Airlines and hotels extend their comeback on the stock market waiting for British tourists | Markets

The European tourism sector continues its rises in the stock market today, given the growing expectation of a recovery in activity after the United Kingdom announced that it plans to lift restrictions on international flights as of May 17.

The CEO of Heathrow airport today joined this message of optimism for the sector and has advanced that the United Kingdom could be the first country to fully recover international air traffic, thanks to its rapid vaccination campaign, which It is promoting the whole of the tourism sector in the Stock Market.

IAG is the best value of the Ibex and it is pointing a rise of 3.2%, adding a rebound of 14% so far this week. The tourism sector is the one that rises the most today in Europe, with an advance of 1.3% that reinforces its rebound so far this month of February. Tourism points to the largest sectoral rise of the month, since it accumulated a revaluation in February of more than 18%. And in the computation so far this year it adds up to a 13.5% rise, only surpassed by the rebound in the raw materials sector, which is up 18%.

Today, the cruise company Carnival is the one that rises the most within the sector in Europe, almost 6%, followed by the German tour operator Tui, with an increase of more than 5%. With these advances, the European tourism and travel sector index is already recovering to its pre-pandemic levels, in February last year, after rising more than 115% from the March lows.

The discovery of the coronavirus vaccines last November was the starting point for the comeback in the sector in the Stock Market, severely punished by the pandemic. And despite the new restrictions on mobility in 2021 and the shocks in the distribution of the vaccine, tourism companies maintain their stock market recovery, in the expectation of a return to activity that allows a certain normality in the summer campaign .

Heathrow Airport CEO John Holland-Kaye said today that the UK “is on the threshold of becoming the first country in the world to safely resume international travel and trade.” It is likely “that citizens will be able to go on vacation next summer after the de-escalation plan announced on Tuesday by British Prime Minister Boris Johnson, which will allow international travel from 17 May.

British tourism, key to the Spanish hotel industry, is now the great hope for that recovery. The British government’s announcement has skyrocketed flight and accommodation bookings. Tui, Easyjet and Rayanair have confirmed Spain as one of the favorite destinations within these reserves, along with Greece, Italy and also Turkey.

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Tourism stocks celebrate de-escalation plans in the UK | Markets

The progress in vaccination campaigns in Europe and, above all, the de-escalation plan announced yesterday by British Prime Minister Boris Johnson, are giving wings to companies in the tourism sector of the Stoxx 600 today on the Stock Exchange. IAG soared 6.8% while the German TUI advanced 6.4% and the German airline Lufthansa rebounded 5.5%.

In the Spanish Stock Market, all the values ​​linked to travel and tourism climb to the top positions. Thus, accompanying IAG are Amadeus, whose titles increased by 6%; Meliá, which recovered 3.4%, and Aena, whose shares also gained 3%.

Easyjet is another of the most bullish. The British airline skyrockets 7% reporting that ticket sales quadrupled in the hours after Johnson’s presentation of the plan. And it is that the British prime minister promised to relax the closure rules in one of the next four months, including the possibility of resuming international travel as soon as May 17.

The market in general and the travel sector in particular have welcomed the announcement of the de-escalation in the UK. One of the strictest confinements in the world, it will start on March 8 gradually with the reopening of schools, in a process that will consist of four phases and that would be completed by June 21.

Johnson announced in the House of Commons his roadmap to reopen society in a “cautious but irreversible” way, which will progress as long as the vaccination campaign continues at its current pace and no new variants appear to alter the plans.

This opens a thread of hope for the sector, one of the most penalized during the pandemic due to confinements and strong restrictions on travel Although experts and the companies in the sector themselves consider that the return to 2019 levels will take some time Arriving, at least until 2023, the summer campaign may be the beginning of the recovery.

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Buffett bets on Chevron and Verizon, loosens on Apple and says goodbye to Pfizer

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The ‘oracle of Omaha’ has spoken. Warren Buffett has unveiled the Berkshire Hathaway portfolio, its main investment arm, with which it has entered this 2021 of the economic recovery. Has revealed positions in the oil company Chevron and the ‘teleco’ Verizonwhile you have loosened on Apple and settled in Pfizer.

The anticipation around this discovery of positions has been even greater than usual this time, because Buffett had to discover some positions that you did not disclose at the end of the third quarter from last year. The investment firm obtained a waiver from the US supervisor to delay this announcement until its investment position was fully built.

The main destination of this ‘secret’ investment has turned out to be Verizon, to whose shares the financial magnate has entrusted 8.6 billion dollars. In addition, Buffett has recovered one of the investment bets value more cyclical cut par excellence by investing 4.100 million dollars in the oil company Chevron, to which the agency recently S&P cut rating to ‘AA-‘.

Surprise investment

The professional services company Marsh & McLennan has completed Bershire Hathaway’s list of new bets to start the year, with a position equivalent to $ 499 million. The latter has been, without a doubt, the great surprise of the well-known investor from Omaha.

In the opposite direction, the investment firm has executed some sales in Apple stocks, which nevertheless continues to rank as a heavyweight in his portfolio. In addition, it has sold all of the shares it owned in the pharmaceutical giant Pfizer, one of the major players in the fight against the Covid-19 pandemic thanks to the vaccine developed together with the German BioNTech. No sign of the 3.7 million shares of the pharmaceutical company notified three months ago.

Pharmaceuticals and banks

Beyond this movement, Berkshire Hathaway has announced an increase in positions in other pharmaceutical companies, such as Merck, Bristol-Myers Squibb (33.3 million shares) and AbbVie (25.5 million titles).

As regards the financial sector, companies such as Wells Fargo. Meanwhile in PNC Financial Services, the buyer of BBVA’s US subsidiary, has liquidated positions.

