More pain for Europe Inc as earnings drought seen spilling over into 2020 By Reuters



By Thyagaraju Adinarayan and Joice Alves

LONDON (Reuters) – With markets taking fright again this week over trade tariffs and a faltering global economy, investors are braced for weak third quarter results in Europe and high expectations going forward could come crashing down to earth.

There have been a slew of profit warnings in recent weeks which have stirred worries that the earnings slowdown will spill over into next year as companies grapple with weaker economic growth stemming from trade spats and the uncertainty caused by the UK’s delayed exit from the European Union.

Markets were rattled this week by U.S. manufacturing and services data that fell below expectations, a move by Washington to hit European products with tariffs and worries over Brexit.

It could be the worst week in a year for the pan European STOXX 600 () while the euro-zone benchmark () is heading for its biggest weekly fall in two months.

After falling into a so-called corporate recession in the second quarter after two straight quarters of profit decline, European companies are expected to report in the coming weeks a 2.2% drop in profits in the third quarter, their worst quarter in three years, according to Refinitiv I/B/E/S.

While 4% earnings growth is seen as achievable for the United States in the fourth-quarter, interviews with investors, analysts and strategists and companies paint a different picture for Europe for the remaining months of 2019 and into next year.

(GRAPHIC – U.S. versus Europe earnings growth: https://fingfx.thomsonreuters.com/gfx/buzzifr/14/7815/7815/Pasted%20Image.jpg)

Companies are taking measures such as cutting costs to shore up profits, but a harder-to-fix drop in demand for products is expected to be evident in company revenues for the July-September quarter, which are seen falling 0.3%, the first quarterly turnover drop since early 2018.

There is room for much disappointment given that consensus profit estimates for the fourth quarter and 2020 are still high at around 10% growth and analysts say expectations could be brought back down to reality over the coming months.

“The big hurdle for this year would be the fourth quarter, not the third quarter,” said Fabio Di Giansante, head of large-cap European equities at Europe’s top asset manager Amundi with 1.43 trillion euros ($1.6 trillion) in assets under management.

“I would expect more warnings after last week,” Di Giansante said, following the earnings downgrades by Pearson (L:), Imperial Brands (L:), British Airways-owner IAG (L:) and Carnival Corp (N:) that knocked billions of pounds off their market value.

At best, Di Giansante expects profit growth to flatline in 2020 while UBS has pegged a 4% drop.

(GRAPHIC – Earnings downgrades: https://fingfx.thomsonreuters.com/gfx/buzzifr/14/7529/7529/Pasted%20Image.jpg)

ROTATION INTO VALUE

A shift by investors into beaten-down stocks that look value for money in September has caught some investors off-guard, who were heavily invested in momentum stocks – rapidly expanding companies – but ahead of the results season value stocks are likely to be seen as a shelter, giving less of a shock if a company misses estimates.

MSCI global basket of value stocks rose 4%, while the momentum stocks slipped 1% last month. Before the rotation, momentum stocks had surged 20% as of August-end, while value stocks were up just 7%.

Di Giansante is among those that have sought safety in cheaper stocks.

“In a normal world, if you’re cheap and you miss, in theory you should have more downside protection, but that hasn’t been the case in the last year-and-a-half,” he added.

For these stocks, “you need to see an inflection point around the corner, if you keep missing, it is postponed”.

DEJA VU?

The final quarter of 2018 also started with major stock indexes close to current levels and earnings growth expectations for the year ahead around 10%.

(GRAPHIC – 2020 earnings growth: https://fingfx.thomsonreuters.com/gfx/buzzifr/14/7528/7528/Pasted%20Image.jpg)

Analysts ended up slashing earnings growth estimates for 2019 to low single digits and the toxic mix of an uncertain macro environment and earnings downgrades led to one of the steepest sell offs in stock market history in late 2018.

But this time could be different, some market experts said, as central banks are more dovish now, providing monetary stimulus and interest rate cuts that have supported stock markets.

Equity strategists do not expect 2020 earnings to be as bad as 2019.

“You start with 10% … the question is not where you start, but where you’re going to end up,” Edmund Shing, global head of equity derivates strategy at BNP Paribas (PA:) said. He expects earnings to rise 6% next year.

Aside from the battering stocks received last week, the STOXX 600 index remains on track for its best annual performance in six years.



