Early premarket gappers
- Gapping up:
- WW +11.9%, SQSP +4%, AMRN +3.8%, TCOM +3.1%, TDW +2.3%, HPK +1.7%, DXC +1.6%, TEAM +1.2%, GWRE +1.1%, VRNA +1.1%, SNY +1%, GSAT +0.9%, TELL +0.7%, BBIO +0.5%, DOLE +0.5%
- Gapping down:
- CARA -30.4%, CVGW -12.2%, NTNX -8%, ZYXI -6.5%, GSBD -5.5%, RIVN -5.3%, DOMO -4.1%, LVLU -3.2%, KEY -3%, CDNA -2.7%, BB -2.5%, PSN -1.5%, HLNE -1.1%, AVAV -0.7%
>>> Up
* DiaSorin SpA Raised to Buy at HSBC; PT 135 euros
* dotdigital Raised to Add at Numis; PT 110 pence (+)
* Hochtief Raised to Buy at Stifel; PT 84 euros
* HSBC PT Raised to 900 pence from 770 pence at Jefferies
* Jupiter Raised to Buy at Canaccord; PT 168 pence (+)
* Sonae Raised to Buy at Bestinver; PT 1.15 euros (+)
* Synlab Raised to Buy at HSBC; PT 10 euros
* Synlab Raised to Buy at HSBC; PT 10 euros
* United Airlines Raised to Outperform at Exane; PT $70 (+)
>>> Down
* Clarkson Cut to Neutral at JPMorgan; PT 3,740 pence
>>> Down
* Clarkson Cut to Neutral at JPMorgan; PT 3,740 pence
* DNB Bank Cut to Hold at Deutsche Bank (+)
* Fresenius Medical Cut to Reduce at HSBC; PT 33 euros
* Gurit Cut to Underperform at Credit Suisse; PT 80 Swiss francs (+)
* Persimmon Cut to Reduce at Peel Hunt
* Puma Cut to Neutral at UBS; PT 63 euros (+)
* Rathbones Group Cut to Hold at Berenberg
* Rightmove Cut to Add at Peel Hunt
* Rolls-Royce Cut to Equal-Weight at Barclays; PT 145 pence
* SEB Cut to Sell at Deutsche Bank (+)
* Telenet Cut to Accumulate at KBC Securities; PT 16 euros (+)
>>> Initiation
* Alpha Services Rated New Underperform at Jefferies
>>> Initiation
* Alpha Services Rated New Underperform at Jefferies
* Enlight Renewable Energy Rated New Overweight at Barclays
* Eurobank Rated New Hold at Jefferies; PT 1.65 euros
* Eurocommercial Rated New Buy at ING; PT 29 euros
* Harmony Energy Income Trust Re-Initiated Buy at Berenberg
* National Bank of Greece Rated New Buy at Jefferies
* Piraeus Bank Rated New Hold at Jefferies; PT 2.50 euros
>>> Call
>>> Call
* GEA Group Guidance Appears Constructive, Morgan Stanley Says (+)
* HelloFresh Profit Robust, Guidance Misses, Morgan Stanley Says (+)
* Jefferies Ups HSBC PT to Street High: EMEA Financials Premarket (+)
* HSBC PT Raised to Street High at Jefferies on Payout Prospects
* JPMorgan Favors Government Bonds, Sees Debt Selloff as Overdone
* JPMorgan Favors Government Bonds, Sees Debt Selloff as Overdone
* Persimmon Cut to Reduce at Peel Hunt, No Longer Deserves Premium
* Rathbones Cut to Hold at Berenberg, Sees Better Value Elsewhere
* Rolls-Royce Cut at Barclays, Time to Focus on Fundamentals
- GEA Group (G1A TH) +1.8%
- GEA Group Sees 2023 Adj Ebitda EU730M to EU790M, Est. EU734.9M
- Rio Tinto (RIO1 TH) +1.6%
- Covestro (1COV TH) +1.1%
- BAT (BMT TH) +1.1%
- ASML (ASME TH) -1.1%
- Genmab (GE9 TH) -1.3%
- Ferrari (2FE TH) -1.3%
- Delivery Hero (DHER TH) -1.4%
- Puma (PUM TH) -1.7%
- UBS downgrades stock to neutral from buy
- Fresenius Medical (FME TH) -1.9%
