Politics & Their Influence on Equities; Example Alpiq

alpiq-vs-spi-6m-2014-june

The above chart shows the second largest swiss utility (Alpiq; ALPH) share price over the last six months. The green line depicts the SPI (broad swiss performance index). Oh, and the T’s depict management transactions (just some small purchases).

A performance difference vs the broad market of over 30% has occured.

Factors behind this:

– Uncertainity about major shareholders like EDF, and their plans to divest their holdings. So basically an over supply of shares hanging over the stock, sentiment.

– Pricing problem; energy can’t be sold with decent margins (strange really, if you look at Oil price and geopolitical problems in the Ukraine and the impact on Gas supplies…)

– Politics: Governments (socialist, populist) and their efforts to switch off nuclear power plants much quicker than planned for (and amortised). This in turn leads to planning problems and uncertainity of credit worthiness.

– Credit Rating (see politics, pricing) being hit.

This table from the Alpiq website was very interesting. Where credit analysts see deterioating or negative outlook (ZKB, UBS) their analysts are ’neutral‘. An indication that ’neutral‘ is the unofficial sell?

alpiq-analysten-rating

Now from a contrarian standpoint there’s some good news.

– Relative Strength is abissmal

– Nobody I talk too like utilities, especially with nuclear power plants (=everyone’s underweight the stocks, sector)

– Buy when there’s fear (and hope it isn’t just realism)

 

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