FINCOR – Sociedade Corretora, S.A.

Markets Perspectives

August 1, 2012

.

Fincor- Sociedade Corretora, S.A. provides services of reception, execution, and transmission of orders. The contents mentioned in this document do not

constitute (nor should they be interpreted as to form) any kind of counseling, or investment recommendation, or a record of our trading prices, or an

offer or solicitation to trade in any financial instrument. Fincor- Sociedade Corretora, S.A. will not accept any responsibility resulting from any use referring to

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

July: Recap

Spain: The target deficit of the country for the next two years was relaxed by the EU. This represents

the third ajustment so far this year. Are these goals set by the EU credible, taking into account the

economical crisis that the country is facing?

4,50%

11,20%

9,30%8,50%

6,30%

4,50%

3,00%

2008 2009 2010 2011 2012 2013 2014

Spain: Government Budget Deficit

Spain: The banking sector is under pressure, with NPLs increased to their highest levels since 1994.

Source: BNP ParibasSource: BNP Paribas

Spain: Further evidence to the pressure on the Spanish banking sector can be seen by the fact that

loans and deposits continue to fall.

Source: BNP Paribas Source: BNP Paribas

7,0626,962

7,267

7,621

6,928

6,749

6,1

6,3

6,5

6,7

6,9

7,1

7,3

7,5

7,7

Germany: 10Y Government Bond

Yield

Spain: 18bn euros fund for the Autonomous Regions. Valencia, Murcia and Catalonia have already

requested a bailout. Who’s next? What is the real dimension of Spanish debt? Meanwhile, the country

banned the sort-selling of their stocks until October.

Revision of the

Government

Budget Deficit

New high NPLs

anmnounced

Valencia

resquests

help

Draghi’s

speech

Greece: In their visit to Greece, Troika will analyse the policies that the country implemented. This

will lead to a decision on whether Greece will receive the next tranche of their aid package.

According to some European Leaders, Greece won’t receive the next tranches of their aid package if they

don’t fulfill their obligations. Factoring in this sentiment, Citibank considers that there is a 90% probability of

Greece leaving the Eurozone.

1,533

1,382

1,285

1

1,1

1,2

1,3

1,4

1,5

1,6

Germany: 10Y Government Bond

Yield

ECB: Cut the interest rates in the region to 0.75%, a historical minimum. Interest rates on deposits fell to

0%. Even so, this measure had pratically no effect on the markets. Instead, we saw investors begin to search

for other safe assets to pour their money into. As it happened, German Government Bonds became

somewhat of a safehaven. Therefore, this measure had no effect on the economy of peripherical countries.

Source: Goldman Sachs

Reacting to this crisis, Mario Draghi said that“within our mandate, the ECB is ready to do whatever it takes to

preserve the Euro”. Markets closed the month with a feeling of relief due to these statements.

ECB cuts interest rates

USA – Macro vs. Micro. Two different speeds?More than half of the companies in the S&P 500 have already presented results for this earnings season.

Earnings results have been surprisingly good, but with a lower dimension than previous quarters.

Sector Positive Negative Inline

Index 71,62% 27,06% 1,32%

Oil and Gas 73,91% 26,09% 0,00%

Basic Materials 52,63% 47,37% 0,00%

Industrials 76,79% 19,64% 3,57%

Consumer Goods 75,76% 24,24% 0,00%

Health Care 77,42% 19,35% 3,23%

Consumer Services 66,67% 30,30% 3,03%

Telecommunications 80,00% 20,00% 0,00%

Utilities 83,33% 16,67% 0,00%

Financials 68,85% 31,15% 0,00%

Technology 69,44% 30,56% 0,00%

113 10 6

90

172

121

4128

6 6 1 2 1 1

10

-1

6 J

un

17

-2

3 J

un

24

-3

0 J

un

08

-14

Ju

l

15

-2

1 J

ul

22

-2

8 J

ul

29

-0

4 A

ug

05

-1

1 A

ug

12

-1

8 A

ug

18

-2

5 A

ug

26

-1

Sep

02

-0

8 S

ep

09

-1

5 S

ep

16

-2

2 S

ep

07

-13

Oct

Earnings Season

S&P500

USA – Macro vs. Micro: two different speeds?Economic Indicators point for an economic slowdown. Bernanke has already indicated that if the current

situation deteriorates, he will implement new measures.

1,7

-0,7

-0,3

-1

-0,5

0

0,5

1

1,5

2

Leading Indicators

Emerging Markets: China cut again its interest rates. Will the economy continue its soft-

landing?

10,70%11,90%

10,30%9,60% 9,80% 9,70% 9,50% 9,10% 8,90%

8,10%7,60%

China GDP

56,6

49

53,3

50,2

48

50

52

54

56

58

China PMI Manufacturing

Central Banks: Apart from ECB and FED, other central banks made their homework. BOE

increased its QE programme in £50 Billions. Brasil cut SELIC, as the Bank of South Korea cut its interest rates.

7,5

12,5

17,5

22,5

27,5

SELIC

Global Economy is slowing downIMF revised downward its forecasts for GDP of the global economy.

