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By Swissquote Analysts
Published on 25.05.2022
Morning news

Samsung Group to Invest in Chips, Biopharmaceuticals, Next-Generation Technology

Topic of the day

Samsung Group said Tuesday that it would invest about $356 billion over the next five years in its semiconductor and biopharmaceuticals businesses, as well as other next-generation technologies, where global competition is intensifying. The plan extends and increases a decision to invest $190 billion through 2024, announced in August last year. The South Korean conglomerate didn’t specify how much of the new investment will go to which business areas. But the plan--which includes capital expenditure and research and development spending--will be led by the group’s crown jewel, Samsung Electronics Co., and Samsung Biologics Co., according to the group. Samsung Electronics aims to defend its lead in its mainstay memory-chip business and boost its chip-design and contract chip-manufacturing operations, where global rivals have been actively ramping up investments, the group said. Last year, Samsung Electronics announced plans for a new contract chip-making factory in Texas dedicated to advanced chip production. Last week, U.S. President Joe Biden visited a Samsung semiconductor plant during his three-day visit to South Korea, underscoring the technology ties between the two countries and the crucial role of chips in strengthening supply chains.

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Swiss stocks

The Swiss stock exchange was able to escape the downward pull on neighbouring stock exchanges in Europe on Tuesday. While the German and Paris stock markets, for example, fell by up to 1.8 per cent, also burdened by a downward trend on Wall Street, the SMI ended the day up 0.2 per cent at 11,484 points. Among the 20 SMI stocks, there were 13 price losers and 6 price gainers; the heavily weighted Novartis share closed unchanged. 34.58 (Monday: 35.93) million shares were traded. The index benefited from the fact that particularly heavily weighted stocks are considered less cyclical and are therefore comparatively resistant to the stagflation fears currently weighing on the stock markets. The pharmaceutical heavyweight Roche (+2.1%) closed with a plus, as did the share of the food giant Nestle (+0.1%). Swisscom (+1.6%) is also considered to be rather resistant to the economy. In addition, the gain at Richemont (+0.5%) provided support, although this was only a small counter-reaction to the losses previously seen after weak business figures. On the reporting day, further price target reductions for the stock came from Stifel and Jefferies, although both houses continue to recommend the stock as a buy.

International markets


European stock indices ended sharply lower on Tuesday, reacting to an earnings warning from Snap, the parent company of US social network Snapchat, as investors continued to scrutinise the health of the European economy. The Stoxx Europe 600 index fell 1.1% to 431.6 points. In Paris, the CAC 40 and SBF 120 lost 1.7% each. In Frankfurt, the DAX 40 gave up 1.8%, while the FTSE 100 in London fell by 0.4%. Prozent. KPMG LLP agreed to pay a fine after the Financial Reporting Council found shortfalls in its audit of Rolls-Royce Holdings PLC, the British jet engine and car manufacturer that settled bribery allegations in 2017. The U.K. audit regulator on Tuesday said it imposed sanctions of £3.4 million - equivalent to $4.2 million - against the professional-services firm and £112,500 against audit partner Anthony Sykes. The investigation, which the FRC announced in 2017, focused on KPMG’s audits of Rolls-Royce for the years ended Dec. 31, 2010, through Dec. 31, 2013. The FRC found no breaches of conduct in the audits spanning 2011 to 2013. Germany’s Bayer AG is working to improve its forecasting capabilities with the help of new technologies and data. While the company doesn’t rely on fully automated forecasts for its divisions yet, it is experimenting with advanced forecasting and predictive analytics, according to Chief Financial Officer Wolfgang Nickl.

United States

U.S. stock indexes ended mostly lower and a selloff in technology stocks deepened as concerns about economic growth and rising interest rates continued to weigh on markets. The S&P 500 fell 32.27, or 0.8%, to finish Tuesday at 3941.48. The tech-heavy Nasdaq Composite slid 270.83, or 2.3%, to 11264.45. The Dow Jones Industrial Average rallied near the closing bell to finish up 48.38, or 0.2%, at 31928.62, after falling as much as 1.6% intraday. All three of the major indexes had fallen more deeply into the red on Tuesday morning as downbeat reports about home sales and corporate outlooks deepened investors' gloom. Stocks recovered somewhat later in the day, but investors said that finding good reasons to jump into the market remained an uphill battle as negative signs about the economy's health mount. Weighing on investors Tuesday was a profit and revenue warning from social-media company Snap a day earlier that soured sentiment about the tech sector. The disappointing report Tuesday showing slower U.S. new-home sales in April further dimmed the mood. Snap's shares plummeted $9.68, or 43%, to finish at $12.79 on Tuesday as investors digested its comments that the macroeconomic environment has deteriorated more than expected. Worries about disruptions to Snap's advertising revenue rippled to other tech stocks that have been battered this year. Meta Platforms shed $14.95, or 7.6%, to close at $181.28 and Google parent Alphabet fell $110.36, or 5%, ending at $2,119.40. Despite Tuesday's broad technology selloff, there were bright spots in the market. Zoom Video Communications climbed $5.01, or 5.6%, to $94.34 after the videoconferencing-services company raised its profit outlook.


At midweek, the stock markets in East Asia and Australia are mostly up. Traders say that investors are taking advantage of the previous day's losses to buy on occasion. On the Hong Kong stock market, the Hang Seng Index advanced 0.6 per cent. Early indications of consolidation gave investors hope that prices were gradually finding a bottom, reports Tina Teng, market analyst at HSBC. In Tokyo, the Nikkei 225 index is little changed after a negative start. The Kospi in Seoul gains 0.9 per cent.


Tuesday's selloff in technology stocks sent investors scooping up government bonds, with the yield on the benchmark 10-year U.S. Treasury note falling to 2.758% from 2.857% Monday. A bond's yield falls when its price rises.


CS raises Barclays target to 245 (240) p – Outperform

UBS raises Linde target to EUR 365 (345) – Buy

CS lowers Signify target to EUR 40 – Neutral

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