Before the bell: time flies

Geopolitical changes on the horizon and a massive dividend from D’Ieteren.

Some years seem uneventful, while some months feel like they contain the happenings of several years. Over the weekend, the Assad regime fell, marking a significant shift in the Middle East. Iran has lost another ally in the region, following the recent weakening of Hezbollah in Lebanon. This leaves Iran increasingly isolated, while Israel celebrates its victories. Backed by the U.S., Iran might find itself under greater scrutiny starting in 2025, potentially influencing the oil markets. In South Korea, the stock market fell by approximately 2% this morning, as uncertainty looms over whether the president will remain in power after last week’s coup attempt. Meanwhile, lower-than-expected inflation figures in China could increase the chances of new stimulus measures during an important government meeting on Wednesday.

On the corporate front, Galapagos announced promising news over the weekend. Its cell therapy GLPG5101 showed encouraging efficacy and a positive safety profile. However, as the drug is still in early stages, further trials are required. Hyloris has secured a new cfo and a commercial partner to sell its drug Valacyclovir in the U.S. Oracle is set to release its financial results this evening.

Mega Dividend Incoming

While often a formality, shareholder approval is required for dividend payouts. On Friday, D’Ieteren’s special shareholders’ meeting approved the company’s planned mega dividend. Shareholders can now look forward to a payout of 74 euros per share, representing a dividend yield of 35.7%. Tomorrow, the dividend will be deducted from the share price, which theoretically should drop by a similar amount. However, many retail investors sold their shares in advance to avoid the 30% tax on the dividend. It wouldn’t be surprising if these investors start repurchasing their shares from Tuesday onward. This could lead to the share price opening slightly higher than theoretical expectations, though there are no guarantees in the stock market.

To Deal or Not to Deal

One of the recurring themes this year is the difficulty of reaching agreements. While political deals remain elusive, can the corporate world do better? That question may be answered today in Germany, where Volkswagen and labor unions will attempt—for the fourth time—to strike a deal. Failure to agree could result in inevitable strikes. Volkswagen plans to close three factories in Germany, a proposal the unions find unacceptable, especially after recently negotiating for wage increases. Now being asked to make concessions, the unions demand that shareholders accept dividend cuts and that management forgo bonuses. A strike at Volkswagen’s main plant in Wolfsburg could have severe consequences. Every two hours of strike action across its four production lines would result in a production loss of 400 to 600 vehicles, further pressuring the company’s profits.

Did you know…

D’Ieteren owns Belron, which in turn owns Carglass? Former AB InBev CEO Carlos Brito now leads Belron. Expectations are that Brito will eventually pursue an IPO for Belron, a strategic move anticipated since his appointment last year.

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