Silvia Quandt & Cie. AG, Merchant & Investment Banking: In-between the lines - Bernhard Eschweiler
DGAP-News: Silvia Quandt & Cie. AG, Merchant & Investment Banking /
Schlagwort(e): Sonstiges/Sonstiges
Silvia Quandt & Cie. AG, Merchant & Investment Banking: In-between the
lines - Bernhard Eschweiler
26.01.2012 / 15:33
---------------------------------------------------------------------
- Tracking the impact of the ECB longer-term liquidity operations
- 'Money for nothing and the bonds for free'
- Businesses are more confident that Euro debt crisis is stabilizing
A commentator of the Financial Times wrote following the recent downgrades
of Euro-area sovereign ratings by S&P: 'The eurozone has fallen into a
spiral of downgrades, falling economic output, rising debt and further
downgrades. [.] And no, the European Central Bank's huge liquidity
boost is not going to fix the problem either. [.] We have moved beyond
the point where a technical fix would work. The toolkit is exhausted.'
This rather grim assessment of the Euro debt crisis stands in sharp
contrast with the response of financial markets following the downgrade
announcement. Euro-area stocks are up 4.6% since January 13, most
sovereign spreads are down - Italian 10-year spreads have dropped 58 bps -
and the Euro is 3.5% stronger versus the Dollar. Is the market too
optimistic or are the pessimists too much in love with their Euro-crash
scenario? In our judgment, the crisis is not about to be solved, but the
probability of a crash seems to be falling and not rising. Several factors
are contributing to this change, not least the ECB's liquidity injections.
Three birds with one stone?
The stated purpose of the ECB's two 3-year longer-term refinancing
operations (LTRO) is to ease banks' liquidity problems. In addition, the
ECB is hoping that banks use the extra liquidity to buy government bonds,
especially in the periphery of the Euro zone. Third, the resulting
positive carry should help banks accumulate capital. In the first tender
on December 21st, banks borrowed EUR489.2 billion from the ECB. The second
tender will take place in February and the amount to be borrowed by banks
from the ECB is widely expected to double. It is too early to declare
success on all scores, but the evidence so far is encouraging.
- Bank liquidity: The December 3-year LTRO has not yet restored normality
in the interbank market. Most banks prefer to park their excess funds
with the ECB rather than lending to other banks. However, the ECB has
averted a liquidity crunch. Banks that need liquidity get it from the
ECB. Furthermore, there are some signs of improving confidence. Cash
parked with the ECB fell below EUR400 billion from a peak of EUR528
billion on January 18. Second, the 3-month Euribor-OIS spread, an
indicator of perceived interbank risk, declined to 79 bps from 101 bps
on December 7th.
- Bond yields: The decline in government bond yields despite an ongoing
flow of bad economic and fiscal news from the crisis countries is the
most surprising development over the last two months. Some of that is
due to a general improvement in confidence (most notably the decline in
long-term bond yields), but much of that is due to the ECB's liquidity
push (most notably the decline in shorter-dated bond yields). The
decline in cash parked with the ECB may as well be a sign that banks
are shifting into government bonds. The demand for government bonds
also suggests that banks are less worried that more write-offs loom.
However, not all bond markets are benefitting from this shift in the
same way. Italy and Spain have seen yields drop the most over the last
two months, although Spain made little progress recently following
disappointing fiscal news. In Portugal, on the other hand, yields rose
across the curve except for the very short end.
- Bank capital: That the ECB's liquidity injections will help banks
rebuilding capital is just a forecast. Evidence will emerge only over
time, but the math is compelling since banks are not yet required to
hold capital against government debt holdings. For an investment of
EUR1 trillion in government bonds with an average carry of 200 bps,
banks would earn EUR20 billion per year, about one fifth of the current
funding gap. The rally in bank stocks as well as the decline in bank
CDS spreads shows rising market confidence that the banking sector will
over time restore balance-sheet health.
It's all about confidence
The final success of the ECB's liquidity operations will be a matter of
confidence. Banks need to trust each other and believe that policymakers
will not force them to take more losses on their sovereign bond holdings.