Europe third-quarter earnings outlook deteriorates as trade war, Brexit bite By Reuters



LONDON (Reuters) – European companies are heading for their worst quarterly earnings in three years as revenue drops for the first time since early 2018, according to the latest Refinitiv data, underscoring concerns about Europe Inc’s deteriorating health.

Companies listed on the STOXX 600 () regional index are expected to report a 2.2% drop in third-quarter EPS, worse than the 1.9% drop expected a week ago and the biggest quarterly fall since Q3 2016, according to I/B/E/S Refinitiv.

Consensus now calls for a drop in revenue of 0.3% in the quarter, which would be the first since Q1 2018, but slightly better than the 0.4% fall expected last week.

Companies are already suffering a corporate recession after earnings declined in the previous two quarters as the U.S.-China trade war and uncertainty over Brexit crimp demand and Germany, the region’s largest economy, at risk of falling into recession.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



A big fiscal splash still a step too far for Europe By Reuters


© Reuters. FILE PHOTO: French President Emmanuel Macron visits the Chateau de By (“By Castle”) in Thomery in support of the European Heritage Days

Mark John, European Economics Editor

LONDON (Reuters) – Prodded by worries about the worst global economic outlook in a decade and electorates still smarting from years of austerity, euro zone governments are starting to loosen their budgetary purse strings.

Don’t expect “new deal” investment programs to transform the region’s economy, however, or even the fiscal shot in the arm that European Central Bank chief Mario Draghi says is needed — at least, not until things get much worse.

“There is a shift towards talking about stimulus but there is no dramatic leap forward,” said Philippe Legrain, adviser to the European Commission during the aftermath of Europe’s 2009 sovereign debt crisis and author of the book “European Spring”, a diagnosis of Europe’s economic failings.

“There is no sense of urgency so far … That might happen when the euro zone enters recession.”

Economists now see a one-in-four chance of a euro zone recession in the coming year. The possibility of a no-deal Brexit in the coming weeks or months should also be concentrating minds across the 19 countries that use the euro.

Advocates of pro-growth policies are pegging their hopes on France’s Emmanuel Macron emerging as the region’s pre-eminent politician and incoming ECB chief Christian Lagarde doubling down on Draghi’s lobbying of debt-averse northern governments.

Europe’s response to the crisis of a decade ago — protracted austerity combined with massive central bank stimulus and still-unfinished banking reforms — saved the euro but has left many of its economies numbed. Euro zone growth was just 0.2 percent in the second quarter of 2019.

While the ECB’s 2.6 trillion euro stimulus program may have helped kick-start a post-crisis recovery of sorts, deep cuts to public spending are blamed for exacerbating poverty and shredding Europe’s welfare safety nets.

Stung by the rise of anti-establishment parties across the continent, and with regional powerhouse Germany on the brink of recession, governments are starting to act.

In Angela Merkel’s last months as German chancellor, politicians in Berlin are for the first time in years publicly questioning a self-imposed balanced budget rule and exploring ways to spend off-budget.

In its first budget since the “yellow vest” street protests began last year, France will this week offer 9 billion euros of tax cuts and put on hold some earlier debt-cutting promises.

“The priority now is to address the totally justified anger of those who are not making ends meet,” Budget Minister Gerald Darmanin told Le Parisien daily.

Even more eye-catching was last week’s announcement by the Netherlands, one of the euro zone’s fiercest advocates of fiscal probity, of new spending on health and housing. An ambitious national investment fund will be launched there next year.

And Italy’s new government has signaled it will deliver an expansionary 2020 budget while it drums up support for its campaign to re-focus the EU’s budget rules to promote growth.

But hard evidence of a game-changing shift remains absent, even as record-low debt costs have opened the door to an estimated 140 billion euros of spending by the end of 2021.

WISHFUL THINKING

Merkel on Friday had the chance to use domestic concern about climate change as cover to issue new debt to re-set the economy on a green path and inject some short-term stimulus.

But the plan announced, offering a headline figure of 50 billion euros of new measures but in a budget-neutral package spread over four years, fell short of some expectations.

“We think any boost to demand would be too small to make much difference to short-term growth prospects in the euro-zone as a whole,” Andrew Kenningham of Capital Economics wrote in a note entitled “Wishful thinking about German fiscal policy”.

