>>> Europe : Brokers Upgrade & Downgrade - 25th of July 2016

>>> Up
*ACCIONA RAISED TO BUY VS NEUTRAL AT CITI
*ENEL RUSSIA RAISED TO HOLD AT RENAISSANCE CAPITAL
*G4S RAISED TO SECTOR PERFORM AT RBC CAPITAL
*KONECRANES RAISED TO BUY AT NORDEA
*VERBUND RAISED TO BUY VS HOLD AT SOCGEN

>>> Down
*AIR FRANCE-KLM CUT TO SELL VS HOLD AT SOCGEN
*ELRINGKLINGER CUT TO REDUCE VS ADD AT ALPHAVALUE
*G4S CUT TO UNDERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*LUFTHANSA CUT TO NEUTRAL VS BUY AT UBS
*LUNDBECK CUT TO HOLD VS BUY AT DNB
*PGS CUT TO REDUCE VS ADD AT ALPHAVALUE

>>> PT Change


>>> Initiaition
*BASIC-FIT RATED NEW BUY AT ING; PT AT EU20.50
*RPC GROUP RATED NEW OUTPERFORM AT CREDIT SUISSE, PT 1025P
*SYROS PHARMACEUTICALS RATED NEW MARKET OUTPERFORM AT JMP SECS
*VAN LANSCHOT RATED NEW BUY AT UBS, PT EU21.7
*VAN LANSCHOT RATED NEW NEUTRAL AT GOLDMAN, PT EU20

>>> Call

>>> Asian Update

Asian Mid-session Market Update: Japan trade surplus wider than expected; G20 vows to support growth; Verizon on track to announce Yahoo deal


***Economic Data***
- (JP) JAPAN JUNE TOTAL MERCHANDISE TRADE BALANCE: ¥692.8B V ¥474BE; ADJUSTED TRADE BALANCE: ¥335B V ¥244BE

***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +0.4%, S&P/ASX +0.5%, Kospi -0.1%, Shanghai Composite +0.2%, Hang Seng -0.3%, Sep S&P500 flat at 2,166

***Commodities/Fixed Income***
- Aug gold -0.5% at $1,317/oz, Sep crude oil -0.1% at $44.13/brl, Sep copper +0.2% at $2.24/lb
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6860 V 6.6669 PRIOR; first weaker Yuan fix in 4 sessions
- (CN) PBOC to inject CNY150B in 7-day reverse repos
- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥440B in 3-5yr JGBs, ¥430B in 5-10yr JGBs
- (AU) Australia MoF (AOFM) sells A$1B in 5.50% 2023 Bonds; avg yield: 1.7343%; bid-to-cover: 3.0x

***Market Focal Points/FX***
- Asian equity markets are tracking Wall St gains on Friday as negative sentiment from Thursday's selloff fails to take hold. The focus is also turning to the coming week, where a busy earnings calendar will be supplemented by policy decisions from the Fed and the BOJ. The former is expected to be very careful in managing expectations of fresh tightening as it awaits more evidence of minimal impact from Brexit, while the latter is anticipated to unveil some further policy stimulus. Traders have also taken note of proactive remarks out of the G20 Communique over the weekend along with chatter of a potential compromise between EU and UK to minimize economic fallout from Brexit process. In FX majors, USD/JPY rose about 60pips to test 106.70 before a late-session retreat, AUD/USD traded in about a 25pip range below 0.7480, and NZD/USD rallied above 0.7010 before the technically-driven retreat below 0.6960. Gold prices have remained under pressure since Friday below 1,325, and PBoC Yuan fix was weaker for the first time in 4 sessions.

- G20 meeting in Chengdu, China yielded a communique that promised to use "all policy tools" to boost growth. Officials stated the G20 nations are "well positioned to proactively address the potential economic and financial consequences", though Brexit as well as "geopolitical conflicts, terrorism and refugee flows" have added to global risks. Guardian reported that EU officials are considering a 7-year exemption for UK on freedom of movement while allowing it to retain access to single market - a pact that would assuage the immigration component of Brexit supporters and concerns over economic impact from Brexit opponents. Also of note in Europe, Italian Fin Min Padoan acknowledged there was a "limited" number of key banks with large amount of non-performing loans for which market-based solutions are being considered, but also reiterated that impact on Italian banks' balance sheets of a prolonged recession is, on aggregate, much less than feared, adding the worries over Italian banking problem are overblown.

