>>> TradeGate Pre-Market Indications

DAX:
  • RWE (RWE TH) +2.8%
    • Elliott Is Said to Take Stake in RWE, Call for Share Buyback (3)
  • Rheinmetall (RHM TH) +1.7%
    • Rheinmetall Orders Surge as Europe Boosts Military Spending
  • BMW (BMW TH) +0.9%
    • Watch German Stocks as Chancellor Scholz Calls for Snap Election
  • Fresenius SE (FRE TH) +0.8%
    • Fresenius SE ADRs Rated New Buy at Berenberg; PT $11.50
  • Munich Re (MUV2 TH) +0.7%
    • Munich Re Sees FY Profit Above EU5B, Saw EU5B
  • Daimler Truck (DTG TH) -3.5%
    • Daimler Truck 3Q Adjusted Ebit Beats Estimates
  • Siemens Energy (ENR TH) -3.8%
    • Siemens Energy Cut to Neutral at BofA
MDAX:
  • Lanxess (LXS TH) +3.4%
    • Lanxess 3Q Adjusted Ebitda Margin Beats Estimates
  • Nordex (NDX1 TH) +3%
    • Nordex Sees FY Ebitda Margin High End of 3% to 4%, Saw 3% to 4%
  • Hensoldt (HAG TH) +2.6%
  • HelloFresh (HFG TH) +2.3%
    • HelloFresh Rated New Buy at Hauck & Aufhaeuser; PT 17 euros
  • Evonik (EVK TH) +1.4%
  • Aixtron (AIXA TH) -1.3%
SDAX:
  • RENK Group AG (R3NK TH) +3.7%
  • Norma (NOEJ TH) +2.3%
  • Heidelberger Druck (HDD TH) +2.2%
  • Duerr (DUE TH) +0.9%
    • Duerr 3Q Adjusted Ebit Beats Estimates
  • Encavis (ECV TH) -1.9%
  • Kontron (KTN TH) -2.6%
  • PNE AG (PNE3 TH) -2.7%
  • AUTO1 (AG1 TH) -3.6%

>>> What to look at today - 7th of November 2024

Most Asian shares rose, following their US peers higher, as investors positioned for a second Donald Trump presidency and an expected Federal Reserve interest-rate cut.  Equity gauges rallied in Hong Kong and China on expectations that Beijing will roll out more stimulus. That was after the S&P 500 surged 2.5% Wednesday, its best post-election day in history, and the Nasdaq 100 advanced 2.7%. The Fed is forecast to trim its benchmark rate by a quarter point Thursday.  The gains for US stocks reflected expectations that a Trump policy agenda favoring lower taxes and less regulation may support corporate profits. At the same time, Treasury 10-year yields surged 16 basis points on Wednesday on expectations the president-elect’s fiscal plans and proposal to hike tariffs will boost inflation and erode the Fed’s ability lower rates. Chinese stocks opened lower but then swung to a gain. Consumer and property shares rallied as traders bet Beijing would shift its focus to boosting domestic demand to offset any negative impact from Trump’s return to the White House. Chinese policymakers lowered their daily reference rate for the yuan to the lowest since late 2023, a sign the central bank is allowing depreciation after a surge in the dollar pummeled the currency.  In other positive news, China’s export growth surged in October to the fastest pace in more than two years, extending a months-long run of resilience that helped sustain the economy before a barrage of stimulus measures aimed at shoring up domestic demand. China’s regulators have told the nation’s banks to lower the rates they pay for demand deposits from other financial institutions in a move to free up idle funds to boost the economy, according to people familiar with the matter.  The yen rose in Asian trade after Japan’s chief currency official Atsushi Mimura said the authorities will take appropriate action against excessive currency moves. The currency had tumbled about 2% on Wednesday following Trump’s victory.  Bloomberg’s dollar index ticked lower in Asia after jumping about 1.3% on Wednesday. Treasury 10-year yields slipped one basis point to 4.42%. Spreads on Asian investment-grade dollar bonds tightened to a record low, with yield premiums on the notes declining by at least one basis point, according to credit traders. Spreads had narrowed to 73 basis points Wednesday, then the lowest based in data compiled by Bloomberg stretching back to 2009.  Fed officials are widely forecast to lower their benchmark rate by 25 basis points at the end of their two-day meeting, a move that will come on the heels of the half-point cut in September. They have projected one more quarter-point reduction this year and an additional full point of reductions in 2025, according to the median estimate released in September.  Wall Street’s “fear gauge” — the VIX — tumbled Wednesday by the most since August. Almost 19 billion shares changed hands on US exchanges, 63% above the daily average in the past three months. Bitcoin, viewed by many as a so-called Trump trade after he embraced digital assets during his campaign, slipped Thursday after rising to a record high the day before. Oil gained after a roller-coaster session on Wednesday as traders weighed the likely impact of Trump’s election victory on the crude market. US After Hours APP +28.4%, LYFT +21.5%, BROS +16.8%, FRSH +15.4%, ZG +14.3%, GH +13.4%, QCOM +6% higher on earnings; APPS -41%, CDLX -29.9%, SEDG -21.1%, MELI -9.2%, DUOL -5.9% lower on earnings.

