HALISTER: Selloff in European Banking Stocks Is Overdone: Credit Suisse

Selloff in European Banking Stocks Is Overdone: Credit Suisse

(Bloomberg) -- European banking stocks are pricing in a 50% chance of a crisis/economic recession, which is “too high,” Credit Suisse equity strategists including Andrew Garthwaite and Marina Pronina write in note.
  • Banks have sold off on concerns over developed market growth, but now gap between their performance and PMI new orders is close to post-crisis high
  • Banks’ credit has lagged selloff in shares, suggesting market movement not about credit crisis worries
  • Banks’ performance correlated to oil price due to exposure to the energy sector: Credit Suisse thinks oil has troughed
  • Despite positive short-term stance, Credit Suisse strategists don’t see European banks sector as an attractive long-term investment
    • Banks offer an asymmetric return profile; their leverage is still high; significant regulatory, tax, litigation risk and pressure on fee income
  • Top picks are: Erste, Danske, Intesa Sanpaolo
NOTE:
  • Stoxx banking sector index down 21% YTD, worst sector performance
  • Feb. 15: Loans to Energy Sector Not a Threat to European Banks, BNP Says
  • Feb. 15: European Banks’ Capital Positions Not Under Threat: BofAML
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
DANSKE DC (Danske Bank A/S)
EBS AV (Erste Group Bank AG)
ISP IM (Intesa Sanpaolo SpA)

People
Andrew Garthwaite (Credit Suisse Group AG)
Marina Pronina (Credit Suisse Group AG)

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UUID: 7947283

HALISTER1: Korean Won, Taiwan Dollar, Rupee Forwards Most Active on DTCC

Korean Won, Taiwan Dollar, Rupee Forwards Most Active on DTCC

(Bloomberg) -- USD/KRW non-deliverable forwards account for 28.6% of total volume today, according to trades reported to DTCC; USD/TWD second-most active at 25.2%, USD/INR third-most active at 10.7%.
  • Notional amounts traded include:
    • Total $117m of USD/TWD at 33.30 matures March 25
    • $100m of USD/INR at 67.8578 matures April 11
  • Total volume was $14.1b as of 2:34pm HKT; global total yesterday was $65.4b, with USD/BRL accounting for 25.2%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283

HALISTER1: Long-Term JGBs Rise; 40-Year Sale Had ’Strong’ Outcome: BNP

Long-Term JGBs Rise; 40-Year Sale Had ’Strong’ Outcome: BNP

(Bloomberg) -- Outcome of today’s 40-year JGB sale was “strong” as investors are focusing their demand on tenors that offer positive yields, says Tomohisa Fujiki, chief rates strategist at BNP Paribas, in an interview.
  • Short-covering by brokers may have also contributed to “strong” result: Tokyo-based Fujiki; NOTE: 40-year JGB auction draws most demand since Feb. 2015
  • Yield on 40-year JGBs slips 2.5 bps to 1.095% in secondary market after earlier touching record low of 1.085%; 30-year yield down 0.5 bp to 0.985% and 20-year yield down 1.5 bps to 0.665%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Tomohisa Fujiki (BNP Paribas SA)

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UUID: 7947283

HALISTER1: INSIDE G-10: Yen Advances Amid Whipsaw Session for Nikkei

INSIDE G-10: Yen Advances Amid Whipsaw Session for Nikkei

(Bloomberg) -- JPY rose vs G-10 peers as Nikkei index swung between an early gain of 1.5% before dropping as much as 0.7%.
  • USD/JPY -0.51% to 112.34 vs 111.97/113.05 range
    • Funds selling spot and Nikkei futures in tandem, helping trigger sell-stops through 112.30: traders
    • Intraday short-covering seen after large trades went through around 112.00, another trader says
    • BOJ’s Kuroda says simply increasing monetary base won’t raise prices
    • EUR/JPY buying seen ahead of options at 123.73: trader
    • Yen demand coming from exporters, year-end repatriation: BTMU
  • AUD/USD +0.06% to 0.7231 vs 0.7212/0.7244 range
    • Month-end hedging ran out of steam, leaving Aussie to retreat, led by falling USD/JPY
  • EUR/USD +0.13% to 1.1044 vs 1.1021/1.1049 range
    • Leveraged and macro investors selling ahead of 1.10 barrier, says trader
    • U.S. says it will oppose competitive FX devaluations at G-20 meeting
  • GBP/USD -0.25% to 1.4115 vs 1.4107/1.4156 range
    • 200 business leaders warn against “Brexit” in letter, Times reports
  • USD/CHF -0.38% to 0.9959 vs 0.9958/1.0002 range
    • Options expiring today include 0.9920 strikes for $200m: DTCC
  • NZD/USD -0.03% to 0.6697 vs 0.6688/0.6715 range
  • BBDXY -0.05% to 1,221.39
  • U.S. Treasury 10-year yield falls 2 bps to 1.731%
  • S&P 500 futures slip 6 points to 1,930
  • Brent crude -1.8%; gold +0.7%; copper -1%
  • NOTE: Inside G-10 (NI ING10), is a G-10 currency update published throughout the trading day. To subscribe to Inside G-10, please click here, “Display & Edit” and then “Set Alert Delivery”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283