- Japan posted the only economic data point of the session, with June merchandise trade surplus exceeding expectations. Exports fell for the 9th straight month, but the 7.4% decline was smaller than 11.3% expected and also marked the first month when exports decline slowed in 5 months. Imports decline was also slightly smaller than expected but down for the 18th straight month. BOJ's much anticipated policy meeting is widely expected to produce a fresh round of stimulus - in fact, one report saw 32 out of 41 analysts forecast an easing, the highest percentage anticipating a move since BOJ Gov Kuroda's first decisions 3 years ago. A local Nikkei report however saw some BOJ officials express reluctance to ease more, deeminng the current mechanisms behind inflation as working properly. Japan Econ Min Ishihara remarked that JPY trading has been calmer now after a period of strength. Cabinet Office has also issued a monthly report maintaining economic assessment for July but cutting its view of business conditions due to Brexit worries.

- In China, a PBoC policy adviser said the economy can still achieve 2016 GDP target of over 6.5% but noted building downward pressure. A separate report from China Academy of Social Sciences (CASS) warned that home price growth may start to slow in the coming months after rapid increase in the first half as inventories in 2nd and 3rd tier cities expand.

- In corporate news, Verizon and Yahoo are said to be in late-stage talks, and a deal of core asset acquisition is expected to be announced before Monday open. Nintendo was down sharply after Friday's report that the company does not expect material financial impact from Pokemon. In Australia, Woolworths saw solid gains after announcing it was closing a 17 loss-making stores and laying off as many as 500 staff.

***Equities***
US equities / ADRs:
- YHOO: Verizon said to have agreed to pay nearly $5B for Yahoo core assets; Deal expected to be announced before Monday open - financial press
- HSY: Reportedly Hershey Trust, the controlling shareholder, agrees to governance changes - press

Notable movers by sector:
- Consumer discretionary: Alibaba Pictures Group 1060.HK -2.8% (profit warning); Hotel Shilla Co 008770.KR -4.3% (Nomura cuts to Reduce)
- Consumer staples: Lianhua Supermarket Holdings 980.HK -4.1% (profit warning); Asaleo Care AHY.AU -1.3% (guidance); Woolworths Limited WOW.AU +7.1% (To close under guidance)
- Financials: Haitong Securities 6837.HK +0.2% (H1 result); Hana Financial Group 086790.KR +6.9% (JPMorgan raised to Overweight); WesFarmers WES.AU +0.7% (Q4 result)
- Industrials: Qinhuangdao Port 3369.HK -16.4% (profit warning); CITIC 267.HK -0.7% (profit warning); Mazda Motor Corp 7261.JP +6.1% (Q1 result speculation); Fujitsu General 6755.JP +2.2% (Q1 result); Dongfeng Motor 489.HK +5.0% (Credit Suisse said its JV raised sales target); Nidec Corp 6594.JP +4.5% (Q1 result)
- Technology: BAIOO Family Interactive 2100.HK -2.5% (profit warning); Nintendo Co. 7974.JP -17.5% (impact from Pokemon Go to be limited)
- Materials: China Aluminum Cans Holdings 6898.HK +3.0% (positive profit alert); OJI Holdings Corp 3861.JP +3.8% (Q1 result speculation); Newcrest Mining NCM.AU -2.5% (Q4 production result); Sims Metal Management SGM.AU -3.3% (Macquarie cuts to Underperform)
- Energy: Sinopec Engineering Group Co 2386.HK -5.0% (profit warning); China Oilfield Services 2883.HK -1.3% (profit warning)