- Fresenius Medical Cut to Reduce at HSBC; PT 33 euros
- Zalando (ZAL TH) -2.5%
- Zalando’s 2022 Earnings Beat Estimates in Profit Push
- Nel (D7G TH) -6.1%
- Nel Offering of 108m Shares Prices at NOK14.90/Share
- HelloFresh (HFG TH) -7.6%
- HelloFresh Profit Robust, Guidance Misses, Morgan Stanley Says
DAX:
- Continental (CON TH) -1.2%
- Fresenius Medical (FME TH) -1.9%
- Fresenius Medical Cut to Reduce at HSBC; PT 33 euros
- Zalando (ZAL TH) -2.8%
- Zalando’s 2022 Earnings Beat Estimates in Profit Push (Correct)
MDAX:
- GEA Group (G1A TH) +1.8%
- GEA Group Sees 2023 Adj Ebitda EU730M to EU790M, Est. EU734.9M
- ProSieben (PSM TH) -1.1%
- Acolendo Ltd. Raised ProSieben Voting Rights to 10.10%
- Delivery Hero (DHER TH) -1.4%
- Puma (PUM TH) -1.7%
- HelloFresh (HFG TH) -7.8%
- HelloFresh Profit Robust, Guidance Misses, Morgan Stanley Says
SDAX:
- Synlab (SYAB TH) +3.9%
- Synlab Raised to Buy at HSBC; PT 10 euros
- Hochtief (HOT TH) +1.1%
- Hochtief Raised to Buy at Stifel; PT 84 euros
- Traton (8TRA TH) +0.9%
- Traton Sees 2023 Adjusted Operating Margin 6% to 7%
- Schaeffler (SHA TH) -0.9%
- Schaeffler FY Revenue Beats Estimates
Stocks rose Tuesday as a rally in the shares of Chinese state-owned enterprises injected strong upward momentum into the Asian trading session. . Stocks turned higher as choppy trading in Hong Kong gave way to a rally in the shares of Chinese state-owned enterprises, creating a tailwind that helped along US equity futures. Moves in major currencies and Treasuries remained subdued within narrow ranges as traders in Asia awaited more cues from Chinese policymakers and Federal Reserve Chair Jerome Powell. The rate on 10-year US government debt remained just below the closely watched 4% level. A gauge of greenback strength was down 0.1%. The Hang Seng China Enterprises Index jumped as much as 2.4% while the Hang Seng Index climbed as as much as 2%. Leading gains were Cnooc Ltd., China Petroleum & Chemical Corp. and China Construction Bank Corp. Later Tuesday, the Fed’s Powell will begin two days of testimony before Senate and House committees. He’ll have the chance of telegraphing how much more policy tightening he thinks is needed, ahead of a pivotal jobs report on Friday and the next US rates decision on March 22. The current lack of traction for US equity markets shows many investors are concluding a recent rally was probably overdone, with recession risks lingering as central banks worldwide indicate they’re unlikely to soon pivot away from strict monetary tightening. oil rallied as a shale executive projected America’s most prolific basin will soon peak. China’s tempered economic forecast limited crude’s upside. Gold edged higher. US After Hours WW +6.2%, AVAV +2%, TCOM +1.9% all up on earnings; CARA -28.2%, CVGW -15.7%, DOMO -4.4% (also names new CEO and CFO) all down on earnings, DXC -3.6% falling after ending discussions regarding possible buyout.
