26/11/2020 - EDHEC Student Finance Club Daily Newsletter

Thursday, November 26th, 2020

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YESTERDAY MARKET SNAPSHOT

Americas Bonds Rates ∆bps

Dow jones 29 872.47 -0.58% U.S. 10Y 0.88 -0.01

S&P 500 3 629.65 -0.16% France 10Y -0.34 -0.01

Nasdaq 12 094.40 +0.47% U.K. 10Y 0.31 -0.02

Small Cap 2000 1 844.81 -0.47% Germany 10Y -0.57 -0.00

S&P/TSX 17 313.07 +0.22% Switzerland 10Y -0.47 -0.04

Japan 10Y 0.02 -0.00

Europe China 10Y 3.31 -0.09

CAC 40 5 571.29 +0.23% Australia 10Y 0.94 +0.01

DAX 13 289.80 -0.02%

FTSE 100 6 391.09 -0.64% Commodities

SMI 10 488.27 -0.03% Crude Oil WTI 45.71 +1.78%

Euro Stoxx 50 3 511.90 +0.11% Brent oil 48.61 +1.57%

Natural Gas 2.90 +4.36%

Asia Gold 1 805.50 +0.05%

Shanghai 3 369.73 +0.22% Silver 23.36 +0.27%

KOSPI 2 625.91 +0.94% Copper 3.31 +0.30%

Hang Seng 26 819.45 +0.56%

Nikkei 225 26 537.31 +0.91% Forex

$ per 1€ 1.19 +0.25%

Pacific £ per 1€ 0.89 -4.21%

S&P/ASX 200 6 636.40 -0.70% CHF per 1€ 1.08 +0.56%

DJ New Zealand 385.91 -0.17% ¥ per 1€ 122.99 -4.21% Source: Investing, EDHEC Student Finance Club would like to remind you that the data contained in this website is not necessarily real- time nor accurate.

EARNINGS & ECONOMIC AGENDA Expected Sales/EPS Forecasted (or Previous)

EUROPE

Britvic FY2020 £636.6m/19.24 FR consumer confidence (Nov) 92 CD Projekt Q3 2020 German Consumer Climate (Dec) -5 Elekta S1 2021 £3.56bn/0.92 IT trade balance (non-EU) (Oct) (€5.32bn) Paypoint S1 2021 SEK Interest rate decision 0% Rémy Cointreau S1 2021 €272.13m/1.95 SEK PPI (YoY) (Oct) -2.20% Severn Trent S1 2021 £919.8m/68.16 Swiss employment level (Q3) (5.095m)

Strabag Q3 2020 Vienna Insurance Group Q3 2020

USA

Gazprom Q3 2020 $17..9bn/0.12 Thanksgiving - Holidays

ASIA

Alibaba Health Information CPI Tokyo Ex Food and Energy Technology S1 2021 (MoM) (Nov) 0.3% Axiata Group Q3 2020 Taiwan GDP (YoY) (Q3) 3.33% Bosideng International S1 2021 Japan Foreign Bond Buying (¥1.009tn) China Yuhua Education FY2020 Tokyo Core CPI (YoY) (Nov) -0.70% Chow Tai Fook Jewellery Group S1 2021 Tokyo CPI (YoY) (Nov) -0.30% Genting Malaysia Q3 2020 RM3.08bn/0.02 Vietnamese CPI (YoY) 2.47% Malayan Banking Q3 2020 RM6.24bn/0.13

MARKET NEWS

EUROPE

Rishi Sunak, U.K. chancellor, warned that the U.K. will suffer its deepest recession since the Great Frost of 1709 after the damage caused by the pandemic. Sunak plans to cut foreign aids and cut pay rises of public non- health workers to address the ballooning budget deficit.

In Spain, Prime minister Pedro Sanchez won the votes needed to pass his 2021 budget proposal by imposing himself over Catalan nationalists. This victory will allow the government to channel tens of billions of euros into the economy from the EU recovery fund.

Angela Merkel has to fight her own political battles as she struggles to convince Germany’s state premiers to back her proposal to tighten the virus restrictions. At least, they agree on one thing: keeping the current partial lockdown until December 20th.

The ECB said that Euro-area banks will need to set aside more money for bad loans when government pandemic support ends. The ECB highlighted that provisions are lower than in previous crises and some asset valuations are stretched, risking sudden asset drops.

Just to be known, half of the leaders of SBF 120 companies earned more than €3m in 2019 as their wages are based on the performance of the company.

AROUNDTOWN (+1.4%) showed an improvement in its financial results during the first 9 months of 2020. The real estate company reported an increase in EBITDA of +30% YoY to €723m, driven by a strong business performance illustrated by its +18% YoY growth of FFO to €438m.

ELIA GROUP (+1.6%) declared the Belgian electricity company is confident about reaching its objectives for 2020. The board management is improving its ROE target of 6.5% to 7.5%.

