Market Comment - In the Spotlight (Manos Chatzidakis)

Wednesday, July 16, 2014

Market Monitor

Market Comment General Index got off to a promising start on Tuesday but early healthy gains were reined in by the end of the session, as bank stocks slid into the red while non-banking blue chips remained on a rising course. Trading volume showed an encouraging increase following the Greek bourse’s third consecutive northbound session. Turnover amounted to 99.1 million euros, up from Monday’s 59.1 million. Despite the small gains in the last three days, the market generally remains on a short term downward course which has kept the benchmark below 1,200 points over the last few days. Lack of domestic fresh news may increase the weight of the foreign factor as investors wait for FED’s speech, Beige book figures and 2Q corporate earnings announcements in the US.        In the Spotlight Greece: Reported a cash primary state budget surplus of EUR1.37bn in H1 2014 vs a deficit of EUR4.77bn over the same period last year.   Greece/PDMA:  Greece sold 1.625 billion euros of three-month treasury bills on Tuesday to roll over a maturing issue. The T-bills were priced to yield 1.75 percent, down five basis points from 1.80 percent in a previous sale in June - the lowest funding cost since January 2010 when the debt agency sold three-month treasury paper at 1.67 percent. The sale's bid-cover ratio was 2.35, down from 2.99 in the previous sale. The amount raised included 375 million euros in non-competitive bids. Greek Banks/ECB: Bank of Greece stated that Greek Bank reliance on ECB liquidity fell to EUR45bn at end-June 2014 against EUR50.7bn at end-May. Greece/Privatizations: With regards to Rhodes Property Development, which calls for developing beach-front land plots in Afantou, Greece received four binding offers from Aegean Sun Investments, Dimand Real Estate Development, Hatzilazarou SA Hotel Operators and M.A. Angeliades.  HRADF’s (Greek state asset sales fund) next board meeting will examine the validity of offers. OPAP: OPAP appointed GTECH as CIS Provider for video lottery terminals. No further details were disclosed. This move highlights OPAP’s strategic decision to reduce IT dependency on Intralot and accelerates VLTs business kick-off, in our view. Piraeus Port Authority:  The container handling activity of Chinese company Cosco’s local subsidiary in Piraeus posted an impressive 26.7 percent increase in the first half of the year compared with the same period of 2013, the firm announced on Tuesday. A total of 1.47 million containers were handled in the year to end-June, against 1.16 million a year earlier. Cosco-operated terminals II and III witnessed an even bigger increase in June alone, reaching up to 29.8 percent over the same month of 2013. Hellenic Sugar: The Hellenic Sugar Industry on Tuesday decided to temporarily shut down two of its three factories, at Orestiada and Serres. A number of the employees at the two factories will be transferred to cover the needs of the only factory that will remain open, at Platy Imathias, close to Veria. Some workers will be employed in maintenance projects while others will be given the option of joining a voluntary exit program. We note that Hellenic Sugar posted €19.3m losses in the first nine months of 2013 while net debt stood at €129.5m. Under a government plan, the privatization of Hellenic Sugar Industry was expected to be completed by the end of 2013. The industry operates three sugar producing units in Plati, Serres and Orestiada, it holds majority stakes in two subsidiaries in Serbia (AD Fabrica Secera Crvenka and AD Fabrica Sajkaska), holding 80 pct and 92.32 pct, respectively. Bank of Cyprus: In an official announcement the bank detailed the capital raising structure which allows existing shareholders to participate in 3 key ways: ¡  The Phase 1 involves a private placement to institutional investors (‘qualified investors’) which could be new or existing shareholders. The Phase 1 is currently underway and is expected to end in late July. Following the solicitation of investor interest, the Bank’s BoD will meet in order to consider the bids received from the investors and whether to proceed with the capital increase, the subscription price per share and the allocation of shares. Participating investors should enter into firm commitments regarding their orders and BoC will call an EGM (expected to take place in August) to approve the transaction, including the waiver of pre-emption rights (we remind that Laiki owns 18% of BoC shares) ¡  In Phase 2, existing shareholders will be able to purchase up to 20% of the total number of shares offered to qualified investors in Phase 1 at the same price as in Phase 1 (the ‘clawback). Phase 2 is expected to take place between completion of Phase 1 and the EGM ¡  In Phase 3, following the approval and publication of a prospectus, BoC will offer an additional €100mn of new shares for subscription by all other existing shareholders prior to any relisting  of the shares on the Cyprus Stock Exchange and the Athens Stock Exchange, subject to necessary regulatory approvals Motor oil/Cyclon: A public tender offer (0.70 euros per share) by Motor Oil for Cyclon will begin in July 17 and will end on August 28. Eurobank: The bank announced that it will release 1H/2Q:14 earnings results on August 29 after market hours. Hellenic Exchanges:  As of today, and following the share capital decrease of the company the shares of the latter are traded on the ATHEX with new par value of € 0.56 per share, and excluding the right to participate in the capital return of € 0.20 per share - through a cash payment - to the shareholders of the company.