Rémi Le Bailly: Hello everyone. I would have preferred to find you in a calmer context because the market is still very hectic today. It is currently down 2.54% and is lining up its fifth consecutive session of decline. In one week, the index lost nearly 8%! The market digested last week’s announcement very badly, we will come back to this.
mumu37: Hello Rémi, is there an ETF or other investment product (normal securities account, PEA, PEA PME) on Euronext Tech Leaders, recently announced? Cordially.
The answer is no, for several reasons. First of all, this initiative is very recent. Then, it is a compartment comprising 108 European technology companies but there is no index for the moment. However, an ETF only exists if there is an index that it replicates. Maybe it will come one day. What is already envisaged is the creation at the end of the year of a specialized Sicav by CDC Croissance. The management company Amiral Gestion will also launch from July 1 a fund, called Sextat Tech, which will be based on the values of the Euronext Tech Leaders compartment.
Laurent: Hello Rémi. Why has the Air Liquide share been falling for several days and up to what support?
Denis answered a question last week about the allocation of free shares. The recent decline has three explanations. The first is the free allocation which mechanically caused a 9.1% drop in the share price (you had 10 shares, you now have 11 but the value of your portfolio remains the same).
The second explanation is that some individuals may take advantage of this free allocation to take partial profits.
The third and main explanation is the market decline. The Cac 40 lost 8.2% in one week, Air Liquide dropped 7.2% (correcting the free allocation mentioned above). Air Liquide certainly resists better than the Cac 40 in periods of market decline, but that does not mean that the stock does not fall when the market suffers. Since the beginning of the year, the share has been stable, still after integration of the free allocation, it remains a good performance when the index fell by nearly 16%.
Storse: Hello, according to rumors, EDF would apparently be renationalised in the coming months. Do you have an idea of the price proposed by the state knowing that it was 32 euros at the time of the IPO? Thank you for your reply.
It is these takeover rumors that give the stock its speculative appeal and that is why we recommend a speculative purchase. You recall that the action was introduced at 32 euros. It seems impossible to me that the action left the Stock Exchange at this price. You must not dream. We put a first objective at 10 euros. We prefer to be cautious.
LAURENT: Hello. Are the markets now anticipating a recession? What do you recommend at this level of the Cac 40 for equities: wait for a rebound to lighten up, do it without delay? Thanks.
I accepted Laurent’s question, but many of you ask me questions about market trends. For weeks Denis and I have been recommending to reduce to around 6,500 points and to return to the market from 6,100 points. We are now well below that level. Logically, this would be the time to come back…
I would be a bit more nuanced. Last week’s announcements (ECB and US inflation) correspond to an awareness of investors who realize that inflation is strong and lasting and that central bankers will do everything to contain it. Are they ready to cause a small recession? Maybe. This is why the market fluctuation range may well have shifted down. The support of 6.089 is being broken down, the next ones are at 5.900 and 5.754 points. The new low point of the range could therefore be at 5,900 or even 5,750 points.
In the short term, after the sharp fall of the last few days, a rebound cannot be ruled out, but I don’t think it’s a real reversal… unless the Fed manages to reassure the markets on Wednesday. But I find it hard to believe it.
morgiou13: Hello Mr. Le Bailly. Could you explain the sudden revision of the target price made in the last edition, from 18 euros to 9 euros? Concerning hedging a portfolio invested in the French market, I followed your advice by using the KB45C turbo put last week. I am familiar with the instrument, however I always have trouble making my choices in front of the profusion of contracts. Beyond the simple definitions attached to this type of instrument, what are the characteristics to consider when choosing between contracts? Thank you and good day. Cordially.
I start by answering the second part of the question. Indeed, we recommended this turbo on the site, which was consistent with our cautious speech.
There are indeed a number of turbo puts on the index. We tend to favor unlimited (without expiry) which seems easier to handle. Note that the infinite bests are even simpler because they have a fixed deactivating barrier.
The main factors to follow are the knock-out barrier, the percentage before this barrier and the leverage. The 3 are linked. The closer the barrier is to the current price, the greater the risk because when this barrier is crossed, the turbo is no longer worth anything (it is deactivated) but the greater the leverage, so the potential for gain is high. To begin with, it is therefore preferable to choose a turbo for which the percentage before the barrier is quite high and the leverage effect “reasonable”, of the order of 3 or 4.
These products are to be monitored much more closely than equities because you have to know how to sell them if you get too close to the knock-out barrier.
As far as Aramis is concerned, we have chosen, given the collapse in value, to set a first, more realistic objective than the one we had defined until now. We still believe in the potential of the company, but the current growth is at the expense of profitability in the first place.
Theo: Hello Mr. Le Bailly, after following Denis’s advice, I reduced my PEA and securities account. My question on life insurance UCs, should sales also be initiated, arbitrations often taking between 3 and 6 days? Thanks.
In theory, the answer is yes, but it is more difficult to be mobile on a life insurance contract and the savings placed in a life insurance contract are often intended to be kept for a long time. In addition, arbitration costs can be high in certain contracts.
In summary, we can afford to give more time to time in a life insurance contract that is less suitable for trading.
JP Markan: Hello. In the context of a takeover bid whose success is uncertain (very fragmented capital), can only part of its shares be brought? To retain part of its securities, if 90% of the securities are not acquired by the initiator, thus leaving part of the float listed (the OPR not being compulsory).
Yes, it’s not at all or nothing. You can “cut the pear in half” if you wish. If the 90% threshold is exceeded, you may be forced to contribute the balance of your securities to a possible withdrawal offer but, at worst, this will be done under the same conditions as the takeover bid.
Dominique: Rémi hello. Is it too late to buy TotalEnergies? How are oil prices likely to evolve in the event of a recession? Thank you for your valuable advice.
We are still buying TotalEnergies, but we were even more so a few months ago when the share was worth 30 or 40 euros. The dividend offers some security: despite the rise in prices, the estimated return for 2022 is just over 5%.
If you do not have TotalEnergies, you can buy a little today and then complete your line according to the evolution of the price of crude and the security.
Julie: Hello, why are Catana shares falling so much when the company is making record profits? The same for Solutions 30? What to do with these actions? Thank you for your reply.
Catana shares are falling like the rest of the market, but the valuation remains reasonable. The title has, moreover, been the subject of one of our recent “coup de coeur” in the weekly. Admittedly, the group is suffering from the shortage of certain components and a possible recession could slow down its sales, but we believe that there is still potential given the growth prospects and the valuation.
The Solutions 30 folder is trickier. Since its serious accounting problems and its questioning by an activist fund, the company has never recovered on the stock market despite its presence on buoyant markets. It is therefore a very speculative title with a high risk of loss (in five days, the action has lost 30%!) If you have any, keep them but I advise against a downward average. If you’re a devotee of those Monday chats, you know I’m allergic to falling averages.
It is time to leave us. The market situation did not improve during our chat hour. The Cac 40 loses 2.43% and the Nasdaq is at -4.34%…
Have a good week anyway. Don’t forget that the stock market remains the best long-term investment, but on the other hand it is one of the most volatile.
Next week, you will have the pleasure of chatting with Denis Lantoine.
#point #Cac #range #points