>>> What to look at this Week-End - 23rd & 24th of July 2016

Weekly Update
Dow +0.29% S&P +0.61% Nasdaq +1.40% Russell +0.63% Brazil +2.56% Nikkei +1.47% Hang Seng +1.41% CSI -1.56% Shanghai -1.36% EuroStoxx +0.46% FTSE +0.92% CAC +0.20% Dax +0.80% Ibex+0.81% MIB +0.18% SMI +0.47%
Political developments and quarterly earnings were the main focus this week, although incessant speculation surrounding foreign, Central Bank intervention swung investor risk sentiment. Thursday broke a string of record closing highs on the DJIA and S&P500, but by Friday the S&P was back at all-time highs. The Republican Party gathered in Cleveland to officially nominate Donald Trump as their presidential candidate, while in Turkey an attempted coup by the military was put down, adding to the endless turmoil in the Middle East. Crude prices retreated back below $45, marking six weeks of contraction after key benchmarks topped out above $50 in early June. About a fifth of the S&P500 have reported quarterly earnings, with average profits a bit lower y/y and revenue a shade higher. While tech and financials have been generally impressive, consumer discretionary stalwarts have hit a wall, and Starbucks CEO went as far as to cite deteriorating global conditions - terrorism, and Brexit included - as driving a cooling in consumer confidence. After another solid swath of US economic data, US Treasury prices moved marginally higher, but yields largely consolidated just below the recent one-month highs. For the week, the DJIA gained 0.3%, the S&P500 rose 0.6% and the Nasdaq added 1.4%.


Macro :
- G-20 Communique to Urge U.K. Remain Close EU Partner: Balduino
- Odey Hedge Fund’s Post-Brexit Gains Evaporate: Financial News
- Schaeuble: Not Worried About Italian Banking Sector
- Kildare Fund Raises More Than $1.1B to Buy Properties: Telegraph
- IMF’s Lagarde Sees Uncertainty From Brexit, Market Volatility
- U.K. Company Profit Warnings at Highest Since 2008: Sunday Times
- Portuguese Banks Face Potential 3.9b Euro Novo Banco Bill: FT

Keep an eye on :
- AH NA : Delhaize, Ahold Complete Merger Following U.S. Clearance
- AIR FP : Air France Cabin Crews Plan to Maintain 7 Days Strike : Gagey
- ALV GY : Allianz’s Hunt Pledges Tighter Ties Between Allianz, Pimco: FT
- ALO FP : Brazil Politician Said to Have Forgiven Alstom $36m Fine: Folha
- AAPL US : Apple Fourth in China Smartphone Market in June: Counterpoint
- AZN LN : Glaxo, AstraZeneca to Confirm Will Remain in U.K.: Sunday Times
- BMPS IM : Monte Paschi Capital ‘At Risk’ in Stress Tests, Sole Reports
- DELB BB : Delhaize, Ahold Complete Merger Following U.S. Clearance
- ENGI FP : Tihange-1 Belgian Reactor Start Delayed to Aug. 8: Engie
- EOAN GY : EON’s Uniper Plans Significant Job Cuts: Rheinische Post
- FWB IM : Fastweb Evaluating Offer for PosteMobile’s Clients: Repubblica
- FCC SM : Spain’s Regulator Says 48.3% of FCC Shares Accepted Carso Offer
- FCA IM : Fiat Chrysler Recalling Almost 410,000 Vehicles: Reuters
- GSK LN : Glaxo, AstraZeneca to Confirm Will Remain in U.K.: Sunday Times
- HSY US : Reportedly Hershey Trust, the controlling shareholder, agrees to governance changes
- JOY US : Joy/Komatsu Deal May Require ’Lengthy’ Antitrust Review: CTFN
- LEON SW : Leonteq CEO Plans to Slow Expansion From 2017: NZZ am Sonntag
- LNKD US : Salesforce CEO told LinkedIn he would have paid much more than Microsoft - Re/code.net
- OR FP : L’Oreal in Pact to Buy IT Cosmetics for $1.2b
- LHA GY : Lufthansa Eurowings Chief to Remain in Role Past 2017: Manager
- MC FP : De Beers Puts Snap Lake Diamond Mine Up for Sale: Reuters
- NYR BB : Firefighters Tackle Blaze at Nyrstar Plant in Balen, VRT Says
- P US : Pandora CEO Declines to Comment on Speculation, Liberty Report
- UG FP : Vinci, Peugeot-Led Group Said to Compete for Lyon Airport: Rtrs
- PRS SM : Prisa 1H Net Loss EU10.5m Vs EU10.8m Profit Year Earlier
- RCS IM : RCS creditor banks will not demand early repayment of debt following Cairo Communications takeover - Il Sole 24 Ore
- SAB LN : Activist Sandell Wades Into SABMiller Takeover Dispute
- SRG IM : Snam CEO Sees Average Net Income Growth of 5%/Year: Corriere
- SDY LN : Speedy Hire Investor Toscafund Seeks General Meeting: S. Times
- SYNN VX : Syngenta Ready to Buy Assets From Possible Bayer/MON Deal: dR
- SYNN VX : Syngenta’s Fyrwald Says Brexit May Aid Faster Breakthroughs: FT
- TKA AV : Telekom Austria 2Q Ebitda Beats Est.; Confirms Rev. Forecast
- TSLA US : Tesla, SolarCity Said to Be Close to Merger Agreement: Reuters - http://bit.ly/2a5xucE
- DG FP : Vinci, Peugeot-Led Group Said to Compete for Lyon Airport: Rtrs
- VOD LN : Liberty Global owner John Malone signals weakened pound increases prospects of Vodafone takeover - The Times
- VOW3 GY : Audi Plans Three E-Autos, Developing Self-Driving System: Stimme
- WMH LN : Rank Group, 888 Mulling Possible Joint Offer for William Hill

