By Swissquote Analysts
Credit Suisse Completes $2.4 Billion Capital Raise as It Advances Cost Cuts
Topic of the day
Credit Suisse Group AG said Thursday that it completed its latest rights offering and had put into action around 80% of the cost cuts it planned for 2023, as the bank maintains course through its painful strategic review. The Swiss lender said that 98.2% of rights offered had been exercised, or around 873 million new shares, until the end of the rights period at midday Zurich time on Thursday. The gross proceeds of the rights offering amount to approximately CHF2.24 billion ($2.38 billion), which, added to a previous capital increase, should raise around CHF4.0 billion, the company said. The rights issue was a cornerstone of Credit Suisse’s strategic review announced on Oct. 27, as the bank tries to overcome multiple quarters of losses. “It will allow us to further support our strategic priorities from a position of capital strength and create a simpler, more stable and more focused bank built,” Chief Executive Ulrich Koerner said. Cost actions already initiated as of Dec. 8 are expected to represent around 80% of the cost-base reduction target in 2023 of about CHF1.2 billion, the Zurich-based bank said.
The Switzerland stock market ended flat on Thursday after a lackluster session as investors, looking for direction, largely stayed away on the sidelines. The benchmark SMI, which moved in a tight range once again, ended with a loss of 5.42 points or 0.05% at 11,004.53. The index, which edged up to 11,035.96 in early trades, dropped to a low of 10,940.27 later on in the session. Lonza Group drifted down 2.27%. Swiss Life Holding and Givaudan ended lower by 1.96% and 1.8%, respectively. Partners Group shed 1.33%, and Geberit lost 1.24%. Novartis ended lower by 0.56%. ABB, Sonova and UBS Group also ended weak. Credit Suisse rallied 3.2%. Swiss Re, Richemont and Alcon gained 1.8%, 1.4% and 1.2%, respectively. In the Mid Price Index, Adecco, Zur Rose and Kuehne & Nagel lost 1.7 to 2.25%. Ems Chemie Holding, Helvetia, Baloise Holding and Clariant also ended notably lower. AMS rallied 2.75% and Swatch Group gained about 2.5%. Barry Callebaut surged nearly 2%. Temenos Group, VAT Group, Tecan Group and Georg Fisher also posted notable gains.
European stocks closed lower on Thursday, extending recent losses, as concerns over a recession, and rising interest rates continued to hurt sentiment. Investors, looking ahead to the upcoming meetings of major central banks, largely stayed cautious and refrained from making significant moves. The pan European Stoxx 600 ended down 0.17%. The U.K.'s FTSE 100 and France's CAC 40 drifted down 0.23% and 0.2%, respectively, while Germany's DAX edged up 0.02%. Switzerland's SMI edged down 0.05%. Among other markets in Europe, Belgium, Czech Republic, Finland, Ireland, Poland, Portugal and Russia ended weak. Denmark, Greece, Netherlands, Norway, Sweden and Turkiye closed higher, while Austria, Iceland and Spain settled flat. In the UK market, Haleon climbed nearly 3.5%. Rio Tinto ended nearly 3% up. Fresnillo, Pershing Square Holdings, Antofagasta and Glencore gained 1.5 to 2.3%. Hargreaves Lansdown gained nearly 1.5% after announcing the appointment of Dan Olley as Chief Executive Officer to succeed Chris Hill. Frasers Group shares tumbled 9% despite posting a jump in sales and profits for the past six months. ICP ended nearly 5% down, while BT Group and Airtel Africa lost 3 to 3.7%. British American Tobacco shares declined sharply after it forecast revenue growth between 2% and 4% at constant currency rates for the year ending December 31. In Paris, Stellantis, Teleperformance, Sanofi, Alstom, Danone, Engie and Publicis Groupe ended lower by 1 to 2%. STMicroElectronics rallied 2.3%. ArcelorMittal also advanced more than 2%. Airbus Group, Thales andWorldLine gained 1.6 to 1.8%. Unibail Rodamco, LVMH, TotalEnergies and Safran also posted notable gains. In the German market, BMW drifted down more than 2%. Volkswagen, Porsche Automobil, Deutsche Post, RWE and BASF also ended weak. Deutsche Wohnen surged 2.6% and Infineon Technologies gained about 2.2%. MTU Aero Engines, Continental, Fresenius, Puma and Vonovia also ended notably higher.
U.S. stocks rose, with the S&P 500 regaining some ground after five consecutive sessions of losses triggered by worries about how severe an economic downturn might be. The S&P 500 advanced 29.59 points, or 0.8%, to 3963.51 on Thursday. The Dow Jones Industrial Average gained 183.56 points, or 0.5%, to 33781.48. The Nasdaq Composite added 123.45 points, or 1.1%, to 11082.00. U.S. stocks have endured a stretch of losses recently. As of Wednesday, the benchmark S&P 500 had fallen eight of the past nine trading days. Worries that the Federal Reserve will hold interest rates higher for longer have been a key driver of those losses, as traders have considered the possibility that officials next year could raise their benchmark rate above the 5% currently expected by investors. Exxon Mobil Corp. maintained its spending plans for the next five years, sticking to its annual budget ranges that were set before the war in Ukraine caused an increase in energy prices and political pressure to increase production. High prices at the pump have propelled Exxon and other oil companies to record quarterly profits this year. President Biden and Democrats in Congress have urged oil companies to use their profits to boost refining capacity to make more gasoline and diesel, lowering prices for consumers. Walt Disney Co. rolled out its new ad-supported Disney+ subscription on Thursday, an attempt to revitalize its flagship streaming service that the company has said lost more than $8 billion over the past three years. Disney is charging $7.99 a month for the version of Disney+ with ads. The ad-free version will now cost $10.99 a month, up from $7.99. More than 100 advertisers have signed up for the new program, according to Disney.
After the losses that predominated on the previous days, slight gains dominated in East Asia on Friday. In China, where the central bank, unlike the US Federal Reserve, is pursuing a policy of supporting the economy, consumer prices rose a tad more than expected on an annual basis in November, but fell on a monthly basis. The annual rate for producer prices was clearly negative, although analysts had expected an even sharper decline. According to economists, the data show the bleak state of the Chinese economy. In this respect, interest rate hikes in China are unlikely to remain on the agenda. The Shanghai Composite oscillates between slight ups and downs, the HSI in Hong Kong again gains disproportionately and gains 1.6 per cent. It thus extended its previous day's rally.
Thursday's move higher in stocks came as a recent rally in Treasury bonds lost steam. The yield on the benchmark 10-year U.S. Treasury note rose Thursday to 3.492% from 3.407% Wednesday. Yields rise when bond prices fall.
CS lowers the Glencore target to GBP 7 (7.50) – Outperform
Citi raises the STMicro target to EUR 53 (52) – Buy
Citi raises the Atos target to EUR 10.50 (9) – Neutral
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