Research Market strategy
By Swissquote Analysts
Published on 30.06.2022
Morning news

Chinese Lithium Giant Targets Up to $1.7 Billion in Hong Kong IPO

Topic of the day

Tianqi Lithium Corp., one of the world's largest producers of battery-grade lithium compounds, said Wednesday that it plans to raise the equivalent of up to $1.7 billion in a Hong Kong initial public offering, braving a subdued global market for stock issuance. Investment banks handling the transaction will start taking orders from investors on Thursday and price the deal on July 6. The lithium producer expects to list on July 13. The listing is poised to become the largest IPO in Hong Kong so far this year. Tianqi Lithium set a maximum price for its shares of 82 Hong Kong dollars, the equivalent of $10.45 apiece. At that price, Tianqi Lithium would pocket about $1.7 billion from the share sale. Tianqi Lithium shares are already traded in mainland China, and the high end of the IPO price range is roughly 43% below the Wednesday closing price of its Shenzhen-listed stock. The company's Shenzhen-listed shares declined 4.4% on Wednesday to close at 122.80 yuan, or the equivalent of about $18.31. They have roughly doubled in the past 12 months. Thursday morning, Tianqi Lithium Corp. A shares added 2% to 125.30 yen in Shenzen.

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Swiss stocks

In midweek trading, the SMI gained 2 points to 10,812 points. At the low for the day, the index had already been at 10,663 points. Among the 20 SMI stocks, there were 15 losers and 5 winners. Turnover was 32.24 (previously: 31.41) million shares. Novartis increased by 0.1 percent only. According to the company, up to 8,000 of the total 108,000 jobs will be eliminated. The layoffs will most heavily affect the company's headquarters in Switzerland. The move is part of a larger strategy announced by the group in April. At the time, Novartis said it planned to combine its pharmaceuticals and oncology businesses and scheduled job cuts. The goal is to achieve annual savings of at least $1 billion by 2024. Roche shares rose 0.7 percent. Nestle gained 1.6 percent. The list of winners in the SMI was headed by Givaudan, which added 2.6 percent.

International markets


European shares declined significantly on Wednesday, tracking global losses and ahead of a panel of major central bank officials that is expected to provide insight into their views on the economy, inflation and the path of monetary policy. The Stoxx Europe 600 index fell 0.7% to 413.4 points. In Paris, the CAC 40 and the SBF 120 lost 0.9% and 1% respectively. In Frankfurt, the DAX 40 gave up 1.7%, and the FTSE 100 in London erased 0.2%. Inflation in Spain rose to 10.2% in June over a year, its highest level in 37 years, according to a first estimate from the National Statistics Institute (INE) published Wednesday. In Germany, inflation slowed slightly to 8.2% in June year-on-year, but this was partly due to new measures to support purchasing power. Real estate companies were punished, penalised by fears of a rise in interest rates which weakens the valuation of their assets. Covivio and Gecina dropped 6.5% and 5.5% respectively. Unibail-Rodamco Westfield fell 4.1%, while Klépierre lost 5.7%. Less exposed to inflation, the pharmaceutical sector stood out. Sanofi gained 1.5% and its former subsidiary Europi added 5.8%. Ipsen (+4.8%) announced that the US health authority had granted a priority review to its application for approval of the experimental drug palovarotene for the treatment of patients with fibrodysplasia ossificans progressiva (FOP). TF1 (-2.9%) has signed an agreement with the Reworld Media group to sell its digital media division Unify, which publishes the websites Marmiton, Doctissimo and auféminin. Just Eat (down 16.5% in Amsterdam) is hoping to find a strategic partner to invest in its US subsidiary Grubhub, but a full sale is not out of the question, said Grubhub's chief executive Adam DeWitt. H&M (+2.2% in Stockholm) on Wednesday launched a share buyback programme worth SEK 3 billion (EUR 281.2 million).

United States

U.S. stocks finished with only slight moves as investors digested comments from central bankers at a panel in Europe and looked toward another round of quarterly earnings reports. The Dow Jones Industrial Average added 82.32 points, or 0.3%, to 31029.31 on Wednesday. The S&P 500 fell 2.72 points, or less than 0.1%, to 3818.83, and the Nasdaq Composite Index lost 3.65 points, or 0.03%, to 11177.89. After three consecutive years of double-digit gains, the market is suffering a bruising first half. The S&P 500 is down about 20% so far this year, putting it on pace for the worst first half in five decades. Stock prices have been hurt by forces that appear in nearly every cycle, such as rising interest rates and slowing growth. The rapid return of inflation, a wobbling Chinese economy and a war in Ukraine that shocked commodity markets have also weighed on stocks. One silver lining for investors: A bad first half doesn’t guarantee a bad second half. In 1970, the S&P 500 fell 21% in the first half and then gained 27% in the second half, ending the year roughly flat. On Wednesday, retailer Bed Bath & Beyond disappointed the market expectations. The stock fell $1.54, or 24%, to $4.99 after the company posted a bigger quarterly loss than Wall Street expected and said its chief executive is leaving. Shares of General Mills rose $4.46, or 6.3%, to $74.72 after the company said higher prices helped lift sales even as the food maker sold fewer items across the board. Consumer-staples stocks have been standouts in 2022. Cruise company Carnival fell $1.46, or 14%, to $8.87, accelerating a decline spurred by a series of price-target cuts by equity research analysts. The price of bitcoin hovered around $20,000. A court in the British Virgin Islands ordered the cryptocurrency hedge fund Three Arrows Capital to liquidate after creditors sued it for failure to repay debts.


In Asia, major indexes closed mixed. In Tokyo, the Nikkei-225 fell by 1.6 per cent to 26,387 points. Sanrio, however, is up 12 per cent, supported by headlines that the owner of the "Hello Kitty" brand is planning a licensing agreement in China with Alibaba Pictures Group. While stock prices in Hong Kong are flat, the index in Shanghai added 1.3 per cent. Chongqing Changan Automobile, however, decreased by 5.2 per cent and Guangzhou Automobile lost 2.9 per cent. In South Korea, the Kospi slipped by over 1 per cent.


U.S. government debt yields posted their biggest declines in a week on Wednesday, ending three straight sessions of gains, after data showed U.S. economic growth unexpectedly contracted by a revised 1.6% annual pace and triggered ongoing recession fears. The 10-year Treasury note fell 11 basis points to 3.093% while the 2-year bond rate dropped 7 basis points to 3.057%.


Deutsche Bank lowers Novartis target to CHF 75 (80) - Sell

JP Morgan reduces Swisscom to Neutral (Overweight)/Target CHF 676 (608)

Goldman Sachs cuts Arcelor target to EUR 30 (35)/Neutral

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