Research Market strategy
By Swissquote Analysts
Published on 12.04.2021
Morning news

Alibaba Hit With Record $2.8 Billion Antitrust Fine in China

Topic of the day

China's antitrust regulator imposed a fine equivalent to $2.8 billion against Alibaba Group Holding Ltd. for abusing its dominant position over rivals and merchants on its e-commerce platforms, a record penalty in the country that comes amid a wave of scrutiny on the business empire of Alibaba founder Jack Ma. China's State Administration for Market Regulation said Saturday in Beijing that Alibaba punished certain merchants who sold goods both on Alibaba and on rival platforms, a practice that it dubbed "er xuan yi"--literally, "choose one out of two." As part of the penalty, regulators will require that Alibaba carry out a comprehensive revamp of its operations and submit a "self-examination compliance report" within the next three years, they said. The 18.2 billion yuan fine is equivalent to 4% of the company's domestic annual sales, the regulator added. Under Chinese rules, antitrust fines are capped at 10% of a company's annual sales. Alibaba's business practices limited competition, affected innovation, infringed on the rights of merchants and harmed the interests of consumers, the regulator said. Alibaba Group's $2.8 billion antitrust fine from China's market regulator is likely a manageable one-off expense for the e-commerce giant, Nomura says. Nomura maintains its buy rating and target price on Alibaba's ADRs, which closed 2.2% lower at $223.31. Alibaba's H-shares jump 7.3% to HK$234.00.

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Swiss stocks

Swiss equities went into the weekend on a somewhat firmer footing. The SMI gained 0.3 percent on Friday to 11,239 points. It is now not far from the record high of 11,270 points, which the index reached in February last year before the pandemic-related slump in prices. Among the 20 SMI stocks, there were 15 price gainers and five price losers. 53.39 million shares were traded (previously: 40.38 million). Economic cyclicals were just as sought after as defensive stocks. Index heavyweight Nestle rose 0.5 percent. The shares of fragrance and flavor manufacturer Givaudan improved by 1.7 percent. In the pharmaceutical sector, Lonza (+1.9 percent) led the way, with Novartis, Roche and Alcon posting gains of 0.3 to 0.8 percent. Among cyclicals, ABB advanced 1.2 percent and Geberit was up 0.9 percent. Lafargeholcim closed 0.9 percent higher after the company proposed a dividend of 2 francs per share for the past fiscal year. Financial stocks mostly lagged the market. They suffered from the recent decline in bond yields. At Credit Suisse (-2.3%), a negative analyst comment was added: Morgan Stanley had downgraded the bank's shares to "Equalweight" from "Overweight". The price of the insurer Zurich gave up only visually by 4.7 percent or 18.90 francs. The stock was trading at a dividend discount of 20 francs on Friday.

International markets

Europe

European stocks are mostly higher on optimism that the region's vaccine rollout will accelerate after a slow start. The Stoxx Europe 600 and CAC-40 rise 0.1%, the DAX gains 0.2% and the FTSE 100 falls 0.4%. "Expectations are growing that the EU is turning a corner in the fight against Covid and that sunnier days will be here next month," Oanda analyst Edward Moya says, noting the EU has secured more vaccines. JD Sports Fashion shares advance 5.1% after Berenberg said the retailer was its top pick in consumer discretionary. Fuchs Petrolub gains 4.8% after Baader Bank upgraded the lubricant manufacturer to buy from sell. Jewellery maker Pandora falls 3.8% after a trading update. Babcock shares fell by 1.6 percent. A circular report in the Financial Times, according to which value adjustments of up to 700 million pounds could be pending at the British defense group, was classified as a burden in trading. After it was already passed around on the stock exchange the previous day, ACS (-0.8%) has now officially expressed its interest in acquiring an 88% stake in Italy's largest freeway operator Autostrade per l'Italia (Aspi). Its value is said to be between 9 and 10 billion euros.

United States

Stocks rose Friday, led by some of the most economically sensitive sectors, and powered the Dow Jones Industrial Average and S&P 500 indexes to records. The rally comes as inflationary signals emerged convincingly. The Dow rose 297.03 points, or 0.89%, to close at 33,800.60, and the S&P 500 tacked on 31.63 points, or 0.77%, to end at 4,128.80. The Nasdaq Composite rose 70.88 points, or 0.51%, to close at 13,900.19. The biggest gainer in the S&P 500 was PVH (ticker: PVH), an apparel maker whose shares soared 5.6%. Among other individual stocks, Johnson & Johnson (J&J) shares were down 1.1 percent. Due to recent quality deficiencies at a contract manufacturer that rendered about 15 million doses of J&J's Corona vaccine unusable, the pharmaceutical company will ship 80 percent fewer vaccine doses in the U.S. next week than this week. In addition, the European Medicines Agency (EMA) is investigating a possible link between the J&J vaccine and cases of thrombosis. Boeing lost 1.0 percent. Just months before the 737 Max is due for re-certification, the plane maker alerted several airlines to a possible new problem with the planes' electrical system. Amazon rose 2.2 percent. A majority of the company's employees at its Bessemer, Alabama, facility voted against forming a union.

Asia

The stock exchanges in East Asia start the new week predominantly with losses, ignoring the positive guidance from the U.S. stock exchanges. The leading index of the Hong Kong stock exchange, the Hang Seng, is down 1.0 percent. On the Tokyo Stock Exchange, the Nikkei 225 index falls by 0.5 percent to 29,618 points. Holding up better than other Asian bourses is the stock market in Seoul, where the Kospi advances 0.1 percent. SK Innovation gains 14.7 and LG Chem 2.1 percent after both companies settled a legal dispute and SK Innovation can now build a factory in the US.

Bonds

The 10-year Treasury yield inched up to 1.66% on Friday from 1.63%. Investors are taking note of the inflationary dynamics in the economy even though the Fed has consistently reiterated its policy will remain accommodative of the economy and financial markets for the foreseeable future.

Analysis

Jefferies raises Lafargeholcim target to CHF 57.40 (51.40) - Hold
MS lowers Credit Suisse to Equalw. (Overw.) - Target CHF 11 (14)
Jefferies raises Saint-Gobain target to EUR 58.30 (41.40) - Hold

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