He noted that the package fell well short of the stimulus announced by Merkel’s coalition in 2009/10, worth 1.5% of GDP.

And while there was much excitement at media reports that the Dutch government would funnel 50 billion euros — 6% of GDP — into its proposed investment fund, the final announcement omitted any specific figure.

“The Dutch did not give Draghi a mind-blowing farewell present,” noted Marcel Klok, senior economist at ING bank.

Euro zone finance ministers agreed this month that fiscal policy must “play a part” in countering the downturn but made clear they planned no coordinated stimulus like the 200 billion euro package agreed in 2008 after Lehman Brothers collapsed.

Christian Odendahl of the Centre for European Reform said it was clear from resistance within the bloc to a common budget to help out euro zone nations in difficulty that there is limited appetite to shake up the current EU framework.

Moreover Italy’s push for “green” investments to be exempted from national deficits has got short shrift in Brussels, a source close to the matter said, adding that any flexibility would be no more than 0.25 GDP points of the structural deficit.

“I’m not sure the review of fiscal rules will get far,” said Odendahl. “The political dynamic in Europe has not shifted.”

Some think that may change if the French get their way.

As the close of the Merkel era allows Macron to emerge as the region’s de facto leader, France is already pushing the idea of a “growth compact” while expressing vocally its concerns about the German slowdown.

Many expect his compatriot Lagarde to amplify Draghi’s call for fiscal support when she arrives at the ECB next month.

“She will have to do a lot beyond simple monetary policy to persuade governments to play their role,” said Legrain.





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Europe Just Reminded Trump Why He’s Mad at Them on Trade By Bloomberg


© Reuters. Europe Just Reminded Trump Why He’s Mad at Them on Trade

(Bloomberg) — If U.S. President Donald Trump wants to heave more trade threats at the European Union, a fresh batch of numbers just gave him a reason.

Figures published on Friday show that the EU’s trade surplus with the U.S. stood at almost 75 billion euros ($83 billion) in the first half of 2019, up more than 11% from a year earlier. While exports to America have consistently outpaced imports, the difference between them has steadily increased: A decade ago Europe’s bilateral surplus with the U.S. was a mere 18.7 billion euros. Another highlight may catch the eye of a leader who sees trade deficits as a sign of weakness:

  • Germany’s surplus is by far the largest in the bloc. Total exports outweighed imports by 112 billion euros from January through June. While the surplus for shipments within the EU narrowed by about a third compared to the previous year, it remained steady at 88 billion euros for business with countries outside the bloc.

Europe, and Germany in particular, has already attracted the ire of the U.S. president. The continent withstood Trump’s aluminum and steel tariffs. He’s said he could label German cars a risk to national security and impose tariffs on auto imports. And he’s threatened France over that country’s new digital tax.

Speaking in New Hampshire last night, Trump repeated his frustration. “The European Union is worse than China, just smaller. It treats us horribly.”

Yet so far, the biggest headwind to European trade — and that’s key to its economy because exports make up some 46% of the bloc’s total output — has come from a conflict on the other side of the world.

A recent study by Germany’s Kiel Institute found that the EU, Canada and Mexico might face a more severe hit from the tariffs the U.S. and China have imposed on each other than the two countries themselves. That’s because products subject to import levies are often processed as intermediate goods and then shipped elsewhere, resulting in more expensive end products.

As much as Europe would like to stay out of the tussle that’s preoccupied the world’s two largest economies for more than a year, it’s too late for that. It’s already caught in the middle.

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Trump Praises Deal to Increase U.S. Beef Exports to Europe By Bloomberg



(Bloomberg) — Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. 

President Donald Trump on Friday praised a previously-announced deal that will open up the European Union to more U.S. beef after the bloc carved out quotas previously granted to other nations.

The Trump administration in June secured more access to the EU’s beef market after the bloc persuaded Australia, Argentina and Uruguay to gradually cede chunks of the import quota. U.S. farmers will be entitled to almost 80% — or 35,000 metric tons — of the annual EU quota on hormone-free beef by the seventh year of the agreement, with an initial allocation of around 40%, European officials told reporters in June.

“The European Union stepped up, and we appreciate it,” Trump said at a signing ceremony at the White House. “This is a tremendous victory for American farmers, ranchers and of course European consumers, because American beef is considered the best in the world.”