Nikkei -0.25% Hang Seng +1.53% CSI +2.61% Shanghai +2.25% Shenzen +2.21%

Eur$ 1.0742 CNH 7.1903 CNY 7.1754 JPY 154.09 GBP 1.2929 CHF 0.8751 RUB 97.8173 TRY 34.2080 WTI$ 72.03 +0.47% Gold 2,655 -0.14% BTC 74,666 -1.70% ETH 2,825 +5%

S&P +0.17% Nasdaq +0.30% EuroStoxx +0.50% FTSE +0.37% Dax +0.39% SMI +0.39%

Macro :
- EU Regulators Probe if Visa, Mastercard Fees Harm Retailers:Rtrs
- Trump Has Tools to Fire Powerful Financial Regulator in Term Two
- Scholz Fires Finance Minister, Raising Prospect of New Election

Keep an eye on :
- AALB NA : Aalberts 10-Month Org. Revenue -2.9%, in Line With Views
- ADYEN NA : Adyen 3Q Net Revenue Misses Estimates (1)
- ALFEN NA : Alfen 3Q Revenue Beats Estimates
- ALMB DC : Alm Brand Boosts FY Pretax Profit Forecast, Beats Estimates (1)
- AMS SM : Amadeus 3Q Net Income Beats Estimates
- AMG NA : AMG 3Q Net Loss $13.4M
- AMS SW : AMS-Osram 4Q Revenue Forecast Misses Estimates
- ANIM IM : Banco BPM Launches Bid for Anima Valuing Firm at €2 Billion
- ANORA FH : Anora Group Oyj 3Q Net Sales Misses Estimates
- MT NA : ArcelorMittal 3Q Ebitda Beats Estimates, ArcelorMittal Says Market Unsustainable But Sees Demand Pick-up
- ARM US : ARM Holdings Sees 3Q Revenue $920M to $970M, Est. $950.9M
- ASTK DC : Asetek Hires ABG as Financial Adviser for Rights Issue
- ASTS US : AST SpaceMobile Slips as Election May Give Rival SpaceX a Leg Up
- AUTO NO : Autostore 3Q Adjusted Ebitda Beats Estimates
- BALN SW : Cevian’s Baloise Move Triggers Top Europe Insurers to Study Deal
- BAMNB NA : BAM 9M Revenue EU4.62B Vs. EU4.54B Y/y
- BAMI IM : Banco BPM Unit Starts Takeover Bid on Anima at €6.20 Per Share
- BEN FP :Beneteau 3Q Revenue EU193.9M Vs. EU315.6M Y/y Vontobel AUM CHF227.6B end of Sept. vs CHF206.8B Y/Y
- BPE IM : BPER Banca 3Q Revenue Beats Estimates
- BRNK GY : BRANICKS Group AG 9M FFO per Share EU0.43 Vs. EU0.4 Y/y
- BT/A LN : BT 1H Adjusted Ebitda Matches Estimates
- CAMX SS : Camurus 3Q Revenue Misses Estimates, Camurus Boosts FY Pretax Profit Forecast
- CMBT BB : CMB Tech NV 3Q EPS Beats Estimates
- CRI FP : Chargeurs 3Q Revenue EU165.3M Vs. EU148.6M Y/y
- CTY1S FH : Citycon Narrows FY EPRA EPS Forecast
- COL SM : Colonial to Analyze Absorbing SFL Unit Through a Possible Merger
- COP GY : CompuGroup 3Q Adjusted Ebitda Beats Estimates
- COTY US : COTY: Coty reports Q1 adjusted EPS 15c, consensus 19c
- CRH LN : CRH Said to Weigh Fresh Sale Attempt for Philippines Cement Unit
- CYTK US : Cytokinetics 3Q Total Revenue Misses Estimates
- DFDS DC : DFDS Maintains FY Revenue Forecast
- DTG GY : Daimler Truck 3Q Adjusted Ebit Beats Estimates
- DBV FP : DBV Tech 3Q Loss per Share 32C, Est. Loss/Shr 35C
- DHER GY : Delivery Hero 3Q Gross Merchandise Value Meets Estimates
- DEZ GY : Deutz 3Q Adjusted Ebit Misses Estimates
- DNO NO : DNO 3Q Ebitda Misses Estimates
- DUE GY : Duerr 3Q Adjusted Ebit Beats Estimates
- ENEL IM : Enel 9M Adjusted Net Income Beats Estimates
- ENGI FP : Engie 9M Ebit Excluding Nuclear EU7.1B Vs. EU8.0B Y/y, Engie Signals Upbeat Earnings View Even as 9-Month Profit Slips
- GN DC : GN Store Nord Sees 2024 Organic Revenue Growth of 1% to 2%
- GiLD US : Gilead Boosts FY Adjusted EPS Forecast, Beats Estimates
- HABA GY : Hamborner REIT Boosts FY FFO Forecast
- HEI GY : Heidelberg Materials 3Q Oper Ebitda Matches Estimates
- HTWS LN : Helios Towers 3Q Adjusted Ebitda Matches Estimates
- HEX NO : Hexagon Composites 3Q Ebitda Beats Estimates
- ITP FP : Interparfums Inc 3Q EPS Beats Estimates
- INS GY : Instone Real Estate 9M Adjusted Net Income EU29M Vs. EU37.1M Y/y
- ICOS IM : Intercos 3Q Revenue EU275.2M Vs. EU246.7M Y/y
- IVG IM : Iveco 3Q Consolidated Revenue Beats Estimates
- KBC BB : KBC 3Q Net Income Beats Estimates (1)
- SKB GY : Koenig & Bauer 9M Ebit Loss EU6.8M Vs. Loss EU2.1M Y/y
- LXS GY : Lanxess 3Q Adjusted Ebitda Margin Beats Estimates
- MC FP : Bulgari CEO Sees China Luxury Market Recovering in Next 2 Years
- MEKO SS : Meko 3Q Revenue SEK4.40B Vs. SEK4.12B Y/y
- MUSTI FH : Musti Group 4Q Operating Profit EU5.80M Vs. EU10.7M Y/y
- MUV2 GY : Munich Re Sees FY Profit Above EU5B, Saw EU5B
- NEM GY : Nemetschek 3Q Ebitda Meets Estimates
- NDX1 GY : Nordex Sees FY Ebitda Margin High End of 3% to 4%, Saw 3% to 4%
- PIHLIS FH : Pihlajalinna 3Q Ebit Beats Estimates
- PIRC IM : Pirelli Chinese Investor Probed on Possible Golden Power Breach
- QIA GY : Qiagen Boosts FY Adjusted EPS Forecast
- QLYS US : Cybersecurity Company Qualys Is Said to Explore Potential Sale
- QCOM US : Qualcomm Sees 1Q Rev. $10.5B to $11.3B, Est. $10.54B: Snapshot
- RAA GY : Rational 3Q Ebit Beats Estimates
- RECSI NO : REC Silicon 3Q Revenue $33.8M Vs. $37.7M Q/Q
- RHM GY : Rheinmetall Extends Contract of CEO Papperger, Replaces CFO
- ROVI SM : Rovi 9M Net Income EU113.5M Vs. EU118.8M Y/y
- RWE GY : Elliott Is Said to Take Stake in RWE, Call for Share Buyback
- SBRY LN : Sainsbury 1H Revenue Meets Estimates
- SESG FP : SES Maintains FY Adjusted Ebitda Forecast
- SGL GY : SGL 9M Adjusted Ebitda EU127.6M Vs. EU130M Y/y
- STLA US : Stellantis to Lower Production, Cut Jobs at Toledo Plant
- STORB SS : Storskogen 3Q Ebit Beats Estimates
- SMHN GY : SUSS MicroTec 3Q Ebit Beats Estimates
- SREN SW : Swiss Re Now Sees FY Net Income Above $3B, Saw Above $3.6B
- TATE LN : Tate & Lyle 1H Adjusted Pretax Profit Beats Estimates
- TEF SM : Telefonica 3Q Adjusted Ebitda Matches Estimates, Telefonica Profit Drops After Impairment on Peru Unit, Inflation
- TEP FP : Teleperformance Has Sequential Like-For-Like Growth: Street Wrap
- TEN IM : Tenaris 3Q EPS Beats Estimates
- TRIP US : TripAdvisor 3Q Adjusted EPS Beats Estimates
- TRUEB SS : Truecaller 3Q Ebit Beats Estimates
- UBER US : Ride-Hailing Drivers in Massachusetts Win Right to Unionize
- VK FP : Vallourec Says Safeguard Plan Implemented in 2021 Has Ended
- VLA FP : Valneva Narrows FY Revenue Forecast
- VEI NO : Veidekke 3Q Revenue Misses Estimates
- VIE FP : Veolia 9M Ebitda EU4.94B Vs. EU4.79B Y/y
- VONN SW : Vontobel AUM CHF227.6B end of Sept. vs CHF206.8B Y/Y
- WEW GY : Westwing Group 3Q Adjusted Ebitda EU3.5M; Confirms FY Guidance
- XXL NO : XXL Announces Fully Underwritten Rights Issue of NOK 600M
- ZEAL DC : Zealand Pharma Maintains FY Net Operating Expense Forecast
- Zentiva : Advent Said to Mull €5 Billion Sale of Generic Drugmaker Zentiva
- ZURN SW : Zurich Ins. 9M P&C Gross Written Premiums $36.13B

