Research Market strategy
By Swissquote Analysts
Published on 05.10.2021
Morning news

Volvo Cars Announces IPO Plan That Could Value It at $25 Billion

Topic of the day

Volvo Cars, the Swedish auto maker owned by China’s Zhejiang Geely Holding, said Monday it would proceed with an initial public offering in Stockholm, in a deal that people familiar with the matter say could value it at upward of $25 billion. Volvo said it aims to raise about 25 billion kronor, equivalent to $2.86 billion, from the issue of new shares. Geely could also sell an unspecified number of its shares. Volvo didn’t provide a target valuation of the entire company following any IPO, or say what percentage stake Geely would retain. Geely has previously indicated it would likely remain a major shareholder after any offering. The proceeds of the IPO will go toward financing Volvo’s efforts to transform its fleet into a fully electric one. It will also invest in battery supply in Europe, the U.S. and China and in the in-house production of electric motors. “The intention here is to secure the future of the company,” Volvo Cars Chief Executive Hakan Samuelsson said in an interview. “Volvo will be an electric car company.” The Wall Street Journal first reported that Volvo was finalizing its IPO plans and was expected to disclose them as early as Monday.

Swiss stocks

Gains in defensive stocks in particular kept the Swiss stock market up on Monday. The focus was on old concerns about supply chain problems and high inflation. The SMI gained 0.1 per cent to 11,582 points. Among the 20 SMI stocks, there were 13 price losers and 7 price winners. 28.26 (previously: 35.88) million shares were traded. Among the defensive heavyweights, which were favoured due to the aforementioned concerns, Nestle and Novartis advanced by 0.3 per cent each and Roche by 1.2 per cent. Financial stocks trended inconsistently, with uncertainty about interest rate developments causing volatility. UBS fell 0.1 per cent and Credit Suisse lost 0.4 per cent, while Swiss Re rose 0.1 per cent. Under pressure in the sector were Partners Group, down 2.4 per cent. The share is up far more than average this year (around 40 per cent), so profit-taking weighed here. The same was true for Alcon (up 26% for the year), which fell by 2.5 per cent.

International markets


European equity markets ended lower on Monday, following US markets hit by uncertainty over President Biden's reform agenda and the US debt ceiling. The suspension of the listing of troubled Chinese property developer Evergrande in Hong Kong and rising oil prices added to investor wariness. The Stoxx Europe 600 index fell 0.5% to 450.8 points. In Paris, the CAC 40 and the SBF 120 each lost 0.6%. In Frankfurt, the DAX 40 lost 0.8% and the FTSE 100 in London gave up 0.2%. The European oil majors stood out thanks to the rise in crude oil prices. TotalEnergies rose 2% in Paris. Deutsche Lufthansa AG said on Sunday that it has added more than 130 flights to its fall holiday schedules amid an uptick in demand. After August, October has shown the highest increase in bookings to sunny European destinations, the airline said. The German carrier said it has expanded its flight program by more than 80 additional flights from Frankfurt Airport and more than 50 additional flights from Munich. A consortium led by U.S. buyout firm Clayton, Dubilier & Rice won the bidding war for U.K. grocery chain Wm Morrison Supermarkets PLC, an almost $9.4 billion bet that highlights the extreme lengths private-equity firms are willing to go amid a global deal frenzy. The CD&R-led group emerged as the front-runner after outbidding SoftBank Group Corp.’s Fortress Investment Group LLC and its partners in an unusual one-day auction held Saturday to decide the victor. The U.K. Takeover Panel, a government arm that oversees deal making in the country, held the contest to end a monthslong standoff fueled by increased offers by each side.

United States

A selloff in Facebook stock and other big technology companies rippled through the market, pushing major U.S. indexes toward steep declines to start the week. Stocks opened with mild declines before losses quickly accelerated. The S&P 500 dropped 1.3%. The broad index closed last week down 2.2%. The tech-heavy Nasdaq Composite Index declined around 2.1%. The Dow Jones Industrial Average lost around 0.9%. The session's moves continued a recent trend of underperformance in big technology companies. Investors have fled shares of the highflying stocks as bond yields have quickly lurched higher. After notching big gains since early last year, tech has been particularly volatile in recent sessions. The tech-heavy Nasdaq Composite posted its third drop of at least 2% since early September. Facebook Inc.’s services went offline for as much as six hours Monday before some of them were restored, an extended outage that disrupted access for users and businesses around the world and left the tech company flailing for a solution. The company apologized for the outage, which affected its core platforms and apps including WhatsApp, Instagram, and Facebook Messenger - and which an outside tracking firm said appeared to be the most widespread in its history. Facebook said the problem was due to networking issues. Outside experts said it appeared to stem from a change the company made to networking instructions for access to its systems. Shares of Amplify Energy Corp. lost nearly half their value Monday after a major oil spill at the company’s platform off the coast of Orange County, Calif., over the weekend. California officials on Sunday were trying to limit damage from the spill of an estimated 126,000 gallons that extended from Newport Beach to Huntington Beach, a distance of about 6 miles.


East Asian stock markets mostly followed the weak lead of Wall Street on Tuesday. As in the USA, concerns about sustained high inflation in the face of ever-rising energy prices and the associated fears of an economic slowdown are weighing on sentiment. In Tokyo, the Nikkei index fell by 1.9 per cent to 27,897 points, while the Kospi in Seoul slumped by 1.7 per cent after the holiday break on Monday.


U.S. government bond yields added to gains in Asia but the yield on the benchmark 10-year Treasury note remained below 1.5%. Yields edged up Monday but selling in Treasurys moderated as stocks fell sharply and government debt drew some modest bids.


CS rises Societe Generale to 35 (34) EUR – Outperform
JPM lowers Vestas target to 196 (200) DKK – Neutral
Barclays rises BP target to 5,00 (4,75) GBP – Overweight

Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.