Europe’s tentative recovery spreads south in September
Happy Hunting Europe is a happy hunting ground, said Marc Lasry , chief executive officer of Avenue Capital Group LLC, which has invested more than $8 billion in loans of struggling European companies. Bank after bank has been offering his New York-based firm assets for sale, he said at the Bloomberg Markets 50 Summit in New York last month. Apollo is among the most active investors, amassing loans with a face value of about 12 billion euros, including 11,000 mortgages in the U.K. Blackstone, the worlds largest alternative-asset manager, last year put $3.5 billion into distressed European mortgages and properties, the most its real estate group has plowed into the region in one year. Investors also are buying European properties from real estate developers and taking over troubled companies or lending directly to them where banks have scaled back. EU banks unloaded 29 billion euros of portfolio loans and assets such as mortgage-servicing units and branches in the first half of 2013, according to Richard Thompson , a partner at PwC in London. That compares with sales of 46 billion euros for all of last year, 36 billion euros in 2011 and 11 billion euros in 2010. The majority of sales have been distressed loans, Thompson said. Investment Returns Most of the portfolios of nonperforming commercial real estate loans sold by banks last year were priced at 40 percent to 50 percent of par value, according to PwC. Richard Furst, Avenue Capitals chief investment officer, said that prices for corporate loans after theyve defaulted range from 30 percent to 70 percent of par. By buying bank loans at such discounts, Avenue can take over European companies at valuations of three to five times earnings before interest, taxes, depreciation and amortization, a common yardstick for valuing acquisitions, Furst said.
Europe wins Seve Trophy
Some argue that radical change is now required, among them as Italy’s Integration Minister Cecile Kyenge, who said the number of places in immigrant centres would be trebled from 8,000 to 24,000. Kyenge, an Italian-Congolese politician who has suffered racist taunts from other lawmakers as the country’s first black minister, told the Corriere della Sera daily the law could “no longer be punitive”. Peope light candles in memory of the victims of Lampedusa on October 4, 2013 in Rome, a day after a Lampedusa is struggling to accomodate 1,000 people in a holding facility with just 250 places — a situation replicated elsewhere in Italy as a new influx of migrants from Syria and Egypt has brought 30,000 arrivals since the beginning of 2013. But with far-right parties peddling xenophobia across Europe and a tough economic climate, hopes are slim that the Lampedusa disaster will spawn a long hoped-for single EU migration policy that could avert further tragedy. Experts in Brussels believe the sympathetic words of politicians all too often clash with the complex and politically explosive issue of illegal immigration in Europe. “We need a new policy at the European level,” said Michele Cercone, spokesman for home affairs commissioner Cecilia Malmstroem. “Migration policies are fragmented, inward-looking, left in the hands of member states and subject to domestic political considerations.” A black flag reading “Shame” in Italian flies in the Lampedusa harbour on October 4, 2013, in Italy, In the short term such a move is unlikely, as asylum-seekers in the European Union must appeal for help in the country through which they enter. This system is frequently criticised by Europe’s southern states, particularly Italy, Greece and Spain, which want a redistribution of asylum applications to even out the burden. But Europe’s northern states say they more than do their bit, as two-thirds of the 102,700 successful applications made to the EU in 2012 were granted by Germany, France, Britain, Sweden and Belgium. Strategies to combat the criminal networks exploiting desperate migrants, as well as maintaining maritime borders, are particularly contentious. Italy is agitating for better surveillance of the coast of Libya, where there has been a marked increase in boats containing migrants since the chaos that followed the fall of the Khadafi regime. Members of the Italian Financial police work in the small harbor of Lampedusa on October 3, 2013 aft Thursday’s incident began on a boat that had set sail from Libya. In 2004, to tighten surveillance along its long borders, the EU set up Frontex, an agency based in Warsaw whose assets such as ships are all donated by member states. Frontex is reported to have saved 16,000 lives in the Mediterranean over the last two years.