Given recent bad experience, including the last round of debt negotiations
with the Greek government, it is surprising how much confidence the banks
have already regained. Policymakers should be careful not to destroy this
change in sentiment.
Signs of improving confidence are not only limited to the banking sector.
They are also visible in the real economy and financial markets. Most
business sentiment indicators for the Euro area show an improvement in
January after a stabilization at the end of last year. For
the Euro area as a whole, business sentiment has moved from contraction
territory toward stagnation mode. In Germany, business sentiment is back
in expansion territory. The details of the German IFO survey show a small
decline in the assessment of current business conditions from a still high
level and a visible improvement in the expectation component. The latter
shows that companies notice an improvement in global business conditions
and are more confident that the Euro debt crisis is stabilizing. This
change in sentiment is still young and fragile. Instead of a downward
spiral, however, an upward spiral of rising confidence and improving
economic news may well be in the making.
Disclaimer
This analysis was prepared by Bernhard Eschweiler, Senior Economic Advisor,
and was first published 26 January 2012, Silvia Quandt Research GmbH,
Grüneburgweg 18, 60322 Frankfurt is responsible for its preparation. German
Regulatory Authority: Bundesanstalt für Finanzdienstleistungsaufsicht
(BaFin), Graurheindorfer Str. 108, 53117 Bonn and Lurgiallee 12, 60439
Frankfurt.
Publication according to article 5 (4) no. 3 of the German Regulation
concerning the analysis of financial instruments (Finanzanalyseverordnung):
Number of recommendations Thereof recommendations for issuers to which
from Silvia Quandt Research investment banking services were provided
during
GmbH in 2012 the preceding twelve months
Buys: 103 35
Neutral: 37 6
Avoid: 10 0
Company disclosures
Article 34b of the German Securities Trading Act (Wertpapierhandelsgesetz)
in combination with the German regulation concerning the analysis of
financial instruments (Finanzanalyseverordnung) requires an enterprise
preparing a securities analysis to point out possible conflicts of interest
with respect to the company or companies that are the subject of the
analysis. A conflict of interest is presumed to exist, in particular, if an
enterprise preparing a security analysis:
(a) holds more than 5 % of the share capital of the company or companies
analysed;
(b) has lead managed or co-lead managed a public offering of the
securities of the company or companies in the previous 12 months;
(c) has provided investment banking services for the company or companies
analysed during the last 12 months for which a compensation has been or
will be paid;
(d) is serving as a liquidity provider for the company's securities by
issuing buy and sell orders;
(e) is party to an agreement with the company or companies that is the
subject of the analysis relating to the production of the recommendation;
(f) or the analyst covering the issue has other significant financial
interests with respect to the company or companies that are the subject of
this analysis, for example holding a seat on the company's boards.
In this respective analysis the following of the above-mentioned conflicts
of interests exist: none
Silvia Quandt Research GmbH, Silvia Quandt & Cie. AG, and its affiliated
companies regularly hold shares of the analysed company or companies in
their trading portfolios. The views expressed in this analysis reflect the
personal views of the analyst about the subject securities or issuers. No
part of the analyst's compensation was, is or will be directly or
indirectly tied to the specific recommendations or views expressed in this
analysis. It has not been determined in advance whether and at what
intervals this report will be updated.
Equity Recommendation Definitions Silvia Quandt Research GmbH analysts rate
the shares of the companies they cover on an absolute basis using a 6 -
12-month target price. 'Buys' assume an upside of more than 10% from the
current price during the following 6 - 12-months. These securities are
expected to out-perform their respective sector indices. Securities with an
expected negative absolute performance of more than 10% and an
under-performance to their respective sector index are rated 'avoids'.
Securities where the current share price is within a 10% range of the
sector performance are rated 'neutral'. Securities prices used in this
report are closing prices of the day before publication unless a different
date is stated. With regard to unlisted securities median market prices are
used based on various important broker sources (OTC-Market).