In other sectors, the increase in investment in the grocery store chain stands out Kroger, in which it already accumulates 33.5 million shares, and the reduction of the portfolio in the automobile GM, where its position is reduced to 72.5 million shares.

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Some 60 Spanish stocks shake their corset that blocks their analysis on the Stock Market | Markets

The Covid has injected speed into the fabric of the European Union. One of the latest changes approved is the reform of the directive to make markets work better, Mifid 2, which, since it came into force, has degraded the ability to produce analyzes of listed companies. The smaller ones have been the most damaged. The urgent touch-up approved last week unlocks the reports of securities that capitalize less than 1 billion of euros. Some 60 Spanish companies (see graph), of the 119 total, will take advantage of the change.

The Mifid 2 review, scheduled for later this year, can’t wait on some issues. The clamor from the day-to-day market supervisors, such as the CNMV, was very loud. Among the questions was reviewing the separation of costs of brokers, forced to break down since 2018 how much they charge for the execution of purchase orders and how much for the analysis (unbundling).

Until the European standard came into force, the intermediary made a package at a fixed price. The goal was to lower running costs, which were often inflated artificially with analytics that weren’t particularly helpful. That mission has been accomplished, but it has had an undesirable side effect. It has completely discouraged reporting from companies with fewer investors. In essence, the smallest.

The change requested by the market has already been approved and in practice will be effective immediately, although the reform has a transposition period of nine months, according to legal sources. “Once it is legislated, although it has not entered into force, it is of common acceptance”, they point out.

The modification is also another of the consequences of Brexit

“In the immediate aftermath of the pandemic, issuers, and in particular small- and mid-caps, must be supported by strong capital markets … Investment services firms should be allowed to be paid jointly for the provision of analysis and execution services ”, states the text approved by the European Parliament. There must be an agreement, yes, between the investor and the intermediary.

However, conditions have tightened compared to the Commission’s initial proposal, which published CincoDías on July 29. This project gave the go-ahead to lift restrictions on companies with an average capitalization below the aforementioned threshold in the last 12 months. The final draft extends the term to three years.

Reports on companies that are not listed are also exempt from complying with the separation. In this case, instead of capitalization, the amount of equity will be used for the calculation. Thus the regulation opens the door to the analysis of firms that issue debt but are not listed. With rare exceptions, they are orphaned of analysis. Investors are guided almost exclusively by the notes produced by rating agencies.

The mission is to facilitate the issuance of debt and also the capital increases and eventual IPOs of smaller companies. The separation of brokerage and analysis costs was an express request of the United Kingdom, and the effect of Brexit has been instantaneous. Time has been lacking for them to reduce this requirement to a minimum. From the beginning, countries such as Spain, France and Germany were against it, they point out from the financial advisory firm finReg 360. The cost of execution has dropped slightly but has left a coverage hole in the stock market and has caused a reduction in the stock analyst templates due to revenue slump.

Companies that issue fixed income are covered by the patch

The global review of Mifid 2 – the European Commission’s proposal will, in theory, arrive at the end of July at the latest – will also address the promotion of trading through trading venues. In other words, through a regulated market, such as the Spanish Stock Exchange managed by BME, or through a multilateral system, such as BME Growth (the old MAB).

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Amsterdam overtakes London as the main European Stock Exchange after Brexit | Markets

The tsunami caused by Brexit has led to a 180 degree turn in European stock trading. If until December of last year London was the largest trading center for shares in Europe, the departure of the United Kingdom from the community club has ended that privilege.

According to data from the CBOE stock trading platform, which operates in markets such as London, Paris, Frankfurt, Amsterdam and Madrid, the capital of the Netherlands has absorbed a good part of the stock market activity of the City of London during the month of January. Amsterdam registered a trading volume of 9.22 billion euros per day during the first month of the year, which implies an increase of 321% compared to the volume reached in December.

In contrast, transactions in London have been reduced by 40.8% in the monthly calculation, to 8,620 million euros.

The data from CBOE, which shows a high increase in trading volume during the month of January in all the markets in which it operates, also indicates that the operation increased by 52.8% in Paris and by 26.5% in Frankfurt. It is true that it is only one of the existing stock trading platforms in Europe –to which we add BME, Euronext, LSE, Nasdaq OMX or Turquoise, among others–, but it is a relevant indicator to take into account.

The collapse of London stock trading could already be seen on the first trading day of the year, January 4, when the City saw some 6,300 million euros in stock trading disappear. Only that day the fall in the trading volume of the London Stock Exchange was 45%.

The departure of the United Kingdom from the EU has meant that since January 1 there is no equivalence agreement between the two countries at a financial level, despite attempts by London. This means, in the case of stock trading, that brokers and banks in the EU must buy, with some exceptions, the shares listed on any of the 27 club markets, even though these are also traded. in London.

The UK’s break with the EU has also had an impact on the derivatives market, a business that moves around 600 billion euros a year in the community club.

The lack of equivalence between the UK financial industry and that of the EU remains on the negotiating table. Michel Barnier, the Union’s chief negotiator for Brexit, said yesterday that the community club is not going to rush to grant equivalency. “Equivalence decisions are, and will continue to be, unilateral,” he said, adding that “we will not assume any risk to financial stability.”

The Governor of the Bank of England, Andrew Bailey, responded in turn that not granting the equivalence “would be a mistake” that would imply that consumers on both sides of the English Channel would face higher financial costs.

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Amsterdam replaces London as the largest European Stock Exchange due to Brexit

The Dutch capital surpasses London after quadrupling its operations and adding 6.5 billion euros fled the United Kingdom

Inside the park in Amsterdam, in full swing.
Inside the park in Amsterdam, in full swing. / reuters
Zigor Aldama
ZIGOR ALDAMA

Friday, 12 February 2021, 02:17