EUR 100.00 For Business Accounts Only

IBERIAN DAILY 02 SEPTEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BBVA, CELLNEX, DURO FELGUERA, MEDIASET ESPAÑA, RED ELÉCTRICA, RENEWABLE ENERGY SECTOR, SANTANDER.

MARKETS YESTERDAY AND TODAY

Stock markets gain height
Gains continued in stock markets after the political risk in Italy came to an end with the government formation, the apparent progress made in trade talks between China and the US and the fact that Brexit remains on hold. Thus, in the Euro STOXX, Real Estate and Financial Services were the best performers (the worst performers last week) vs. the drops of Banks and Media that ended flat. On the macroeconomic level, in Germany, retail sales slowed down in July more than expected. In Spain, the current account deficit reached -1.2 Bn in the 1H’19 vs. the 1.6 Bn surplus last year while July’s retail sales climbed more than expected. In the euro zone, August’s preliminary inflation fell one tenth (in line), as well as core inflation (disappointing), which came in at 1.0% and 0.9%, respectively. As for the ECB, E. Nowotny completely ruled out share purchases in the QE and he does not expect the ECB to add new instruments but to modify the current ones while O. Rehn bet on maintaining a high level of accommodative policy. From the UK, B. Johnson was in favour of reaching an agreement with the EU, whereas a Scottish court ruled out the preliminary cancellation of the Parliament suspension. In the US, real personal outlays climbed more than expected in July, suggesting dynamic private consumption in the 3Q’19. On another note, August’s final University of Michigan confidence deteriorated significantly. In Japan, the 2Q’19 business earnings fell significantly. In China, August’s official manufacturing PMI contracted more than expected, whereas the Caixin index rose unexpectedly above 50, but external orders continue to deteriorate. Meanwhile, the manufacturing PMI in Japan, Taiwan, India and Ireland fell further in August (all below 50), whereas South Korea’s rose, but still in the contracting region. In Argentina, the Govt. announced a control on currencies in order to halt the flight of capital, which will lead to the parallel exchange rate will increase its gap with the official one and exceed 70 pesos/USD.
What we expect for today
The markets would open flat with a slightly bearish slant in view of the new tariffs in the US and China coming into effect and the poor data from the global manufacturing sector in August. Currently, S&P futures are down -0.33% (the S&P 500 closed -0.13% lower vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 18.98%). The Asian markets that are open are sliding (Hong Kong -0.44% and Japan -0.36%).
Today is a holiday in the US. In the euro zone we will learn August’s final manufacturing PMI. As for auctions, Holland’s Treasury will issue up to € 2 Bn in 6M T-bills and France’s up to € 4.3 Bn in 3,6 &12M T-bills.


COMPANY NEWS

MEDIASET ESPAÑA, SELL
The Italian courts have recognised that the ruling in favour of Vivendi voting in its EGM (to be held on 4 September to vote on the merger with Mediaset Italia and España) is only applicable to the 9.9% Vivendi holds directly in Mediaset Italia and not to the 18.8% it holds through another company (Simon Fiduciaria) that lacks voting rights. Note that Vivendi’s intention is to vote against the merger. Likewise, note that in order for the merger to move forward, it must have at least 2/3 of the shareholding structure’s backing (Vivendi’s 9.9% would not be enough to block it).
Vivendi’s opposition is one of the main setbacks to the merger going through, which in our opinion is unappealing for Mediaset España. However, TL5’s share price is now -8.4% below the initial valuation for the merger (at € 6.28/sh.) and -12% below the € 6.54/sh. offered for shareholders voting against the merger. Note that the cash amount to be paid by Mediaset Italia and TL5 to shareholders voting against the merger will not exceed € 180 M (around 5% of the total shareholders of the merged company).