Research Market strategy
By Swissquote Analysts
Published on 31.03.2021
Morning news

Electric Jet Maker Lilium to go Public via Merger with SPAC Qell

Topic of the day

Lilium GmbH, a Munich-based maker of an electric vertical take-off and landing jet, said it is going public via a merger with special purpose acquisition corporation Qell Acquisition Corp. in a deal with an implied $3.3 billion pro forma equity value. Qell, a SPAC or blank-check company, is led by Barry Engle, a former president of General Motors North America, and aims to invest in next-generation sustainable mobility. Once the deal closes, the company will be renamed Lilium and trade on Nasdaq under the ticker symbol "LILM." "Lilium can revolutionize regional travel, saving people hours not minutes," the companies said in a joint statement. "Using its 7-Seater Lilium Jet, revealed today, Lilium's regional shuttle service will enable sustainable, high-speed transportation." Lilium is expected to receive about $830 million of gross proceeds from a PIPE offering of $450 million along with $380 million cash held in trust by the SPAC. The deal is expected to close in the second quarter.

Swiss stocks

The SMI closed up 0.3 percent on 11,121 points Tuesday. Apart for Credit Suisse, bank stocks saw a recovery after Monday’s losses. Cyclical stocks were particularly in demand. Credit Suisse again had the sharpest decline, falling 3.1 percent. On Monday, US-based hedge fund Archegos Capital Management’s payment problems had caused Credit Suisse to tank and pulled down other bank stocks. Analysts estimate the Credit Suisse loss from the payment default at around USD 3.5 billion before tax. Competitor UBS recovered 1.1 percent, while asset management firm Partners Group climbed 1.7 percent. Insurers also performed well, with Zurich up 1.2 percent, Swiss Life 0.9 percent, and Swiss Re 0.3 percent. Swatch surged 3.3 percent to lead the SMI, after analysts upgraded it to “buy” from “hold”, saying they see good cyclical recovery potential for Swatch and expect a V-shaped recovery in turnover and profit. Richemont climbed 2.4 percent in its wake. Index heavyweight Nestle gained 0.7 percent.

International markets


The European stock markets went up significantly on Tuesday. There was good news from Europe in the morning. Economic sentiment in the Eurozone improved surprisingly strongly in March. For the first time since the outbreak of the pandemic, the indicator is now slightly above its long-term average. The composite economic sentiment index published by the European Commission rose to 101.1 points from 93.4 in the previous month. The DAX gained 1.3 per cent to 15,009 points in comparatively quiet trading, and a new all-time high was marked at 15,030 points in the afternoon. Germany's leading index passed the 15,000-point mark for the first time. The Euro Stoxx 50 rose by 1.1 per cent to 3,926 points. Royal Mail PLC said Tuesday that it will pay a one-off final dividend of 10 pence (14 U.S. cents) a share in respect of fiscal 2021, and that trading has been broadly in line since its March 10 update. The U.K. postal company said that for the year to March, it expects its General Logistics Systems business to report adjusted operating profit--a key measure which strips out exceptional and other one-off items--of around 350 million pounds ($481.7 million), with an adjusted operating profit margin around 8.7%.

United States

Major U.S. stock indexes retreated as investors sold shares of technology companies that had powered higher in a low-yield environment. The S&P 500 fell 0.3% as of the 4 p.m. close of trading in New York, while the Dow Jones Industrial Average also dropped 0.3%. The Nasdaq Composite slipped 0.1%. Declines in shares of Microsoft, Apple, and Facebook weighed on the broad stock market. BioNTech SE said Tuesday that it swung to profit for the fourth quarter as revenue soared and that it and Pfizer Inc. expect to expand coronavirus vaccine manufacturing capacity to up to 2.5 billion doses by year end. The German pharmaceutical company posted net profit of 366.9 million euros ($431.6 million) for the quarter, boosted by sales of the Covid-19 vaccine it is manufacturing with Pfizer, compared with a net loss of EUR58.2 million in the same period a year prior. Revenue for the quarter rose to EUR345.4 million, compared with EUR28 million in the fourth quarter of 2019, the company said. Merck & Co. Inc. said that after the intended Merck spinoff of Organon, Organon will acquire Alydia Health. Alydia Health is a commercial-stage medical device company focused on preventing maternal morbidity and mortality caused by postpartum hemorrhage or abnormal postpartum uterine bleeding. Organon will be a global healthcare company formed through a spinoff from Merck to focus on women's health. Organon agreed to acquire Alydia Health for up to $240 million total consideration, including $215 million upfront plus a $25 million contingent milestone payment.


As already seen on Wall Street, rising bond yields in the USA are once again weighing on the stock markets in Asia. Even better-than-expected economic data in China did little to lift sentiment. Activity in Chinese industry rose more than expected in March and recovered from the production interruption during the Chinese New Year. Purchasing managers' indices for both the manufacturing and services sectors increased, clearly pointing to expansion.


Yields on U.S. government bonds moved higher again in Asia after they marked new territory in their recent climb on Tuesday before quickly retreating, as investors focused on Washington's spending plans and prepared for the end of the quarter. The yield on the benchmark 10-year Treasury note rose as high as 1.773% early in the session on Tuesday-its highest intraday level since January 2020-but was back to 1.724% at the close. Recently, it was at 1.743%.


UBS rises the LVMH target to 640 (623) EUR – Buy
UBS rises the Kering target to 590 (585) EUR – Neutral
JPM rises the Flutter target to 16.233 (15.038) p – Neutral

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