>>> Europe : Brokers Upgrades & Downgrades - 7th of November 2024

>>> Up
* Banco BPM Raised to Neutral at BNPP Exane; PT 7.10 euros
* Banco BPM Raised to Neutral at Mediobanca SpA; PT 7.30 euros
* DiaSorin Raised to Equal-Weight at Morgan Stanley; PT 100 euros
* Ericsson Raised to Buy at ABG; PT 100 kronor

>>> Down
* EDP Renovaveis Cut to Neutral at Mediobanca SpA; PT 15 euros
* Exclusive Networks Cut to Neutral at Citi; PT 24.25 euros
* JPMorgan Cut to Underperform at Baird; PT $200
* Palantir Cut to Underperform at Jefferies; PT $28
* Schroders Cut to Equal-Weight at Morgan Stanley; PT 358 pence
* Sodexo Cut to Hold at Jefferies; PT 80 euros
* XXL Cut to Sell at Pareto Securities; PT 9 kroner

>>> Initiation
* Fresenius SE ADRs Rated New Buy at Berenberg; PT $11.50
* SmartCraft Rated New Buy at Nordea; PT 35 kroner

>>> Call
* DiaSorin Downgrades Have Troughed, Morgan Stanley Lifts Rating
* Gubra Raises Low End of Range for CRO Business 2024 Guidance
* Schroders Cut at Morgan Stanley on Limited Growth Visibility

FT : Risk assets rally but bond market views Donald Trump’s victory with caution

Risk assets rally but bond market views Donald Trump’s victory with caution
Analysts and investors warn tension between different aspects of president-elect’s policy add to risks of a reversal

US stocks and other risky assets rallied on Wednesday after Donald Trump’s decisive election victory, but bond investors highlighted why euphoria could be shortlived if the president-elect’s campaign policies drive up inflation.