Disclaimer This publication has been prepared and published by Silvia
Quandt Research GmbH, a subsidiary of Silvia Quandt & Cie. AG. This
publication is intended solely for distribution to professional and
business customers of Silvia Quandt & Cie. AG. It is not intended to be
distributed to private investors or private customers. Any information in
this report is based on data obtained from publicly available information
and sources considered to be reliable, but no representations or guarantees
are made by Silvia Quandt Research GmbH with regard to the accuracy or
completeness of the data or information contained in this report. The
opinions and estimates contained herein constitute our best judgement at
this date and time, and are subject to change without notice. Prior to this
publication, the analysis has not been communicated to the analysed
companies and changed subsequently. This report is for information purposes
only; it is not intended to be and should not be construed as a
recommendation, offer or solicitation to acquire, or dispose of, any of the
securities mentioned in this report. In compliance with statutory and
regulatory provisions, Silvia Quandt & Cie. AG and Silvia Quandt Research
GmbH have set up effective organisational and administrative arrangements
to prevent and avoid possible conflicts of interests in preparing and
transmitting analyses. These include, in particular, inhouse information
barriers (Chinese walls). These information barriers apply to any
information which is not publicly available and to which any of Silvia
Quandt & Cie. AG and Silvia Quandt Research GmbH or its affiliates may have
access from a business relationship with the issuer. For statutory or
contractual reasons, this information may not be used in an analysis of the
securities and is therefore not included in this report. Silvia Quandt &
Cie. AG and Silvia Quandt Research GmbH, its affiliates and/or clients may
conduct or may have conducted transactions for their own account or for the
account of other parties with respect to the securities mentioned in this
report or related investments before the recipient has received this
report. Silvia Quandt & Cie. AG and Silvia Quandt Research GmbH or its
affiliates, its executives, managers and employees may hold shares or
positions, possibly even short sale positions, in securities mentioned in
this report or in related investments. Silvia Quandt & Cie. AG in
particular may provide banking or other advisory services to interested
parties. Neither Silvia Quandt Research GmbH, Silvia Quandt & Cie. AG or
its affiliates nor any of its officers, shareholders or employees accept
any liability for any direct or consequential loss arising from any use of
this publication or its contents. Copyright and database rights protection
exists in this publication and it may not be reproduced, distributed or
published by any person for any purpose without the prior express consent
of Silvia Quandt Research GmbH. All rights reserved. Any investments
referred to herein may involve significant risk, are not necessarily
available in all jurisdictions, may be illiquid and may not be suitable for
all investors. The value of, or income from, any investments referred to
herein may fluctuate and/or be affected by changes in exchange rates. Past
performance is not indicative of future results. Investors should make
their own investment decisions without relying on this publication. Only
investors with sufficient knowledge and experience in financial matters to
evaluate the merits and risks should consider an investment in any issuer
or market discussed herein and other persons should not take any action on
the basis of this publication.
Specific notices of possible conflicts of interest with respect to issuers
or securities forming the subject of this report according to US or English
law: None
This publication is issued in the United Kingdom only to persons described
in Articles 19, 47 and 49 of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2001 and is not intended to be distributed,
directly or indirectly, to any other class of persons (including private
investors). Neither this publication nor any copy of it may be taken or
transmitted into the United States of America or distributed, directly or
indirectly, in the United States of America.
Frankfurt am Main, 26.01.2012
Silvia Quandt Research GmbH
Grüneburgweg 1860322 Frankfurt
Tel: + 49 69 95 92 90 93 -0
Fax: + 49 69 95 92 90 93 - 11
Ende der Corporate News
---------------------------------------------------------------------
26.01.2012 Veröffentlichung einer Corporate News/Finanznachricht,
übermittelt durch die DGAP - ein Unternehmen der EquityStory AG.
Für den Inhalt der Mitteilung ist der Emittent / Herausgeber
verantwortlich.
Die DGAP Distributionsservices umfassen gesetzliche Meldepflichten,
Corporate News/Finanznachrichten und Pressemitteilungen.
