FINCOR – Sociedade Corretora, S.A.

Weekly

September 17th, 2012

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said content or about any resulting effect that could have occurred.

Germany’s Constitutional

Court-The Court approved the participation of the

country on the funding of ESM, with a limit of

€190B.

-For a bigger amount, it will have to approved on

the Parliament.

Commitment – a word missing

the Greek dictionary-Greece needs to implement additional austerity

measures of €11.5B. The Troika is evaluating its

efforts and policies. Without its approval, Greece

won’t receive the next aid.

-Negotiations aren’t over about the measures to

take, as the Hellenic Government wants to smooth

them.

Spain – a Bailout will be

needed to the Public Sector-A previous bailout was asked for its Banking

System. Now, Spain is expecting the results of the

audits to the Banks.

-For the public sector the Government hasn’t took a

decision. The Government is trying to gain time

while the costs of funding are falling, due to the

announcement of the OMT by the ECB.

A Banking Union in Europe?

Guess who is opposing…-The Finance Ministers of the Regions met in

Nicosia, where the issue was discussed. The main

divergences comes from France VS Germany –

where the first intends to give permission to the

Bailout Funds to rescue banks.

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Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12

2Y Bond Yields: Spain

-The FED announced that its Committee

approved QE3 in an 11-1 vote.

-$40B of Mortgage Backed Securities (MBS) will

be bought monthly and on indefinitely period,

until the economy starts giving signs of

recovering.

-FED’s Mandates are price stability and

maximum employment. Due to that it will

follow closely the latter. More boost measures

can be applied if the economy continues

growing at a slow pace.

-Interest Rates will be maintained at these low

levels until at least 2015. TWIST operation will

continue at the same time of MBS.

QE3 – I’m back!

US – Mixed economic data from the country

74,3

50

55

60

65

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75

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85

U. Michigan Consumer Confidence

0,21%

0,59%

0,19%

0,86%0,68%

0,48%

-0,60%

0,82%

0,03%0,14%

0,54%

-1,16%

Industrial Production MoM

Innovation = Apple-The company launched last Wednesday in San Francisco the iPhone 5. A taller, thinner, with a faster chip

then the previous. Better features on your camera, a longer battery life and a 4G LTE will increase the data

functioning of the phone. Will this launch be enough to sustain new rises on the stock’s price.

-In the Arab World protests are growing against

the US. The ambassador of the country in Libya

was assassinate.

-Israel Prime Minister said Iran’s efforts to

develop a nuclear weapon is now at a “Red

Zone”.

-Territorial dispute over the Senkaku Islands is

increasing tensions between China and Japan.

Rest of the world- Geopolitical tensions are rising

PortugalTroika Mission in the country was concluded:

- Real GDP remains in line with projections. Real GDP should decline 3% in 2012 and 1% in 2013.

- Exports are performing better than expected.

- The deficit targets were revised to 5% of GDP (2012), 4,5% of GDP (2013) and 2,5% of GDP (2014), in

order to ease the economic and social cost of fiscal adjustment.

- Additional consolidation efforts are required

The Government presented new austerity measures. Some of them were:

- Employees' social security contributions will increase from 11% to 18%.

- An increase in corporate taxes for large corporations and on the tax burden for wealthy individuals (No

details).

- An increase in the taxation over capital gains, from 25% to 26,5%.

BCP Rights Issue:

- The Rights started trading last Friday, and will continue until September 24th.

Weekly Preview

US We should follow closely the Markets

performance after the QE3. S&P500 is

already at levels unseen since 2007. Will this

program bring any consequences to the

Financial Markets? Manufacturing and real-

estate data will be published during the

week.

Europe From Europe we should continue be focused

on the sovereign crisis in the region. We are

still waiting for a report from Troika about

Greece while it is negotiating measures of

€11,5B. Spain is another important issue,

while we markets expect that the country will

have to ask for a bailout and we wait for the

Audit Results to the Banking Sector. In

Germany will be published the ZEW and PMI

Manufacturing.

Rest of

the

World

From China, we are still expecting new

stimulus measures for the economy. We

should follow closely the disputes between

the country and Japan and the Middle East.0

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S&P500

Market viewECB and FED actions reduced market risk premium, we remain positive for risk asset. Altough central banks

are doing their jobs, there are still several risks for the markets that can prompt risk assets to fall. As PIMCO’s

El-Erian said, a Geopolitical conflict, the Fiscal Cliff in US, the sovereign crisis from Europe and an economic

slowdown from China are the major risks.

Weekly Preview

Vicious Cycle of Europe. We are currently on level 2.

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2Y Government Bond Yields

Spread of

Spain over

Germany

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Put Call Ratio CBOE

i) Ideas for the week: Portugal BES vs BCP: Reasons to buy:

-Operations: BCP is the bank with the biggest retail operations in Portugal. As the Government presents new

austerity measures and the outlook of the economy continues to deteriorate, the Bank should continue to

be pressed by the NPLs increase.

-In a multiple valuation, BES continues to be more attractive then BCP, having an estimate Price-to-Book of

0,3 for 2013 while BCP has 0,52.

-Technical’s gives us a buy signal for BES and a sell for BCP.

-Capital Increase: BES was the only Portuguese Bank that didn’t have to resort to a capital injection from the

state. There is the risk in BCP of the State becoming a reference Shareholder on the back of the capital

increase (less likely) or CoCos (more likely). There is a lot of uncertainty in BCP regarding the current

shareholder structure and who is going to the capital increase. We think that it will be needed a strong

investment from retail s or eventually new reference shareholders to fulfill the capital increase, which will

place a downward pressure over the rights price.

Weekly Preview

Balance Balance Balance Balance SheetSheetSheetSheet RatiosRatiosRatiosRatios

BCP BES

Q1 2012 Q2 2012 Q1 2012 Q2 2012

NPL / Total Loans 9,3% 10,9% 6,8% 7,5%

Source: Bloomberg

Disclaimer

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