Powell and Lagarde push Bel20 significantly into the red

The stern words from Fed Chairman Jerome Powell and ECB Chairman Christine Lagarde weighed on stock market sentiment. The Bel20 performed worse than its European peers due to its exposure to interest-rate sensitive real estate shares.

A profit series that came about because investors, as is often the case, had energetically magnified one quote from the same Powell to the conclusion that the Fed’s inflation battle was gradually becoming a ‘mission accomplished’. On Friday afternoon, Powell’s European counterpart Christine Lagarde added that no interest rate cut should be expected ‘in the coming quarters’.

The Bel20

received a decline of 1.2 percent to 3,439 points. The Brussels stock market barometer had extra trouble because it has an interest-sensitive brick in its stomach. WDP

Aedifica

lost 1.1 and 1.2 percent respectively.

But also KBC

weighed with a heavy loss of 2 percent to 51.28 euros. The banking and insurance group managed to turn a sharp red opening into a green close on Thursday after the quarterly report, thanks to a soothing analyst call, but KBC clearly did not manage to mollify all analysts.

The stock exchange UBS maintains its lukewarm advice (‘neutral’) and price target of 54.10 euros. Analyst Johan Ekblom is cutting the profit forecasts for 2024 and 2025 by 7 to 8 percent due to the forecast for lower interest income. For 2024 he now expects a net profit per share of 6.22 euros, for 2025 the target is 7.14 euros.

‘The downward price potential is limited to the book value, so about 10 percent. But at the same time, a clear signal is needed that revenues are on the rise again before the share can recover,” the analyst explains his tepid advice. As an illustration of the uncertain outlook, Ekblom points out that KBC management no longer gives an indication for 2025 in the presentation.

Aperam

lost 1.4 percent to 27.43 euros. The stainless steel producer reported a net loss of 42 million euros, but according to management the bottom has been reached.

“Europe is experiencing a very challenging market environment with historically low prices and volumes,” says CEO Timoteo Di Maulo. “With our cost savings, we are laying the foundation for a better 2024, regardless of what the recovery will look like.” The stainless steel group wants to cut costs by an additional 50 million euros, on top of the previously planned 50 million.

“Due to the warning in September, the stainless steel producer’s results were not really a big surprise,” says Degroof Petercam analyst Frank Claassen. ‘We already knew that Aperam was affected by the challenging European market environment and company-specific problems, such as the longer than planned outage at the Ghent factory.’

“The situation should turn around in the coming quarters,” the analyst continues. ‘It is logical that the company sees an improvement in the fourth quarter because the last three months of the year are stronger due to a seasonal effect. The company-specific problems will decrease.’

“We are very pleased with the confidence that private investors have shown in us,” says CFO Sandrine Dufour. “It underlines our access to diversified financing sources and allows us to extend our debt maturity profile.”

Shurgard

did a similar trick. Because the safe deposit box king also raised 300 million euros in one day with a capital increase from institutional investors at a price of 36.75 euros per share.

Degroof Petercam analyst Vincent Koppmair places his price target ‘under review’. According to the analyst, the issue price represents a discount of 13 percent compared to the last net asset value (according to EPRA standards) of 42.30 euros per share.

‘The announcement of the capital increase was a surprise to us yesterday. “Nevertheless, the inclusion of the shares on offer and the fact that the books were several times oversubscribed is a positive signal of the market’s confidence in the company,” he says. His advice remains ‘buy’.

UCB fell 1 percent while Shurgard fell 5.4 percent.