U.S. futures and Asian stocks rose Thursday as sentiment received a fillip from a pause in the global sovereign-bond selloff and possible steps to ease the cash crunch in China’s struggling property sector. MSCI Inc.’s Asia-Pacific share index snapped a five-session drop, led by a climb in Hong Kong amid a technology rally. U.S. and European futures were in the green. The S&P 500 shed 1% in a choppy session Wednesday, while the Nasdaq Composite entered a correction, down over 10% from a November high. Chinese regulators are considering making it easier for builders to access certain funds from presold properties, a step that would help tackle the industry’s liquidity crunch. An index of property developer shares climbed. Separately, Chinese lenders lowered borrowing costs to boost the economy. The dominant theme for markets remains prospective Fed rate hikes and the possible reduction of its holdings in Treasuries starting later in 2022. The withdrawal of outsized stimulus threatens to inject more volatility across a range of assets. Global stocks have already dropped more than 3% this year. In the U.S., upbeat earnings from companies including Morgan Stanley, UnitedHealth Group Inc. and Procter & Gamble Co. failed to shore up sentiment. The earnings season so far has been a little bit rocky, and investors need to monitor commentary from companies about price and wage pressures.
US After Hours EVA -6%, DFS -2.5% decline on earnings/guidance
Nikkei +1.11% Hang Seng +2.83% CSI +0.85% Shanghai -0.07% Shenzen -0.88%
Eur$ 1.1355 CNH 6.3471 CNY 6.3440 JPY 114.45 GBP 1.3629 CHF 0.9156 RUB 76.1489 TRY 13.5337 WTI$ 87.27 +0.36% Gold 1,840.25 -0.02% BTC 42,000 -0.50% ETH 3150 -0.20%
S&P +0.56% Nasdaq +0.73% EuroStoxx +0.44% FTSE +0.54% Dax +0.32% SMI +0.35%
Macro :
- Chinese Banks Cut Borrowing Costs as PBOC Signals Easing
- China Stocks Rally With Property in Lead as Easing Bets Advance
- European Seed VC Behind Cazoo and Flink Raises $340 Million Fund
Keep an eye on :
- AIR FP : Germany Courts BMW, Airbus in Bid to Speed Up Green Transition
- AA US : Alcoa 4Q Adjusted Ebitda Meets Estimates: Snapshot
- ALO FP : Alstom 3Q Sales Miss Estimates
- AOW NO : Aker Offshore Wind Isn’t Planning Capital Raise After ScotWind
- ASML NA : ASML Sees Berlin Factory Production Resuming in 1H: FAZ
- AZA SS : Avanza 4Q Operating Income Beats Estimates
- BEAN SW : Belimo FY Sales Beats Estimates
- BMW GY : Germany Courts BMW, Airbus in Bid to Speed Up Green Transition
- BNP FP : China’s Regulatory Risks Keep BNP Cautious on Their Stocks
- COTN SW : Comet Prelim FY Sales CHF513M
- EDF FP : EDF Halts 14 Oil, Gas Power Plants as Strike Enters Fourth Day
- EDP PL : EDP Renovaveis Says Electricity Generation Rose 6% in 2021
- GALE SW : Galenica FY Sales Beats Estimates
- GET FP : Getlink FY Revenue Meets Estimates
- GLB ID : Glanbia Co-op Seeks EU250 Million From Exchangeable Bond: Terms
- IBAB BB : IBA and Mercury Plastics Sign Contract for Irradiation Solution
- IDIA SW : Idorsia Gets Japanese PMDA Approval of PIVLAZ 150mg
- IDIA SW : Idorsia: Lancet Report Shows Day/Night Impact of Insomnia Drug
- MOVE SW : Medacta Prelim FY Revenue Meets Estimates
