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Milan stocks post gains as FCA and banks take the lead

by Andrea Fontana

Italian financial gains, starting from the former “popolari” banks, and the “Opel effect” on the automotive sector, with Fiat Chrysler Automobiles (FCA) rallying 4%, pushed the Milan stock exchange 0.65% higher yesterday. The Milan blue-chip index outperformed a broadly flat region.

No big surprises came from the US, where Federal Reserve Chair Janet Yellen confirmed the central bank’s monetary policy approach in a congressional testimony. Yellen reiterated the intention to proceed with gradual monetary tightening, leaving the door open to an interest rate hike at the upcoming meetings of the Federal Open Market Committee, with the first coming in March.

In macroeconomic news, investors learned that according to data published by the Italian Banking Association (ABI), Italian banks’ net non-performing loans (NPLs) increased to €86.9 billion in December 2016 from €85.2 billion in November. According to the monthly report, the flow of net bad loans has slowed more than 2% since hitting €89 billion in November 2015. On a year to year basis, NPLs dropped 1.9%. The net NPL to loan ratio rose to 4.89% in December from 4.8% in November but was slightly lower than 4.91% in December 2015.

In Milan dealings, Banco BPM gained 4.9% and BPER rose 3.4%, leading the gains in the banking sector, while insurer Unipol extended gains and closed up 3.6% after releasing quarterly results and announcing its dividend policy. FCA’s gains pushed top shareholder Exor 3% higher, while Peugeot (up 3%) was the best performer in Paris on confirmed reports of talks with GM to buy the US car maker’s Opel business. According to analysts, the sale of Opel would facilitate an eventual tie-up between GM and FCA.

The insurance sector extended gains, with Unipolsai rising 2.6% after analysts welcomed the group’s dividend policy. Generali gained 1.6% amid ongoing speculation about a possible industrial partnership proposal by Intesa Sanpaolo (up 1.6%).

Among banking stocks, Mediobanca climbed 2.4% and UniCredit rose 1%.
In the red column, oil services company Saipem lost 2.8% while among utilities Snam dropped 0.5% and Enel dipped 0.3%.

Telecom Italia lost more than 1%, on speculation (denied by the companies) of possible consolidation between French telecoms groups, especially Orange, Bouygues and Altice. Mediaset shares closed down 0.8%.

Off the FTSE MIB index, Bonifiche Ferraresi rallied 4% after the announcement of an intervention by state-backed lender Cassa Depositi e Prestiti through the CDP Equity Fund to reorganize the company also through a public listing.

Mondadori gained 6% while Piaggio closed up 0.5%. According to analysts, a possible US import tax on motorcycles would not have a significant impact on the Pontedera group as it would affect a relatively small market share.