The quota was set a decade ago to settle a transatlantic dispute over an EU ban on meat from cattle that were raised with growth hormones. World Trade Organization rules required the volumes be made available to other nations that export beef, and Australia, Argentina and Uruguay gradually replaced the U.S. as the largest suppliers.

While the tonnages involved are relatively small, the move could add to tailwinds for U.S. beef exports, a relative bright spot for American agriculture, which has been battered by trade disputes with China and elsewhere. The value of U.S. beef exports in 2018 reached a record $8.4 billion, Department of Agriculture data show.

The announcement comes as Trump feuds with Europe over various trade issues. Among them, Trump has threatened to impose tariffs on French wine after that country imposed a tax on technology companies that will particularly impact American firms.

The U.S. and EU are working on a limited trade agreement that would cut industrial tariffs but have reached an impasse over whether to include agriculture in the negotiations.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Carmakers drive Europe higher, Johnson batters sterling By Reuters



By Marc Jones

LONDON (Reuters) – A wave of central bank easing and positive soundings from the earnings season buoyed world stocks on Tuesday, while Britain’s pound fell before the expected confirmation of hard-Brexit advocate Boris Johnson as the country’s prime minister.

Corporate results from oil bellwether Halliburton (NYSE:), Swiss bank UBS and Apple (NASDAQ:) supplier AMS all helped Europe’s benchmark add 0.5% to Monday’s gains.

The auto industry also gained as German parts makers Hella and French peer Faurecia surged nearly 6% and tyre maker Continental rose 4% despite a profit warning, putting the sector on track for its best day since April 1.

“The results are coming in and have helped the market today and we are still under the influence of interest rates,” said Francois Savary, the chief investment officer of Prime Partners, referring to expectations of U.S. and ECB rate cuts.

He also said Wall Street earnings had provided no real worries so far and this week’s results from Facebook (NASDAQ:), Amazon.com (NASDAQ:) and Google parent Alphabet (NASDAQ:) would “drive the market up the road.”

Among currencies, the dollar reached a two-week high after U.S. President Donald Trump and congressional leaders agreed on Monday to a two-year extension of the U.S. debt limit, ending the threat a government default later this year.

The New Zealand dollar led G10 losses after its central bank said it had “begun scoping a project to refresh our unconventional monetary policy strategy and implementation,” although it added it was at a very early stage.

Britain’s pound slid toward the mid $1.24 region with euroskeptic Boris Johnson widely expected to replace Prime Minister Theresa May in a matter of hours.

Concern that Britain will crash out of the European Union without a deal have grown since Johnson said he would pull Britain out on Oct. 31 “do or die”.

The pound traded at $1.2459, near last week’s 27-month low of $1.2382.

“Johnson is expected to become the new prime minister, so there is a real chance of a hard Brexit,” said Takuya Kanda, general manager of research at Gaitame.Com Research Institute in Tokyo.

The euro fell 0.2% to $1.1189, weighed down by the likelihood of even more negative ECB interest rates in the coming months. The central bank meets on Thursday.

“It is going to take a bold stroke by the ECB to both satisfy markets clamoring for incremental easing and make a difference to the economy, all the while remaining inside its institutional setting and not destabilizing the financial system,” wrote Carl Weinberg, chief international economist at High Frequency Economics.

HOT SPOTS

Europe’s government bonds barely budged, with their yields slumping since the start of the year. Some yields did tick higher after the U.S. move on its debt ceiling.

Germany’s 10-year bond yield, the benchmark for the euro zone, was up a basis point, but at minus 0.34% was near Monday’s two-week low and not far from the record low posted at the start of the month.

Upcoming events to watch include the first of potentially two confidence votes in Spain. Caretaker prime minister Sanchez needs an absolute majority to form a formal coalition with far-left rivals Podemos.

There was also a rumored meeting between the leaders of the two squabbling parties who make up Italy’s coalition government, 5-Star Movement’s Luigi Di Maio and League’s Matteo Salvini.

“Investors are waiting to see whether this government will survive,” said DZ Bank strategist Daniel Lenz. “One possibility is that the coalition continues but both agree to replace (Giuseppe) Conte as prime minister, which would be a very bad signal.”

Conte is widely seen as a moderating influence on the anti-establishment Italian government, particularly in terms of its relationship with Brussels.

