More fears about Greece caused a downturn in the financial markets in the week 21-25 June (Paris -4.5%, London -3.9%, Milan -2.8%, Frankfurt -2.4%). Five year Greek credit default swaps rose to 959 base points (a new historic record): projections against Greek bankruptcy risk rose 56%.
At sector level, rumours about the probable introduction of a European tax on the banking sector (not approved by the weekend’s G8 meeting ) and the downgrading of BNP Paribas by Fitch have provided an incentive for sales of European bank stock, which lost 4% from 21 to 25 of June.
The automotive sector was also weak (DJ Stoxx Auto&Parts -2.7%) with Pirelli at €0.463, a fall of 4.1%, with below average daily volumes. Kepler renewed its positive view of Pirelli stock (Buy, TP €0.54), highlighting expectations that the results of the core Tyre business would exceed objectives for 2010.
Blackrock, one of the major foreign investment funds, announced that it had increased its holding in Pirelli & C. to over 2%. The presence of Blackrock illustrates the renewed interest expressed by international funds in investing heavily in Pirelli.
The property sector’s stock market performance reflected the disappointing numbers of US home sales to May (at their lowest since 1970 ) with Pirelli RE closing at €0.351 (-9.3%). The performances of its principal Italian peers were similar (Bastogi -5%, IGD -4.3%).