Holdings include Swiss bank UBS ( UBS ), German automaker Volkswagen ( VLKAY ) and French food and consumer products giant Danone ( DANOY ). The Dodge & Cox International Stock Fund ( DODFX ), one of the top 25 mutual funds by total assets, also has a 30% allocation in Europe. It owns stakes in German conglomerate Bayer ( BAYRY ) and the U.K. bank HSBC ( HBC ). Then there are funds with an even bigger weighting in Europe, like the Vanguard International Growth Fund ( VWIGX ). About 55% of this fund is invested in European stocks, such as French cosmetics leader L’Oreal ( LRLCF ) and German athletic brand Adidas ( ADDYY ). Investing via ETFs: If you want to buy a fund that focuses more directly on Europe — and pay lower fees in the process — you have many more options in exchange traded funds. The largest dedicated Europe ETF by assets is the Vanguard FTSE Europe ETF ( VGK ), with about $13 billion under management. Top holdings include U.K.-based Royal Dutch Shell ( RDSA ), Swiss consumer products maker Nestle ( NSRGY ) and HSBC. Best of all, the costs are super low. The VGK fund charges just 0.12% in expenses, which works out to a measly $12 a year on every $10,000 you invest. Google+ Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET.
The best ways to invest in Europe’s recovery
It had lost the last six meetings. “They were determined to win,” Continental Europe captain Jose Maria Olazabal said. “Sometimes the determination helps and I think it did this time.” The teams were tied 9-9 at the end of play Saturday and were still level 12-12 after the first six singles matches on Sunday. Simon Khan of England couldn’t play because of a back injury, meaning his match against Thomas Bjorn was halved, while Gonzalo Fernandez-Castano rallied from two down after eight holes to split the point with Jamie Donaldson . Nicolas Colsaerts birdied Nos. 15 and 17 to protect his slim lead and edge Paul Casey by a hole. Joost Luiten had won four matches in the competition, but lost 3 and 2 to Tommy Fleetwood , who went three up on the front nine. Gregory Bourdy of France became the first player to win five points in a single Seve Trophy, making six birdies to rout Scott Jamieson 4 and 3. After Marc Warren thrashed Thorbjorn Olesen 4 and 3, Matteo Manassero defeated Stephen Gallacher 3 and 2 to give Continental Europe a 13-12 lead before Miguel Angel Jimenez pushed Britain and Ireland to the brink by dominating David Lynn 6 and 4. Paul Lawrie beat Mikko Ilonen 2 and 1 to keep alive his team’s hopes of a tie that would have forced a greensomes sudden death playoff. “They were very strong. We gave it everything, but came out just short,” Britain and Ireland captain Sam Torrance said. Molinari went three up after 10 holes and birdied No. 16 from 12 feet to decide his match against Wood. “It was funny yesterday when Olazabal was reading the list,” Molinari said.
are expected to show a slight easing in the expansion for non-manufacturing companies, which have consistently outpaced their European peers. The main disappointment in Europe was Spain, where a rise in business activity during August – the first in more than two years – proved short-lived as firms slipped back into decline. Still, the data pointed to a broadening recovery across the euro zone, said Nick Matthews, senior European economist at Nomura, though that had yet to be borne out in official data. “The hard data so far for the third quarter has perhaps a bit more on the disappointing side – in particular industrial production …was very weak in July,” said Matthews. “We expect this to bounce back, but this suggests we could see a slightly slower pace of growth in the third quarter relative to the second quarter.” PMI compiler Markit said its surveys suggested the euro zone economy grew around 0.2 percent from July through September, a touch below the 0.3 percent registered in the second quarter. Nomura’s Matthews said they suggested a slightly stronger rate of growth for the final months of the year. STILL NOT ON SOLID GROUND Markit’s Eurozone Services PMI rose to 52.2 in September from August’s 50.7, little changed from a preliminary reading of 52.1. Readings above 50 signify growth. Businesses in No.1 economy Germany reported rising new orders and staffing levels, while France’s private sector grew for the first time in a year and a half. The upbeat mood was further bolstered by news that euro zone retail sales jumped 0.7 percent in August, month-on-month, hitting the top end of forecasts. Draghi said on Wednesday the euro zone economy still faced downside risks [ID:nL6N0HS2YP]. Chris Williamson, Markit’s chief economist, said the surveys pointed to slightly stronger growth towards the end of this year, even if the region was not out of the woods. “The political instability that has reared up in Italy is a reminder that there remains plenty of scope for recoveries to be derailed,” said Williamson.