When can Brussels celebrate a stock market record?
After the Dutch, the French were also able to unpack last week with a record for their stock market index. If there is a generous offer on Argenx, patience is the message for the Bel20 investor.
The US and European stock exchanges are on record hunting. Investors are thanks to good economic recovery and better corporate results in the third quarter. Especially in Europe – very low, see minimum amounts for stocks.
On Monday, the French CAC40 index was able to beat the September 2000 record. A bit combined with the Amsterdam AEX, which broke the 20-year-old record this spring. Both stock market barometers hit a record in September 2000 thanks to their then high-flying telecom operators: France Telecom (now Orange) for the CAC, KPN for the AEX. 21 years later, little remains of that star status of the telecommers: Orange records 92.5 percent (!) below the peak at that time (see chart). KPN is also a shadow of its old self.
But both star baskets now have a different V12 under the hood: in Amsterdam that is ASML, the world market leader in as complex as crucial machines for chip assembly. And in Paris that LVMH, especially thanks to the flagship Louis Vuitton the world market leader in luxury. Since the autumn of 2000, that share has passed by more than 8.5. The Brussels Bel20 does not have such a V12, consistently the basket is still 8 percent below the peak of May 2007 – 4,757 points.
In connection with the AEX and the CAC40, the Bel20 should not digest a dotcom bubble, but a credit crisis. The implosion of Fortis and Dexia caused major damage to the stock market index. The Bel20 is not alone in this, by the way.
Brussels as a mid-engine
As is often the case, Belgium is also a middle engine in Europe when it comes to stock markets. On the one hand, there are record levels in the northern and southern neighbours, but also in Germany, Poland and the Scandinavian countries. specification, there are still a lot of exchanges in mainly southern countries that are much further from a stock exchange record. The stock exchanges of Madrid and Lisbon are more than 40 percent below the peak of 2008. In Milan the stock market peak dates from 2000. The MIB index is still 45 percent below that. The pinnacle of stock market woes is the Greek stock market, which is still 85 percent below its 1999 peak. Greece went de facto bankrupt during the debt crisis of 2011.
The pinnacle of stock market woes is the stock market in Greece, which is still 85 percent below its 1999 peak.
It’s not easy for the Bel20 either. In the annual reshuffle in March, Elia and Melexis replaced Barco and ING. Best performance since that reshuffle: ING
with a jump of 28 percent. Because ING was a heavyweight, the distance to the Bel20 record would be only half as great without that exit. Euronext Brussels said goodbye to ING after a few years because the bank was ‘too little Belgian’ after a few restructurings.
setback
How fast can we uncork the champagne bottles for a new stock market record? Not so fast, the simulations show. First of all, we have to take into account a small faller. On November 15, KBC . expanded
a double coupon of 3 euros gross, because the European dividend restrictions have been removed. Good for the KBC shareholder who will see his account well-stocked on 17 November. But because the Bel20 is a price index, the dividend cut will push the index back another half percent. Good that other heavyweight AB InBev
keep the money in your pocket.
The major impact of the KBC coupon has to do with the weight of the bancassurer in the Bel20. In the previous reshuffle, the heavyweights KBC, Argenx and AB InBev will be given a maximum weight of 12 percent. That weight then evolves with the price evolution. KBC already won 46 percent this year with more gold cases in the Czech Republic, as a result of which the weight in the Bel20 rose to 13.5 percent. That is well above the weight of Argenx (10.6%) and AB InBev (10.3%).
Should each Bel20 share meet the average price target of the analysts, the Brussels star index is still 2 percent below the peak.
If we are to believe the analysts, it will take more than a year before the Bel20 reaches a record level. After all, they set a price target at twelve months. If each trades against the price target, the Brussels star index will be at 4,665 points over a year, still 2 points.
After the Bel20 rally of 21 percent since the beginning of this year, not every target price is above the stock price anymore. Based on the price target, the analysts even see KBC fall by 7 percent, Melexis by 10 percent and Sofina by 12 percent. They see the most upside potential at Solvay (+20%), AB InBev (+25%) and Telenet (+36%). But what happens to Telenet has little special impact on the Bel20 due to its low index weight. Telenet must increase by 13 percent to have the impact of a KBC that makes a spurt of just 1 percent.
three-stage rocket
Some investors think the Bel20 could break the record on December 17. Then the US speaks to the crucial gateway market, developing golden anthesis as a treatment for the daily muscle myasthenia gravis (). But even if we take into account a price jump of 26 percent – in accordance with the most positive price target of 357 euros from the Cow stock exchange – then the peak will still not peak.
A bid from big pharma for Argenx after excellent FDA news at 535 euros per share, according to our calculation of the Bel20 record, would break.
The Belgian star basket needs a three-stage rocket among the heavyweights for a new record. With excellent FDA news for Argenx, a permanently flaming KBC and an AB InBev that is finally thawing, the record is well in sight. But it will take time.
One exception: an offer from big pharma for Argenx after excellent FDA news at 535 euros per share, according to our calculation of the record. It would be the ultimate jackpot for the investor in Argenx, but also a big loss for the Brussels stock exchange as a biotech hub. In that case, it is better to leave the Bel20 record of the day before Fortis’ aggressive cut-up offer on ABN AMRO, as a reminder of reckless stock market behaviour.