Market Comment - In the Spotlight

Manos Chatzidakis

Market Comment

Greek stocks ended lower in the Athens Stock Exchange on Friday as investors took profits ahead of the weekend. The composite index of the market fell 0.88 pct to end at 1,177.70 points, after rising as much as 0.76 pct early in the session. 

The week ended negatively by 1.08% finishing a five in a row positive weekly closings. Except from Troika’s visit market will also focus on results announcements from HTO and Coca Cola which are expected on Thursday before the opening.

We expect a stabilize session as the market may wait for the outcome of the negotiations between Troika and Government. Mytilineos and PPC shares will be in the spotlight on the arbitration news that came up on Friday.

In the Spotlight

Greece/PMI:   Greece's Purchasing Managers' Index (PMI) fell to 47.3 points in October, from 47.5 points in September after rising to a 44-month high in August, a report by Markit said on Friday.  A rapid decline in new orders' levels pushed the index to lower levels in the beginning of the fourth quarter of the year and noted that export orders fell significantly in October. Production levels in Greek manufacturing units fell, extending their decline for the 49th consecutive month, while inventory levels fell in October. Pending works fell significantly, while employment in the sector decline more rapidly in the month, at the fastest rate since June.

Greece/PDMA: Greece will auction a six-month Treasury bill issue tomorow seeking to raise 1.0 billion euros from the market, the Public Debt Management Organization said on Friday.

Alpha Bank: Alpha Bank will buy €65m in common shares, €64m in convertable bonds for Cypriot unit’s capital increase, according to Cyprus stock exchange filing.

Banking Sector/Cyprus: Hellenic Bank Pcl, Cyprus’s second- biggest lender secured total €358m in new capital required to bring core tier 1 capital ratio to 9.5%. Third point will acquire 30% stake of the bank.

Mytilineos:  The company announced that the arbitration procedure regarding the contract for the supply of electricity to the Group’s subsidiary ALUMINION S.A. by the PPC S.A. has been completed. Aluminium of Greece shall be supplied with electricity by the PPC for a period of time equal to 8,760 hours annually at the price of €40.7/MWh, inclusive of the fixed and variable cost of energy, the charges for Transmission System Use, Ancillary Services, PSO and the surcharges for the contributory fees in favour of RAE and of the Electricity Transmission System Operator (HTSO or DESMIE) S.A. / Electricity Market Operator (LAGIE) S.A. and exclusive of charges in connection with the RES/ETMEAR Special Duty for Renewable Energy Sources and for Reduction of Air Pollutant Emissions, Excise Duty on electricity, Customs Rights (DETE) and any other tax charges levied.” The ruling concerns the period from 1 July 2010 to 31 December 2013 inclusive. Following the above arbitration ruling, which both parties have undertaken in advance to accept, PPC and ALUMINION shall proceed to settle financially and in terms of accounting operations the bill between them, with retroactive effect as of 1/7/2010. The difference to ensue for ALUMINIUM S.A. and for its parent company, MYTILINEOS HOLDINGS S.A., shall be reflected in the interim summary financial statements for the period from 1 January to 30 September 2013, to be released together with the nine-month results on 20 November 2013. 

• According to our estimates news are positive for Mytilineos and negative for PPC. Mytilineos will record a pre-tax €50m one off on Q4 and €15-17m recurring annual pretax earnings.

GEK TERNA: GEK TERNA and York Capital Management have reached an agreement for York Capital to invest €100 million in GEK TERNA.  The investment will contribute to GEK TERNA’s efforts for ongoing growth and implementation of the group’s investment plan and reflects a vote of confidence for the recovery of the Greek economy. Under the agreement, York Capital will fully subscribe to the issuance of a five year bond loan mandatorily convertible, partly to new GEK TERNA shares and partly exchangeable with existing TERNA ENERGY shares owned by GEK TERNA. The subscription price for York Capital has been set at 2.50 Euros per GEK TERNA share. In addition, York Capital will acquire 9.99% of GEK TERNA’s share capital through a share capital increase and 3% of TERNA ENERGY’s share capital currently held by GEK TERNA. After the investment, York Capital will be represented by one member at each of the two companies’ Boards of Directors.