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By Swissquote Analysts
Published on 14.02.2022
Morning news

BMW Takes Control of China Venture, Sees Big Profit Gains

Topic of the day

Bayerische Motoren Werke AG (+2.7%) said it has taken majority control of its Chinese joint venture, securing its grip on its operations in the world’s biggest auto market. Under the deal, effective Friday, BMW said it is paying 3.7 billion euros, equivalent to $4.2 billion, to raise its stake in BMW Brilliance Automotive Ltd. to 75% from 50%, a move it flagged in 2018. BMW’s partner, Brilliance China Automotive Holdings Ltd., will retain 25% of the venture. BMW said the move would create a one-off financial gain of €7 billion to €8 billion as a result of the higher valuation of the asset, as well boosting its cash flow and earnings significantly. BMW said it delivered 846,237 vehicles from its BMW and Mini brands to customers in China last year, an increase of 21% from the previous year. China accounts for about 40% of BMW’s total auto sales. The BBA venture produced about 700,000 vehicles for BMW last year.

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Swiss stocks

On Friday, the SMI lost 0.7 per cent to 12,232 points. Among the 20 SMI stocks, there were 17 price losers and three price winners. 43.05 (previously: 59.26) million shares were traded. Credit Suisse continued its weakness from the previous day and lost a further 0.3 per cent. The bank had massively disappointed with its quarterly figures the day before. UBS also fell by 0.7 per cent. Zurich Insurance recovered 1.3 per cent. Among the heavyweights, Nestle stood out with a gain of 1.1 per cent. The share has recently underperformed the SMI. Roche, on the other hand, fell by 1.9 per cent. Cyclicals tended to be weak. ABB fell by 1.5 per cent and Geberit by 1.6 per cent.

International markets


European equity indices gave up ground on Friday as investors anticipated a tightening of monetary policy by the Federal Reserve (Fed) following the announcement of record inflation in the US in January. The Stoxx Europe 600 index fell 0.6% to 469.6 points. For the week as a whole, the Stoxx Europe 600 index gained 1.6%. In Paris, the CAC 40 and SBF 120 lost 1.3% and 1.2% respectively on Friday. In Frankfurt, the DAX 40 was down 0.4%, and the FTSE 100 in London decreased by 0.2%. Pharmaceutical company Ipsen gained 6.4% after announcing exclusive negotiations with independent pharmaceutical company Mayoly Spindler for the sale of its family health division. The group also reported Friday 2021 results and 2022 targets above analysts' forecasts. Atos rebounded 4.3% on Friday, after losing 4.5% the day before following a new profit warning. Euronext (-2.6%) expects underlying operating costs, excluding marketing expenses, of around €622m this year after the integration of Borsa Italiana. EDF (-2.4%) lowered its 2023 nuclear production estimate for France due to the numerous reactor outages planned for maintenance and inspection. TF1 (+1.9%) has clearly exceeded its margin target for 2021. Shares in premium-car maker Mercedes-Benz rose after the German company said it beat its own expectations for 2021. Mercedes-Benz, which changed its name from Daimler recently after spinning off its trucks business, targeted 10% to 12% of adjusted return on sales for the Mercedes-Benz Cars & Vans segment for the full year and now expects around 12.7%. For the fourth quarter of last year, it sees the car business's adjusted return on sales at 15%, boosted by solid net pricing, good product mix and favorable used-car performance. Shares in Mercedes-Benz gained 6.7% on the Frankfurt Stock Exchange. Banco BPM shares jumped 9.8% on the Milan Stock Exchange after press reports that UniCredit may consider a takeover of the Italian bank. Delivery Hero shares tumbled a further 11.8%.

United States

U.S. stocks and bond yields sank Friday, as growing tensions between Russia and Ukraine sent investors flocking to safer assets. The retreat from stocks extended a selloff that began Thursday after data showed inflation hit 7.5% in January, raising fresh concerns that the Federal Reserve might have to tighten monetary policy more aggressively than once thought. The S&P 500 tumbled 85.44 points or 1.9% in Friday trading, to settle at 4418.64. Its combined two-day loss over Thursday and Friday amounted to 3.7%, the index’s largest two-day percentage decline since October 2020. The technology-heavy Nasdaq Composite slid 394.49 points, or 2.8%, on Friday to finish at 13791.15. The Dow Jones Industrial Average lost 503.53 points, or 1.4%, to end at 34738.06. All three major indexes ended the week with losses. The S&P 500 and Nasdaq Composite lost 1.8% and 2.2%, respectively, for the week. The Dow ended with a weekly loss of 1%. Among S&P 500 sectors, only the energy and utilities groups finished the day higher Friday. Occidental Petroleum gained $2.30, or about 5.7%, to finish at $42.98. Hess added $3.80, or 4.1%, to close at $96.20. Zillow’s Class C shares gained $6.61, or 14%, to finish at $55.40 after it reported a jump in revenue for its core unit, despite losing $881 million on its closed home-flipping business last year. Fintech company Affirm lost $12.13, or 21%, to close at $46.55 after its sales forecast came in below Wall Street’s expectations. It also plunged 21% Thursday. Apollo Global Management fell by $4, or 5.7%, to end at $65.67 after it reported a lower profit. The Wall Street Journal reported that the private-equity firm was nearing a deal to buy Worldline’s point-of-sale terminal business.


In Asia, major indexes broadly closed with losses. Japan's Nikkei Stock Average was down 2.1% at 27127, dragged by falls in electronics stocks, as equity markets remained unnerved by Russia-Ukraine tensions and the prospect of Fed policy tightening. Bridgestone slumped 7.9% as rising crude-oil prices raise concerns about higher costs of raw materials. Meanwhile, oil explorer Inpex jumped 6.7%. Earnings remain in focus with Recruit Holdings, Nippon Paint Holdings and Dentsu Group scheduled to announce their results later in the day. Shanghai (-0.9 per cent), Hong Kong (-1.3 per cent) and Seoul (-1.2 per cent) slipped as well.


Treasury yields fell Friday as the U.S. warned that a Russian invasion of Ukraine could occur in the coming days, sparking demand for assets perceived as safe. The yield on the benchmark 10-year U.S. Treasury note hit its highest session level since August 2019 on Friday, at 2.036%, before easing to end down 12 basis points at 1.914%. The 2-year Treasury bond yield lost 10 basis points to 1.488%, after its sharp rise the previous day. The yield on the 10-year German Bund was 0.297%, down from 0.285% on Thursday evening.


Bryan Garnier starts Medios with Buy - Target 65 EUR

LBBW raises Deutsche Börse target to EUR 175 (170) - Buy

Metzler lowers Bechtle target to 53 (64) EUR - Hold

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