Medienarchiv unter http://www.dgap-medientreff.de und
http://www.dgap.de
---------------------------------------------------------------------
154150 26.01.2012
DGAP-News: Silvia Quandt & Cie. AG, Merchant & Investment Banking /
Schlagwort(e): Sonstiges/Sonstiges
Silvia Quandt & Cie. AG, Merchant & Investment Banking: In-between the
lines - Bernhard Eschweiler
26.01.2012 / 15:33
---------------------------------------------------------------------
- Tracking the impact of the ECB longer-term liquidity operations
- 'Money for nothing and the bonds for free'
- Businesses are more confident that Euro debt crisis is stabilizing
A commentator of the Financial Times wrote following the recent downgrades
of Euro-area sovereign ratings by S&P: 'The eurozone has fallen into a
spiral of downgrades, falling economic output, rising debt and further
downgrades. [.] And no, the European Central Bank's huge liquidity
boost is not going to fix the problem either. [.] We have moved beyond
the point where a technical fix would work. The toolkit is exhausted.'
This rather grim assessment of the Euro debt crisis stands in sharp
contrast with the response of financial markets following the downgrade
announcement. Euro-area stocks are up 4.6% since January 13, most
sovereign spreads are down - Italian 10-year spreads have dropped 58 bps -
and the Euro is 3.5% stronger versus the Dollar. Is the market too
optimistic or are the pessimists too much in love with their Euro-crash
scenario? In our judgment, the crisis is not about to be solved, but the
probability of a crash seems to be falling and not rising. Several factors
are contributing to this change, not least the ECB's liquidity injections.
Three birds with one stone?
The stated purpose of the ECB's two 3-year longer-term refinancing
operations (LTRO) is to ease banks' liquidity problems. In addition, the
ECB is hoping that banks use the extra liquidity to buy government bonds,
especially in the periphery of the Euro zone. Third, the resulting
positive carry should help banks accumulate capital. In the first tender
on December 21st, banks borrowed EUR489.2 billion from the ECB. The second
tender will take place in February and the amount to be borrowed by banks
from the ECB is widely expected to double. It is too early to declare
success on all scores, but the evidence so far is encouraging.
- Bank liquidity: The December 3-year LTRO has not yet restored normality
in the interbank market. Most banks prefer to park their excess funds
with the ECB rather than lending to other banks. However, the ECB has
averted a liquidity crunch. Banks that need liquidity get it from the
ECB. Furthermore, there are some signs of improving confidence. Cash
parked with the ECB fell below EUR400 billion from a peak of EUR528
billion on January 18. Second, the 3-month Euribor-OIS spread, an
indicator of perceived interbank risk, declined to 79 bps from 101 bps
on December 7th.
- Bond yields: The decline in government bond yields despite an ongoing
flow of bad economic and fiscal news from the crisis countries is the
most surprising development over the last two months. Some of that is
due to a general improvement in confidence (most notably the decline in
long-term bond yields), but much of that is due to the ECB's liquidity
push (most notably the decline in shorter-dated bond yields). The
decline in cash parked with the ECB may as well be a sign that banks
are shifting into government bonds. The demand for government bonds
also suggests that banks are less worried that more write-offs loom.
However, not all bond markets are benefitting from this shift in the
same way. Italy and Spain have seen yields drop the most over the last
two months, although Spain made little progress recently following
disappointing fiscal news. In Portugal, on the other hand, yields rose
across the curve except for the very short end.
- Bank capital: That the ECB's liquidity injections will help banks
rebuilding capital is just a forecast. Evidence will emerge only over
time, but the math is compelling since banks are not yet required to
hold capital against government debt holdings. For an investment of
EUR1 trillion in government bonds with an average carry of 200 bps,
banks would earn EUR20 billion per year, about one fifth of the current
funding gap. The rally in bank stocks as well as the decline in bank
CDS spreads shows rising market confidence that the banking sector will
over time restore balance-sheet health.
It's all about confidence
The final success of the ECB's liquidity operations will be a matter of
confidence. Banks need to trust each other and believe that policymakers
will not force them to take more losses on their sovereign bond holdings.