- KOA NO : Kongsberg Automotive Wins Contract With EU42m Est. Lifetime Rev
- LLBN SW : Liechtensteinische LB Prelim FY Operating Income CHF476M
- MC FP : French Champagne Sales Hit Record EU5.5 Billion in 2021: Echos
- PAH3 GY : Porsche SE's $49 Billion Volkswagen Stake Driven by Sportscars
- PST IM : Poste Italiane Weighs Buying Lottomatica Italia Servizi: MF
- REP SM : Repsol Must Compensate Oil Spill ‘Immediately’: Foreign Ministry
- ROSE SW : Zur Rose Says Client Data From Online Shop May Have Been Stolen
- SMCP FP : SMCP Names Christophe Chenut, Xavier Veret as Board Members
- SOI FP : Soitec Names Pierre Barnabé as Group CEO, Suceeding Paul Boudre
- SUSE GY : SUSE FY Adjusted Ebitda Beats Estimates
- TEL NO : Telenor Signs Collaboration Pact With Amazon Web Services
- TRUEB SS : Truecaller Holder Open Ocean Fund Three Ky Offers 12.5m Shares
- TRUEB SS : Truecaller Revenues for 4Q Expected at SEK380m-400m
- UNA NA : Unilever Won’t Increase Offer for GSK Consumer Unit Over GBP50B
- VALN SW : Valora to Propose Sascha Zahnd as Chairman at April 6 AGM
- VIRP FP : Virbac 4Q Revenue EU246.4M Vs. EU220.3M Y/y
- VLA FP : Valneva Says Covid-19 Vaccine Candidate Neutralizes Omicron
- VOW GY : Porsche SE's $49 Billion Volkswagen Stake Driven by Sportscars
- ROSE SW : Zur Rose FY Sales Beats Estimates
(FULL GS Internet & Media 2022 Outlook Resume Coverage attached)
>>> Up
* Atrium Ljungberg Raised to Buy at Handelsbanken; PT 220 kronor
* Balder Raised to Hold at Handelsbanken; PT 570 kronor
* British Land Raised to Buy at Peel Hunt; PT 650 pence
* Bucher Raised to Buy at Kepler Cheuvreux; PT 530 Swiss francs
* Burberry Raised to Buy at Kepler Cheuvreux; PT 2,280 pence
* Castellum Raised to Buy at Handelsbanken; PT 260 kronor
* Catena Raised to Buy at Handelsbanken; PT 600 kronor
* Coloplast Raised to Hold at Carnegie; PT 1,015 kroner
* Commerzbank Raised to Outperform at Exane; PT 9 euros
* Embraer ADRs Raised to Overweight at Morgan Stanley; PT $23
* Entra Raised to Buy at Handelsbanken; PT 230 kroner
* EVOLVA RAISED TO BUY VS HOLD AT BERENBERG
* FDJ Raised to Outperform at Oddo BHF; PT 38 euros
* Hemnet Raised to Buy at Carnegie; PT 184 kronor
* HIKMA PHARMACEUTICALS RAISED TO BUY VS HOLD AT PEEL HUNT
* MOL Raised to Buy at Goldman; PT 3,700 forint
* Platzer Raised to Buy at Handelsbanken; PT 150 kronor
* Rentokil Raised to Buy at Citi Following Terminix Acquisition
* Sagax Raised to Hold at Handelsbanken; PT 280 kronor
* Siemens Healthineers Raised to Buy at Jefferies; PT 75 euros
* Simcorp Raised to Buy at SEB Equities; PT 775 kroner
* Thule Raised to Buy at SEB Equities; PT 550 kronor
* Vinci Raised to Buy at SocGen; PT 114.60 euros
>>> Down
* Compass Cut to Hold at Deutsche Bank
* Countryside Cut to Hold at Peel Hunt; PT 330 pence
* EDF Cut to Equal-Weight at Morgan Stanley; PT 10 euros
* Erste Cut to Hold at Raiffeisen Bank; PT 49 euros
* Ford Cut to Hold at Jefferies; PT $25
* Hellenic Petroleum Cut to Neutral at Goldman; PT 7.50 euros
* InPost Cut to Underperform at Exane; PT 5.90 euros
* Paradox Interactive Cut to Hold at Jefferies; PT 175 kronor
* Philips Cut to Hold at Jefferies; PT 32 euros
