EUR 100.00 For Business Accounts Only

IBERIAN DAILY 17 DECEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, BANKING SECTOR, CELLNEX, CIE AUTOMOTIVE, GRUPO SAN JOSÉ, IAG, RED ELÉCTRICA, TELEFÓNICA.

MARKETS YESTERDAY AND TODAY

Market confident inflation will be controlled
European stock markets closed with sharp gains after the decisions made by the Central Banks in their December meetings. In the Euro STOXX, the best-performing sectors were cyclicals like Energy and Basic Materials, whereas Real Estate and Household Goods were the only sectors in the red. On the macro side, the ECB’s meeting also followed the expected script, announcing the end of the PEPP in March’22, partly offset by greater purchases during part of 2022 in the original APP programme. In the euro zone, the EC meeting was held with the Covid variants as a key issue, giving the green light to an increase in vaccine productions and after it was known that booster Moderna doses would be effective against Omicron. Meanwhile, France forbade travel from UK to curb the spread of Omicron. In macro data, December’s preliminary manufacturing PMI fell less than expected and the services PMI fell much more than expected. In the UK the +15bps hike (to 0.25%) to the reference rate was a surprise, due to more persistent inflation than initially forecast. In the US, weekly jobless claims rose more than expected, housing starts and building permits for November rose more than expected, December’s Philadelphia Fed index contracted more than expected and industrial output rose less than expected in November. In Mexico, the BdM meeting resulted in a higher-than-expected rate hike to 5.5% (+50bps). In Japan, the BoJ interest rates meeting extended the aid programme for SMEs until September 2022, but will cut aid for large corporations due to the better financial conditions. In Turkey, the BoT cut interest rates to 14% and will raise wages to fight inflation.
What we expect for today
European stock markets would see a bearish opening, consolidating the heavy gains from the previous session. Currently, S&P futures are down -0.13% (the S&P 500 ended -0.62% lower yesterday vs. its level at the European closing bell). Volatility in the US rose (VIX 20.57). Asian markets are sliding (China’s CSI 300 -1.5% and Japan’s Nikkei -1.8%).
Today in the UK we will learn November’s retail sales, in Germany December’s IFO, in the euro zone November’s final inflation and the Eurogroup will meet.

COMPANY NEWS


GRUPO SAN JOSÉ. A lot of hidden value. We initiate coverage with a BUY recommendation.
GSJ offers an exposure to the Construction business (33% of EV BS(e)) and the extension of Paseo de la Castellana in Madrid through its 10% stake in DCN (25%), and also owns other assets of different kinds, mainly real estate assets (27%). After a difficult period following the great financial crisis, today GSJ has a strong balance sheet, with adjusted net cash levels equivalent to 60% of its market cap. We see hidden value in a stock that has gone unnoticed by the market, and we initiate coverage with a BUY recommendation and a T.P. of € 9.65/sh. (+149% upside).