Before the Bell: Strong Start to the Christmas Week for Asian Markets

The Belgian government wants a larger stake in Ageas, the German government injects funds into AMG, and Binance breaches regulations.

Friday was largely positive for markets. On Wall Street, both the S&P 500 (+0.9%) and the Nasdaq (+1.3%) posted solid gains. Cruise operator Carnival (+9.8%) benefited from excellent results. As we already noted on Friday morning, Nike’s share price (-10.5%) fell sharply after the company announced a major drop in revenue in China. European equities gained an average of half a percent on the final trading day of the week. Only Euronext Paris barely moved. The fact that the French index includes no fewer than three luxury stocks—Kering (-2.5%), Hermès (-2%), and LVMH (-0.9%)—is not always an advantage. In Brussels, the Bel20 closed 0.4% higher on Friday. Within the index, UCB (+2%) and Melexis (+1.7%) were the strongest performers, while Cofinimmo (-1.8%) posted the largest decline.

In Asia this morning, gains dominate. In Tokyo, the Topix (+0.6%) and the Nikkei (+1.8%) are higher. Hong Kong is flat, while on the Chinese mainland equity markets are up by an average of 1%. There are no notable macroeconomic releases scheduled today, nor any planned corporate earnings announcements—typical for the period around Christmas. The Financial Times does report this morning that crypto exchange Binance allowed suspicious accounts to continue trading, even after its settlement with U.S. authorities in 2023.

German Government Backs AMG

This morning, AMG announced that it has received funding from the German federal government for its operations in Bitterfeld. The Dutch specialist in critical raw materials such as lithium and vanadium will receive 36 million euro to scale up its battery-grade lithium hydroxide plant to full commercial production. AMG aims to become one of the first large-scale European players in a market that is still largely dominated by China. For Germany, this investment fits into a broader strategy to bring strategic raw materials closer to home and to build a European value chain for critical materials and batteries. Through this subsidy, Germany wants to provide its domestic industries, including the automotive sector, with a stable and local supply of strategic and critical materials. AMG offers investors a pure-play way to gain exposure to Europe’s push for raw material autonomy. The share price is already up 84% this year. That does not necessarily make the stock expensive, considering it traded at 49 euro per share in 2023. On Friday evening, the share closed at 26.24 euro.

More Government Involvement at Ageas?

From the very start of Spaarvarkens, we have consistently been enthusiastic about investing in Ageas. At the time, a share in the Belgian insurance group cost just 37 euro. Today, it stands at 58.85 euro. If you do not find a price gain of 59% over nearly six years impressive, consider that Ageas also paid out 19.3 euro per share in dividends over that period. That brings the gross return to 111%. This is the return achieved by an investor who was able to reclaim wit holding tax. If not, the total return on Ageas still amounts to 96%, or even more if dividends were reinvested. Ageas is therefore a very attractive investment—and even the government knows it. Three years ago, Belgium acquired a 6.33% stake in Ageas for 590 million euro. That investment is now worth 712 million euro. Prime Minister Jambon would like to increase the stake to 15%, as policymakers in Brussels are aware that France’s BNP Paribas could potentially make a move on Ageas. Is that a good idea? Or perhaps not? Investors generally prefer not to see too much government influence at the helm of a company.

Did you know…

that AG is older than Belgium itself? The Belgian core of Ageas began its activities back in 1824. The name “Ageas” was only introduced at the end of April 2010, when the insurance activities were separated from bancassurer Fortis.

This article was translated from Dutch and was originally published on Spaarvarkens.be.