>>> Boscolo debt may be acquired by Varde; company may attract new majority shar

Boscolo debt may be acquired by Varde; company may attract new majority shareholder via EUR 80m capital increase 

Creditor banks of Italian hotel chain Boscolo could sell their debt to the Varde fund, Italian language daily Il Corriere della Sera reported.

The unsourced article said that creditor banks could sell EUR 240m debt for EUR 210m. The total bank debt is EUR 350m, it added. The Varde offer is of particular interest to Unicredit, BPM and BMPS, which hold over half of the bank debt, the item noted.

The report also said Boscolo advisor Mediobanca is working on finding a majority partner for the hotel chain. The new partner would take the stake via a EUR 80m capital increase, it added.

Previous reports have pointed to Starwood as the most likely buyer.

Boscolo closed 2015 with turnover of EUR 185m and EBITDA of EUR 35m. The EBITDA was above the planned target of EUR 32m, the report noted.

The original article appeared in print; Page 40


Source Il Corriere della Sera

FT : New drugs aim to kill cancer cells by destabilising their DNA

New drugs aim to kill cancer cells by destabilising their DNA

Drugs that selectively destroy cancer cells by destabilising their DNA will be developed in a £6m project funded by the Wellcome Trust at the University of Sussex, in collaboration with AstraZeneca.
The initiative is part of a wider move by oncology researchers to discover ways to stop the normal evolution of tumours into more lethal forms that resist treatment.

The Sussex research aims at the biochemical network within cells that biologists call the DNA damage response — DDR — system.
The damage response system detects and repairs breaks in DNA that occur frequently because of environmental factors and chemical stress, as well as random errors as cells divide.
Cancer cells already have a somewhat degraded DNA damage response system, which enables them to mutate, proliferate and evolve rapidly.
The aim is to destabilise the process further so that cancer cells cannot repair the DNA damage — and the resulting genetic mayhem kills them.
Healthy cells can resist this partial destabilisation.
“Within four years we aim to have at least three new drugs in development, which exploit the defects in our DNA in order to kill cancer cells,” said Professor Simon Ward, head of Sussex’s Drug Discovery Centre. “They will be more effective treatments, very specifically targeted at genetic subsets of the population, which will involve less side-effects for patients.”
New DDR drugs could also increase the effectiveness of traditional chemotherapy and radiation treatment, which work by causing high levels of DNA damage, enabling oncologists to destroy tumours with smaller doses.
At present only one DDR drug is on the market: AstraZeneca’s Lynparza, which was approved for some genetic types of ovarian cancer in 2014 and is showing promising results in clinical trials against advanced prostate cancer.
Lynparza works by inhibiting the action of an enzyme called Parp that is involved in DNA repair.
AstraZeneca is developing a pipeline of compounds that will work across several different DDR biochemical pathways, on their own or in combination with other anticancer drugs. These involve blocking enzymes with names such as WEE1, ATR, ATM as Aurora B, as well as Parp.
Each product will be targeted at a specific genetic group of patients but estimates suggest that the DDR approach as a whole could treat as many as 40 per cent of cancers, said Susan Galbraith, head of AstraZeneca’s innovative medicines unit.
The company will contribute a range of technical, scientific and managerial support to the Sussex project. In exchange AstraZeneca will have first right to negotiate commercial development of any compounds that are discovered. “This sort of collaboration is extremely important for our cancer drug discovery programme,” said Dr Galbraith.