ELIOR (-4.7%) has revealed bad results for FY2019-20 due to covid. The collective catering group published a turnover of €3.967bn, down -19.4% YoY, and affected to the tune of more than €1bn by the pandemic. Figures however perfectly in line with the preliminary data unveiled last November 6, which had also been shown to be better than what was expected by analysts, pushing the title to the top of the SBF 120.

LIONTRUST ASSET MANAGEMENT (-3.1%) has suffered a –26.3% YoY loss in pre-tax profits for S1 to £6.9m, despite a huge growth (+41%) in the assets under management. The British group, however, decided to raise its interim dividend per share by +11% to £0.11.

MELROSE INDUSTRIES (+1.5%) regained investors’ enthusiasm due to fast recoveries in the sectors where the holding invests, such as the automotive one. The declarations also mention a decrease in the company net debt for the end of the year related to operating restructuration.

NESTLE (+0.2%) has signed an agreement to sell its Yinlu brand, specialized in the manufacturing of peanut milk and canned rice pudding in China, at Food Wise Co Ltd, the company controlled by the family of the founder of Yinlu.

PLASTIC OMNIUM (+7.1%) has increased its expectations for S2 2020. The group is now aiming for an operating margin of over 5% (compared to 4% previously) and a free cash flow of over €400m (against €250m previously).

ROCKWOOL INTERNATIONAL (-0.9%) managed to keep a stable activity despite the circumstances, through successful cost control. However, for Q3 2020, the Danish wool manufacturer sales incurred a slight decrease as well as its profitability with a – 4.1% YoY declining Return on Invested Capital to 17.7% YoY.

ROTORK (-1.6%) reported an increasing cash reserve for Q3 2020. Despite higher liquidity, organic sales incurred a -3% decline YoY and the order intakes of this industrial control equipment manufacturer are still 16% below its 2019 level.

UNITED UTILITIES (+2.6%) S1 revenue dropped by –4% YoY to £894m (vs £945m expected) mainly due to new regulations concerning the customers’ price regime resulting in a bill decrease. The water management company however decided to raise its interim dividend per share to £0.142 (vs £0.120 last year).

MACROECONOMIC INDICATORS ACTUAL EXPECTED PREVIOUS DKK Retail Sales (YoY) (Oct) 13.6% - 4.2% FR Jobseekers Total 3.5m - 3.6m Spanish PPI (YoY) -4.1% - -3.3%

USA

Wall Street indices had mixed fortunes on the eve of Thanksgiving when the market will be closed. The DJIA fell by -0.6%, a day after a historic session. The S&P 500 lost -0.2%, while the NASDAQ rose +0.5%.

Unemployment benefit claims increased for the second week in a row, a signal that the economic recovery is almost at a standstill, affected in particular by the new restrictions imposed in the face of the Covid- 19 cases resurgence. The income of American households fell in October due to the expiry of some aid that had been put in place in the spring to deal with the pandemic. On the other hand, orders for durable goods and household consumption expenditures increased more than expected.

Worried about the economic slowdown caused by the pandemic and the lack of a new stimulus plan, the Federal Reserve promised at its last monetary policy meeting to review its asset purchases ‘fairly quickly’ to support the economy. The markets reacted moderately to these minutes, with many investors expecting an announcement that the Fed will increase its government bonds buybacks or adjust their maturities.

DEERE&COMPANY (-1.9%) The industrial company specialized in heavy construction machinery released its earnings for Q4 2020, with an EPS of $2.39 and revenue of $7.3bn. Noticeably, its net sales of equipment came in at $9.73bn, declining only –1.7% YoY. In the specifics, sales in the agriculture & turf segment were up compared to last year, whereas sales in the construction & forestry segment were down.

JP MORGAN (-1.1%) was blamed for failing risk management. The American bank has agreed to pay $250m to close this investigation.

MODERNA (+10.8%) Shares soared during the session as investors expect good results from the final shot analysis that is expected to come very soon now. After that, the company will be able to file for emergency use authorization. Moderna’s shots have been reported to be 94.5% effective and it would be the second company to file for the FDA's authorization.

NORDSTROM (+11.65%) The US luxury department stores chain saw its shares skyrocket as investors took into account yesterday’s excellent results. No one was expecting online sales to be as good as they were, at $1.6bn, which accounted for 54% of all total sales. The company managed great delivery; items being delivered in available in 48h.

SALESFORCE (-5.3%) Rumors are saying that the company would be in discussions to acquire SLACK TECHNOLOGIES (+37.5%), the collaborative platform, an activity that has greatly benefited from the lockdowns linked to the coronavirus. Operators are afraid that this transaction could trigger a wave of mergers and acquisitions in the software sector.

MACROECONOMIC INDICATORS ACTUAL EXPECTED PREVIOUS 30-Year Mortgage Rate 2.92% - 2.99% Michigan Consumer Expectations (Nov) 70.5 71.3 79.2 Michigan Consumer Sentiment (Nov) 76.9 77 81.8 New Home Sales (MoM) (Oct) -0.3% 1.5% 0.001 New Home Sales (Oct) 999k 970k 1,002k PCE price index (MoM) (Oct) 0.0% - 0.2% PCE Price index (YoY) (Oct) 1.2% - 1.4% Personal Spending (MoM) (Oct) 0.5% 0.40% 1.20% Retail Inventories Ex. Auto (Oct) 0.700% - 1.000%

ASIA

Thousands of Thai protesters called on King Maha Vajiralongkorn to cede control of a royal fortune valued in the tens of billions of dollars, as the latest in months of anti-government demonstrations focused squarely on the monarchy.