Nikkei +0.25% Hang Seng -0.85% CSI -1.45% Shanghai -1.05% Shenzen -1.97%
Eur$ 1.0691 CNH 6.9439 CNY 6.9383 JPY 135.95 GBP 1.2045 CHF 0.9298 RUB 75.4092 TRY 18.9038 WTI$ 80.69 +0.29% Gold 1,847.50 +0.04% BTC 22,466 +0.26% ETH 1,576 +0.60%
S&P +0.13% Nasdaq +0.14% EuroStoxx -0.07% FTSE +0.14% Dax -0.04% SMI -0.21%
Macro :
- Fast-Money Quants Are Buying Stocks as Human Traders Stay Put
- JPMorgan Favors Government Bonds, Sees Debt Selloff as Overdone
Keep an eye on :
Keep an eye on :
- AIR FP : Airbus Reports Share Buyback For Long-Term Incentive Plan
- ARCH NO : Archer Offering of 1.04b Shares Prices
- ACR NO : *AXACTOR PLANS SALE OF €6B OF SPANISH SOURED LOANS: CONFIDENCIAL
- BANB SW : Bachem FY Ebitda Misses Estimates
- BNR GY : Brenntag Is Said to Consider Buying Back At Least 5% of Stock
- DOKA SW : Dormakaba 1H Adjusted Ebitda CHF184.6M Vs. CHF193.5M Y/y
- DUFN SW : Dufry AG FY Sales Beats Estimates
- EQT SS : BPEA EQT Is Said to Merge Tricor, Vistra in $6.5 Billion Deal
- FER SM : *SPAIN MULLS VETOING FERROVIAL'S PLAN TO LEAVE THE COUNTRY: PAIS
- GALE SW : Galenica Sees 2023 Sales +3% to +6%
- G1A GY : GEA Group Sees 2023 Adj Ebitda EU730M to EU790M, Est. EU734.9M
- HFG GY : HelloFresh 2023 Adjusted Ebitda Forecast Misses Estimates
- HEN3 GY : Henkel Sees 2023 Adjusted Ebit Margin 10% to 12%, Est. 10.8%
- HUBN SW : Huber+Suhner FY Ebit Meets Estimates
- SDF GY : Intrepid Potash 4Q Adjusted EPS Misses Estimates
- LISN SW : Lindt & Spruengli FY Ebit Meets Estimates
- META US : Meta Is Said to Plan Thousands More Layoffs as Soon as This Week
- MITRA BB : Mithra Pharma FY Revenue Beats Estimates
- NG/ LN : UK Grid Issues Energy Supply Warning for Tuesday Amid Cold Snap
- NEL NO : Nel Offering of 108m Shares Prices at NOK14.90/Share
- NEOEN FP : Neoen Launches ~€750M Rights Issue to Finance Investment Plan
- NEXI IM : Nexi 4Q Adjusted Ebitda Beats Estimates
- PDX SS : Paradox Interactive to Release Three Full Games in 2023
- RIO LN : Rio Tinto to Pay $15M Penalty to Settle Bribery Case: US SEC
- SAE GY : Shop Apotheke FY Revenue Meets Estimates
- SAE GY : Shop Apotheke CEO Stefan Feltens to Step Down
- SNAP US : Snap Surges as Push to Ban TikTok Gains Steam in US Congress
- STM FP : STMicroelectronics to Change Euronext Trading Symbols on Mar. 13
- STM FP : STMicroelectronics to Change Euronext Trading Symbols on Mar. 13
- TGS NO : TGS Sees Multi-Client Investments of Over $350m vs $320m-350m
- TIT IM : Macquarie CEO Says Media Reports About M&A Are ‘Speculation’
- TTE FP : Fuel Deliveries Blocked in All Refineries in France: AFP
- TWEKA NA : TKH FY Revenue Beats Estimates
- WW US : WW International 4Q Loss per Share Misses Estimates
- YAR NO : Intrepid Potash 4Q Adjusted EPS Misses Estimates
- ZAL GY : Zalando’s 2022 Earnings Beat Estimates After Profitability Pivot
>>> Up
* DiaSorin SpA Raised to Buy at HSBC; PT 135 euros
* Hochtief Raised to Buy at Stifel; PT 84 euros
* HSBC PT Raised to 900 pence from 770 pence at Jefferies
* Synlab Raised to Buy at HSBC; PT 10 euros
>>> Down
* Clarkson Cut to Neutral at JPMorgan; PT 3,740 pence
* Synlab Raised to Buy at HSBC; PT 10 euros
>>> Down
* Clarkson Cut to Neutral at JPMorgan; PT 3,740 pence
* Fresenius Medical Cut to Reduce at HSBC; PT 33 euros
* Persimmon Cut to Reduce at Peel Hunt
* Rathbones Group Cut to Hold at Berenberg
* Rightmove Cut to Add at Peel Hunt
* Rolls-Royce Cut to Equal-Weight at Barclays; PT 145 pence
>>> Initiation
* Alpha Services Rated New Underperform at Jefferies
>>> Initiation
* Alpha Services Rated New Underperform at Jefferies
