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Newsletter week 12
This week`s headlines
• Weak Euro to Gain European Companies
• US Import Prices Rise
• Is Egypt Becoming More Attractive to Foreign Investors?
• Unexpected Drop in Eurozone Industrial Production
Weak Euro to Gain European Companies
The Euro/USD spot price is currently at a
level of 1.05 – a relative low price that can be
compared to 1.38, which was the spot price
about one year ago. Thus, the spot price has
decreased with approximately 24 per cent
over a one-year period. The euro’s decrease
toward equality with the dollar will probably
result in a badly needed improvement for
European companies this year and force U.S.
competitors to change their businesses or
risk losing market share. The consequences
of a drop in the Euro currency rate will most
likely lead to more exports from Europe to
the United States due to lower prices for the
customers as a result of the decrease in the
Euro price.
Even some U.S. companies benefit from the
weaker euro due to lower borrowing costs
and lowered costs in the European located
businesses. The U.S. companies that will gain
most from the low Euro price are those with
costs in Euro and revenues in US dollars.
Those companies will gain in to ways from the
change in currency and hence gain leverage
in their profit.
Meanwhile, the weaker euro may actually
affect some European companies’ earnings
due to drops in the values of hedging instruments, which move in the opposite direction
to companies’ revenues. Buying futures and
other financial instruments with currency as
the underlying asset is a way for companies
to reduce the risk from currency fluctuations
and thereby secure future cash flows. With
euro weakness likely to persist due to the
European Central Bank’s quantitative easing
program and a likely hike in U.S. interest rates
on the back of a stronger U.S. economy, longer term planning is a must.
Writers
Carl Hemmingson
Macro and small cap
Oscar Dahlblom
Macro and small cap
Henrik Egesten
Weak Euro to Gain European Companies
Shant Sanossian
Macro: Middle East and Africa
Mu Chuang
Macro: China Likely to Roll out Deposit Insurance,
Free Up Rates
Patrik Olofsson
Technical analysis
Simon Skålberg
Technical analysis
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Macro
also bought large amounts of foreign assets for
newly printed DKK, with the objective to keep
the currency pegged to the euro at a price of
7.46. The government now says that the fight
for the krone is won.
SWEDEN
Sweden Terminates Military Equipment Agreement with Saudi Arabia
Sweden’s agreement with Saudi Arabia has for
some time been questioned. The agreement
was terminated after Sweden’s Foreign Minister Wallström’s planned speech to the Arab
League was cancelled. International media are
reporting the events as directly related and
describe the situation as a big political quarrel.
The Arab League has condemned Wallström
and the events have already had direct consequences in terms of terminated agreements
for Swedish companies operating in the region.
In the longer term, many jobs in the defence
sector may be threatened.
THE AMERICAS
US Stocks Fall with Declining Oil Price
Standard & Poor’s 500 Index (S&P 500) fell for
the third week in a row. The index includes 500
listed companies on the American market. An
oil sell-off and dollar rally affected energy and
industrial companies negative and thus the
S&P 500 Index as well. The Index has been
very unstable during the last weeks. Randy
Frederick, managing director of trading and
derivate at Charles Schwab Corp, said regarding the instability ”We need the dollar and oil
to settle down or we’re going to see more big
moves”.
EUROPE
Unexpected Drop in Eurozone Industrial Production
EMU’s industrial production fell unexpectedly in January. Industrial production fell
0.1 percent in January, compared with the
previous month, rising 1.2 percent over the
same month last year. Expectations were that
production would rise 0.2 percent from the
previous month, according to Bloomberg News
survey. In the EU as a whole, industrial output
was unchanged in January, compared to the
month before, and rose 1.5 percent over the
same month last year.
US Import Prices Rise
After seven months of declining import prices,
the U.S. import prices rose in February as the
cost of petroleum increased. The Labor Department said on Thursday that import prices
gained 0,4 percent in February after a revised
3,1 percent plunge the month before. The forecast for the import prices was an increase of
0,2 percent. The import prices excluding petroleum fell by 0,4 percent in February. The Labor
Department also showed that export prices
declined by 0,1 percent for the same month.
Denmark Managed to Defend the Krone
After the Swiss franc was disconnected from
the euro on January 15 and the increased
concerns over Greece, the Danish krone’s
connection to the euro has been under heavy
pressure. In order to reduce the inflow of capital, the Danish central bank cut the deposit
rate to minus 0.75 percent and stopped auctioning government bonds. The Central Bank
ASIA AND THE PACIFIC
China Likely to Roll out Deposit Insurance,
Free Up Rates
At the press conference this Thursday, PBOC
said the deposit insurance is likely to be in
place by the end of June as a prerequisite for
deeper financial reforms. Also, PBOC mentio-
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Macro
ned there’s high probability of interest rates
liberalization by removing the cap on what
banks can pay depositors over benchmark
rate this year. Payments to depositors that
often failed to match the inflation rate enabled
banks to funnel cheap loans to state enterprises. Thus, the reform is believed to channel
more wealth to the masses, and end a dual-track rate system.