FT : Italian finance minister rejects need for banks bail-in

Italian finance minister rejects need for banks bail-in

Pier Carlo Padoan, the Italian finance minister, has denied that Italy’s banks are suffering from systemic problems and rejected a “bail-in” of private investors as he sought to reassure global markets over the state of Italy’s financial institutions.
“We are going in the right direction, there is no risk in terms of systemic stability,” Mr Padoan said at the end of the G20 meeting of finance ministers and central bank chiefs in the Chinese city of Chengdu on Sunday, adding that there were a few “contained” critical cases.
The Italian reassurances came as the G20 pledged to use “all policy tools” to support growth, saying they were ready to respond to any negative fallout from Brexit amid uncertainty over protectionism and Britain’s future relations with the EU.
“The outcome of the referendum on the UK’s membership of the EU adds to the uncertainty in the global economy,” read a joint communiqué released by China’s finance ministry. “Members of the G20 are well positioned to proactively address the potential economic and financial consequences stemming from the UK referendum. In the future, we hope to see the UK as a close partner of the EU.”
Global risks from Brexit dominated the two-day meeting. Philip Hammond, the UK’s newly appointed chancellor of the exchequer, said negotiating partners had expressed optimism about bilateral relations. He said: “Among the non-EU G20 colleagues, they’ve all spotted the significant opportunities that there are for greater trade and the potential to do direct bilateral trade deals in the not too distant future with the UK.”
Mr Padoan’s comments come ahead of a key week for Italian banks, which will be closely watched when the results of European-wide stress tests are published on Friday, possibly leading one or more of them to rush to raise new capital.
Jack Lew, the US Treasury secretary, met Mr Padoan on the sidelines of the G20, saying that while Europe’s banking system was stronger due to reforms put in place in recent years, more work remained, and banks should continue to clean up their balance sheets.
The Italian banks have been disproportionately hit in the market turmoil following last month’s Brexit vote because they are saddled with non-performing loans dating back to the recession.

Results of the stress tests raise the prospect of a public injection of cash by the Italian government, which would probably involve a hit to private investors in the banks under tough EU state aid rules. But Italy has also been trying to arrange a private-sector rescue to avoid such a scenario and Mr Padoan ruled out a so-called bail-in “for the moment”.
The G20’s call to use “all policy tools” echoes similar language at a meeting in Shanghai in February and contained no concrete commitments on fiscal stimulus. Policymakers broadly agree that scope for further monetary policy stimulus is limited but faultlines remain over more aggressive moves.
In addition to Brexit, full-throated protectionism expressed by Donald Trump, US Republican presidential nominee, is also rattling global confidence.
The G20 communiqué cited “geopolitical conflicts, terrorism, and refugees” as further sources of economic uncertainty.
Mr Lew and his Chinese counterpart Lou Jiwei agreed to work together to cut global excess capacity in sectors including steel and aluminium. They will also work on new global guidelines on government provision of export credit, amid complaints that Chinese companies unfairly benefit from government support. Mr Lew expressed support for multilateral negotiations on cutting steel capacity.

WSJ : Apple Is Ripe for a Rally

Apple Is Ripe for a Rally

Down 21% over the past 12 months, Apple shares have been punished more than enough

Tech investors are a discerning bunch these days—a harsh reality that is pressuring Apple Inc. more than it deserves.

In this yield-starved environment, stock investors are attracted to steady income. This would benefit Apple, except that like other former highfliers, it has been tossed out by investors. The iPhone giant’s shares have slid 6% this year and 21% over the past 12 months. While some of that is justified as iPhone sales have slowed, the selloff also looks overdone heading into Tuesday’s earnings report.

Apple at least has a low bar to hurdle. Analysts polled by FactSet estimate fiscal third-quarter earnings of $1.40 a share, down 24% from the same period a year ago. That estimate has fallen from $2.01 in November. Revenue for the period ending in June is expected to have dropped 15% to $42.1 billion, which would be Apple’s second consecutive quarterly sales decline.