* SEB Cut to Neutral at Exane; PT 136 kronor
* TCM Group Cut to Hold at SEB Equities; PT 160 kroner
* Walmart Cut to Sector Weight at KeyBanc
>>> Initiation
* Adevinta Reinstated Neutral at Goldman; PT 133.30 kroner
* AUTO1 Reinstated Buy at Goldman; PT 27 euros
* Auto Trader Reinstated Neutral at Goldman; PT 799 pence
* Believe Rated New Neutral at Goldman; PT 19 euros
* Bouygues Reinstated Neutral at Oddo BHF; PT 34 euros
* Directa SIM Rated New Neutral at EnVent S.p.A.; PT 5.61 euros
* Elekta Reinstated Underperform at Jefferies; PT 90 kronor
* Evotec SE Rated New Buy at Berenberg; PT 51 euros
* Informa Reinstated Sell at Goldman; PT 519 pence
* ITV Reinstated Sell at Goldman; PT 125 pence
* JCDecaux Reinstated Sell at Goldman; PT 21.20 euros
* Kahoot Rated New Buy at Goldman; PT 54.70 kroner
* Learning Tech Reinstated Buy at Goldman; PT 220 pence
* MFE-MediaForEurope Rated New Sell at Goldman; PT 1.17 euros
* Pearson Reinstated Buy at Goldman; PT 896 pence
* ProSieben Reinstated Buy at Goldman; PT 18.10 euros
* Prosus Reinstated Buy at Goldman; PT 127.10 euros
* Publicis Reinstated Buy at Goldman; PT 73.90 euros
* RELX Reinstated Buy at Goldman; PT 2,866 pence
* Rightmove Reinstated Neutral at Goldman; PT 826 pence
* RTL Reinstated Buy at Goldman; PT 62.80 euros
* Schibsted Reinstated Neutral at Goldman; PT 358 kroner
* Scout24 SE Reinstated Neutral at Goldman; PT 66.70 euros
* Stroeer Reinstated Neutral at Goldman; PT 76.80 euros
* UMG Rated New Buy at Goldman; PT 29.90 euros
* Vivendi Reinstated Buy at Goldman; PT 14.70 euros
* Wolters Kluwer Reinstated Neutral at Goldman; PT 100 euros
* WPP Reinstated Buy at Goldman; PT 1,450 pence
>>> Call
* EDF Cut at Morgan Stanley on More Nuclear Risks, Low Visibility
* Hikma Upgraded to Buy at Peel Hunt on Strategy, Stock Weakness
* Unilever Unlikely to Win Support For GSK Unit Deal: Bernstein
After Hours Summary: EVA -6%, DFS -2.5% decline on earnings/guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: AA +1.3%, KMI +0.7%
Companies trading higher in after hours in reaction to news: SEMR +4.3% (announced acquisition of Backlinko), KNTE +1.2% (to present preclinical data on KIN-3248 at ASCO GI Cancers Symposium), OMER +1.2% (confirmed submission of response to FDA's CRL for narsoplimab BLA)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: EVA -6.0% (provided preliminary results for FY21; also announced signing of MOU with US customer and commenced a stock offering), DFS -2.5%, UAL -2.4%, FUL -2.2%, WTFC -1.9%
Companies trading lower in after hours in reaction to news: AMH -4% (announced public offering of common shares), MCRB -3.6% (announced publication of data from Phase 3 ECOSPOR III study in the NEJM), ZYME -3.4% (provided corporate update), EHC -2.8% (plans to spin off home health and hospice business), HT -2% (provided operating results for December)
Closing Stock Market SummaryThe S&P 500 fell 1.0% on Wednesday, fading an early 0.8% gain despite encouraging earnings news and a decline in interest rates. The Nasdaq Composite (-1.2%) and Dow Jones Industrial Average (-1.0%) performed comparably to the benchmark index, while the Russell 2000 lagged with a 1.6% decline.
