Flash boursier

Key data

Highlights:

1° Uncertainty grips the US
2° WEF begins in Davos this week

Worrying bout of flip-flopping

Two months after his unexpected win, Donald Trump will be sworn in this coming Friday as the 45th President of the United States. A great deal of uncertainty (and volatility) surrounds the handover, and recent events – starting with president-elect’s first press conference – have done nothing to soothe the fears expressed by various economic stakeholders.

Over the weekend came some aggressive talk about the pharmaceutical and biotechnology industries. At the outset, Trump had been positive on these business sectors but this worrying volte-face immediately sent related stocks plunging.

A staunch opponent of globalisation during his campaign, Trump then issued a warning to German carmakers, threatening new import duties if these companies continued assembling cars in Mexico for sale in the US market.

On the world political front, the president-election revealed support for the Brexit win, further undermining an EU that is already wracked with divisions, while at the same time criticising Angela Merkel’s record on immigration.

The 47th World Economic Forum begins this week in Davos, where world leaders hope to provide some stability against the backdrop of an ever-changing world. The guest of honour is China. President Xi Jinping, on a state visit to Switzerland, will be the first Chinese president to take part in the annual WEF. It will give him an opportunity to reaffirm the global importance of China as an economic world power.

With people in general concerned about the incoming US administration, China’s participation will chiefly provide it with a way of shouldering more global governance responsibilities. Apart from the main meetings, debates on the future of finance and the prospective role of monetary policy will be our highlights.

Richemont (ISIN: CH0210483332, price: CHF 77.40)

The group has reported financials for the third quarter of its financial year to March 2017. The figures topped estimates, in particular the jewellery division. The retail outlets of the group’s various brands also performed well.

The better showing was especially visible in the Asia-Pacific region, which represents 45% of the group’s sales. Sales rose by 6% over the quarter compared with the prior-year period and by 5% at constant exchange rates.

Although Richemont does not issue full-year guidance, its business conditions are doubtless improving. Additionally, fourth-quarter results will be helped by the low prior-year base. The group has invested heavily in its sales network in support of growth, and these efforts are starting to pay off.

These better-than-expected figures sent the share surging, and it pierced the long-term downtrend line in place since late 2013. The upturn in the share price has also been supported by target-price upgrades from brokers.

Hold with a target price of CHF 85.

Hugo Boss (ISIN: DE000A1PHFF7, price: EUR 54.99)

The group has announced that the decline in 2016 EBIT will not be as bad as initially expected. Like its competitors, the German fashion group has been hit by the contraction in China’s luxury goods market but was able to stem the sales decline in Q4 2016.

It will reported audited 2016 financials on 9 March but, in the meantime, these initial indications have reassured investors.

Mark Langer, the former CFO appointed as CEO in May 2016, is planning to simplify brand strategy and adjust prices to win back customers and attract younger buyers. The new strategy is pushing the right buttons, by restoring some balance to the premium segment and casualwear as well as harmonising prices worldwide.

The balance sheet is solid and free cash flow plentiful. At close to 6%, the dividend yield is a sight for sore eyes.

Hold based on a target at EUR 70.

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