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12 June 2017 Monday Report Economy Markets Swiss Market Equities Sentiment of traders Performances Today’s graph This document has been issued for information purposes. The views and opinions contained in it are those of Bordier & Cie. Its contents may not be reproduced or redistributed. The user will be held liable for any unauthorised reproduction or circulation of this document, which may give rise to legal proceedings. All the information contained in it is provided for information only and should in no way be taken as investment advice. Furthermore, it is emphasized that the provisions of our legal information page are fully applicable to this document and namely provisions concerning the restrictions arising from different national laws and regulations. Consequently, Bordier Bank does namely not provide any investment services or advice to “US persons” as defined by the Securities and Exchange Commission rules. Furthermore, the information on our website – including the present document – is by no mean directed to such persons or entities Bonds GEMALTO (Satellites) recently issued another cautious message on the rest of the year, confirming top line growth of -9% for Q2 2017. While the group’s ‘structural’ transformation has been postponed to 2018, the government/M2M/enterprise segments should rally in H2. INDITEX (Core Holdings) will report strong Q1 earnings growth on Wednesday. The consensus expectation is for sales of €5.54bn (up 13% on a reported basis, of which +7% LFL, +1% from forex effects and +5% from store openings), EBITDA of €1.094bn (up 14.6%; margin up 20 bps) and net profit of €650m (up 17%). INGENICO (Satellites) was somewhat under pressure last week: downgraded to neutral by an analyst; Verifone, the group’s main competitor, released its Q2 results; results in line with expectations, but competition in China is likely to put pressure on margins. These factors are already reflected in Ingenico’s guidance. LEGRAND (Core Holdings): shareholders voted at the AGM to authorise the group to buy back up to 10% of its share capital over 18 months with effect from 31 May 2017, at a maximum price of €75 per share, subject to a €1bn cap. L’OREAL (Core Holdings) has entered into exclusive negotiations with Natura for the sale of The Body Shop. The planned sale values the chain at an EV of €1bn, above market estimates (€750-800m). This would allow L’Oréal to sell an asset that has hampered growth (-10 bps a year) and profitability (-10 bps a year) for ten years wit- hout incurring a capital loss. PROSIEBENSAT.1 (Core Holdings) is deepening its digital par- tnership with TF1 and Mediaset, with the three groups to set up a shared digital platform to offer pan-European programmatic advertising campaigns to international advertisers. To be monitored this week: Swiss Air Lines May passenger statis- tics, KOF forecast healthcare expenditure, Flughafen Zürich May passenger statistics, SNB 2017 financial stability report and OFS May producer and import prices. In company news, Axpo is due to report its H1 results and PEH its 2016-17 results. Stock market Neither the UK election nor the ECB meeting managed to trigger a correction in indices. A notable exception was Friday’s sell-off of the Nasdaq’s tech stars, which might herald a broader correction… or not. The pause in Europe continues, while the US could see a broader correction. Currencies The UK press has described Theresa May as a political zombie. The UK election has pushed GBP down to GBP/USD 1.2750, EUR/GBP 0.88 and GBP/CHF 1.2340 this morning. A fall to GBP/USD 1.24 and EUR/GBP 0.90 is possible. We note that, in spite of Qatar’s po- litical isolation and the FBI/Trump saga, EUR/USD 1.12, USD/CHF 0.97 and EUR/CHF 1.0850 remain virtually unchanged. We expect EUR/USD to weaken to 1.1075, with USD/CHF between 0.9550 and 0.98 and EUR/CHF between 1.08 and 1.10. Gold remains bull- ish, with support at $1,260/oz. Equity markets took a breather, with developed markets losing 0.6% (MSCI World), though emerging markets more than held their own (up 0.4%). The ECB’s decision to maintain its accommodative monetary policy enabled peripheral 10-year yields to fall (IT: -16 bps; SP: -13 bps). The loss of Theresa May’s absolute majority in the UK general election triggered a further fall in GBP (down 1.5%), while USD gained ground (with the dollar index up 0.4%), causing gold to drop 1.1%. To be monitored this week: SME confidence (NFIB index), import, producer and consumer prices, retail sales, confidence among homebuilders (NAHB index), housing starts, building permits, industrial production and Fed meeting in the US; industrial production and trade balance in the eurozone; and investment, retail sales and industrial production in China. US statistics give little indication as to the direction of the economy. Business orders contracted slightly in April (down 0.2% MoM) and the ISM services PMI leading indicator slackened to 56.9 (from 57.5 in April). Lastly, consumer credit grew by a much less than expected $8.2bn in April. In the eurozone, the trend remained positive: Q1 GDP growth was revised upwards slightly (from 0.5% to 0.6% QoQ; 1.9% YoY), retail sales were up 0.1% in April (up 2.5% YoY) and in- vestor confidence (Sentix) has improved further in June (from 27.4 to 28.4). In China, the (Caixin) services confidence index picked up (from 51.5 to 52.8) in May and currency reserves held steady at $3,504bn. Positive momentum in international trade (with imports up 14.8% YoY and exports up 8.7% YoY) is good news. As at 09.06.2017 02.06.2017 31.12.2016 SMI 8845.85 -2.19% 7.62% Europe Stoxx 600 390.39 -0.55% 8.02% MSCI USA 2316.06 -0.36% 8.77% MSCI Emerging 1018.19 0.31% 18.08% Nikkei 225 20013.26 -0.81% 4.70% As at 09.06.2017 CHF vs. USD 0.9703 -0.66% 4.75% EUR vs. USD 1.1184 -0.81% 6.03% 10-year yield CHF (level) -0.17% -0.18% -0.20% 10-year yield EUR (level) 0.27% 0.27% 0.11% 10-year yield USD (level) 2.20% 2.16% 2.45% Gold (USD/per once) 1'266.31 -0.94% 9.40% Brent (USD/bl) 48.36 -3.11% -14.72% Source: Datastream Since The bank resolution system has been put into action for the first time, for Banco Popular (bail-in). Shareholders and holders of AT1 debt have lost their entire investment, and subordinated debt will be converted into shares. The bank is to be absorbed by Santander, which will inject €7bn in fresh share capital. Prices fell, though with- out any contagion effect. We remain positive on this class, whose fundamentals are improving. Source: Thomson Reuters Datastream China exports by region Twelve-month percentage changes (3-month MAV) 00 02 04 06 08 10 12 14 16 -40 -20 0 20 40 60 US EU Asia