Nine of the 11 S&P 500 sectors closed lower, as selling interest accelerated into the close on no specific news. The consumer discretionary (-1.8%), financials (-1.7%), and information technology (-1.4%) sectors led the retreat, while the consumer staples (+0.7%) and utilities (+0.5%) sectors closed higher.
Early on, there was optimism surrounding the EPS beats from Procter & Gamble (PG 162.00, +5.27, +3.4%), UnitedHealth (UNH 462.52, +1.53, +0.3%), Bank of America (BAC 46.44, +0.18, +0.4%), and Morgan Stanley (MS 95.74, +1.73, +1.8%) insofar that they signaled more companies would successfully navigate the higher-cost business environment.
At the same time, interest rates had backed off from overnight highs and continued to push lower throughout the session. It looked like a good set-up for an equity rebound, but unfortunately, that didn't happen. The inability to rebound from sizable losses deterred risk sentiment, fueling a belief that more downside was ahead.
Presumably, investors bought the dip in Treasuries to hide out from the equity volatility, geopolitical uncertainty, and any impact from the Fed's tightening plans. As a reminder, the Fed meets next week to discuss monetary policy.
The 2-yr yield declined two basis points to 1.01% after flirting with 1.08% overnight, and the 10-yr yield declined four basis points to 1.83% after flirting with 1.90% overnight. The U.S. Dollar Index declined 0.2% to 95.56. WTI crude futures approached $87.00 per barrel ($86.86/bbl, +1.38, +1.6%).
Interestingly, homebuilding stocks were noticeably weak despite housing starts and building permits for December beating expectations. There might have been some disappointment that the increases were driven by multi-unit dwelling instead of single-unit dwellings.
The iShares US Home Construction ETF (ITB 71.73, -1.88) fell 2.6%, additionally pressured by KeyBanc Capital Markets downgrading several stocks in the space.
Reviewing Wednesday's economic data:
- Housing starts increased 1.4% month-over-month in December to a seasonally adjusted annual rate of 1.702 million (consensus 1.650 million) while permits increased 9.1% month-over-month to 1.873 million (consensus 1.702 million).
- The key takeaway from the report is that the increases were driven by multi-unit dwellings. Single-unit starts were down 2.3% and single-unit permits were up just 2.0% with little to no growth in the two largest homebuilding regions (the South and the West).
- The weekly MBA Mortgage Applications Index increased 2.3% following a 1.4% increase in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report, Existing Home Sales for December, and the Philadelphia Fed Index for January on Thursday.
- Dow Jones Industrial Average -3.6% YTD
- S&P 500 -4.9% YTD
- Russell 2000 -8.1% YTD
- Nasdaq Composite -8.3% YTD
Israeli fintech Personetics raises $85M for tools to help incumbents personalize banking services to compete with neobanks
Big banks are under a lot of pressure to modernize their services to meet demands of consumers who now view things like mobile apps that identify who and where you are; or instant, on-demand products, as table stakes — consumers that are in turn increasingly looking at neobanks to give them a better level of service when it comes to their money and managing it. Today a startup that is building tools to help incumbent address this challenge is announcing a round of funding on the back of a lot of demand for its services.
Personetics, which has built AI-based technology for banks to personalize their offerings — for example understanding a users’ spending habits, and combining that with larger datasets, to offer advice for savings, based on a customer’s spending patterns — has raised $85 million, funding that will go towards expanding the tools that Personetics provides to banking customers, as well as to expand its base of users.
That base is already pretty impressive. It currently has 80 banking customers, a list that spans some of the world’s biggest names in financial services. (Names that it can disclose include Metro Bank, Santander, U.S. Bank, Huntington Bank, UOB, Hyundai Card, and MUFG.) Altogether Personetics’ technology interacts with some 120 million users across 30 countries.
It has also been on a fundraising run, with this round adding up to $160 million raised since the start of 2021. This latest round is being led by Thoma Bravo with Viola Ventures, Lightspeed Ventures, Sequoia Capital, Nyca Partners and Warburg Pincus — all previous investors in the company — also participating. It’s not disclosing valuation.