Given recent bad experience, including the last round of debt negotiations
with the Greek government, it is surprising how much confidence the banks
have already regained. Policymakers should be careful not to destroy this
change in sentiment.
Signs of improving confidence are not only limited to the banking sector.
They are also visible in the real economy and financial markets. Most
business sentiment indicators for the Euro area show an improvement in
January after a stabilization at the end of last year. For
the Euro area as a whole, business sentiment has moved from contraction
territory toward stagnation mode. In Germany, business sentiment is back
in expansion territory. The details of the German IFO survey show a small
decline in the assessment of current business conditions from a still high
level and a visible improvement in the expectation component. The latter
shows that companies notice an improvement in global business conditions
and are more confident that the Euro debt crisis is stabilizing. This
change in sentiment is still young and fragile. Instead of a downward
spiral, however, an upward spiral of rising confidence and improving
economic news may well be in the making.
Disclaimer
This analysis was prepared by Bernhard Eschweiler, Senior Economic Advisor,
and was first published 26 January 2012, Silvia Quandt Research GmbH,
Grüneburgweg 18, 60322 Frankfurt is responsible for its preparation. German
Regulatory Authority: Bundesanstalt für Finanzdienstleistungsaufsicht
(BaFin), Graurheindorfer Str. 108, 53117 Bonn and Lurgiallee 12, 60439
Frankfurt.
Publication according to article 5 (4) no. 3 of the German Regulation
concerning the analysis of financial instruments (Finanzanalyseverordnung):
Number of recommendations Thereof recommendations for issuers to which
from Silvia Quandt Research investment banking services were provided
during
GmbH in 2012 the preceding twelve months
Buys: 103 35
Neutral: 37 6
Avoid: 10 0
Company disclosures
Article 34b of the German Securities Trading Act (Wertpapierhandelsgesetz)
in combination with the German regulation concerning the analysis of
financial instruments (Finanzanalyseverordnung) requires an enterprise
preparing a securities analysis to point out possible conflicts of interest
with respect to the company or companies that are the subject of the
analysis. A conflict of interest is presumed to exist, in particular, if an
enterprise preparing a security analysis:
(a) holds more than 5 % of the share capital of the company or companies
analysed;
(b) has lead managed or co-lead managed a public offering of the
securities of the company or companies in the previous 12 months;
(c) has provided investment banking services for the company or companies
analysed during the last 12 months for which a compensation has been or
will be paid;
(d) is serving as a liquidity provider for the company's securities by
issuing buy and sell orders;
(e) is party to an agreement with the company or companies that is the
subject of the analysis relating to the production of the recommendation;
(f) or the analyst covering the issue has other significant financial
interests with respect to the company or companies that are the subject of
this analysis, for example holding a seat on the company's boards.
In this respective analysis the following of the above-mentioned conflicts
of interests exist: none
Silvia Quandt Research GmbH, Silvia Quandt & Cie. AG, and its affiliated
companies regularly hold shares of the analysed company or companies in
their trading portfolios. The views expressed in this analysis reflect the
personal views of the analyst about the subject securities or issuers. No
part of the analyst's compensation was, is or will be directly or
indirectly tied to the specific recommendations or views expressed in this
analysis. It has not been determined in advance whether and at what
intervals this report will be updated.
Equity Recommendation Definitions Silvia Quandt Research GmbH analysts rate
the shares of the companies they cover on an absolute basis using a 6 -
12-month target price. 'Buys' assume an upside of more than 10% from the
current price during the following 6 - 12-months. These securities are
expected to out-perform their respective sector indices. Securities with an
expected negative absolute performance of more than 10% and an
under-performance to their respective sector index are rated 'avoids'.
Securities where the current share price is within a 10% range of the
sector performance are rated 'neutral'. Securities prices used in this
report are closing prices of the day before publication unless a different
date is stated. With regard to unlisted securities median market prices are
used based on various important broker sources (OTC-Market).