“Sugar rush is a good term for what we’ve experienced,” said Tina Fordham, founder of advisory firm Fordham Global Foresight, which advises investors and corporate executives on political issues. While the Republican victory was good for equities, she said “we are not in the same economic environment that we were in 2016, and Trump’s policies are inflationary. I think it does eventually intersect with expectations about the Fed rate cutting cycle, and geopolitical risks.”

The S&P 500 and Nasdaq Composite both set new record highs on Wednesday, jumping 2.5 per cent and 3 per cent, respectively. 

Investors are always wary of reading too much into early moves after presidential elections, and many warned about the risk of “head-fakes” in the run-up to the vote. However, several analysts and investors said the tension between different parts of Trump’s policy platform added to the risks of a reversal.

Economists have warned that several of Trump’s proposed policies, including corporate tax cuts, sweeping tariffs and the deportation of millions of immigrants could cause a resurgence in inflation just as the Federal Reserve had grown confident that it had brought price rises under control.

Futures market pricing on Wednesday indicated investors were still expecting the Fed to announce a quarter-point rate cut on Thursday, but they have scaled back their expectations for rate reductions over the next 12 months.

“You can simultaneously believe that a corporate tax cut noticeably increases the value of equities,” said David Kelly, chief global strategist at JPMorgan Asset Management, “but at the same time that tax cut could increase deficits . . . and long-term interest rates.”

The Russell 2000 index of small-cap companies rose even further than the S&P, leaping 5.8 per cent to its highest level since 2021. The advance reflects a belief that small companies, which tend to be more focused on their domestic market, have more to gain from tax cuts and less to lose from a trade war. The Russell 2000 is also heavily weighted towards financial stocks, which investors are hoping will benefit from looser regulation and an increase in dealmaking.

However, it could also be on the frontline of any reversal in sentiment. The most important driver of the Russell for most of this year has been interest rate expectations, and a return to inflation and higher-for-longer rates could lead to a sharp reversal.

“We’re having an outsized reaction right now,” said Invesco’s chief global market strategist, Kristina Hooper. “A decisive win was a surprise given the polling, but I think there will be at least some modest reversal . . . as we hear more and more from the president-elect.”

Although equity investors on Wednesday were mainly focused on the positive side of the equation, there were already some pockets of activity pointing towards longer-term worries. The worst-performing sector in the S&P 500 was real estate, a sector where returns are highly correlated with interest rates. Utilities, another rate-sensitive sector, also slid.

Concerns were more pronounced in government bond markets. By late afternoon on Wednesday, the benchmark 10-year Treasury yield was up 0.15 percentage points to 4.44 per cent — its highest level since July — while the longer-dated 30-year yield climbed 0.17 percentage points to 4.62 per cent, reflecting a steep decline in price.

Bondholders and strategists said the sharp moves in Treasury yields reflected expectations of an inflationary environment during Trump’s presidency that could deter the Fed from rapidly easing monetary policy, after the central bank cut rates in September for the first time since 2020.

Invesco’s Hooper said: “I think we are getting much closer to the potential for ‘bond vigilantism’.” This is when bond investors try to force governments to change policy by driving up their borrowing costs. “A showdown could certainly be hastened because of this election.”

Still, Robert Tipp, head of global bonds at PGIM Fixed Income, stressed that the vast scale of the US economy and its bond market made it much less vulnerable to the sort of volatility that rocked the UK when former prime minister Liz Truss attempted to radically increase borrowing in 2022.

“I think we’re in a market where there are still more buyers than issuers,” he said. 

Investors also emphasised that while the results of Tuesday’s presidential election were decisive, and the Republicans had gained control of the Senate, there was less clarity over who would control the House of Representatives, which could affect Trump’s power to implement more radical proposals.

Bond investors “will be paying a lot of attention” to the final balance of power in Congress, said Dec Mullarkey, managing director at SLC Management. “Rates are by far the most responsible asset class in paying attention to the deficit.”

If bond yields continue to rise, investors predicted that equity investors would not be able to shrug it off forever. 

“In general we’re staying with a pro-risk posture,” said Matt Peron, global head of solutions at Janus Henderson, the $380bn asset manager. 

“Earnings are definitely picking back up . . . [and] you can take off some tail risk” due to the decisive result. But, he added: “The deficit issue and the interest rates issue will be something the equity markets have to contend with. I don’t think they can just ignore that.”

FT : Banks face growing risk as double defaults on commercial loans mount

Banks face growing risk as double defaults on commercial loans mount
A bank practice known as ‘extend and pretend’ has delayed a write-off reckoning but may hide a growing systemic risk

The number of US borrowers in danger of defaulting a second time on commercial property loans is at the highest level in a decade, raising concerns that a bank practice known as “extend and pretend” is hiding growing systemic risk.

“They are kicking the can down the road,” said Ivan Cilik, a principal with accounting firm Baker Tilly’s financial services group. “I think lenders are trying to work out the problems with these loans, but if rates don’t come down borrowers are not going to be able to make payments.”


Regulators are growing increasingly worried about the rise in loan modifications and whether they are distorting loan markets.

Last month, researchers at the New York Fed published a paper warning that lenders appeared in many cases to be offering breaks to property borrowers for the sole purpose of postponing a write-off.

