Research Market strategy
By Swissquote Analysts
Published on 12.03.2021
Morning news

Generali with Good Dividend and Solvency II Ratio

Topic of the day

Generali Assicurazioni closed 2020 with a record operating result for the second consecutive year, reaching €5.208 billion, up from €5.192 billion in 2019, considering that the impact of Covid-19 is estimated at 123 million. The Group's gross premiums amounted to €70.704 billion, showing a slight growth compared to the previous year (+0.5%), thanks to the contribution of the life segment. Net income was €1.744 billion (€2.670 billion in 2019), impacted by €332 million in liability management, the contribution to the extraordinary international fund for Covid-19 and divestments, and €287 million in investment write-offs, mainly in the first half of 2020. The Group confirmed an excellent capital position with a stable solvency ratio of 224%. The payment of a dividend per share of € 1.47, divided into two tranches of € 1.01 and € 0.46 respectively, was advised.

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Swiss stocks

Swiss share prices barely held their ground at the end of trading on Thursday. The market was held back by the financial sector, while economic cyclicals were in demand. The SMI lost 0.2 per cent to 10,883 points. Above all bank stocks, which had been among the beneficiaries of rising market interest rates in recent weeks, were sold after the European Central Bank (ECB) announced that it would accelerate the pace of its purchases under the PEPP pandemic programme in the coming quarter. In this way, the ECB wants to prevent a tightening of financing conditions. However, the low interest rate environment is making traditional business more difficult for the banks. CS Group fell by 4.0 per cent and UBS by 1.6 per cent. Low interest rates are also unfavourable for the investment results of insurers. In the SMI, Swiss Life, Swiss Re and Zurich fell by 0.4 to 1.0 percent. Cyclical stocks, meanwhile, benefited from the economic stimulus package approved by the US Congress late on Wednesday, which US President Joe Biden plans to sign into law on Friday. ABB, Geberit, Lafargeholcim and Sika posted gains of between 0.6 and 2.3 per cent.

International markets

Europe

European stock markets closed sharply higher on Thursday after the European Central Bank (ECB) reassured investors that it will ease tensions in bond markets. The Stoxx Europe 600 index rose 0.5 % to 424.2 points. In Paris, the CAC 40 gained 0.7 per cent to 6,033.8 points, closing above 6,000 for the first time since 21 February 2020. The SBF 120 also gained 0.7 per cent, reaching levels not seen since the same date. In Frankfurt, the DAX 30 rose 0.2% to 14,569 points, hitting a new all-time high, while the FTSE 100 gained 0.2% in London. Banking stocks had been among the beneficiaries of rising market interest rates in the bond markets in recent weeks, but now the cards were reshuffled: the banking stocks sector was the sector loser in Europe with a drop of 1.6 per cent. Burdened by the effects of the pandemic, BMW earned significantly less last year due to declining car sales. Profits slumped by almost a quarter, and the dividend is to be reduced accordingly to 1.90 from 2.50 euros per ordinary share. The premium manufacturer was cautiously optimistic for the current year. The share was quoted 3.5 per cent lower. Astrazeneca (-2.5%) was also under pressure. Denmark and Norway have suspended vaccinations with the British pharmaceutical company's vaccine - temporarily, according to reports. According to the Danish health authority, it has received reports of "severe cases of blood clots forming" in vaccinated people.

United States

The New York Stock Exchange ended higher on Thursday, pushing the Dow Jones and S&P 500 to new all-time highs, as a lull in bond yields and the enactment of the stimulus package fueled investor optimism. At the close, the Dow Jones Industrial Average (DJIA) gained 0.6% to set a second consecutive record at 32,485.59 points. The broader S&P 500 index gained 1% to 3,939.33 points, surpassing its previous record high set on 12 February. The tech-heavy Nasdaq Composite index gained 2.5% to 13,398.67 points. The European Commission announced on Thursday that it had granted conditional marketing authorisation for the Covid-19 vaccine developed by Janssen Pharmaceutica, a pharmaceutical company of the US group Johnson & Johnson (stable). The stock of South Korean e-commerce giant Coupang, which opened at $35 apiece, finished strongly on Thursday in its first trading session, soaring 41.5 percent to $49.52. At this price level, the company is valued at more than $85 billion, a record for a foreign company's IPO since China's Alibaba, which was valued at $168 billion when it entered the US market in 2014. General Electric (-7.5%) continued to decline after Oppenheimer lowered its recommendation on the stock from "outperform" to "in-line performance". The stock had already lost 5.4% on Wednesday after announcing its financial outlook and a share consolidation. Vir Biotechnology (+32.1%) and GlaxoSmithKline announced on Wednesday night that their monoclonal antibody treatment had reduced hospitalizations or deaths from Covid-19 by 85% compared to a placebo in a clinical trial. Bumble shares rose 11% to $69.76.

Asia

The East Asian stock exchanges, apart from China, continue to follow the good lead of Wall Street at the end of the week. The stock exchanges in Tokyo and South Korea record gains of around 1.4 per cent. The Shanghai Composite (+0.4 per cent) recovers somewhat from a weak start to trading, whereas the Hang Seng in Hong Kong loses 0.3 per cent.

Bonds

The 10-year US Treasury yield was little changed on Thursday, at 1.527%, down from 1.518% the previous day, after rising to 1.594% earlier in the week.

Analysis

UBS raises target Standard Chartered to 508 (465) p - Neutral
LBBW lowers ING to Hold (Buy) - Target EUR 11 (9)
Stifel raises Adidas target to EUR 340 (320) – Buy

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