Disclaimer This publication has been prepared and published by Silvia
Quandt Research GmbH, a subsidiary of Silvia Quandt & Cie. AG. This
publication is intended solely for distribution to professional and
business customers of Silvia Quandt & Cie. AG. It is not intended to be
distributed to private investors or private customers. Any information in
this report is based on data obtained from publicly available information
and sources considered to be reliable, but no representations or guarantees
are made by Silvia Quandt Research GmbH with regard to the accuracy or
completeness of the data or information contained in this report. The
opinions and estimates contained herein constitute our best judgement at
this date and time, and are subject to change without notice. Prior to this
publication, the analysis has not been communicated to the analysed
companies and changed subsequently. This report is for information purposes
only; it is not intended to be and should not be construed as a
recommendation, offer or solicitation to acquire, or dispose of, any of the
securities mentioned in this report. In compliance with statutory and
regulatory provisions, Silvia Quandt & Cie. AG and Silvia Quandt Research
GmbH have set up effective organisational and administrative arrangements
to prevent and avoid possible conflicts of interests in preparing and
transmitting analyses. These include, in particular, inhouse information
barriers (Chinese walls). These information barriers apply to any
information which is not publicly available and to which any of Silvia
Quandt & Cie. AG and Silvia Quandt Research GmbH or its affiliates may have
access from a business relationship with the issuer. For statutory or
contractual reasons, this information may not be used in an analysis of the
securities and is therefore not included in this report. Silvia Quandt &
Cie. AG and Silvia Quandt Research GmbH, its affiliates and/or clients may
conduct or may have conducted transactions for their own account or for the
account of other parties with respect to the securities mentioned in this
report or related investments before the recipient has received this
report. Silvia Quandt & Cie. AG and Silvia Quandt Research GmbH or its
affiliates, its executives, managers and employees may hold shares or
positions, possibly even short sale positions, in securities mentioned in
this report or in related investments. Silvia Quandt & Cie. AG in
particular may provide banking or other advisory services to interested
parties. Neither Silvia Quandt Research GmbH, Silvia Quandt & Cie. AG or
its affiliates nor any of its officers, shareholders or employees accept
any liability for any direct or consequential loss arising from any use of
this publication or its contents. Copyright and database rights protection
exists in this publication and it may not be reproduced, distributed or
published by any person for any purpose without the prior express consent
of Silvia Quandt Research GmbH. All rights reserved. Any investments
referred to herein may involve significant risk, are not necessarily
available in all jurisdictions, may be illiquid and may not be suitable for
all investors. The value of, or income from, any investments referred to
herein may fluctuate and/or be affected by changes in exchange rates. Past
performance is not indicative of future results. Investors should make
their own investment decisions without relying on this publication. Only
investors with sufficient knowledge and experience in financial matters to
evaluate the merits and risks should consider an investment in any issuer
or market discussed herein and other persons should not take any action on
the basis of this publication.
Specific notices of possible conflicts of interest with respect to issuers
or securities forming the subject of this report according to US or English
law: None
This publication is issued in the United Kingdom only to persons described
in Articles 19, 47 and 49 of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2001 and is not intended to be distributed,
directly or indirectly, to any other class of persons (including private
investors). Neither this publication nor any copy of it may be taken or
transmitted into the United States of America or distributed, directly or
indirectly, in the United States of America.
Frankfurt am Main, 26.01.2012
Silvia Quandt Research GmbH
Grüneburgweg 1860322 Frankfurt
Tel: + 49 69 95 92 90 93 -0
Fax: + 49 69 95 92 90 93 - 11
Ende der Corporate News
---------------------------------------------------------------------
26.01.2012 Veröffentlichung einer Corporate News/Finanznachricht,
übermittelt durch die DGAP - ein Unternehmen der EquityStory AG.
Für den Inhalt der Mitteilung ist der Emittent / Herausgeber
verantwortlich.
Die DGAP Distributionsservices umfassen gesetzliche Meldepflichten,
Corporate News/Finanznachrichten und Pressemitteilungen.
Medienarchiv unter http://www.dgap-medientreff.de und
http://www.dgap.de
---------------------------------------------------------------------
154150 26.01.2012