“Banks ‘extended-and-pretended’ their impaired commercial real estate mortgages in the post-pandemic period,” the study’s others wrote, and warned the generous modifications could lead “to credit misallocation and a build-up of financial fragility.”

That is leading to a rise in double defaults.

At the end of September, the value of commercial real estate “re-defaults” was up 90 per cent in the past year through September, to $5.5bn, an increase of $1bn in the past quarter alone, according to data released earlier this week by the banks and compiled by industry tracker BankRegData.

That is the highest level since 2014 of modified, non-performing commercial real estate loans, in which a borrower was under stress, received relief — either a forgiven payment, lower mortgage rate or some other modification — and is once again delinquent.

A decade ago, delinquent mortgages on both residential and commercial properties were still falling from financial crisis highs.

This time around, as interest rates have risen, delinquencies and defaults have been concentrated in commercial properties — primarily office buildings that have seen a drop in tenants since the pandemic, though also malls and more recently apartment buildings.

In all, the value of rising defaults is still relatively small compared to the nearly $2tn that banks have lent into commercial property. But the value of delinquent property loans to developers and investors has risen 25 per cent to $26bn in the first nine months of this year.

The loan modifications have helped banks to report a slowdown in the rate of new delinquencies in commercial real estate, with a 40 per cent increase this year.

Last month, a Moody’s review of property loan modifications found that banks offered little in terms of payment breaks, often less than 2 per cent off total payments in the majority of bank modifications.

Instead borrowers were allowed to delay missed payments, and given more time to pay them back.

Still, about only about a third of the modifications that banks have offered in the past year have resulted in the borrower defaulting for a second time.

But given the relatively modest relief and the fact that many modifications are new, Baker Tilly consultant Cilik expects re-defaults, and eventually losses for banks, will continue to rise.

“We are in the early part of the curve,” said Cilik. “If we continue to see rising delinquencies we will know that these modifications are just not working out.”

FT : Carrefour seeks way out of strategic impasse

Carrefour seeks way out of strategic impasse
Retailer’s CEO Alexandre Bompard is examining range of options including disposals as share price lags peers

The French supermarket group was in talks with Canada’s Alimentation Couche-Tard to sell itself in a €16.2bn deal which would have created a transatlantic retail giant.

However that proposal was rapidly shut down by France’s finance ministry within a matter of days, on the grounds that it threatened the country’s food security. Later that year, Carrefour and smaller privately held French rival Auchan ended talks over a €19.4bn tie-up after the two sides failed to agree on terms and Carrefour faced opposition from some of its top shareholders. 

In the intervening years the Paris-listed group’s share price has stagnated at around €15 while it trades at a sizeable discount to the MSCI Europe Food & Staples Retailing index. Carrefour’s market capitalisation has also shrunk by more than a quarter to under €10bn since chief executive Alexandre Bompard took the helm in 2017.

That is partly why the 52-year-old executive has been examining a wide range of options with its advisers to boost valuation, four people with knowledge of the situation said.

Scenarios have included disposals, including Carrefour’s operations in Italy or Poland, one of the people said, who cautioned the deliberations which were first reported by Bloomberg were at a preliminary stage.

“What is certain is that Bompard is looking for a way out of Carrefour’s current situation. He can’t be satisfied with the current valuation,” said one of the people. “Conversations like this always take a long time to come to a decision because you’re weighing it against alternative scenarios such as a transaction on the whole.”

Bompard has been frustrated by Carrefour’s performance, several people familiar with the situation said. But gaining momentum in the competitive, low margin grocery retail business is notoriously difficult — especially as inflation has put pressure on consumers.

It is even more challenging in the fractured, highly competitive French market, which accounted for over a third of Carrefour’s global 14,930-strong store network and just under half of its €94.1bn in sales and operating income of €2.26bn last year.

The fifth largest supermarket group in Europe by sales, Carrefour has gained market share in its core French market in the past year — moving from 19 per cent at the start of the year to 21.4 per cent according to Kantar — thanks to investment in cutting prices and acquiring smaller rivals Cora and Match from Belgium’s Louis Delhaize group earlier this year. 

Over the years Bompard has aggressively cut costs and prices to woo customers and invested in ecommerce to catch up with competitors. He has also converted underperforming large format stores into franchises.

Carrefour has more than halved its product price gap with Leclerc, the historical price leader in France, compared to last year, analysts at Barclays noted. 

However while sales and cash generation have improved, operating margins have been difficult to budge and have declined slightly over the past three years, moving from 3.06 per cent in 2021 to 2.67 per cent last year.

Sales in France fell 3 per cent on a like-for-like basis to €11.7bn in its most recent quarter although volumes improved as the company invests in pricing amid fierce competition.

“This competitive pricing strategy is bearing fruit — Carrefour has started to regain market share in volume terms,” analysts at Barclays wrote. “A recovery in French margins is key for future earnings growth. The management team’s focus is on turning around domestic operations.”

Carrefour declined to comment for this story.


The question is what now. Selling out of non-core markets is a tactic Carrefour has employed before. It exited China, which was lossmaking, in 2019 as part of a global consolidation strategy after a period of rapid expansion that stretched the company’s resources. It also sold out of Taiwan in 2022, and departed Colombia in 2012.

“Exit multiples were very good for Colombia and Taiwan. Sales like this have been done before in the industry, and by Carrefour. It makes sense to retrench on the core when business is challenging,” said Cedric Lecasble, analyst at Stifel.

