Flash boursier
11/02/2019
Flash boursier
Key data
| USD/CHF | EUR/CHF | SMI | EURO STOXX 50 | DAX 30 | CAC 40 | FTSE 100 | S&P 500 | NASDAQ | NIKKEI | MSCI Emerging MArkets | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Latest | 1.00 | 1.13 | 9'003.41 | 3'135.62 | 10'906.78 | 4'961.64 | 7'071.18 | 2'707.88 | 7'298.20 | 20'333.17 | 1'036.03 |
| Trend | |||||||||||
| %YTD | 1.87% | 0.66% | 6.81% | 4.47% | 3.29% | 4.88% | 5.10% | 8.02% | 9.99% | 1.59% | 7.27% |
Highlights:
1. Cooling in Franco-Italian relations
2. Slower economic indicators in Europe
Matter jitters are back
Doubts have once again surfaced over whether the US-China trade dispute will actually be resolved. Largely mediocre corporate earnings reports in Europe have done little to improve the mood in equity markets. Poor cohesion among EU members is also rattling investors. France and Italy have fallen out, following the repeated barbs from the Italian majority directed at President Emmanuel Macron. Lastly, the European Commission last week struck down the planned merger between Alstom and Siemens, designed to do for trains what Airbus had done for European aircraft manufacturing.
Donald Trump and Xi Jinping are unlikely to meet any time before 1 March, which marks the deadline for transitioning to a 25% duty charged on a wide range of imported Chinese goods. Even so, a US delegation will visit Beijing this week, potentially leading to a breakthrough. Speculation of action against Chinese telecommunications equipment suppliers has also worried investors. Europe – for its part – seems uninterested in defending its strategic interests. As noted above, the European Commission vetoed the proposed merger between Alstom and Siemens, believing that it would have negative consequences for prices and competition. Arguments about creating a European champion fell on deaf ears. Yet even though CCRC (China Railways Construction Corp.) is not currently a major player in Europe, it is closing the technological gap at high speed and nabbing market share in the process.
In Europe, economic indicators point to a slowdown in growth momentum. Forecasts for 2019 have been slashed. In Italy, GDP growth is estimated at a paltry 0.2%, implying a deterioration in public finances. The yield spread between BTP (Italian government bonds) and the German Bund is nearing 3 percentage points. Latest manufacturing orders in Germany fell by 7%. Yet not everything is gloomy. Carmakers are adapting quickly to new emission tests while confidence indicators show that consumers are more upbeat than corporations. Central banks remain accommodative on the whole, and this should support share valuations. In the US, Republicans and Democrats continue to talk past each other on the issue of border security. There is a minor risk of the shutdown resuming but investors do not seem overly concerned at the moment.
Swisscom AG (ISIN: CH0008742519, price: CHF 444)
The telecoms carrier has reported results for 2018 in line with expectations. Overall, figures were steady compared to the previous year, both in terms of revenue (CHF 11.7bn) and net profit (CHF 1.5bn). These figures were released into an extremely difficult context for telecoms firms, which are facing fiercer competition, margin squeezes and market saturation. Swisscom has safeguarded net profit by relying on pockets of growth (such as its Italian subsidiary, Fastweb) and strict cost-cutting.
Swisscom remains the undisputed industry leader in Switzerland, having cornered more than 60% of the mobile phone market. The group benefits from a loyal customer base, built up through attractive triple-play offers. Unusually, Swisscom is now stealing a march on the industry with the launch this month of a new mobile subscription (inOne Mobile Go) that completely eliminates roaming charges in Europe and doing so at a price that undercuts the competition.
The share’s correction in the last few days has lowered the valuation to 15x the 2020 earnings, in line with competitors in the sector. The group has confirmed that the dividend will be maintained at CHF 22 for 2019, indicating a dividend yield of close to 5%.
Alphabet (ISIN: US02079K3059, price: USD 1,102.38)
LGoogle’s parent company reported results that beat expectations. Revenue surged by 22% to over $39bn. Profit reached nearly $9bn. Over the full year, profit amounted to $30.7bn, which is more than Amazon and Apple combined. In contrast, expenses were higher than expected and this took a toll on operating margin, which narrowed from 24% in the year-earlier period to 21%.
Alphabet has made massive investments to secure its future and diversify income. It needs to upgrade its infrastructure if it wants to remain the market leader in internet services. The group also needs to take on Amazon’s dominant position in the cloud and develop new technologies that will enable it to generate profits, such as self-driving cars, healthcare innovation and artificial intelligence.
The group has recruited nearly 19,000 people over the past year. Most of this increase in headcount reflects Google’s cloud developments. The cloud industry is expected to expand by a further 30% this year.
Hold recommendation.
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