EUR 100.00 For Business Accounts Only

IBERIAN DAILY 25 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AENA, CAF, OHL, TOURISM SECTOR.

MARKETS YESTERDAY AND TODAY

US preparing for another round of fiscal stimuli
It was a very positive session for global stock markets, with several macro releases standing out, and where the IBEX managed to erase Wednesday's losses, gaining more than +1.3%. Thus, in the Euro STOXX all the sectors closed with gains, led by Basic Materials, Travel & Leisure and Utilities, whereas Real Estate and Chemicals were the worst relative performers. On the macro side, in Germany June's IFO rose more than expected in both expectations and current situation, suggesting growth of more than 9.4% YoY in the German economy in 2Q'21. In Spain, the final 1Q'21 GDP data was raised +0.1% to -4.2% YoY. In the UK, the BoE kept its monetary policy unchanged (rates at 0.1% and £ 895 Bn purchase programme). Despite the evident improvement in inflation and growth, only chief economist A. Haldane voted against maintaining stimulus measures. In the US, the third reading of the 1Q'21 GDP confirmed the +6.4% QoQ, May's durable goods orders rose less than expected (core component falling unexpectedly) and weekly jobless claims rose less than expected. In politics, there was a preliminary agreement among Republican and Democrat senators on the infrastructures package, cutting Biden's initial proposal to US$ 973 Bn over the next 5 years (vs. US$ 2.25 Tn announced in April'21), although with the possibility of it being extended a further 3 years to US$ 1.2 Tn.
What we expect for today
European markets would open with gains, as suggested by the solid performance in Asia and the new highs in S&P500 futures, although with worse performance by value vs. growth due to the tightening on debt curves. Currently, S&P futures are up +0.15% (the S&P 500 ended practically unchanged vs. its price at the closing bell in Europe). Volatility in the US decreased (VIX 15.97). Asian markets are rising (China's CSI +1.3% and Japan's Nikkei +0.7%).
Today in the US we will learn May's personal outlays and in Mexico April's IGAE economic activity index.

COMPANY NEWS

ANTI-TOB PROTECTION SPAIN. The Govt. extends protection for strategic companies through 31 December.
As rumoured, the Govt. has extended the timeframe for TOB protection measures taken in March'20 and extended in November'20 from 30 June'21 to 31 December'21. The measures were put in place to stop investors from being able to take control of Spanish companies in strategic sectors (energy infrastructure, transport, water, healthcare, communications, data treatment or storage, aerospace, defence, electoral or financial) and basically banned new stakes from these investors equal to or above 10% of share capital, meaning any investment requires the Government's express authorisation.

TOURISM SECTOR
Yesterday, the British Govt. included the Balearic Islands, Malta and Madeira (along with other 15 regions) in its green list, which will allow tourists to travel to these destinations without quarantining upon their return, although they will still have to present a certificate of a negative Covid-19 diagnostic test. The changes will come into force on 30 June.
Beyond the changes made to the traffic light system, the British Govt. confirmed it expects to lift in the summer travel restrictions on fully vaccinated persons travelling to countries in the amber list (according to World in Data, 46.7% of UK nationals would have already been fully vaccinated, which means ~35 M citizens).
Although the inclusion of 15 new regions on the green list is positive, there is still an important step left, and that is to allow vaccinated citizens to travel without restrictions. Earlier this week, there were rumours that this measure could be taken yesterday, but it has been delayed once again. Nonetheless, the Govt. at least confirmed that it could be reviewed in the summer. IAG fell -1% yesterday (the air sector posted losses except for Ryanair).
Note that, in the case of IAG (where we have a BUY recommendation), the UK business accounts for 33% of total sales (globally) and a change in travel restrictions would support our estimate that the company will reach 60% of capacity (vs. 3Q'19) in 3Q'21e. IAG has risen +25.5% YtD but is still -56% below pre-Covid levels. For Meliá, the weight of the UK business on the EBIT level is 14%, but this already includes a favourable scenario (SELL), with a cumulative rise in 2021 of +19.5% and coming in only -17% below pre-Covid levels. For NH (SELL) the possible impact is marginal, bearing in mind its urban hotel business model.