ECONOMY

In Brief

No love for Greek stocks until debt concerns ease Greek stocks may remain «unloved» until the country manages to ease investors’ concerns that it will be forced to restructure its debt, HSBC Holdings Plc analysts said. «Greek equities are likely to remain unloved until country credibility is restored,» a team of analysts led by Athens-based Joanna Telioudi wrote in a report yesterday. «Although Greece has got off to a rather strong start, the overall process of adjustment is likely to prove a multiyear slog with many turns along the way.» The risk of debt restructuring validates low valuations and will cap potential rallies, the report said. Greece’s benchmark ATHEX index is the worst-performing Western European gauge so far this year, losing 30 percent amid concern that Prime Minister George Papandreou won’t be able to reduce the European Union’s second-biggest budget deficit. A 110-billion-euro ($138 billion) EU and International Monetary Fund package of emergency loans and accompanying austerity measures are driving down earnings prospects for Greek companies. «The market’s risk/reward profile will improve dramatically should confidence in government actions start to recover,» HSBC said. (Bloomberg) Record bond yields in Europe draw interest Record bond yields in Europe are proving too good to miss for Michiel de Bruin at F&C Asset Management as predictions of imminent sovereign defaults subside. «We are still buying across the market,» said de Bruin, who oversees $32 billion of European government debt at F&C in Amsterdam. «In our central scenario, we expect that the nervousness around European sovereign bonds will dissipate.» Investments in so-called peripheral nations are paying off as the bonds of Portugal have rallied 7.2 percent, Ireland gained 4.8 percent and Italy 2.2 percent since May 7, just before the European Union announced its 750-billion-euro ($942 billion) bailout fund for the region’s debt-laden governments. Even Greece’s securities have climbed 13.4 percent, according to indices compiled by Bloomberg and the European Federation of Financial Analysts Societies. While Pacific Investment Management Co, which runs the world’s biggest fixed-income fund, says the rescue only delays governments from confronting their budget woes, a growing number of money managers are snapping up European debt with historic relative yields to benchmark German bunds. F&C, London’s Baring Asset Management and UBI Pramerica SGR in Milan are betting that accelerated budget cuts will reduce deficits as Europe’s economy improves. (Bloomberg) Ackerman confident Deutsche Bank AG CEO Josef Ackermann says that he’s confident Greece and the euro members can overcome the sovereign debt crisis. «I am confident that Greece and the euro area as a whole will manage to overcome their problems,» Ackermann wrote in prepared remarks for a speech in Daejeon, South Korea, yesterday. «There can be no doubt that many hard years lie ahead for the countries that lived beyond their means and need to restore their competitiveness as well as private and public sector balance sheets.» (Bloomberg) Bank head indicted Banca Transilvania, Romania’s second-largest listed bank, has denied any knowledge of wrongdoing after the bank’s head was indicted by prosecutors on charges of money laundering and manipulating the market. The DIICOT office for fighting organized crime said board chairman Horia Ciorcila benefited from privileged information that Bank of Cyprus intended to acquire a stake in his bank. Banca Transilvania said in a statement it gives full support to authorities «for the fast and transparent resolution of this case.» «The board of Banca Transilvania does not have any knowledge of any ill-willed action of any of its members and trusts the moral and professional credibility of all its members.» (Reuters) Inflation slows Bulgarian consumer price inflation slowed to 1.4 percent year-on-year in June from 1.9 percent in May as food prices dropped, the statistics office said yesterday. The government expects inflation to reach 2.2 percent at the end of the year as the economic recovery gathers pace. (Reuters)