Chinese Foreign Minister Wang Yi arrived in South Korea for talks of a trip to Seoul by Chinese President Xi Jinping.

Japan's government cut its view on capital spending in November for the fifth time this year as companies trimmed investment and said overall economic conditions were still severe due to the coronavirus pandemic.

In his first high-level meeting with Beijing, Japanese Prime Minister Yoshihide Suga said stable ties with China were important, as his country pursues a balancing act with its neighbor.

Beijing supports further deepening mutual access between the mainland and Hong Kong financial markets and the expansion of the scope of the Stock Connect linking the two sides.

South Korea Business Survey Index (BSI) in the manufacturing sector measures the level of optimism that business leaders have about the performance of the economy in the current month and their outlook for the following month. The Index is based on the survey of around 2800 companies in fifteen areas including sales, inventories, production facilities, prices, labor force, and profitability. For each of the indicators measured, the net difference between the number of positive responses, and the number of negative responses is computed. The BSI above 100 indicates an improving outlook and below 100 a deteriorating outlook. The Business Survey Index (BSI) on business conditions in the manufacturing sector in South Korea rose to 85 in November 2020 from 79 in October. It was the highest reading since April 2012 as the economy continues to recover from the coronavirus pandemic. In the non- manufacturing sector, the BSI on business conditions for November 2020 was 73, up 4 points from the previous month, while the outlook for the following month also gained 3 points to 72.

BIOCON BIOLOGICS (-3.0%) Biocon Biologics is in talks to raise funds from ADQ, the Abu Dhabi government’s sovereign wealth fund, as India’s leading biosimilar firm looks to strengthen its manufacturing muscle and add value to shareholders ahead of a proposed IPO.

EVA AIRWAYS (-4.3%) the Taiwanese international airline reported its revenue decreased -44% to NT$49.52bn. Net loss totaled NT($1.83bn). Revenues reflect Air Transportation Business segment decrease of -34% to NT$43.93bn, Maintenance Service segment decrease of -77% to NT$4.78bn.

FRASERS PROPERTY THAILAND (-0.8%) The public Company Limited operates as a real estate developer reports its revenues decreased- 6% to BAH17.73bn. Net income increased + 56% to BAH2.79bn. Revenues reflect a Real Estate segment decrease of- 6% to BAH14.65bn.

GSK CONSUMER (+3.7%) GSK Consumer Healthcare has forayed into the specialized denture care category in India with the introduction of the Polident brand.

LUPIN (-0.1%) Drug firm Lupin has launched generic immunosuppressant Tacrolimus capsules in the American market after its alliance partner Concord Biotech received approval for the product from the US health regulator.

NASMEDIA (+0.3%) the leading mobile performance marketing agency reported its revenues decreased -13% to W51.76bn. Net income decreased -8% to W9.18bn. Revenues reflect Search advertising segment decrease of -30% to W14.86bn, Network, digital advertising sales segment decrease of -3% to W36.91bn.

TOP GLOVE CORP (-2.1%), which has shut some factories after thousands of workers tested positive for COVID- 19, said on Wednesday that it expects some supply shortages that could push up prices of medical rubber gloves.

MACROECONOMIC INDICATORS ACTUAL EXPECTED PREVIOUS HK Trade Balance HK$-36.8bn - HK$-12.7bn KRW Consumer Confidence (Nov) 97.9 - 91.6

GRAPH OF THE DAY

Today’s graph is again about COVID-19. During the past election, the current pandemic and its metrics were pushed out of the media, yet COVID has never been this prevalent in the US, and current vaccines are not improving the survival rate of those that have already contracted the virus. These numbers are worrying, to say the least, and only confirm that the pandemic is not over yet.

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Sources: Bloomberg, CNBC, Financial Times, Investing Calendar, Les Echos, Reuters, The Business Times, Investing.com, Market Watch, The Daily Shot.

DISCLAIMER The electronic communication has been prepared by the daily newsroom members, members of EDHEC Student Finance Club and was not produced, reviewed, or edited by the Research Department. This communication is for informational purposes only and does not constitute the giving of financial advice nor it is intended as an offer or solicitation for the purchase or sale of any financial instruments, investment product, or service. The information contained in the body of this communication is derived from sources deemed to be reliable but no representation or warranty, express or implied, is made by EDHEC Finance club as to its accuracy, completeness, or correctness. EDHEC Finance club does not undertake any obligation to update this material. To the full extent permitted by law, EDHEC Finance club nor any of its representatives accepts any liability whatsoever arising from the use of this communication. This email (including any attachment) is intended only for the direct recipients.