including a review of potential M&A and possible hikes in cash returns. We also highlight each stock’s investment drivers (positive and negative) through 2015. In general we see another robust year for semi capex, softer telecom capex (but stable vendor revenue), ongoing strong growth in low end smart-phones, a medium-term inventory correction in analog semis (with solid underlying trends), and the continuing emergence of mobile payments.
MADRID | The Corner | Chairman at Bundesbank and member of the ECB’s Government Council Jens Weidmann warned -again- that more ECB measures to solve low inflation are difficult and could face legal limits. As markets await for Mr Draghi’s appearance on Thursday, ECB’s Benoit Coeure insisted in a Bloomberg TV interview they won’t “rush to a new decision without knowing.”
MADRID | The Corner | It seems Mario Draghi is preparing the markets and the ECB’s Government Council for further action as soon as next December. Investors are reluctant to trust Mr Draghi’s words, but they seem to be more confident lately. However, this “affair” will come to an end if the ECB does not take effective measures. According to market watchers at Link Securities, markets will closely monitor the ECB’s Government Council meeting, which will be crucial for investors to maintain their trust in the European institution.
LONDON | By Zoso Davies, Mike Kessler, Dominik Winniki (Barclays) | European corporates are becoming more acquisitive: European M&A is up 11% year-to-date by deal volume, despite a number of high profile proposals being rejected by boards or withdrawn. The pick-up in deal-making was driven by increasingly acquisitive behaviour: European issuers spent €779bn on deal-making through October (+48% y/y), of which three quarters was spent buying assets from other European companies. Inbound M&A has fallen, in part due to the stymieing of tax-inversion deals by US corporates.
By Kyohei Morita, Yuichiro Nagai, James Barber, and the CFA at Barclays | The BoJ shocked the markets with further easing on Halloween. The actual effect on the economy will likely be less direct. The weaker JPY and lower real interest rates have not boosted export volumes and private capex since the start of QQE, and this may not change in the near future. However, consumer spending could draw support from wealth effects and higher wages linked to stronger exporter profits under JPY depreciation
BEIJING | By James A. Dorn via Caixin | In his new book Markets over Mao: The Rise of Private Business in China, Nicholas R. Lardy, one of the world’s leading China experts and a senior fellow at the Peterson Institute for International Economics, makes a strong case that the market, not the state, has been the key factor in the country’s remarkable rise. In 1978, Beijing began to loosen its grip on economic life and paramount leader Deng Xiaoping recognized the failure of central planning as a development model. Today China is the world’s second-largest economy, and the range of choices open to consumers has greatly expanded under economic liberalization and trade.
ZURICH | By UBS analysts | Global investors have been big sellers of Europe ex-UK equities in September and also the last 12 weeks (Figure 1). And this doesn’t include the heavy sell-off in the last week. US Treasury data shows that US-based investors were net sellers of $14.3bn in June–the biggest month of selling since the collapse of Lehman’s in 2008. How far through the current correction are we? So far the European market is down 8% from its September peak–in-line with the average of 9.5% in Bull market corrections since 1975.
MADRID | By Francisco López | Economic confidence dropped again in September to mid-2009 levels highlighting a worsening of the economic malaise in the Eurozone (EZ). The PMI Index fell 1.1 points to 85 points, well below the long term average (100points).
MADRID | By Francisco López | Up to this point, investors had scarcely listened to economists’ warnings about world economic stagnation, but in the last number of days the situation has changed as commodities’ prices dropped, with debt and equity markets beginning to exert some pressure.
MADRID | The Corner | European stocks climbed as investors waiting for the Fed’s FOMC decision and Scottish referendum outcome began to take positions again. However, analysts say market behaviour will be not easy to predict due to today´s quadruple witching hour. Western markets, both bonds and stocks, have a much simpler scenario to assess and may turn to macro and companies’ fundamentals.