Investment Managers Securities Analysts

Bermuda & Cayman

European Stock Markets

European Stock Markets

Source: Bloomberg
European equities were weighed down on signs of weakening economic data and political concerns over the Italy/EU budget dispute.

European Markets

• On October 31 eurozone’s largest bank, Banco Santander, S.A., reported strong performance in its Spanish domestic market and a solid underlying business in Brazil as Third Quarter 2018 net profit was up 36 percent from a year earlier – all whilst improving its solvency position. Santander’s diversification overseas, especially in Brazil, has helped the bank cope with tough conditions faced by its European rivals since the onset of the financial crisis. Santander rose 2.1 percent on the day.

• On November 7 Adidas AG, the world’s second-biggest sports apparel brand, reported sales growth of eight percent in Third Quarter 2018, just shy of expectations but a higher profit than predicted: up 19 percent on the same period last year. Currency headwinds and higher costs for raw materials were offset by stronger margins as Adidas sold a greater proportion of its products directly over the internet and through its own stores rather than via retailers. However, Adidas lowered their sales forecast due to stiff competition in Europe. Adidas shares fell 3.4 percent on the day.

• On November 12 SAP SE, Europe’s biggest software company, announced that it was buying US survey software maker Qualtrics for $8 billion in cash. SAP thinks Qualtrics will beef up SAP’s cloud customer relations business – an area that is growing faster than SAP’s traditional desktop-bound.

software services. Investors seemed to like the deal in principle but not so much in price. SAP paid 20 times Qualtrics’s predicted sales for 2018. SAP’s share price dropped 5.3 percent after the announcement.

• On November 21 British defense contractor Babcock International reported a 64 percent decline in profits from a year earlier. The decline was largely due to a one-off charge arising from internal restructuring and the closure of a shipyard. However, it was Babcock’s negative outlook that worried investors the most. Babcock’s big project to dismantle Britain’s old nuclear reactors comes to an end in 2019 which will lead to a much bigger-than-expected drop in revenue. Babcock’s share price fell 4.8 percent on the day.

• On December 19 British pharmaceutical company GlaxoSmithKline plc (GSK) announced a major partnership with American rival Pfizer Inc. to merge both companies’ consumer health businesses into a single entity. With approximately $12 billion in annual revenue and a seven percent market share, it will be the world’s largest producer of non-prescription medicines. GSK, contributing the bigger brands, is set to own 68 percent of the newly created company with Pfizer owning the rest. The shares of GSK rose 3.4 percent while Pfizer’s fell 1.0 percent on the news.