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Equity Research

Banca Akros has a significant market share on the secondary stock market trading thanks to a service targeted to both Italian and foreign institutional investors and that includes equity research and trading on the Italian and other European stock markets, which it operates on directly and through the ESN partnership.

ESN has been providing execution services, fundamental equity research for over ten years on all the countries in the eurozone through new European partners that operate locally. The research activity is organised by industry and is covered by different local teams of financial analysts.

The entire research library, produced locally or on a pan-European basis, is accessible to all ESN clients, who can also tap the services of all nine partners, each with its own specialisation on its own local market, by way of their relationship with Banca Akros.

Equity research

The research reports stem from the close-knit relationship among the ESN partners in a framework with shared technological solutions and methods, which represents an important aspect underlying the quality and independence of the research. The analysts are organised by sector at a pan-European level under the guidance of a sector coordinator. Every year Banca Akros produces:

  • Over 150 company reports;
  • 2 Blue Chip Stock Guides, 2 Small Cap Stock Guiders;
  • Numerous sector reports.

and ESN produces:

  • over 250 company reports;
  • over 100 sector reports;
  • over 50 strategy reports.

 

Example of a research paper

 

Breakdown of recommendations

Ripartizione raccomandazioni UK
 

How often a fundamental analysis recommendation is published varies depending on market events and the absolute performance of stocks compared with their fundamental valuation. The stock coverage policy provides for at least two publications a year.

Confidentiality among the bank’s various activities

The bank adopts organisational measures, procedures and rules of conduct on the exchange of information within the bank and with the outside world in order to ensure:

  • protection and confidentiality of privileged information;
  • correct outflow of information from the bank;
  • solutions in the event of any conflicts of interest arising out of the joint management of a number of activities.

The operating guidelines do not replace the organisational, procedural or regulatory safeguards on staff conduct or the code of conduct the bank has already adopted; indeed, they are an addition.

Analysts’ independent judgment

The financial analysts are required not to seek, receive or provide information to their work colleagues that could in any way invalidate their independence and/or impartial judgment when producing research papers and/or investment recommendations or favour the asymmetric distribution of the information either within the bank or outside it and to comply, in general, with the principles and rules of conduct set forth by the bank’s current code of conduct for correct performance of the activities of a Financial Analyst.

Coverage policy and research distribution

The choice of which listed companies to cover is taken by the Head of Equity Research and takes into consideration the interests and requirements of institutional clients for complete sector coverage, as well as to meet the coverage requirements set by ESN, which places a priority on companies listed on the EURO Stoxx 600 index.

Recommendation system (fundamental analysis)

The ESN Recommendation System is Absolute. It means that each stock is rated based on total return, measured by the upside/downside potential (including dividends and capital reimbursement) over a 12-month time horizon. The final responsible of the recommendation of a listed company is the analyst who covers that company. The recommendation and the target price set by an analyst on one stock are correlated but not totally, because an analyst may include in its recommendation also qualitative elements as market volatility, earning momentum, short term news flow, possible M&A scenarios and other subjective elements.

Sistema delle Raccomandazioni dal 31.03.2015

The ESN spectrum of recommendations (or ratings) for each stock comprises 5 categories: Buy (B), Accumulate (A), Neutral (N), Reduce (R) and Sell (S).

Furthermore, in specific cases and for a limited period of time, the analysts are allowed to rate the stocks as Rating Suspended (RS) or Not Rated (NR), as explained below.

  • Buy: the stock is expected to generate total returns of over 15% during the next 12-month.
  • Accumulate: the stock is expected to generate total returns of 5% to 15% during the next 12-month.
  • Neutral: the stock is expected to generate total returns of -5% to 5% during the next 12-month.
  • Reduce: the stock is expected to generate total returns of -5% to -15% during the next 12-month.
  • Sell: the stock is expected to generate total returns of under -15% during the next 12-month time horizon.
  • Rating Suspended: the rating is suspended due to: a) a capital operation (take-over bid, SPO, etc.) where a Member of ESN is or could be involved with the issuer or a related party of the issuer; b) a change of analyst covering the stock; c) the rating of a stock is under review by the Analyst.
  • Not Rated: there is no rating for a stock when there is a termination of coverage of the stocks or a company being floated (IPO) by a Member of ESN or a related party of the Member.

Note: a certain flexibility on the limits of total return bands is permitted especially during higher phases of volatility on the markets

How often a fundamental analysis recommendation is published varies depending on market events and the absolute performance of stocks compared with their fundamental valuation. The stock coverage policy provides for at least two publications a year.

Recommendation system (technical analysis)

The recommendation system under the technical analysis procedure is based on expected price trends relative to registered changes within a given time frame, normally the last four/five months of daily monitoring.

All opinions and/or valuations are given as follows:

  • Likely Increase (buy), i.e. likely increase in the price, with indications of various levels of likely price targets (resistance/stop loss);
  • Likely Decrease (sell), likely decrease in the price, with indications of various levels of likely price targets (support/stop loss).

How often a technical analysis recommendation is published varies depending on market events and the absolute performance of stocks and the relative indices compared with their valuation on the graph and the momentum.

Specialist Activity and Corporate Broking

According to the Italian Stock Exchange, the Specialist is asked to provide the listed company afundamental research coverage and improve, by providing liquidity, the stock market transactions on the company equity, Also a certain level of corporate advisory can be part of the service. The bank’s support is particularly important to improve the communication with institutional investors in Italy and abroad.

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