* Enlight Renewable Energy Rated New Overweight at Barclays
* Eurobank Rated New Hold at Jefferies; PT 1.65 euros
* Eurocommercial Rated New Buy at ING; PT 29 euros
* Harmony Energy Income Trust Re-Initiated Buy at Berenberg
* National Bank of Greece Rated New Buy at Jefferies
* Piraeus Bank Rated New Hold at Jefferies; PT 2.50 euros
>>> Call
>>> Call
* HSBC PT Raised to Street High at Jefferies on Payout Prospects
* JPMorgan Favors Government Bonds, Sees Debt Selloff as Overdone
* JPMorgan Favors Government Bonds, Sees Debt Selloff as Overdone
* Persimmon Cut to Reduce at Peel Hunt, No Longer Deserves Premium
* Rathbones Cut to Hold at Berenberg, Sees Better Value Elsewhere
* Rolls-Royce Cut at Barclays, Time to Focus on Fundamentals
China warns of potential conflict with US over containment strategy
Foreign minister Qin Gang calls on Washington to commit to ‘guardrails’ around Taiwan
China’s foreign minister has warned of a clash with the US unless Washington ceases its attempts to contain Beijing, highlighting the Chinese Communist party’s concerns over escalating tension between the rival superpowers.
“If the US doesn’t hit the brakes and continues to barrel down the wrong track, no amount of guardrails can prevent the carriage from derailing and crashing, and there will surely be conflict and confrontation,” Qin Gang said on Tuesday.
The foreign minister’s remarks, made at a press conference during the annual session of China’s rubber-stamp legislature, followed a highly unusual direct criticism of the US by China’s leader Xi Jinping.
“Western countries, led by the US, are implementing all-round containment, encirclement and suppression against us,” Xi told delegates of China’s top political advisory body on Monday, according to state media. While Xi frequently uses nationalist rhetoric, he rarely mentions the US directly in criticising Washington’s policies.
The statements from Xi and his top diplomat came after the US last month shot down a Chinese high-altitude balloon that had intruded into its airspace, an episode that foiled the latest bilateral attempt to stabilise relations.
US and Chinese interests collide on a wide range of issues including Taiwan, Russia’s assault on Ukraine and global technology leadership.
Growing concerns in Washington that Beijing could pose the biggest threat to US security have driven efforts to counter its influence, including export controls and sanctions targeting Chinese technology companies, strengthening ties with allies in the Indo-Pacific region and stronger support for Taiwan.
In a sign of how dangerous Beijing’s and Washington’s conflicting positions have become for Taiwan, the country’s president Tsai Ing-wen has convinced US House Speaker Kevin McCarthy to meet in the US instead of hosting him in Taipei over fears that such a visit could trigger military retaliation from Beijing.
Referring to Washington’s stated desire to prevent a conflict, Qin said the most important “guardrails” were for Washington to recommit to the “essence” of previous joint communiqués on Taiwan — a body of partly ambiguous diplomatic language that the two sides have interpreted in different ways for decades.
“Why talk big about respecting sovereignty and territorial integrity on the Ukraine question but then not respect the sovereignty and territorial integrity in the question of China’s Taiwan?” he said. “Why on the one hand demand China not provide weapons to Russia, but on the other hand sell weapons to Taiwan in long-term violation of [joint communiqués]?”