Much of the bearish thesis is due to weakening iPhone sales, which account for more than half of revenue. The iPad isn’t selling as well as it used to and the jury is out on the Apple Watch. Tech investors are allergic to anemic growth, which explains why the tech-heavy Nasdaq has lagged behind the Dow industrials and S&P 500.

Still, Apple has been punished more than enough. The iPhone slump appears priced in. And while the next iPhone, expected later this year, likely won’t be a significant upgrade, there is optimism that sales growth will soon bounce back. Analysts forecast iPhone unit sales will rise 5% for fiscal 2017, which ends next September.


Apple is the sort of stock that investors love these days. It plans to spend $250 billion on dividends and buybacks by March 2018, which would boost earnings per share and yield. Already, Apple’s 2.3% dividend yield is well above the 10-year Treasury yield.

Apple remains wildly profitable, too. Its $10.52 billion profit in the March quarter easily surpassed combined profits of Alphabet Inc., Amazon.com Inc. and Facebook Inc.
And its valuation is compelling. Shares fetch 11 times projected earnings, a 34% discount to the S&P 500. By that measure, the stock is the cheapest it has been in at least the past 15 years.

This Apple deserves another bite.

Barron's : Another Record High as Market Parties On

Another Record High as Market Parties On

Another record-setting week for stocks. Is a September rate hike back on the table?

Stock prices closed at all-time highs for the second week in a row. The fireworks weren’t as impressive as the previous week, when at least one major index set a new high each day, but the market finished Friday with a flourish.

The Dow Jones Industrial Average rose 54 points, or 0.3%, to close at 18,570.85, just inches below its record high of 18,595.03, hit Wednesday. The Standard & Poor’s 500 index picked up 13, or 0.6%, to 2175.03, a new high. The Nasdaq Composite rose 1.4%, to 5100.16.

Still, it was an up and down week, due partly to second-quarter earnings reports that tugged the market one way and then the other. Soft results from the transportation sector and from Intel (ticker: INTC) Thursday cooled off a market that had shot up on a strong report from Microsoft (MSFT) the previous day.

Markit said Friday that its July preliminary U.S. Manufacturing Purchasing Managers Index (PMI) rose to 52.9, above expectations and the highest in nine months. Markit’s Eurozone Composite July PMI data fell less than feared. Even hints from the Federal Reserve that it could raise interest rates before year end didn’t sidetrack the bull—for now.

The package of stronger economic data was helpful, says Quincy Krosby, Prudential Financial’s markets strategist. Though earnings weren’t great, the tone is more positive and suggests—with more companies yet to report—that the profits-growth recession is lessening, she says. Rightly or wrongly, that’s led to an easing of worries about Brexit.

Some issues should be capping market enthusiasm—whether uncertainty about the U.S. elections or long-term Brexit fallout—but the market doesn’t seem to care, according to Mark Luschini, chief investment strategist at Janney Montgomery Scott. “The path of least resistance is up,” he says.

Investors are looking past the second quarter and “borrowing” earnings growth from the balance of the year and 2017, he adds. The “sturdy” U.S. economic data mean the Fed will likely hike interest rates by year end, Luschini says, and a September hike isn’t off the table “if the data holds up.”

There’s some rally-chasing going on, adds Seth Setrakian, president of Spectrum Capital Management. “Everyone who was panicked a month ago after Brexit can’t help themselves buying now,” he says. Setrakian, who also says a September Fed rate hike is on the table again, is worried about the next few months. Commodity prices are soft, the dollar is strong, and there’s continuing uncertainty about the elections, he says. “The market doesn’t care…until it does.”

The Chicago Board Options Exchange Volatility Index, or VIX, at 12.02, is at two-year lows, Setrakian points out. The VIX is used as an indicator of complacency and moves inversely to stocks. With a VIX below 13, “stocks should be harvested,” he avers.

Short-term caution is called for. August is traditionally a month of low activity and profit-taking, while September is historically the worst month for stocks. This week sees a Fed meeting Tuesday and Wednesday. No hike is expected, but the Fed might give more hints about the future. On Friday, U.S. second-quarter GDP data and the employment cost index will be released.

