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Telef贸nica unseats Telecom Italia in the battle for GVT

Companies

MADRID | The Corner | Vivendi board has decided to enter into exclusive talks with Telef贸nica for the disposal of its Brazilian subsidiary company Global Village Telecom (GVT), preferring Telef贸nica’s bid over the Telecom Italia’s one. Telef贸nica will pay a total consideration of 鈧7.45 bn, of which 鈧4.66bn in cash and the remainder in newly issued shares of the combined Telef贸nica Brazil-GVT entity corresponding to a 12% economic interest.聽

In Europe

Eurozone’s credit continues to squeeze in July, especially in Spain

MADRID | The Corner | The ECB published yesterday figures on bank lending that show the聽 outlook keep being worrying. On the one hand there was an improvement in credit to households and on the other hand a further squeeze on credit to business, especially a pronounced decline in countries like Spain. The overall balance in July is a contraction of 1.6% YoY, which represents a further improvement since it got to the bottom during November, December and January (-2.5% YoY each month). Credit in the private sector continues to contract (-2.3% YoY) in line with last month but improving over July 2013 (-3.7% YoY ) and in general over the monthly evolution in 2014. In Spain the credit contracts 鈧 7bn (-1.2% MoM from -1.04% MoM in June) and it moves back by 鈧 77 bn YoY (-11.7%). In Italy the set-back is even bigger MoM (-3.6%) but is limited to +1.6% YoY.

In Europe

Economic sentiment worsens in Italy, Germany and France, but remains stable in Spain

MADRID | The Corner | In August the Economic Sentiment Indicator (ESI) fell in the euro area (by 1.5 points to 100.6) and the EU (by 1.2 points at 104.6). Once again the core Europe does not bring any good news, where sentiment dropped in Italy (by 4.1p to 97.8), Germany (by 1.9p to 104.1 ) and France (by 0.6p to 95.1), while sentiment remained flat in Spain (103.).聽 Among the data published by the European Commission today, the industrial confidence fell in the EA to -5.3 in August from -3.8 in July and construction sentiment dropped to -28.4 from -28.2. Sentiment in the services industry declined to 3.1 from 3.6 and retail trade to -4.6 from -2.3. Consumer confidence remained at -10.

Economic sentiment indicator
In Europe

Hollande’s new government ready for reforms

MADRID | The Corner | The economy is stagnant, the confidence of businesses and consumers continues to decline and unemployment is touching new highs. France is being forced to carry out reforms from all sides, hence Fran莽ois Hollande and Manuel Valls have chosen the social democrat Emmanuel Macron as Minister of Economy, confirming their willingness to pursue the economic reform agenda.

In Europe

ECB stimulus speculations keep circulating

MADRID | The Corner | The expectation that the ECB will finally announce a QE program after Draghi鈥檚 words at Jackson Hole and the confirmation that the ECB would have hired Blackrock for advice on launching a ABS program continue to nurture the Eurozone bond rally and thereby the credit one. Yesterday many bond markets in Europe returned to record lows with improvements in 10 years of 3bp (Germany), 2.5bp (Spain) and 2bp (Italy).

World economy

China’s antitrust investigation threatening 25% of car industry’s global benefits

MADRID | The Corner | China鈥檚 antitrust investigation on over 1,000 manufacturers and foreign suppliers in China (market of 鈧 450,000 million in revenues) threatens 25% of the sector鈥檚 global benefits. In particular, German manufacturers are the most exposed (BMW, Daimler, Audi and Porsche generate 50.000 million euros and account for over 80% of demand for luxury goods). According to Morgan Stanley figures, 80% of the market has been influenced by foreign companies. In the short term Morgan Stanley analysts believe the focus of the problem will centre on imports but generalized cuts in luxury markets are also expected.

In Europe

European earnings: 2Q 2014 the strongest since 1Q 2012

MADRID | The Corner | Now that the earnings season in Europe has finished, Morgan Stanley analysts point out that, excluding small caps, there are 4% more companies that have beaten estimates versus those that have missed them. Therefore, this last quarter has been the strongest since 1Q12. The IT and consumption sectors are those with the best results. Moreover, Europe comes back in the 2Q to the EPS growth (3.7% above the expectations) and the companies start to raise revenue guidance.

european earnings season