Although we hear a lot of talk these days about digital transformation being synonymous with migrating to the cloud, Personetics typifies a persistent trend in the world of enterprise that runs contrary to that. David Sosna, its CEO and co-founder, said that although the company offers a SaaS version of its personalization tech, “many” of its customers — including some of the names that have made a big point of trying to modernise, such as Santander — are actually using Personetics on-premises.
“Sending financial data out is something banks are doing, but it’s not 100%,” he said. “I see them moving there, but I don’t see them rushing there. Financial data is probably the last thing that you will see migrate to the cloud.” More commonly, they may build new services in the cloud, which they will then run in tandem with legacy services, which are not. Even in those cases, he added, “we are part of that infrastructure on services like Azure, or Google Cloud or AWS, but they own it — not us.”
Beyond the mechanics of how the services get implemented, the more salient fact is that they are being implemented full-stop. They are moving to personalisation for a number of reasons. First and foremost is the rise of challenger banks lighting a fire under them and getting them moving.
“They are seeing the impact of the alternatives,” he said, with the migration away from the incumbents happening gradually. “25% of your customers may be adopting external lending providers or BNPL. That’s a common thing.”
Secondly is the fact that this is simply what consumers are demanding now, the “table stakes” in this territory, as Sosna puts it. “They really have no choice.”
Third of all has been the impact of Covid-19 and wider market forces. With more banks closing down physical branches, they have become more — and in some cases, completely — reliant on digital platforms to run and grow their businesses. This too is leading them to build and run better sites and apps to get this done.
Given that it’s not a big leap between financial services and fintech — indeed, in cities like London which have strong industries in tech and financial services, the two have long competed heavily to recruit technical talent — it’s surprising that we haven’t seen more banks trying to built personalization in house rather than look to a third-party provider like Personetics.
Sosna said that some have indeed tried this. “The big ones are trying and have built certain capabilities,” he said. “The big ones believe they need to own it.” However, much of this has been slow to take off, and so in many cases working with a third party has been an easier way for them to experiment. “That’s the case and I don’t think it will change,” he added.
In the midst of a fintech revolution that has seen a huge wave of challenger banks emerge, and an equally impressive group of banking infrastructure startups surface to provide API-based, embedded services to neobanks to build their products, there has been a smaller set of companies that have seized an opportunity to address the needs of incumbents to compete against these newer players. Others in the same category include 10x, which was founded by ex-incumbent banking executives and has raised significant funding to build tools specifically for the behemoths.
It will be interesting to see how and if Personetics over time works with more neobanks, alongside the incumbents. After all, neobanks have gone all-in on embedded services, so it would make sense for them to look to third parties potentially to improve personalization, too.
Personetics does have some digital banks as customers, Sosna said, although most of these have grown out of the bigger incumbents. “We like that segment because they have more muscle to start with,” he said. “A lot of these fintechs start and stop and go right and left. It’s hard for us to understand their strategy, so once they get to a certain size it might make more sense to partner.”
Down the line, the company is likely to bring on more services to underpin the personalization it already offers, such as in more specific areas like lending, where it might, for example, give banks the ability to evaluate loan applications faster and using a wider set of data comparable to what new-wave fintechs are providing. It’s already doing a lot of automated work in moving money around so lending is a natural step.
“When it comes to savings and lending and investing one of the things we like is to provide an automated capability to move money on your behalf,” he said. This might happen, for example, between a current account and moving surplus money every month into a higher-interest account to accrue better returns. “We have multiple banks using that now, where you opt in and then automatically moves the money without asking your permission every time.”
“As the range and complexity of financial products continues to grow, Personetics simplifies and personalizes banking for consumers with its industry-leading AI technology,” said Robert Sayle, a partner at Thoma Bravo, in a statement. “We are thrilled to partner with Personetics and leverage our operational expertise in software and financial technology to help accelerate the company’s momentum, the introduction of new products and technology, and the platform‘s reach to financial institutions and their customers across the globe.”