In commodities, added 0.19% to reach $63.38 per barrel. It had risen 1.2% the day before on concern over possible supply disruptions after Iran seized a British tanker last week.



PayPal launches international money transfer service Xoom across Europe By Euronews



U.S. payments company PayPal is expanding further in Europe by launching its international money transfers service Xoom in Britain and 31 other countries across the continent.

Xoom allows customers to transfer money abroad to more than 130 markets internationally, including India, Pakistan, Nigeria, Kenya, Poland and China.

The company said the roll-out would help it grab market share in the $689 billion (£550 billion) global remittances market, building on previous launches of the service in the United States and Canada.

Britons alone transfer over $26 billion in remittances overseas annually, many sending money to help family members pay bills.

Xoom partners with major banks and other finance firms to facilitate the money transfers, with customers able to transfer up to 8,800 pounds per transaction.

(Reporting by Iain Withers, editing by Deepa Babington)


View on euronews

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Exxon’s Loss In a Court Case in Europe May Be a Gain for Carbon Market By Bloomberg


© Reuters. Exxon’s Loss In a Court Case in Europe May Be a Gain for Carbon Market

(Bloomberg) — Exxon Mobil Corp (NYSE:).’s loss in a court case in Europe may translate into a gain for carbon prices in the continent’s emissions trading system.

The European Union’s Court of Justice ruled that part of Exxon’s processing plant in Germany should be classified as an electricity generator, a decision that could result in a cut to its allocation of free pollution rights. Since 2013, utilities have to buy permits to pump out carbon dioxide while other industries get some or all of theirs for free.

The June 20 ruling, if followed by EU governments, could mean about 3,000 factories that transfer heat or electricity to the public grid may no longer qualify for all of their allocated permits, according to analysts including Berenberg Bank’s Lawson Steele, who wrote a detailed report on the impact of the decision.

“The unnerving aspect of this ruling is that this has been happening since 2013, so there’s a retrospective angle,” said Mark Lewis, global head of sustainability research at BNP Paribas (PA:) SA’s asset management unit, who’s followed the market since it began. “It’s backfiring not just on Exxon. Many companies receiving free allowances for power stations located at factories.”

The ruling may drive up the cost of carbon, already trading at an 11-year high, depending on how nations react, said Bo Qin at BloombergNEF. And applying the ruling to previous years could have a significant impact, though the chance of that “appears to be very small,” said Trevor Sikorski, an Energy Aspects Ltd. analyst.

Exxon said it was too soon to comment on the ruling.

The European Commission wasn’t immediately available to comment on how the decision may change the way allowances are distributed.

The EU’s Emissions Trading System hands out or auctions pollution permits for more than 12,000 facilities owned by utilities and industries, as well as airlines. The court’s decision, which could take months to put into action, may impact the 2020 allocation of allowances if the affected supply isn’t returned to the market, said Berenberg’s Steele.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Partial ECM exit to leave Deutsche Bank focused on Europe


LONDON/HONG KONG (Reuters) – Deutsche Bank (DBKGn.DE) is focusing its equity capital markets (ECM) business such as initial public offerings (IPOs) on Germany and Europe, scaling back in the United States and retreating from most of Asia, banking sources said.

The headquarters of Germany’s Deutsche Bank are photographed in Frankfurt, Germany, July 8, 2019. REUTERS/Kai Pfaffenbach

Germany’s largest lender said on July 7 it would retain a “focused” ECM franchise as well as U.S. and European equity research teams as part of a 7.4 billion euro ($8.3 billion) shake-up which all but ends its ambitions on Wall Street.

The bank’s “reinvention”, which is expected to lead to 18,000 job cuts by 2022, includes the closure of all of its equities trading and cutting some parts of its fixed income operations.

Deutsche Bank’s plans to shrink its ECM business, which involves raising money for corporate clients on the world’s stock markets through IPOs and private placements, has left some bankers questioning how it can still compete.

Its franchise is already under pressure. In the first half of 2019, Deutsche Bank ranked 13th in the league table for global equity capital market deals, down from ninth place in the same period a year ago, Refinitiv data shows.

But in its home market, Deutsche Bank was third biggest in terms of fees in 2018, lagging its U.S. Wall Street rivals JP Morgan (JPM.N) and Goldman Sachs (GS.N), the data shows.

