These Are 2021’s Biggest Winners and Losers in European Stocks
These Are 2021’s Biggest Winners and Losers in European Stocks
(Bloomberg) -- European equity markets are on course to end the year with healthy gains, but for stock pickers, it’s been another wild ride.
Lockdown winners and renewable-energy companies have seen their rallies cut short, and many new listings have fallen flat. Banks and Swedish stocks surged, while a dealer of Rolex watches and a car-window repairer were among companies that had notable gains.
For fund managers, the excitement shows few signs of easing.
“Next year is slated to be another good environment for really good stock pickers,” Pia Haak, chief investment officer at asset manager Swedbank Robur, said by email. Tighter central bank policies mean an increase in volatility is “on the cards,” said Haak, whose firm manages about 1.9 trillion Swedish kroner ($208 billion).
Haak says renewables could return to winning ways in 2022 as climate change stays in focus. State Street Global Advisors strategist Maya Beyhan, meanwhile, expects technology to have another strong year, aided by persistent hybrid-working trends and the shortage of semiconductors.
Below we look at some of the biggest winners and losers of 2021:
Banks
- UniCredit (+75%), SocGen (+71%), Sabadell (+61%)
Banks were the best-performing group in the Stoxx Europe 600 Index this year. They soared as stickier-than-expected inflation fueled predictions of interest rate increases. After the Bank of England delivered for British lenders last week, hawkish tilts from the European Central Bank and U.S. Federal Reserve could buoy sentiment further. The sector is also benefiting from reduced loan-loss estimates as the economy rebounds and increased consumer card activity after lockdowns were eased. Still, the omicron variant’s spread could threaten both drivers.
Read: Tighter Policy Is Everything Banks Could Wish For: Taking Stock
Sweden
- EQT (+145%), Vitrolife (+142%), AddLife (+139%), SBB (+120%), MIPS (+119%)
Five of the Stoxx 600’s top 10 gainers hail from Sweden, thanks to the market’s exposure to growth stocks.
Private equity group EQT AB continues to benefit from the capital raising and dealmaking momentum that’s seen it soar since its 2019 initial public offering, though the gains were trimmed this month on regulatory concerns.
Meanwhile, Samhällsbyggnadsbolaget i Norden AB, known as SBB, has benefited from a sector-wide rally in Swedish property stocks, and Vitrolife AB is expected to get a boost from a rebound in fertility treatments that were disrupted by the pandemic. Other big winners include life-sciences company AddLife AB and sports-helmet maker Mips AB.
Watches of Switzerland (+137%)
Lockdowns left many Britons with spare cash as socializing were curtailed. That’s benefited Watches of Switzerland Group Plc, which operates its own timepiece shops as well as Rolex-branded outlets. The rally might not be over, according to analysts at Bank of America, who say expansion in the U.S. could drive further gains.
D’Ieteren Group (+137%)
Brussels-based car dealer D’Ieteren has tracked the broader auto sector higher, while also benefiting from investor interest in its Belron vehicle glass repair unit, which operates brands including Autoglass. Belron reported half-year organic sales growth of 29% in August.
Stay-at-Home Stocks
- Delivery Hero (-24%), Deliveroo (-45%), TeamViewer (-73%), Sinch (-19%)
So-called lockdown winners went from 2020 outperformers to 2021 laggards because investors lost confidence in their growth outlooks as economies reopened.
A rout for food-delivery stocks worsened this month after the European Union proposed new rules on how the companies employ their couriers. Other stay-at-home shares have had more company-specific issues, like TeamViewer AG’s expensive deal to sponsor English soccer club Manchester United. The prospect of renewed restrictions tied to the coronavirus may revive the fortunes of these stocks again.
Renewables
- Siemens Gamesa (-37%), Vestas Wind Systems (-33%)
Surging commodity prices, higher transportation costs and longer lead times have hit renewable firms’ margins. On top of that, investors appear to have taken a more measured approach to green investing after the exuberance seen last year.
Some sustainability-linked assets went into 2021 with not-so-sustainable valuations, said Lewis Grant, global equities portfolio manager at Federated Hermes. They’d become “detached from their underlying fundamentals,” he said by email, noting “naive flows” into some environmental, social and governance assets.
IPOs
- THG (-72%), Auto1 (-46%), Allegro.eu (-54%), InPost (-36%)
Many of the new arrivals to the Europe’s public markets have failed to live up to the hype. Half of the year’s 10 biggest Stoxx 600 decliners went public in the past 15 months. One of them, e-commerce company THG Plc, got thrown out of the benchmark this week.
Buoyant equity markets have attracted firms that “might not be ready to go public,” said Haak.
Atos (-51%)
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