Previous Forecasts New Forecasts Changes in Forecasts

2010 2011 2012 2013 2012 2013

Global 5,30% 3,90% 3,50% 3,90% -0,10% -0,20%

Developed Economies 3,20% 1,60% 1,40% 1,90% 0,00% -0,20%

USA 3,00% 1,70% 2,00% 2,30% -0,10% -0,10%

Eurozone 1,90% 1,50% -0,30% 0,70% 0,00% -0,20%

Germany 3,60% 3,10% 1,00% 1,40% 0,40% -0,10%

France 1,70% 1,70% 0,30% 0,80% -0,10% -0,20%

Italy 1,80% 0,40% -1,90% -0,30% 0,00% 0,00%

Spain -0,10% 0,70% -1,50% -0,60% 0,40% -0,70%

Japan 4,40% -0,70% 2,40% 1,50% 0,40% -0,20%

United Kingdom 2,10% 0,70% 0,20% 1,40% -0,60% -0,60%

Emerging Economies 7,50% 6,20% 5,60% 5,90% -0,10% -0,20%

China 10,40% 9,20% 8,00% 8,50% -0,20% -0,30%

India 10,80% 7,10% 6,10% 6,50% -0,70% -0,70%

Russia 4,30% 4,30% 4,00% 3,90% 0,00% -0,10%

Brazil 7,50% 2,70% 2,50% 4,60% -0,60% 0,50%

Mexico 5,60% 3,90% 3,90% 3,60% 0,30% 0,00%

South Africa 2,90% 3,10% 2,60% 3,30% -0,10% -0,10%

Portugal- Tagus increased the price offered per stock from 2,66€ to 2,76€ on their hostile takeover bid for Brisa. A

decision has to be made before August 8th, but indications are that they will be successful on the takeover.

- BPI launched a rights offering to increase their capital by €200 million. The subscription price per stock is

0,5€.

- In the Earnings Season we would like to underline:

i) BCP results were worst than expected, affected by domestic operations and their Greek operations;

ii) Jerónimo Martins margins decreased on the back of the pressure in their domestic activities. Results

were also affected by the fall of the LFL in Biedronka operations;

iii) Sonaecom results were above expectations due to their fiscal savings;

iiii) Zon results were in line with expectations, with ZAP sales increasing 13% QoQ.

Markets PerformanceThe markets kept pressed during this month, with a special regard to peripherical countries in Europe.

6,385

5,464

4

4,5

5

5,5

6

6,5

10Y bond yields: Spread Spain vs.

Germany

Last PriceChg. %

MTD

Chg. %

YTD

Europe

PSI 20 4688,08 -0,21% -14,67%

IBEX35 6738,1 -5,13% -21,34%

CAC 40 3291,66 2,97% 4,17%

DAX 30 6772,26 5,55% 14,82%

FTSE 100 5635,28 1,15% 1,13%

FTSE MIB 13890,99 -2,69% -7,94%

SMI 6399,27 5,48% 7,80%

Euro Stoxx 50 2328 3,24% 4,07%

USA

DOW 30 13008,68 1,00% 6,48%

S&P500 1379,32 1,26% 9,68%

Nasdaq 2939,52 0,15% 12,83%

Latin America

Bovespa 56097,05 3,21% -1,16%

Mexbol 40704,28 1,26% 9,78%

Asia

Nikkei 225 8695,06 -3,46% 2,84%

Hang Seng 19796,81 1,83% 7,39%

Last PriceChg. %

MTD

Chg. %

YTD

FOREX

Euro/$ 1,23 -2,32% -5,10%

£/Euro 1,2746 -2,29% -5,95%

Euro/Yen 96,08 4,08% 3,73%

Eur/CHF 1,20128 -0,01% 1,29%

Commodities

CRB 482,44 1,44% 0,09%

WTI Oil 87,96 3,03% -11,03%

Brent Oil 104,59 6,86% -0,31%

Gold 1614,7 1,08% 3,26%

Next Month preview

Will the ECB act?Everything points to the reopening of the SMP (Security Market Programme), by purchasing Spanish and

Italian Government Bonds.

However, it won’t be easy to convince Germany to use EFSF for that purpose. Nevertheless, expectations are

high for tomorrow’s meeting.

Spain, how deep is the

hole?How many more regions will ask for a bailout? Will

the government ask for one as did Portugal, Ireland

and Greece? How are their 10 year government

bonds going to perform? Clearly, we don’t want

contagion to spread to Italy!!

Greece, are you really going

to leave the Eurozone?Everything depends on Troika’s report and the

Greek commitment with the programme.

Europe: Macro figures don’t look good..

FED, what are you going to do?Will the FED act, and when will it be?

We don’t foresee any significative action by the FED in todays meeting.

Source: Goldman Sachs

US: Frustating employment figures, significant macro slowdown QoQ

Earnings Season in the US

Earnings season will continue during the month of August. Below, we’ve underlined a few sectors and

highlighted select companies:

Utilities: with Duke Energy Corp

Technology: with Cisco

Oil and Gas: with Marathon Oil Corp

Emerging MarketsChina, what are you going to do? Everyone is

expecting another cut on your interest rates.

Pressure is mounting in Middle East due to Syria and

Iran. Oil prices have been rising, which might

increase pressure over inflation.

0,67%

2,20%

2,93%3,47%

4,70%5,07%

5,73%6,27%

4,60%

3,77%

2,87%

China Inflation

78,1

92,97

87,47

75

78

81

84

87

90

93

WTI Oil

Valuation: P/E below average; but are we already in a recovery phase?

Price/Earnings ratio UBS

Time to step in? Or… have I seen this before?

1379,32

1257,6

1050

1100

1150

1200

1250

1300

1350

1400

1450

1 31 61 91 121 151 181 211 2411257,6

S&P500 in 2012

S&P500 in 2011

Asset allocation

Corporate Bonds (name selection)

Emerging Markets Equities

US Equities

Emerging Markets Currencies

Commodities

European Equities

Sovereign Debt from peripheral

Countries in Europe (Spain, Italy, 10

years)

Long Term Positive but still conservative due to market risks

Contatos :

FINCOR – Sociedade Corretora, SA

Rua Castilho N.44, 4º Piso

1250-071 Lisboa, Portugal

Tel. +351 21 382 40 10

Fax.+351 21 380 30 49

fincor@fincor.pt

www.fincor.pt

http://fincorcorretora.blogspot.pt/