MACRO EVENTS WEEK 12
Monday: India WPI Inflation, Switzerland Retail
Sales, US Industrial Production
Tuesday: German ZEW Economic Sentiment,
EU CPI, US Building Permits, Japan Trade Balance
Wednesday: Great Britain Average Earnings
Index +Bonus, Great Britain Claimant Count
Change, EU Trade Balancem New Zeeland GDP
Retail Sales Down in Singapore
Retail sales in Singapore fell by 5 percent in
January compared with the previous year, with
the Food and Beverage sector (F&B) and petrol
service station leading the decline. The motor
vehicles sector continued to show growth and
the retail sales excluding motor vehicles fell by
8,7 percent. Compared to the previous month,
retail sales increased a seasonally-adjusted 4,8
percent. Excluding motor vehicles, retail sales
climbed 2,5 percent.
Thursday: Norway Interest Rate Decision, US
Current Account, US Philadelphia Fed Manufacturing, Russia Unemployment Rate
Friday: German PPI, Canada Core CPI, Canada
Core Retail Sales
SPOT PRICES and one week change
OMXS30 1 665, 13 +0,29 %
NASDAQ 100
4 871, 76 -1,43 %
S&P – 500 2 053, 40 -1,25 %
DAX 30 11 901, 61 +2,76 %
NIKKEI
19 254, 25 +2,47 %
HANG SENG
23 823, 21 -1,24 %
Gold spot
1 159, 08
-0,70 %
Crude Oil (Brent)
56, 84 -4,39 %
USD/SEK
8, 72 +2,8 %
EUR/USD
1, 05 -3,24 %
MIDDLE EAST AND AFRICA
Is Egypt Becoming More Attractive to Foreign
Investors?
Government cuts the corporate tax from 25%
to 22.5% in order to attract more potential
foreign investments after the 2011 turmoil.
Egypt expects $10bn annually to support the
growth and create jobs. During the international investment conference in Sharm Al Sheikh
in March, the government offered a range of
projects with value around $35bn, mainly in:
infrastructure, power and real estate industries. Egypt lately faced a bidding war between
European and regional investors on two food
companies indicating an increasing confident
in this 90 million population market, supported
by the new improvements in the permission
procedures.
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Small Cap
MultiQ Launches New Product
MultiQ launches In-Store Tablet, a mobile
digital sign for e-commerce and sales support
in stores. Physical retail space often limits the
amount of products displayed in stores. InStore Tablet gives customers access to e-commerce in the store and thus an unlimited range
of products. The new product widens MultiQ’s
product range, which previously primarily comprised stationary screens.
Saniona Estimates AN363 to Have a Market
Value of 6 Billion Dollars
Saniona is a Danish pharmaceutical company
listed on AktieTorget. Saniona has agreements
with pharmaceutical giants, for example Pfizer.
The company has 15 different projecta, one of
them is AN363. An363 is a drug candidate for
the treatment of neuropathic pain and it will go
into clinical phase 1 trial this year. According to
their CFO, Thomas Feldthus the market is expected to be worth more than 6 billion dollars.
Analyst Group’s analysis of MultiQ
Analyst Group’s analysis of Sanoina
Vindico Security’s Norwegian Associated
Company Receives Strategic Orders
Unisecure Norway has signed a distribution
agreement with Safe4 Security Group AS in
Norway. Together with Safe4, a supply contract
has been signed with Komplett AS. The contract
concerns marking kits with DNA. Deliveries
will begin in the next few months and the first
order has been received.
Rootfruit Launched in 100 Granngården
Stores
According to a press release, Rootfruit launched
their product ”Gårdchips 225 gram” in approximately 100 Granngården stores. The company’s
CEO, Hans Jacobsson, expressed in the press
release that he’s glad that Granngården chose
Rootfruit’s original product of ”Gårdschips” and
this adds to the already strong growth the company already has.
Analyst Group’s analysis of Vindico
Alteco Medical: CEO Says They’re Reaching Break Even 2016 or 2017
The research company Alteco Medical focuses
on sepsis, a life threatening blood infection.
The company has the CE-product LPS Adsorber that has a filter that captures the bacterial
toxin form the blood. Jonas Jönmark, CEO, said
that they will reach break even when they sell
approximately 100 products a month. He thinks
that they will reach this goal in the next year,
2016 or the year after, 2017.
