ARGENTINA: AUTOMOTIVE: Week in Review
ACEA data showed sales 6.1% lower YoY in the EU. Stellantis saw a 27% drop. While spreads have held well through earnings so far, commentaries on the 2025 outlook have mostly been downbeat. Stellantis was put on watch negative, this time by Fitch.
- Spreads managed a slight outperformance at -3.5bp on average this week. LKQ underperformed marginally following earnings, while RENAUL and GM’s were well received.
- Mercedes-Benz was the big-name OEM reporting this week. Guidance was reiterated following the recent profit warning. EBIT posted a decent miss, but FCF held up well.
- Valeo revenue missed slightly, but margin and FCF guidance were confirmed.
- Renault impressed, managing to go the year without a profit warning while posting a very small sales miss.
- Michelin revenue came in ok, but it became the latest to revise down guidance https://marketnews.com/automotive-michelin-mlfp-a2-a-a-3q24-sales.
- Volvo Car also guided down, gambling on a value over volume strategy in a time of intense competition https://marketnews.com/automotive-volvo-car-vovcab-ba1-bb-nr-3q24-results
- LKQ results were mixed, with an increased buyback not what credit investors would have wanted to see.
- GM highlighted the ongoing gap between US and European OEMs, with a beat and raise.
- Traton revenues beat expectations.
Forvia’s sales release was uneventful, with a profit warning already recently communicated.
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EURGBP: SocGen Recommend Positioning for EUR/GBP Upside via Options
- SocGen recommend buying a 2m 0.8500/50 EUR/GBP call spread and 2m one-touch option, with a knock-in at 0.8650 to benefit from a spot bounce, citing the rates market over-priced for ECB rate cuts in a soft-landing and the BoE's struggle to remain restrictive.
- As such, they expect the EUR/GBP rates differential to rebound imminently, lifting EUR/GBP with it.
GILT PAOF RESULTS: The PAOF for the 4.00% Oct-31 Gilt was not taken up.
- A total of GBP937.5mln had been available.
- This leaves GBP15.368bln of the gilt in issue.
JAPAN: Backing From Peers Could Give Koizumi Edge In LDP Leadership Contest
The leadership contest for the governing conservative Liberal Democratic Party (LDP) takes place on Friday 27 September, with the election still too close to call. On the timing of the election, there is little in the way of an official schedule. Japan analyst Rintaro Nishimura posts on X: "...the 2021 LDP presidential election winner was determined by around 3:15 PM. Convention to count votes begins around 2 PM on Friday. We should know winner by around the same time." A 1515JST announcement would equate to 0215ET/0715BST/0815CET.
- Former Defence Minister Shigeru Ishiba (67), former Environment Minister Shinjiro Koizumi (43) and Economic Security Minister Sanae Takaichi (63) lead the way in polling.
- First-round votes are split, with half going to LDP lawmakers and half to grassroots party members. In the likely event no candidate secures a majority, an immediate run-off between the top two candidates takes place. In the runoff, the 368 LDP lawmakers retain their votes, while 47 go to the LDP prefectural parties (one for each region). As such, amassing 208 votes will result in victory.
- The importance of getting the backing of LDP lawmakers, especially in the second round, tips the scales marginally towards Koizumi. According to polling he has the strongest open backing among LDP parliamentarians. Ishiba on the other hand is popular with the public and rank-and-file members, but struggles to gain backing from peers. As such, Ishiba emerging in first place in the first round but then losing to Koizumi in the run-off could be the most feasible outcome.
