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Still Plenty Of Alpha

09 December 2014 by lberuti

Usually, at this time of year, people do not expect dramatic moves on risky assets as most market participants quietly await the festive period before moving on to the new year ahead. So the move by Mr Samaras to announce that the President elections will take place in December rather than February came as a somewhat unpleasant surprise, especially considering that the results (which decide whether Greece needs to hold general elections in the first quarter of 2015) will most likely not be known until the 29th December, when liquidity will be thin to say the least. That dampened the enthusiasm that had characterised the market recently, and credit indices were wider across the board, with iTraxx Crossover and iTraxx Financial Subordinated bearing the brunt of the pain. But even if that negative environment, it was possible to identify some underperformers. OTE ( Hellenic Telecommunications Organistaion SA ) was among them of course, but TSCO ( Tesco Plc ) also saw its 5 year risk premium increase 36bps to 172bps on the back of a profit warning and dragged all the UK retailers with it, while MWDP ( Wendel SA ) was 16bps wider to 79.5bps after SGOFP ( Compagnie de Saint Gobain SA ) confirmed its bid to buy control of Sika for €2.3bln. Even during large market moves, the dispersion does not want to go away.