Catella: FlexLiv Nominated for “Insurance
Industry Innovation of the Year”
Catella’s FlexLiv pension product has been
nominated for the Insurance Awards 2015 in
the category “Insurance Industry Innovation
of the Year”. The motivation is: “Cheaper and
more flexible”. Insurance Award is the Nordic
insurance industry’s own awards gala. The purpose of the awards is to highlight and reward
companies who have distinguished themselves
in a positive way.
Analyst Group’s analysis of Alteco Medical
Analyst Group’s analysis of Catella
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Technical Analysis
OMXS30
Since week 11 OMXS30 has broken
through the roof of its falling trend
channel and is once again moving in an
uptrend. Notice that this is in the very
short term and although the volume is
stable, MACD is still moving below the
signal line and dropping which indicates a
weakness in the uptrend. But still, we are
slightly more positive to OMXS30 compared to last week. Index has support at
1630, 1605 and 1580 in the short term
and further at 1480, 1407 and 1268 in the
longer term. Stop-loss is suggested to be
set just below these levels. Index closed at
1665,13 last week.
S&P 500
S&P 500 has fallen down through its support at 2062 after a double top formation
was formed last week and hit bottom at
2040. The index tested to break up again
through 2062 without success and closed
last week at 2053. The MACD line did two
weeks ago cross the signal line from above
and has been falling since and are now
moving just below zero. The index has
been moving in the same direction as the
MACD line. Both our suggested stop losses
from last week has been broken through
and we are now setting up a new suggested stop loss at 2030 in the short term. In
the longer term we have a strong support
at around 1990 and we suggest a stop loss
at 1980. The index is still trending north,
but we suggest our readers to keep an eye
of the direction of the index next week to
secure that last week’s slump was nothing
but a minor speed bump in the long term
trend.
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Technical Analysis
Net Insight B
Net Insight B has now made an established
break through the support of its middle
term trend channel and is now trading just
below its support at 3,38 SEK. The sudden
change of direction that we saw last week
for the MACD line is now proven to be
nonsense as we have seen a continued fall
for both the MACD line and the signal line
which are now moving below zero. This
does indicate a negative view of the stock.
The volume has fallen last week and it will
be interesting to see if this will have an
impact on the direction of the stock next
week. Keep an eye of the direction of the
stock next week as it might be a sign of the
future trend direction. Suggested stop loss
at 3,25 SEK in short term and 3,15 SEK in
the longer term. We are in the short term
having a neutral view of the stock as we
are waiting for stronger signs of future
trend direction.
Catella B
Catella B has broken through its resistance
at 15,50 SEK after a symmetric triangle was
formed. This might be an indication that
the stock will once again continue to trend
upwards as the stock closed at 15,70 SEK
last week. Even though we have seen the
MACD line cross the signal line from above
are both lines still moving above zero. We
are also seeing that the MACD line is currently about to change direction, which is
positive. Suggested stop loss at 14,70 SEK
and 14,50 SEK in the short term and 13,70
SEK in the longer term. The volume is
following the tops and the bottoms of the
trend, which indicates a strong trend. Our
view of the stock is still technically positive
as the symmetric triangle has given us a
good sign of continued rise.
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Technical Analysis
Unlimited Travel Group
Since week 11 Unlimited Travel Group
(UTG) has continued its rising trend. After
week 10’s peaking-point at 22,30 SEK, UTG
fell down to and tested it’s previous uptrend channel. UTG did not break through
and instead accelerated up and through
its previous resistance at 22,02 SEK which
now has become a support. The volume
matches the highs and lows well which indicates a stronger uptrend. MACD is moving above the signal- and zero line which
indicates a bullish view from the market.
It will be interesting to see what happens
this week, due to the fact that UTG for
the moment has no real resistance which
makes way for a further increase in the
trend. Support is seen at 22,02 SEK, 21,33
SEK, 19,85 SEK and 19,05 SEK in the short
term and 17,90 SEK in the longer term. We
recommend that stop-loss is set just below
these levels depending on your level of
buy-in. For our previous buy recommendation at 20,40 SEK we still hold 19,30 SEK
as stop-loss. UTG closed at 22,60 SEK last
week and our total technical view of the
stock is positive.
Sino Agro Food
Since week 11 Sino Agro Food (SIAF) has
started to consolidate and move sideways.
The strong uptrend we could see during
previous weeks is therefore gone. Instead,
a new resistance at 9,30$ and support at
9,03$ is seen in the short term where SIAF
for the moment is moving in-between.
Although MACD is starting to fall which
indicates a coming downtrend, the volume
is strong and increasing. Support is seen
at 9,03$ and 8,20$ in the short term and
7,87$, 7,32$ and 6,80$ in the slightly longer term. Stop-loss is suggested to be set
just below these levels depending on your
level of buy-in. Our technical view of SIAF
is for now neutral until a stronger trend is
displayed. SIAF closed at 9,12$ last week.
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