J. Fels/ A. Balls (PIMCO) | In looking at the investment implications of the cyclical window of weakness for the global economy, we note global rates markets price in recession-like conditions already, while corporate credit markets and risk markets more generally appear to price in better outcomes, either in terms of the macro outlook, the efficacy of central banks in continuing to supress volatility, or both.
Behind this worse performance is the elevated weight of the banking sector in the Ibex-35, being one of the sectors with the worse performance – the Euro Stoxx Banks has risen 0.76% this year – as well as the country´s political instability, which keeps many investors on the side-lines of our market.
Gilles Moëc (AXA Group) | We knew that the European Central Bank (ECB) was very divided in the run-up to the Governing Council meeting on September 12th, but two weeks later the fallout of what must have been a very fractious discussion is still very much here.
Renta 4 | Faced by the changing market conditions directly affecting the profitability of coal-fired power stations in Spain, Endesa´s board has decided to accelerate end of their production without expecting any impact on operating profits.
Joachim Fels (PIMCO) | By cutting the deposit rate to -50 basis points, extending forward guidance, introducing a two-tiered system for excess reserves that mitigates the adverse impact of negative rates on bank profitability, and resuming open-ended net asset purchases of EUR 20 billion per month, the European Central Bank (ECB) recently provided clarity about its prospective monetary policy stance for the foreseeable future and thus well beyond the change in leadership from Mario Draghi to Christine Lagarde that takes place at the end of October.
Santander Corporate & Investment | We reiterate our recommendation to Buy after revising our model with the aim of including the performance in the first quarter of 2019 and recent tendencies. We have lowered our new objective price (OP) for the close of 2019 from 4.7€/share to 42.5€/share mainly because the valuation at market prices of CIMIC (without recommendation) in our model.
Banc Sabadell | The demand for steel in Europe (40% EBITDA) is somewhat weaker than expected (the expected recovery in car making has not happened), which means price rises are not expected. However, ArcelorMittal has showed that it is doing its homework in reducing cash outflows, given a tight financial situation, which could lead to announcements of improved shareholder remuneration in 2020.
Renta 4 | Mediaset España has issued a communiqué on its results for July and August, again characterised by cost flexibility (savings of almost 20 million euros because of the absence of the world cup) and the reinforcement of incomes not depending on conventional ads.
Cie Automotive will acquire 100% of the social capital of Somaschini S.p.A. The enterprise value is 79.6 million euros, equivalent to less than five times EBITDA for this year, and will be adjusted at closure of the deal depending on its indebtedness, as is usual in this type of operation.