Spain and Brazil are both strong markets for Carrefour so are unlikely to be top candidates if Carrefour were to move forward with asset sales, Lecasble added. However mature, non-core European markets like Italy, Belgium, Romania or Poland could make sense, he said. 

The most radical solution would be a sale, such as to private equity groups. While the option has been floated by advisers over the years, the idea is fraught with difficulty, the people said. People close to the company insist it is not on the table.

Pharmaceutical giant Sanofi’s proposed deal to sell its consumer health division to American private equity firm Clayton Dubilier & Rice in October set off a political firestorm. The French state has decided to take a small stake in the €16bn spin-off in order to guarantee its interests on issues like jobs and health supply chains. 

“Carrefour is one of the biggest employers in the country, and a private equity sale implies cost retrenchments and job cuts. The opposition on the social and political sides would be huge,” said Lecasble. 

Those constraints, plus the difficulties of the sector, may dampen interest. When the prospect had been floated to private equity in the past “the reaction has been: to do what with it?” said another banker in Paris. “The exit and synergies aren’t obvious.”

But with the share price still depressed and management keen for answers, “now could be a time to look at it, and other options, again,” said a third banker. 

FT :BHP chief sees signs of recovery in China after September stimulus

BHP chief sees signs of recovery in China after September stimulus
Mike Henry says ‘green shoots’ in property, where miner’s iron ore and copper fuel construction

The head of Australian miner BHP has said he sees long-awaited “green shoots” in China’s depressed property market after Beijing unveiled a stimulus package to try to boost the economy.

The world’s largest mining group relies on China’s construction industry to fuel demand for its iron ore and copper, and Mike Henry, chief executive, said there were signs of recovery.

“We’re finally starting to see some green shoots,” he said in a Financial Times interview in Tokyo. “If you look at the parts of the economy that are lagging, it has been consumption and property. Surprise, surprise, it comes back to consumer confidence.”

Henry said policymakers needed to structure stimulus in a way that built consumer confidence, while cautioning: “I don’t know that it’s ever going to be just a matter of money.”

China launched a stimulus package in September, including interest rate cuts and funding for the stock market. Following the measures, sales for the 100 biggest property developers rose year on year in October for the first time in 2024.

Lawmakers have spent three years grappling with a seismic property showdown and are meeting in Beijing this week after previously signalling more support for local governments that rely heavily on land sales.

BHP is the world’s third-largest producer of iron ore, a key steelmaking ingredient, and a top miner of copper, widely used for electrical wiring when buildings are finished. The health of China’s property sector has thus been a big factor in driving commodities prices and profit levels.

Henry suggested that iron ore prices might not be buoyed much beyond their current level of just above $100 a tonne as China’s excess steel production would be channelled towards domestic real estate. He said that would help ease surging Chinese steel exports, on course to be the highest since 2016.

The BHP chief also addressed speculation about deal activity.

In May, it dropped a £39bn takeover pursuit of UK mining rival Anglo American, yet under UK rules it can come back with an offer at the end of this month, when a six-month embargo expires.

A recent visit by Henry and Catherine Raw, BHP’s head of mergers and acquisitions, to South Africa, where BHP no longer has operations but Anglo has platinum and iron ore mines, has fuelled speculation that the mining industry heavyweight could soon table another offer.

Henry said the visit had “nothing to do with the acquisition opportunity”, claiming instead it was for general relationship-building with new ministers in Pretoria, as well as for visiting investors and people related to a BHP-backed nickel project in Tanzania.

BHP landed itself in a pickle last week over comments by chair Ken MacKenzie, who said at the company’s annual meeting it had “moved on” from the failed Anglo takeover attempt.

The company later backpedalled, issuing a statement saying Mackenzie’s comments were not intended as formal market guidance that no further offer would be made.

FT :The end of Germany’s dysfunctional coalition offers Europe new hope

The end of Germany’s dysfunctional coalition offers Europe new hope
Paralysis in Berlin is a big reason the EU is ill-prepared for Donald Trump’s return

Barely 12 hours after Donald Trump’s victory in the US presidential election, his America First policy claimed its first European victim with the collapse of Germany’s coalition government.

The three coalition partners — Olaf Scholz’s Social Democrats, the Greens of economy minister Robert Habeck and the liberal Free Democrats of finance minister Christian Lindner — have been at loggerheads for months over policy to the point of paralysis. On Wednesday, they convened to try to resolve their differences over a €9bn hole in the 2025 budget.

The dispute over the fiscal shortfall — a tiny sum set against planned expenditure of more than €2tn — was in reality a proxy for a much wider, and ultimately unbridgeable, ideological divide. Scholz and Habeck have long wanted Lindner to agree to relax Germany’s strict debt rules so the government can spend more on defence, support for Ukraine and reviving the economy. Scholz argued on Wednesday that with Trump’s return to the White House, Russia’s war against Ukraine was precisely the kind of emergency that allows the rules to be relaxed. Lindner refused and was fired, spelling the end of the coalition.

It was a rare display of decisiveness by Scholz who, with some justification, rounded on his finance minister, accusing him of acting irresponsibly and in bad faith. It is easy to blame Lindner and the FDP. They have instigated many of the coalition’s bust-ups for their own political gain. The FDP’s poll rating has sunk below the 5 per cent threshold for representation in the Bundestag and Lindner was looking for a reason to bail out. His timing is terrible, given how much is at stake for Germany’s prosperity and security at this juncture. But the bickering and indecision afflicting the government had become untenable.

