Before the bell: investors take profits in Asia

It is not unusual for markets to decline slightly on the final day of a strong trading week. Fund managers, market makers and other traders often lock in profits at that point.

Yesterday, both the S&P 500 (+0.3%) and the Nasdaq (+0.4%) moved higher again. The software sector continues to attract buyers. Cisco (+2.6%), Microsoft (+2.2%) and Salesforce (+2%) remain in demand. PepsiCo (+2.3%) reported better-than-expected results. Netflix disappointed after the close. The stock finished the session unchanged but dropped 9.7% in after-hours trading. European markets showed little sign of buying appetite. In Frankfurt, the index rose 0.4%, with software stocks also performing well—SAP gained 3.5%. Even luxury group Hermès (+1.1%) advanced, while L’Oréal (-2.3%) and Mercedes-Benz Group (-2.2%) declined. Animalcare Group (+34.8%) surged on the London market following a takeover bid. In Brussels, the standout performer was D’Ieteren Group (+5.5%). According to the Financial Times, subsidiary Belron could go public at a valuation of 30 to 40 billion euro.

Asian markets are trading lower this morning. Japan is down 1%, while Hong Kong declines 1.3%. Nintendo (+3.9%) and TDK (+3.4%) are still being bought, as is Lenovo (+1.6%). However, Pop Mart (-3.7%) and Ping An Insurance (-3.6%) are under pressure. Investors will soon be able to react to the results published after the close by Econocom, where revenue declined slightly in a challenging market. Ericsson reports results today, while National Bank of Belgium, Inclusio and What’s Cooking Group publish their annual reports.

Lower prices lead to higher volumes

Less can sometimes be more. PepsiCo is experiencing this firsthand. The second-largest US cola producer reduced snack prices by up to 15%, leading to higher consumer demand. This breaks a long-standing trend of declining revenues. Despite the popularity of weight-loss drugs, PepsiCo’s chips and snacks remain in demand. That raises the question: does this not reduce profitability? Not necessarily. Companies are cutting costs. They streamline wherever possible—and evidently, they are still finding ways to save. In my view, this will be the defining theme of the coming decades: cost efficiency. Because it is possible. With or even without the help of artificial intelligence. Should we fear that? Not if we can deliver meaningful value, although excessive cost-cutting will inevitably occur in some areas. Which sectors and companies benefit from cost savings? Where can expenses be reduced significantly, and who profits from enabling those savings? Consultants? I doubt it. That is precisely where cuts are likely to be made.

Belron does not want to be in the Bel20

Investors are being prepared for new IPOs. It is part of the game. The IPO of SpaceX is approaching. You are buying too, right? Belron, the world’s largest vehicle glass repair company, is also planning a listing. It will not be long before investors can subscribe to shares that will likely cost more than a two euro coin. The exact price remains unknown, but the valuation is estimated between 30 and 40 billion euro. Belron is expected to become a market star—but not in Brussels. The company has chosen Euronext Amsterdam. This comes as no surprise. In Brussels, Belron could easily enter the index, but who is really interested in Brussels? A city in decline with a stock exchange that hardly lives up to its name. A merger between Euronext Brussels and Euronext Amsterdam would seem logical, although Euronext Brussels would more likely be absorbed by Euronext Paris. “A country without a stock exchange is a poor country,” once said Etienne Cooreman. “Ah, Etienne Cooreman,” today’s politicians might think, “just an old man.”

Did you know…

that Euronext is the largest stock exchange in Europe, with more than 1,800 listed companies? Euronext Brussels is only a small part of that, with just over 100 listed firms.

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