Take 5 and come back tomorrow (25/6/24) Markets Pensions Hotels Tlgo Working hours

None of what follows is investment advice.

Market environment: Tech stop - (Asia-Pacific markets rose with futures for Europe down and those for the US slightly up) – Asia-Pacific markets rose led by Japan but with investors speculating on an end to the tech rally. Futures for Europe are down and those for the US moderately up.

Response to the crisis: Yes, we can (kick the can) - (The Government sends letters encouraging workers to postpone their retirement in return for up to 4% more per additional year worked (Expansion p22) – This represents typical kicking the can forward behaviour for the Government by trying to reduce short term pension payments at the cost of higher ones later on. And the demographic problem is not getting any better.

Hotels: Back on track - (May hotel night stays rise 11.1% YoY with ADR +9.16% and RevPAR +15.57% (National Statistics Institute) – After the distortions created by the Easter holidays in the March/April by YoY comparisons (March +19.1%, April -3.2%), May continues showing steady strong growth in night stays, with a stronger contribution from foreign (+12.3%) than domestic (+8.1%) tourists. The continued strong rise in ADR should be good for the hotels although not so much for inflation.

Talgo: Back to making trains ?- (Magyar Vagon says that a possible entry of the Sepi state holding company into the shareholding of Talgo will not solve the latter’s industrial problem (Cinco Días p4) – The above seems to be in response to yesterday’s rumours of the Government considering buying the Talgo stakes on sale (in a gradual fashion so as not to cause the need for a full bid) as an alternative to the Magyar Vagon bid for the private equity funds present in the Talgo shareholding. Although the primary reason for the bid was the desire of the funds to exit, it is also true that Talgo seems to have a deficit in production capacity that could be partly solved by integration into the Hungarian company. This could put pressure on the Government not to block the Magyar Vagon bid, as it could hurt Talgo’s prospects and those of its shareholders who would be left without the option of a bid.

Working hours: Negotiating with yourself - (The ministry of Labour prepares a reduction in working hours without counting with the involvement of the Employers’ Federation (El Economista p27) – The Government has a funny way of looking at “negotiating” in the labour sphere. Given that it largely ignores the point of view of the employers’ there is relatively little point in them making suggestions, which usually leading to the Government negotiating with itself and the unions (but I repeat myself).