Share price performance

Performance of the international stock markets and of the ACEA share

International stock markets recorded a negative trend in 2011, primarily as a result of the sovereign debt crisis in certain countries and risk of recession. The US stock market bucked the trend, where the Dow Jones recorded growth of more than 5%.

The year just ended was characterised by the following main socio-political events which had a significant impact on the global economy and performance of the stock markets: (i) political unrest in the Middle East and North Africa; (ii) the violent earthquake which struck Japan and the resulting nuclear catastrophe in Fukushima, which forced governments worldwide to reconsider atomic energy policies; (iii) the killing of Osama Bin Laden in May.

These events determined, among other things, a rise in the price of oil, which contributed to the slowdown in the recovery of the global economy.

In 2011, the sovereign debt ratings of certain countries continued to be downgraded by the three main ratings agencies: Moody’s, Standard & Poor’s and Fitch. The revision of credit ratings, political and economic tensions in the Euro zone, the crisis in the financial sector and fears over Greece’s potential default heightened the emergency regarding European sovereign debt. This situation led, in the second half of the year, to a significant increase in “country risk” in Italy, causing a significant increase in the return differential between 10-year Italian government bonds and the corresponding German securities by more than 500 basis points. The spread performance and political ups and downs which concerned Italy adversely impacted the Stock Market, which recorded an extremely high level of volatility and the FTSE MIB fell by more than 25%. More specifically, the Italian Stock Market underperformed the international stock market lists, recording the following changes: FTSE Italia All Share -24.3%, FTSE MIB -25.2% and FTSE Italia Mid Cap -26.6%.

INTERNATIONAL STOCK MARKETS

With reference to the US Stock Market, as at 31 December 2011 (compared to 31 December 2010), the Dow Jones recorded growth of 5.5%, the Nasdaq C. a decrease of 1.8%, while the S&P500 remained essentially unchanged.

The Asian Stock Market indexes recorded the following performances: Nikkei 225 -17.3%, Hang Seng Hong Kong -20.0%.

In Europe, the Paris Stock Exchange lost 17.0%, the London Stock Exchange 5.6% and the Frankfurt Stock Exchange 14.6%.

ACEA SHARE PERFORMANCE 

The extreme fragility of the Italian economic situation also affected securities which belong to the utilities sector, that have always been considered “defensive”.

In the second half of the year, Acea’s share performance was also adversely affected by the outcome of the Referendum on 12/13 June, relating to the Water Area, which involved: 1) the repeal of the current method of calculating the water tariff, based on the return on invested capital; 2) repeal of art. 23 bis of Legislative Decree no. 112/2008 (so-called “Ronchi” decree) which made provision for the privatisation of the water sector and which offered Italian local utilities opportunities for development.

After the Referendum, the financial community expressed worries about the reduction in visibility regarding regulation of the water market, highlighting the need for prompt legislative intervention by the government.

Within said context, ACEA’s share price stood at 4.888 euros as at 31 December 2011 (capitalisation: 1,041.0 million euros), down 41.97% compared to 31/12/10. In 2011, a high of 8.5797 euros was recorded on 11 May, with a low of 4.596 euros recorded on 20 December.

During the year subject to analysis, average daily traded volumes amounted to 251,780, a considerable decrease compared to 2010 (515,410).

Acea shares

(Source: Bloomberg)

The normalised graph of ACEA’s share performance is shown below, compared with Stock Market indexes.

Indici di borsa

(graph normalized at Acea value - Source: Bloomberg)

  % change at 31/12/2011 (compared to 31/12/10)
Acea -41.97%
FTSE Italia All Share -24.29%
FTSE Mib -25.20%
FTSE Italia Mid Cap -26.56%

Around 160 reports/notes were published on ACEA’s share in 2011.