Beijing claims Taiwan as its territory, though it has never ruled the country, which it has threatened to take by force if Taipei refuses to submit to its control.
In a snub of Washington’s warnings not to provide weapons or munition to Moscow, Qin praised China’s close partnership with Russia for blazing a trail of trust between major powers and creating a “model” for international relations.
“With China and Russia joining hands, the move towards a multipolar world and more democratic international system has gained momentum and global strategic balance and stability have gained a guarantor,” Qin said. “The more turbulent the world is, the more China-Russia relations should keep moving forward.”
Invoking exchanges with ordinary Americans during his term as China’s ambassador to the US, Qin said: “What should be determining China-US relations is the shared interests, shared responsibilities and the friendship between our peoples and not US domestic politics and hysteric new McCarthyism.”
China’s Cities Struggle Under Trillions of Dollars of Debt
Financial obligations built up during pandemic weigh on growth as China’s legislature meets to address economic needs
As China tries to turn the page on one of its worst stretches of growth since the 1970s, its economy is being weighed down by the colossal debts of its local governments, which swelled during the pandemic and are starting to come to a head.
Xi Jinping’s zero-Covid campaign saddled cities with billions of dollars in unplanned expenditures for mass testing and lockdowns. The Chinese leader’s crackdown on excessive property-market leverage led to a sharp drop in land sales, depriving cities of one of their biggest revenue sources.
Two-thirds of local governments are now in danger of breaching unofficial debt thresholds set by Beijing to signify severe funding stress, with their outstanding debt exceeding 120% of income last year, S&P Global calculations show.
About a third of China’s major cities are struggling to pay just the interest on debt they owe, according to a survey by Rhodium Group, a New York-based research firm. In one extreme case, in Lanzhou, the capital city of Gansu province, interest payments were the equivalent of 74% of fiscal revenue in 2021.
Chunks of debt are coming due soon. Research by Lianhe Ratings Global, a subsidiary of a large domestic rating agency, found that about 84% of the $84.2 billion in offshore debt owed by local government financing vehicles will mature between this year and 2025.
The main concern isn’t that cities will default and trigger a financial crisis, though economists say that can’t be ruled out. It is that cities will have to keep cutting spending, delay investments or take other actions to keep creditors at bay, impairing growth for years.
In Zhengzhou, home to a Foxconn Technology Group assembly site for Apple Inc.’s iPhones, bus drivers say their salaries were cut in 2021 and haven’t been restored. Street sweepers report to work even though some say they haven’t been paid in months.
“Our salary isn’t high. Why does the country even owe us this kind of money?” said Xu Aiqiang, 67, as she swept a park on the west side of Zhengzhou. She said her company, a city contractor, hasn’t paid her monthly salary of around $320 for seven months. “Even if they aren’t paying me, I’m still keeping my areas clean, so I can see it for myself.”
Teachers in the southern megacity of Shenzhen are complaining on social media about sharp cuts in bonuses, an important pay component. In January, a heating company in the rust belt city of Hegang in northeastern China told residents to prepare for a cutoff in heat after the company failed to get subsidies from the local government.
Protests have broken out in recent weeks in cities such as Wuhan, Dalian and Guangzhou over public healthcare system overhauls that have included cuts in medical benefits due in part to strained government finances.
On Sunday, at annual meetings of China’s legislature in Beijing, Chinese policy makers offered only modest support for local governments, signaling they want to promote fiscal discipline.
Fiscal transfers from central authorities to local governments, which Beijing provides annually, are set to increase 3.6% to around $1.5 trillion this year, a far cry from last year’s 18% increase. Municipalities will be allowed to issue around $550 billion worth of local government special-purpose bonds this year, down from last year’s actual issuance of $580 billion.
A few days earlier, Chinese Finance Minister Liu Kun played down financial strains faced by local officials, saying on Wednesday that the situation remained mostly stable last year and is expected to further improve this year as the economy recovers.