Europe is badly prepared for a Trump presidency. Its strategy has been to hope for the best rather than plan for the worst. It has lacked a sense of urgency in arming Ukraine and bolstering its own security. Germany’s political shambles is not the only reason. France is in political disarray and President Emmanuel Macron has suffered a dramatic loss of authority. The big European economies are in the doldrums and budgets are under severe strain. But the EU is invariably stuck when there is a power vacuum in Berlin. Germany is Europe’s indispensable nation. The EU cannot revive its economy or take on more responsibility for its own security unless Berlin deploys its fiscal firepower to make it happen, whether at home or through the EU, in the form of more joint borrowing.

Scholz was at his most impressive when he declared a Zeitenwende, or watershed moment, for his country in the wake of Vladimir Putin’s full-scale invasion of Ukraine in early 2022. He promised a long-term commitment to turn Germany into a military power, “with the strength of our own” to keep tyrants such as Putin in check. But his ambition quickly ran out of steam. And while his government rapidly weaned German industry off Russian fossil fuels, the economy is suffering the consequences and is struggling to find a new growth model.

Many Germans feel their country needs new direction and ideas. The Social Democrats and Greens have haemorrhaged popular support. Scholz on Wednesday appealed to the opposition Christian Democrats to find common ground on the urgent need for measures to support the economy and strengthen defence. Germany must not follow America, where “ideology has made co-operation across political boundaries almost impossible”, he said. Scholz is right, not least because Germany’s political system is designed for coalition government. However, the CDU is likely to see that as an attempt to play for time and enhance Scholz’s legacy, when they would prefer fresh elections even sooner than March.

The so-called red-yellow-green or “traffic light” coalition was seriously on the blink and could not continue. But it is regrettable that the EU’s most powerful member will be consumed by an election campaign just as Trump returns to office threatening punitive tariffs against German and European imports, a withdrawal of the US security umbrella and an unfair peace deal for Ukraine. A divided Germany has a lot to lose.

FT : Chinese exports soar as Beijing prepares for trade tensions with Donald Tru

Chinese exports soar as Beijing prepares for trade tensions with Donald Trump
China could respond to aggressive new tariffs with bigger stimulus action or currency depreciation, say analysts

China’s exports soared in October and its trade surplus ballooned, official data showed on Thursday, just days after Donald Trump won the US presidential election with promises of sweeping tariffs to suppress imports from China.

The central bank also set its official exchange rate against the dollar at the lowest level in a year, in a sign that Beijing is expecting further depreciation pressure on the renminbi following Trump’s victory.

President Xi Jinping called Trump on Thursday to congratulate him on his electoral victory, according to Chinese state news agency Xinhua. Xi told Trump that trade between the world’s two largest economies would “benefit from co-operation and suffer from confrontation”, it reported.

But the bumper export figures are expected to inflame tensions between Trump’s incoming administration and Beijing, which could respond to aggressive new tariffs with bigger stimulus action, said analysts and bankers.

China’s dollar-denominated exports rose 12.7 per cent year on year in October, exceeding an average forecast of 5 per cent by analysts surveyed by Bloomberg and a gain of 2.4 per cent in September.

Imports declined 2.3 per cent last month, worse than a Bloomberg forecast of a 2 per cent fall and 0.3 per cent growth in September.

Trade between China and the US was more subdued than the headline figures but still showed strong growth. Exports rose 8.1 per cent in October, while China’s imports from the US climbed 6.6 per cent.


Chinese analysts said China’s burgeoning trade surplus — which hit $95.7bn in October compared with forecasts of $75bn — would provoke Trump, who could undo President Joe Biden’s work in repairing communication between the countries.

“Of course China will be on top of the list,” said Wang Dong, a professor at Peking University. “The stability, the relative improvement that we have been witnessing . . . will probably come to an end,” he added, predicting “a resumption of enmity and antagonism between Washington and Beijing”.

The People’s Bank of China has maintained a strong renminbi policy this year, keeping its daily reference rate — which sets a 2 per cent trading band for the currency — within an unusually narrow range.

The fixed rate on Thursday of Rmb7.166 a dollar marked the currency’s sharpest one-day weakening since April 2022 and came after it tumbled 1 per cent against the dollar on Wednesday.

Trump has threatened to impose 60 per cent tariffs on Chinese goods, which analysts said could spur Communist party leaders, who have been reluctant to embark on a wholesale fiscal stimulus, into more determined action to boost the economy.

Chinese lawmakers are expected on Friday to unveil a fiscal package that will include debt swaps for troubled local governments and potentially additional stimulus measures.

A Trump win “is not necessarily bad for China as this may ‘pressure’ Beijing [to implement] a bigger stimulus”, Qi Wang, chief investment officer for wealth management at UOB Kay Hian, wrote in a note.

But analysts do not anticipate a spending “bazooka” to prop up lagging household demand, which has been hit by a prolonged property slowdown and risks plunging the economy into a deflationary spiral.

“Everyone is expecting a big China fiscal stimulus post the US election.” said a senior investment banker at a US financial institution in Hong Kong who wished to remain unnamed. “I think markets will be far more driven by that than anything else . . . in the near term.”

The size of any additional stimulus will depend on Trump’s new tariffs, experts said. Analysts estimated prior to Trump’s victory that Beijing would need to spend Rmb10tn ($1.4tn) on stimulus directly targeting households, rather than Chinese policymakers’ preferred tools of infrastructure investment and local government refinancing.

