No-one really knows why Mario Draghi said last week that for the time being there are no reasons to increase the ECB’s anti-deflation weaponry beyond March 2017. He said the matter had not even been discussed during the central bank’s Council Meeting on Thursday. The euro has risen and the yield on the German bund as well.
The start of the ECB’s corporate debt purchasing programme has fuelled a significant rise in issuances in the primary market, with a substantial reduction in interest rates in these placements. In this context, the French firm Sanofi and Germany’s Henkel have become the first European companies to place their debt at negative rates.
This week Telefonica has been one of the main protagonists of the Spanish stock market. Firstly, it confirmed to bourse regulator CNMV that it will launch an IPO of between 25% and 50% of its infrastructure affiliate Telxius. And secondly, that it is finalising the partial sale of its UK subsidiary O2.
In contrary to what the chartists say, equities are not always a better investment bet than bonds. Read John Authers’ article where he provides a summary of what has happened in the last 10 years.
UBS | Cash equity volumes were down sharply in August on a YoY and MoM basis across all the European exchanges we cover, driven by the typical seasonal summer slowdown. The August average daily volumes (ADVs) marked a 2 -year low for DB1 & LSE, a 3 -year low for Borsa Italiana and Euronext and a 14 -year low at BME . August ADVs were down 55% YoY for BME, 40- 44% for DB1, Euronext & Borsa Italiana and 24% for LSE.
In recent times, hardly anything ever happens in the Spanish stock market. There are practically no IPOs or shareholder squabbles to attract investors’ attention. So when there is even a slight movement, like the possible sale of 20% of Gas Natural by majority shareholders Repsol and La Caixa, it shakes the market up more than normal.
Alfonso de Gregorio (Gesconsult) | Europac is a company which is involved in all sectors related to the paper and packaging industry. It’s a highly cyclical company trading at a 10% discount versus the average for the sector, both in terms of PER and EV/EBITDA.
Alarm bells are sounding across Europe over the possibility of Spain being a year without a government. Even the international press is calling for an end to the political deadlock in its editorials. But the concern has yet to reach the markets: the day before the start of a new investiture process in Spain, which could end in failure, the country’s risk premium remained below 100 basis points and the Ibex 35 blue-chip index lost hardly any ground, in line with the performance of its European peers.
Oil demand in both Emerging Markets (EMs) and Developed Markets (DMs) has risen strongly since 2014, but now the oil market will have to rely on EM consumption, according to a BofA Merrill Lynch Global Research report.
The banking sector has more than one reason to complain about the ECB’s latest moves. In addition to the fact that zero interest rates are burying their margins, their lending business is now suffering the damaging effects of the central bank’s corporate sector purchase programme. This new measure has meant that many big companies are substituting bank financing with bond issues.