Summary:
- European Union agrees on regulation to limit “greenwashing” practices
- DAX (DE30 on xStation5) pulls back below the breakout level
- Vonovia (VNA.DE) among DAX leader after earnings release
Following lacklustre performance of Asian equity market, stock from the Old Continent headed lower in the first minutes of Thursday’s trade. British and Russian shares were underperforming the most while Spanish IBEX (SPA35) managed to post a decent gain. Miners lagged while telecoms and banks led higher.
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DE30 dipped below the breakout level at 11560 pts and the 33-period moving average (H4 interval) over the night. The index is struggling to climb back up and may be set to tread water for a while. However, in case the downward move is to be extended the short-term upward sloping trendline (around 11490 pts at press time) may be the first level to watch for sellers. Source: xStation5
The European Union agreed on a new regulation today that may have visible impact on the asset management industry on the Old Continent. Namely, EU members countries reached agreement over the so-called “greenwashing”. Greenwashing is practice of claiming to be more environmental friendly than the reality suggests. Under new regulation asset managers and insurer will be obliged to make more direct disclosures of the environmental impact of their investments. Such a development may limit investments in companies that pose significant environmental threat, for example firms operating coal power plants, as managers taking care of “eco-friendly” portfolios would face higher scrutiny over whether they follow portfolio’s investment objective or not.
Speaking of environment, the UK government announced some more details of country’s push towards green power sources. The United Kingdom plans wind farms to account for a third of country’s electricity output by 2030. This figure stood at around 17% in 2018. Moreover, the UK will also encourage companies to boost production of the windpower equipment as it wants more than a half of needed parts to be manufactured domestically by 2030. Note that such policy is nothing new as the country already accounts for around 40% of the global wind power output.
Major European stock market indices after the first hour of trade:
- DAX (DE30): -0.41%
- FTSE 100 (UK100): -0.46%
- CAC40 (FRA40): -0.37%
- IBEX (SPA35): +0.20%
- FTSE MIB (ITA40): -0.03%
Vonovia (VNA.DE) leads DAX gains after earnings while Infineon (IFX.DE) underperforms despite upgrade at Exane. Source: Bloomberg
Company News
Vonovia (VNA.DE) is one of the best performing DAX members today on the back of a strong earnings report for 2018. The German residential property company generated funds from operations (FFO) of €1.07 billion, marking a 15.8% YoY increase. The company upheld previous guidance of reaching €1.14-1.19 billion and expressed will to raise dividend payout for 2018 from €1.32 per share to €1.44 per share.
Analysts from major banks issued a range of recommendations for DAX members today. Below we present summary of new recommendations:
- Deutsche Lufthansa (LHA.DE) upgraded to “buy” at Citi. One-year price target raised from €20.50 to €30.00
- Infineon Technologies (IFX.DE) upgraded to “outperform” at Exane.
- Daimler (DAI.DE) downgraded to “hold” at Bankhaus Lampe. One-year price target lowered from €60 to €50.
- BMW (BMW.DE) downgraded to “sell” at Bankhaus Lampe. One-year price target lowered from €78 to €65.
Infineon (IFX.DE) is trading lower today despite receiving an upgrade at Exane. The stock continues to pull back from the vicinity of 200-session moving average (purple line). Price seems to be heading towards the €19 handle, a level that served as a floor to recent trading. Source: xStation5
