European Stock Markets
Nobody wins a trade war, International Monetary Fund chief Christine
Lagarde said in March. But for some European companies, a bit of
friction couldn’t hurt.
European producers of aircraft, telecoms equipment and whisky could stand to benefit if U.S.-China trade tensions allow them to chip away at their American rivals’ share of the massive Chinese market.
Traders and investors have begun looking at which European stocks could reap rewards if the two countries impose tariffs on a long list of each other’s goods.
China’s tariff list targets U.S. aircraft imports, hurting Boeing (BA.N) and potentially opening the way for European arch-rival Airbus (AIR.PA) to fill the gap.
Boeing is the main proxy in any trade war plays, according to a trader at Northern Trust Capital Markets, who said he had seen some investors short the stock in the past weeks.
China accounts for 10 percent of all U.S. aircraft exports and all U.S. auto exports, according to UBS.
Boeing’s shares were punished on Wednesday but recovered at the close, while Airbus was among the best performers.
The consumer sector could also see some rotation of Chinese demand away from big U.S. names and into European brands. German sportswear brand Adidas (ADSGn.DE), for example, could make inroads to the detriment of U.S. rival Nike (NKE.N).
Investors emphasized that Nike, which makes most of its products in China, would likely see little price change from the tariffs, however. Any impact would likely come from Chinese consumers actively turning away from U.S. brands.
One portfolio manager said he was short Nike shares as he expected Chinese consumers to shun the brand in favor of European names.
U.S. companies producing to export to China, like the maker of Jack Daniels whisky in Kentucky (BFb.N), could be more directly impacted.
European drinks makers’ shares rose on Wednesday on speculation Chinese demand may switch to European equivalents such as Martell cognac and Chivas Regal whisky, produced by Pernod Ricard (PERP.PA), or Remy Martin cognac (RCOP.PA).
Nokia (NOKIA.HE) was singled out by traders and analysts as a likely beneficiary of tariffs drawing more Chinese demand to European mobile equipment makers. Its shares were steady during Wednesday’s sell-off and were up 1.9 percent on Thursday.
Europe’s biggest export to China is telecommunications equipment, according European statistics office Eurostat.
Big exporters of industrial machinery, such as ABB (ABBN.S) and Siemens (SIEGn.DE), could also be relatively favored by higher U.S.-China trade costs because they compete directly with U.S. firms such as Honeywell (HON.N), said Roland Kaloyan, European equity strategist at Societe Generale.
ABB and Siemens enjoyed strong price gains on Thursday.
Investors also pointed to European chipmakers such as ASML (ASML.AS) and Infineon IXFGn.DE as likely to benefit from China switching away from U.S. semiconductor suppliers.
Semiconductor stocks, which have led the rally in tech over the past year, are highly liquid and therefore easy for investors to short as a proxy to the trade war theme, the Northern Trust trader said.
The complicated nature of global supply chains means tariffs on U.S. imports could also negatively impact European companies.
Chinese tariffs on auto imports from the United States, for example, could disproportionately hurt European carmakers which export their products to China from U.S. plants.
Asked about the Chinese tariffs, Daimler (DAIGn.DE) said it would not speculate about ongoing negotiations.
Companies with manufacturing sites in China could also get hurt.
Goldman Sachs analysts pointed to the healthcare sector, where medical technology companies GN Store (GN.CO), Sonova (SOON.S) and Philips (PHG.AS) have big Chinese manufacturing facilities.
European producers of aircraft, telecoms equipment and whisky could stand to benefit if U.S.-China trade tensions allow them to chip away at their American rivals’ share of the massive Chinese market.
Traders and investors have begun looking at which European stocks could reap rewards if the two countries impose tariffs on a long list of each other’s goods.
China’s tariff list targets U.S. aircraft imports, hurting Boeing (BA.N) and potentially opening the way for European arch-rival Airbus (AIR.PA) to fill the gap.
Boeing is the main proxy in any trade war plays, according to a trader at Northern Trust Capital Markets, who said he had seen some investors short the stock in the past weeks.
China accounts for 10 percent of all U.S. aircraft exports and all U.S. auto exports, according to UBS.
Boeing’s shares were punished on Wednesday but recovered at the close, while Airbus was among the best performers.
The consumer sector could also see some rotation of Chinese demand away from big U.S. names and into European brands. German sportswear brand Adidas (ADSGn.DE), for example, could make inroads to the detriment of U.S. rival Nike (NKE.N).
Investors emphasized that Nike, which makes most of its products in China, would likely see little price change from the tariffs, however. Any impact would likely come from Chinese consumers actively turning away from U.S. brands.
One portfolio manager said he was short Nike shares as he expected Chinese consumers to shun the brand in favor of European names.
U.S. companies producing to export to China, like the maker of Jack Daniels whisky in Kentucky (BFb.N), could be more directly impacted.
European drinks makers’ shares rose on Wednesday on speculation Chinese demand may switch to European equivalents such as Martell cognac and Chivas Regal whisky, produced by Pernod Ricard (PERP.PA), or Remy Martin cognac (RCOP.PA).
Nokia (NOKIA.HE) was singled out by traders and analysts as a likely beneficiary of tariffs drawing more Chinese demand to European mobile equipment makers. Its shares were steady during Wednesday’s sell-off and were up 1.9 percent on Thursday.
Europe’s biggest export to China is telecommunications equipment, according European statistics office Eurostat.
Big exporters of industrial machinery, such as ABB (ABBN.S) and Siemens (SIEGn.DE), could also be relatively favored by higher U.S.-China trade costs because they compete directly with U.S. firms such as Honeywell (HON.N), said Roland Kaloyan, European equity strategist at Societe Generale.
ABB and Siemens enjoyed strong price gains on Thursday.
Investors also pointed to European chipmakers such as ASML (ASML.AS) and Infineon IXFGn.DE as likely to benefit from China switching away from U.S. semiconductor suppliers.
Semiconductor stocks, which have led the rally in tech over the past year, are highly liquid and therefore easy for investors to short as a proxy to the trade war theme, the Northern Trust trader said.
The complicated nature of global supply chains means tariffs on U.S. imports could also negatively impact European companies.
Chinese tariffs on auto imports from the United States, for example, could disproportionately hurt European carmakers which export their products to China from U.S. plants.
Asked about the Chinese tariffs, Daimler (DAIGn.DE) said it would not speculate about ongoing negotiations.
Companies with manufacturing sites in China could also get hurt.
Goldman Sachs analysts pointed to the healthcare sector, where medical technology companies GN Store (GN.CO), Sonova (SOON.S) and Philips (PHG.AS) have big Chinese manufacturing facilities.
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