The State Council Information Office, which handles press inquiries for China’s government, didn’t respond to a request for comment.
Economists note that Beijing still has plenty of fiscal room to intervene in individual cases if necessary to prevent major defaults. Local governments can also sell off assets, if they can find buyers.
However, the central government’s balance sheet isn’t strong enough to bail out every contingent liability in China, wrote Nicholas Borst, director of China research at Seafarer Capital Partners, a San Francisco-based investment firm, in a research paper on local debt released this month.
“Moreover, a one-off series of bailouts would increase moral hazards and not change the underlying dynamics that led to the problem in the first place,” he wrote.
That means local residents—especially civil servants—may see more salary cuts and reduced services, as well as fewer infrastructure investments to power growth and employment.
“The real cost of the debt won’t be a financial crisis but it’ll lead to many years of struggling to allocate the cost of that debt,” said Michael Pettis, a finance professor at Peking University.
Officially, China’s 31 provincial governments owe around $5.1 trillion, including bonds held by local and foreign investors.
Those figures don’t include a variety of off-balance-sheet debts typically raised through so-called local government financing vehicles, which have proliferated in recent years to fund infrastructure and other spending obligations. The debts from those vehicles are expected to reach nearly $10 trillion this year, according to the International Monetary Fund.
The debt from those vehicles is more than the combined government debt of Germany, France and Italy as of the third quarter of 2022, according to European Union data.
Interest on the debts crowds out other spending. The Rhodium Group research found that interest costs accounted for at least a fifth of fiscal resources in 25 Chinese cities in 2021. Anything over 10%—the case in more than 100 cities—leads to “meaningful constraints,” Rhodium said.
Local governments’ debt problems have been building since the global financial crisis. Many became addicted to launching projects—which juiced growth—and selling land and borrowing more to pay for all of it, economists say.
In addition, China’s local governments must shoulder most of the costs of services such as public education and healthcare. Beijing restricts how they can raise money, compelling them to send most of what they collect in taxes to the central government, while limiting what they can borrow.
Zhengzhou, with nearly 13 million residents, has healthier finances than many other cities. Its streets are vibrant, with residents crowding eateries.
Yet in the past three years, Zhengzhou’s fiscal revenue dropped by 14% on average each year while total debt grew by 14% annually. Its debt-to-fiscal income ratio rose to 178% in 2022, from 75% in 2019.
Another street sweeper told The Wall Street Journal he hasn’t been paid by his company, also a city contractor, since he joined nearly two months ago. Another two months’ worth of salary remains unpaid from his last job, at a local sanitation department.
He said he was told the district government hasn’t sent his company the money to pay his salary, equivalent to around $370 a month.
“Sooner or later they’ll have to pay me,” he said as he kept picking up discarded tissue paper and dried leaves. He relies on his son, a truck driver, to assist him financially, he said.
Zhengzhou’s government didn’t respond to a request for comment.
In late February, a bus company in Shangqiu, a city about two hours’ drive from Zhengzhou with around 7 million residents, said it would suspend bus service starting March 1 due to a “lack of sufficient fiscal support” along with other factors. The decision was retracted after Shangqiu’s government apologized for “negative social impact.”
Similar scenarios have played out in at least three other cities, according to local media.
While some analysts believe the odds of a financial system meltdown are low, stress could spread if more local borrowers struggle to repay loans on time.
In December, Zunyi Road and Bridge Engineering Construction Group, a local government financing vehicle based in Guizhou, one of China’s most indebted provinces, struck a deal with banks to get another 20 years to repay loans worth more than $2 billion. The deal raised fears that other banks could have to bear restructuring costs.
Some analysts say Beijing is unwilling to make changes that could put local government finances on a more stable footing, such as implementing a property tax to raise more funds, because doing so would be politically unpopular and could undermine central authorities’ control over localities.
Selling more state assets risks going against Mr. Xi’s objective of using state players to achieve strategic goals such as self-sufficiency in key technologies.