Recovery Fund, for Morgan Stanley, will favor Unicredit, Enel and Generali – La Stampa


Between ups and downs, there is no lack of opportunities on the markets. One of the engines for growth that analysts have identified is that of the Recovery Fund, among the tools that will have to revive the fate of the Old Continent. But which companies will benefit from this measure on the stock exchange? This is the question that Morgan Stanley’s analyzes have asked in a broadly diffused one. The answer? It leads to three major Italian companies: Enel, Generali and Unicredit. These are three out of the nine names identified in Europe by the experts (Amundi, Axa, Bnp Paribas, Bureau Veritas, Infineon, Rexel). All these securities will be the main beneficiaries of the Recovery Fund and of the renewed interest of operators in the region. These are realities that are at discount prices, with strong potential for ascent. Almost all the securities belong to the financial sector and the periphery which has been heavily penalized in recent years by sales.

For Morgan Stanley, “if implemented as proposed, the Recovery Fund could be seen as the fiscal equivalent of Mario Draghi’s famous” whatever it takes “speech from 2012 and should strengthen a cyclical economic recovery in the region and reduce risk on many European assets ยป. For the experts, as of 2010 the valuations of European assets suffer from an intrinsic risk premium which is caused by persistent fears regarding a possible break in the Eurozone. However, a more coordinated and stronger tax response suggests that these concerns should decrease over time. After several years of persistent underperformance in both the European economy and the stock markets, investor skepticism is high, sentiment / positioning is low and valuations are attractive. All this creates the conditions for a stronger performance phase in the future, provided that the policy proceeds in the promises to make the fund.

The trend is also seen as improving for the Btp that Morgan Stanley’s strategists are predicting up to 125 basis points by the end of this year (yesterday this value was in the 180 bp area).

Returning to equities, Enel is favored by the Recovery Fund in particular for the measures that will increase the use of renewable energy in which it operates. It will also take advantage of the return of confidence on the periphery and on Italy as a whole and the return to the center of attention on the issue of decarbonisation. For experts, Enel is also well positioned to benefit from capital flows towards Italian equities, given that the share represents the largest weight in the MSCI Italia index (22.2%). Among the risks on the Italian utility, experts see exposure to the economy of our country but also to that of Latin America, and in particular to Brazil, areas in which it has been operating for some time.

As for Generali, the company will benefit from the drop in the BTP / Bund spread for experts. “In the long term, the history of equity remains intact, with the likelihood that the company will continue to improve its life insurance margins and support the growth of asset management”.

Unicredit is indicated as the first choice in Italy. Underperformance is not justified by the numbers according to experts. The institute is also continuing on the path of cost cutting and this will benefit the title which is at its lowest and which has paid excessively also for the country risk.

For Morgan Stanley, the European stock market has good future prospects. “However, after several years of persistent underperformance in both the economy and the stock markets, it will take some time for investor skepticism to subside.”

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