“Debt swaps are one item of the package, but there will be other expenditures to stimulate consumption,” said Ma Wei, associate researcher at the Chinese Academy of Social Sciences, a government think-tank in Beijing. “Maybe not in the form of giving money to everyone like in the US, but giving some subsidies to ordinary people to buy goods like cars and electronics.”

Ma predicted policymakers would wait until December or January to announce additional measures. China’s Communist party leadership will hold their annual Central Economic Work Conference, a landmark meeting for economic policy, in December.

>>> US After Hours Summary: APP +28.4%, LYFT +21.5%, BROS +16.8%, FRSH +15.4%, Z

After Hours Summary: APP +28.4%, LYFT +21.5%, BROS +16.8%, FRSH +15.4%, ZG +14.3%, GH +13.4%, QCOM +6% higher on earnings; APPS -41%, CDLX -29.9%, SEDG -21.1%, MELI -9.2%, DUOL -5.9% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: APP +28.4% (also increases its share repurchase authorization by $2 bln), LYFT +21.5%, BROS +16.8%, FRSH +15.4% (also authorizes new $400 mln share repurchase program), ZG +14.3%, GH +13.4%, MKSI +11.2%, WAY +8.2%, UPWK +8% (also to acquire Objective AI, announces new $100 mln share repurchase auth), MEOH +7.8%, ZIP +7.3%, ELF +6.8%, RLJ +6.8%, HUBS +6.7%, RAMP +6.5%, LZ +6.3%, BBSI +6%, QCOM +6% (also authorizes a new $15 bln stock repurchase plan; also files mixed shelf securities offering), CPRX +5.6%, ASPN +5.3%, MCK +5.2%, KIND +5.2%, CERT +5.1%, ALNT +5%, ARDT +4.6%, TTWO +4.4%, VTLE +3.9%, WK +3.8%, KD +3.7%, PYCR +3.7%, CDE +3.5%, HCAT +3.4% (also to acquire Intraprise Health), VCYT +3.3%, CXW +3.2%, GILD +3%, MODV +2.7%, RCUS +2.7%, MWA +2.6%, VAC +2.5%, RPD +2.3%, AMED +2.3%, LTM +2.1%, COHR +2%, ANSS +1.9%, MFC +1.7%, SITM +1.3%, ACAD +0.9%, ET +0.8%, ODD +0.8%, COTY +0.7%, GFL +0.7%, RGNX +0.6%, VSTO +0.6%, LB +0.5%, VZIO +0.5%, FICO +0.2%, GNK +0.2%, AWR +0.1%, BTG +0.1%, CXT +0.1%, FSK +0.1%, KAR +0.1%, KGS +0.1%, RNR +0.1% (also increases share repurchase auth to $750 mln), SKT +0.1%, STE +0.1%

Companies trading higher in after hours in reaction to news: EBS +19.3% (brincidofovir will be included in a clinical trial), SEER +2.4% (SEER enters into co-marketing and sales agreement with TMO), ABUS +1.8% (files $300 mln mixed shelf securities offering), BBIO +1.5% (Viking Global (Andreas Halvorsen) affirmed 13.4% active stake), TMO +0.8% (SEER enters into co-marketing and sales agreement with TMO), IDXX +0.2% (amends supply agreement)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: APPS -41%, CDLX -29.9%, SEDG -21.1% (also names new Chairman), WOLF -18.7%, MTCH -15%, CRSR -12.9%, CLOV -12.9%, KVYO -11.2%, CTVA -9.7%, JXN -9.3%, MELI -9.2%, KRUS -8.7%, AMC -5.9%, DUOL -5.9%, ARM -5.5%, TNDM -5.4%, BYND -5.3%, ACLS -5.2%, RXRX -5.2%, EOLS -5.1%, RGLD -5%, FBIN -4.4%, SUI -4.4% (also announces restructuring and CEO retirement), AGI -4.3%, TRIP -4.1%, OR -3.9%, IIPR -3.6%, JOBY -3.6%, KW -3.4%, STR -3.4%, CWAN -3.3%, DV -2.9%, AEE -2.8%, CLNE -2.8%, JANX -2.5%, KNTK -2.3%, RVMD -2.3%, TS -2.3% (also approves a $700 mln follow-on share buyback program), FSLY -2%, NTR -2%, WES -1.8%, ALB -1.7% (also provides update on operating structure review; announces a 6-7% workforce reduction), SRPT -1.6%, RLAY -1.4%, ENLC -1.2%, DLX -1%, MRO -1%, APA -0.9%, IONQ -0.9% (also to acquire Qubitekk; also partners with ANSS to enhance engineering simulation), TPC -0.9%, ECG -0.9%, CHRD -0.7% (also authorizes new $750 mln share repurchase program), HL -0.6%, VSAT -0.6%, BALY -0.5%, CYTK -0.5%, OSUR -0.5%, QTWO -0.5%, BMBL -0.3%, COOK -0.3%, PR -0.3%, VECO -0.3% (also receives $50+ mln of orders in 2024 for its WaferStorm system), ADTN -0.2%, LAW -0.2%, RDN -0.1%, SBGI -0.1%

Companies trading lower in after hours in reaction to news: CNTX -5.4% (files $250 mln mixed shelf securities offering), KMT -1.1% (files mixed shelf securities offering), MHK -0.9% (COO to retire, names new COO), COST -0.3% (reports Oct comps), CDMO -0.2% (to be acquired for $12.50/sh by investment firms)