ECM league tables can be volatile given there are often large swings in IPO volumes from year to year, with revenues from such activities at investment banks already suffering from reduced issuance and fee pressure..

However, Deutsche Bank’s ECM practice made up just 3% percent of its total investment banking revenue last year and sources said a fall in proceeds would not hit its bottom line.

Deutsche Bank has already axed a number of ECM banking roles in Asia, Europe and the United States since Chief Executive Christian Sewing announced his overhaul, sources said.

VANISHING UNICORNS?

Jason Cox, the Asia-Pacific head of equity capital markets was laid off and teams were disbanded in Japan, Australia and most of Asia, sources have previously said.

At least three members of the London team lost their jobs on Monday, sources said, and the roles of global head of ECM and global head of equity syndicate, responsible for researching and marketing IPOs, remain vacant.

And teams could gradually be reduced further, the sources told Reuters, with a likely knock-on effect.

“The very small ECM team that we will have globally after this will mean that we won’t get senior roles in any of the IPOs,” a senior Deutsche Bank investment banker in Asia said.

“So if a company in London or a unicorn in China is looking to do an IPO, they would not look at Deutsche as a lead, nor will we pitch for that role,” the senior banker said, adding that the bank could still pitch for junior roles in some deals.

In the United States, it will continue to work on sectors that it deems strategic, a source close to Deutsche Bank said.

The underwriting role it secured in the IPO of U.S. electric bus maker Proterra, was helped by the bank’s relationship with auto investors in Europe, another source said.

Over the past year Deutsche won global coordinator roles for IPOs including Volkswagen’s truck unit Traton (8TRA.F) and luxury car maker Aston Martin (AML.L), and bookrunner roles in the IPOs of ride-hailing giant Uber Technologies (UBER.N).

It also has a global coordinator role on the IPO of brewing firm Anheuser-Busch InBev NV’s (ABI.BR) Hong Kong arm Budweiser, which on Friday delayed pricing the flotation.

There are also more deals in prospect, with Deutsche Bank securing roles in up to 10 which should happen in the next 12 to 18 months in Europe, a third source said.

Additional reporting by Joshua Franklin and David French in New York; Editing by Alexander Smith



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Negative yields creep into emerging Europe – Business News



BELGRADE: The rally in eastern Europe’s sovereign bonds has left yield-hungry investors with little to grasp at, pushing many toward higher-risk alternatives.

All of the Czech Republic’s outstanding euro bonds are trading at negative yields, while the rate on Poland’s 2029 note is 15 basis points away from dropping below zero. Junk-rated Serbia’s 10-year bonds offer less than 1.5% and the spread on euro-area hopeful Croatia’s 2028 notes has almost halved this year.

“Central and eastern Europe can’t win much” in terms of further tightening of spreads, said Lutz Roehmeyer, who helps manage 700 million euros ($786 million) at Capitulum Asset Management in Berlin. “The region is coupled with the euro area developments, its yields are already low and cannot go much lower.”

The changing sentiment is a ripple from investors preparing for a weaker growth outlook. Even after a stronger-than-anticipated U.S. jobs report on Friday, futures contracts are still pricing in a quarter-point easing or more from the Federal Reserve. 

Markets are also betting that Christine Lagarde will extend ultra-loose monetary policies at the European Central Bank.

Those shifts have helped push already-depressed bond yields across the continent to record lows.

“Clients who were used to much higher yields have a hard time looking at Croatia or Serbia at these levels,” said Lovro Kuspilic, a fixed-income trader at Amsterdam-based broker AFS Interest.

With credit spreads tightening further and about a quarter of global debt carrying a negative yield, bond investors active in eastern Europe are turning toward more exotic names further to the south or the east of the continent, or 

considering more volatile credits. Turkey’s euro bonds due 2026 trade at a yield of 5.03%, while Ukraine’s new seven-year notes still offer 5.93%, despite dropping almost 100 basis points since their pricing on June 14.

“We have ridiculously cheap valuations imposed by political risk in Turkey, and in Ukraine our bets on a new stable government after elections is not yet in the price,” said Gintaras Shlizhyus, a Vienna-based credit analyst at Raiffeisen, cautioning that the change at the helm of Turkey’s central bank over the weekend “wasn’t anything good.” 

He also has a buy recommendation for Serbia, Kazakhstan and North Macedonia. – Bloomberg





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