* European shares turn slightly positive after weak start
* Fed's Powell: "the next few months will be very
challenging"
* RSA receives 7.2 bln stg cash takeover offer
* S&P 500 futures in the black
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THE HOT TOPIC? CHINA’S GREEN TRANSITION (1056 GMT)
While in Western countries analysts are debating about
rotation and value stocks, the real hot topic seems to be
China’s green shares after the country pledged to achieve carbon
neutrality by 2060.
China is pointing to a much faster green transition than
major advanced economies, according to SG. In the upcoming 14th
Five Year Programme it is likely to aim for more ambitious
targets than those under the Paris Agreement.
The investment bank introduced its “China Green Tech Basket”
with 40 companies exposed to the transition, after filtering
them by size, market accessibility, balance sheet strength and
growth metrics.
The basket trades at 27x forward earnings with a price to
2019-22e EPS growth ratio of 1.2x, an SG research note says.
Based on our back-testing analysis, over the past two years,
the Green Tech basket would have returned 183%, outperforming
the CSI 300 by 130% and the world market by 159%, it adds.
President Xi Jinping on Tuesday said China would step up its
efforts to peak carbon dioxide emissions by 2030 and fulfil its
pledge to achieve carbon neutrality before 2060. "You can count
on China to keep its promise," Xi was quoted as saying by
official news agency Xinhua.
In the table below the mobility cluster of SG’s basket.
Below the energy efficiency cluster.
Below the power cluster.
(Stefano Rebaudo)
*****
EUROPE OFF TO WEAKER START (0831 GMT)
It looks like equity investors have stopped thinking too
much about the future benefits of vaccine breakthroughs as
rising COVID-19 cases forces them to focus on the more immediate
risks that the pandemic poses to corporate profitability.
European shares are off to a slightly negative start
following weakness in the previous session with most sectors
trading in the red and tech seeing a slight return of favour.
The pan-regional STOXX 600 benchmark was last down
0.1% after hitting on Monday its highest level since February.
In single stocks, RSA stood out, rising 3.8% after
the British insurer received a cash offer worth 7.2 billion
pounds, while better than expected results lifted heating
technology firm Nibe Industrier.
(Danilo Masoni)
*****
ON OUR RADAR: MORE DEALMAKING FOR FINANCIALS (0750 GMT)
Turning to the corporate front, newsflow is pretty quiet so
far but dealmaking activity in the financials sector with a
takeover offer for RSA Insurance could liven things up.
The British insurer said it had received a cash offer worth
7.2 billion pounds from Canadian insurer Intact Financial
and Danish insurer Tryg. Its shares are seen
rising 5% at the open.
Meantime, German exchange operator Deutsche Boerse
said it would buy 80% of corporate governance adviser
ISS for about $1.8 billion, the latest in a flurry of deals to
sweep across the industry.
Still in financials M&A, potential bitters for Lyxor, the
fund management arm of SocGen are emerging. Sources
said that Amundi and BNP Paribas are among a
group of bidders exploring tentative offers.
In earnings news, Software AG increased its
guidance for 2020, sending its shares up 3% in premarket trade,
while SAF Holland were up 3.3% before the cash market
open after it raised its EBIT margin target range.
In another upbeat update, British bicycles and car products
retailer Halfords reported a more than doubling in H1
profit, boosted by a COVID-19-driven cycling boom.
Global Fashion Group could be a sharp faller after
it placed new shares at a discounted price of 7.30 euros through
an accelerated book build, raising 120 million euros.
(Danilo Masoni)
*****
EUROPE SEEN LOWER AS COVID WORRIES RETURN (0642 GMT)
European shares are set to fall slightly at the open today
as the vaccine breakthroughs euphoria gives way to worries over
the near term damage to the fragile economic recovery from
rising COVID-19 cases.
Serving as a reminder that we're not out of the woods yet,
Fed chairman Powell said that the surge in coronavirus cases is
a big concern and the economy will continue to need support from
both fiscal and monetary policy.
"With the virus now spreading at a fast rate, the next few
months will be very challenging," he said late yesterday.
Following losses in Asian markets overnight, futures for
European and U.S. stock benchmarks are sliding around 0.3-0.4%.
"The anticipated cyclical upswing faces plenty of
obstacles," says Ian Williams, economics & strategy research
analyst at Peel Hunt in London.
(Danilo Masoni)
*****