Barron's : Lloyds, Royal Dutch Shell Among U.K. Bargains Now

Lloyds, Royal Dutch Shell Among U.K. Bargains Now

Barron’s spoke to four fund managers who are sorting through the British stock market for the best values.

It’s been one month since the stunning Brexit referendum, in which voters decided that the United Kingdom will leave the European Union. The British stock market hasn’t yet tumbled into the dust.

Indeed, Barron’s spoke last week with a handful of portfolio managers who run U.S. mutual funds that invest in British stocks, and their sentiments were fairly upbeat.

“Net net, we’ve increased our holdings in U.K. stocks,” says David Herro, the veteran international stockpicker who oversees the $23.6 billion Oakmark International fund (ticker: OAKIX), which had more than 14% of its holdings in U.K. companies as of June 30. Since the Brexit vote, he says, “prices went down a lot more than their intrinsic value.” He especially favors U.K. financial stocks.

One stock Herro likes is Lloyds Banking Group (LLOY.UK), which is down 22% since the Brexit referendum in local currency. Still, at 56.20 British pence late last week, the stock was off its low of 47.55 pence, set on July 6. The bank is well-capitalized, he says, with a strong franchise.

Though not everyone is as optimistic as Herro, there is definitely a sense that British stocks are stabilizing, now that the dust has settled a bit.

Europe-focused stock funds, many of which have big weightings in British equities, were down an average 1.42% in the past month, according to Morningstar. That’s not great, but it’s nowhere near as bad as it could have been, especially considering how bleak the mood was in the first few days after the vote, when Britain’s political leadership appeared adrift.

Big questions about Britain’s future remain, notably what kind of impact, economic and otherwise, that separation from the EU will have on the island nation. At least the political crisis has been settled for now, with a new prime minister, Theresa May of the Conservative Party.

SOME MANAGERS SEE two very different stock markets developing in Britain.

The FTSE 100 Index, a benchmark of very large U.K.-based companies that tend to have a lot of international business, is up 6.2% in local currency since the referendum. The FTSE 250, which is considered more of a proxy for domestic-focused companies in the U.K.—including those in such sectors as real estate and retailing—was down 2%, but well off its late-June lows.

“Generally speaking, companies that have benefited from a weaker sterling have gone up, while companies that are more domestically focused have gone down,” says Stephen Docherty, head of global equities at London-based Aberdeen Asset Management. Since the Brexit vote, the pound has lost about 10% of its value against the greenback, though it has bounced back off its lows.

Many of the U.K. companies Aberdeen holds earn a big percentage of their profits from overseas business. That includes Royal Dutch Shell (RDSB.UK), which was among the top holdings in the $477 million Aberdeen International Equity fund (GIGIX) as of June 30. Most of the fund’s top holdings are based outside of the U.K., however. Its post-Brexit performance of 2.42% surpasses 94% of its foreign large-cap-blend peers.

A WEAKER BRITISH CURRENCY should help multinational U.K. companies, Docherty says. But “domestic growth forecasts are coming down for the U.K. economy, and there is the possibility that inflation picks up through a weaker sterling,” he adds. That, in turn, could lead to higher interest rates—which bodes ill for companies reliant on the British market.

Paul O’Connor, a portfolio manager at Henderson Global Advisors in London, says that the two funds for U.S. investors he helps run have very little exposure to domestically focused U.K. companies. One of them is the $4.8 billion Henderson International Opportunities fund (HFOAX), which as of June 30 had more than 15% of its assets in British holdings. Its post-Brexit return is around 1%, putting it in the top 40% in Morningstar’s foreign-large-blend category.

O’Connor doesn’t expect investor sentiment to improve for domestically focused U.K. companies in the near term. “I don’t see the bounce until the economic and political uncertainty can lift,” he says, “and I don’t see that happening for a long time.”

Not every manager Barron’s spoke to is keen on the U.K. market. David Marcus, who runs the $327 million Evermore Global Value fund (EVGBX), says he has not held a British stock in about three years—though some 70% of the fund’s assets are in European holdings.

U.S. fund managers, he says, have been crowding into the U.K., which he sees as a market whose multiples “were not compelling.” The Brexit vote and its aftermath were not enough of a catalyst to change his mind.

Still, Marcus says, “You will have good days and bad days over the coming months as this starts to kick in. That’s going to create value.”