Report
Research Department
EUR 100.00 For Business Accounts Only

IBERIAN DAILY 21 SEPTEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, CAIXABANK, ELECTRICITY SECTOR, IBERDROLA, REPSOL, TOURISM SECTOR.

MARKETS YESTERDAY AND TODAY

The sharpest drops in months
Profit taking on European stock markets following the sell-off in the Chinese real estate sector (with the Hang Seng falling to one-year lows) due to doubts on Evergrande, which would be about to default and would not receive Govt. support according to S&P,. While this is a source of concern given its systemic character due to its high exposure to the country’s banks (estimates point to US$ 75 Bn in direct debt and US$ 88 Bn through suppliers), its effect on the global level should be limited. With all this in mind, in the Euro STOXX all sectors fell, with Pharma and Household Goods performing the best, whereas Basic Materials and Banks (hit hard by the fear of rising NPLs given the situation with Evergrande and its possible financial impact) recorded the biggest losses. On the macro side, in the US the NAHB real estate confidence index for September rose unexpectedly. Separately, the Biden administration is considering the possibility of easing travel restrictions for fully-vaccinated passengers from the EU and UK starting in November. From the Fed, W. Dudley mentioned that worries surrounding China will not delay the Fed’s decision on tapering. In this regard, the market consensus expects an announcement to be made in the upcoming meeting that it will begin in November.
What we expect for today
The European stock markets would open with gains as the Asian markets stabilise and following the strong punishment seen on Monday’s session. Currently, S&P futures are up +0.6% (the S&P 500 ended +0.28% higher vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 25.71). Asian markets are sliding (China’s CSI is closed while Japan’s Nikkei is shedding -1.8%).
Today in the US we will learn August’s real estate market data, building permits and August’s housing starts and the OECD will release its economic forecasts. In debt auctions: Germany (€ 3 Bn in bonds due 2028).


COMPANY NEWS


ELECTRICITY SECTOR
Yesterday, the Ministry for the Ecological Transition made public a text specifying the gas RD (available on /es/) and sent it to the system operator. The text explains the method expected to be used to collect the € 2.6 Bn for the windfall profits generated by gas prices, setting the system to carry out the necessary settlements and clarifying that the impact will be passed on to nuclear and hydro, as expected, but renewables with PPA signed will be excluded. In order to be able to avoid the cut, generators will have to present through their market representative the details on the long-term contracts, that these were conducted at a fixed price, i.e. not indexed, and thus not assuming the rise in gas prices, and not corresponding to contracts of large electricity groups with their own marketers.
Separately, the Govt. has submitted a letter to EC Vice-president Frans Timmermmans and the EU Commissioner of Energy Kadri Simson to urge them to take a common stance on the electricity problem on the European level. In the letter, the Govt. demands a reformation of the electricity wholesale market and the creation of a European platform for the acquisition of gas and strategic reserves, as well to take action on the emissions market.
Positive news for the renewables that confirms Friday’s rumours. In any case, this measure will facilitate from now on judicial appeals before the Supreme Court due to the discrimination produced by the measure by technologies or coverage structures (PPA/bilateral contracts) especially on the part of the integrated companies, as they would be unaffected by this measures (since they have a high weight of bilateral contracts with their own marketers).
For the renewables, in Solaria, this change would have an impact for the 6 months of minimum application (
Underlyings
Actividades de Construccion y Servicios SA

ACS Actividades de Construccion y Servicios is a holding company. Through its subsidiaries, Co.'s activities are divided into the following areas: Construction, engaged in the construction of civil works, and residential and non-residential building construction; industrial services, engaged in the development of applied engineering services, installations and the maintenance of industrial infrastructures in the energy, communications and control systems sectors; services, groups together environmental services, the outsourcing of building maintenance services, logistics and transport services; and concessions, mainly engaged in transport infrastructure concessions.

CaixaBank SA

Caixabank is an investment company based in Spain. Co. is involved in investment portfolio management activities across two areas: Services and Financial Business and Insurance. In the services area, Co. provides investment solutions for companies involved in the infrastructure, energy, services and entertainment sectors. In the financial business and insurance area, Co. is engaged in the investments for international banks, insurance and specialist financial services. Co. focuses most of its banking investments in India, China, the U.S., and Central and Eastern Europe with a particular interest in retail banking. Co. is also involved in the disinvestments activities.

Iberdrola SA

Iberdrola is a holding company. Through its subsidiaries, Co. operates in four segments: network business, which includes all the energy transmission and distribution activities, and other regulated activity originated in Spain, the U.K., the U.S. and Brazil; deregulated business, which includes electricity generation and sales businesses as well as gas trading and storage businesses carried on by Co. in Spain, Portugal, the U.K. and North America; renewable business, with activities related to renewable energies in Spain, the U.K., the U.S. and the rest of the world; and other businesses, including the engineering and construction businesses and the non-power businesses.

Repsol SA

Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.

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Analysts
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