Equities Equities Equities

Equities are bouncing back; semiconductors and crypto review

Equities 8 minutes to read
PG
Peter Garnry

Head of Equity Strategy

Summary:  The European equity market is up 3% this week despite high volatility and maximum uncertainty related to the war in Ukraine and the fallout from unprecedented sanctions against Russia. Putin said earlier today that he sees "positive movement" in the peace talks with Ukraine and the equity market being extremely sentiment driven these days are running higher on this comment. However, there are still many reasons to be cautious on equities and we are not changing our defensive stance. In today's equity update we are also highlighting changes we have made to our semiconductors and crypto theme baskets are reviewing them.


European equities muster first weekly gain since early February

STOXX 600 is up 3% this week as commodity markets have pulled back from their recent gains and today sentiment got another boost as Putin said he sees “positive movement” in the peace talks with Ukraine. The equity market has gone from modelling the future cash flow to become completely sentiment driven and we must reiterate that investors should not at this point read too much into these headlines moving markets. We are still in a maximum uncertainty environment and the outcome of the war in Ukraine is still incredible unpredictable. In addition global equities are still valued 0.8 standard deviations above its average historical valuation and as such considerable downside is still a risk. In addition to valuation risks, the inflationary pressures are not going away anytime soon and that will continue to put pressure on equity sentiment and making the operational environment for companies very difficult.

Source: Bloomberg

Theme basket review: Semiconductors see big changes

We are still in the process of reviewing all of baskets and today we are updating two of our theme baskets. The semiconductor basket is seeing the biggest changes with 11 companies being replaced. The semiconductor industry has been challenged this year from rising input costs and bottlenecks in the production. The semiconductor theme has also been caught up in the general rotation out of technology stocks and into themes such as commodity, defence, logistics, and cyber security.

The companies that have been removed either due to sanctions, too low market value, acquisitions, or their business found to be a less good exposure versus the theme:

  • MediaTek, Semiconductor Manufacturing International, Xilinx, Teradyne, ASM International, MKS Instruments, SUMCO, Azenta, SOITEC, Tianshui Huatian Technology, Siltronic

    The companies that have been added are:

  • Samsung Electronics, LONGi Green Energy Technology, Marvell Technology, Synopsys, Cadence Design Systems, Will Semiconductor, GLOBALFOUNDRIES, ON Semiconductor, Tiankin Zhonghuan Semiconductor, Skyworks Solutions, Kyocera

The table below shows the new updated table of constituents in the semiconductor basket.

NameMkt Cap (USD mn.)Sales growth (%)EBITDA growth (%)Diff to PT (%)5yr return
NVIDIA Corp566,45061.496.448.5825.4
Taiwan Semiconductor Manufacturing Co Ltd539,14418.519.356.0290.8
Samsung Electronics Co Ltd338,48718.129.531.987.5
ASML Holding NV249,67533.159.037.5402.4
Broadcom Inc239,95915.531.017.9205.6
Intel Corp190,0001.5-13.017.747.6
Advanced Micro Devices Inc173,24968.3141.242.0665.3
QUALCOMM Inc174,35835.037.238.0206.8
Texas Instruments Inc159,54326.944.013.6145.1
Applied Materials Inc110,39832.859.539.6249.0
Micron Technology Inc84,79034.256.647.3201.5
Analog Devices Inc78,79044.119.937.0102.2
Lam Research Corp69,34138.548.946.0344.6
Tokyo Electron Ltd70,98646.484.319.7420.9
LONGi Green Energy Technology Co Ltd68,76674.8NA22.01,258.0
Marvell Technology Inc55,31950.3134.345.8317.5
KLA Corp49,55434.570.239.2290.2
NXP Semiconductors NV47,38828.555.635.680.5
Synopsys Inc46,05817.925.028.3318.8
Cadence Design Systems Inc41,45111.416.521.4376.0
Infineon Technologies AG41,35124.862.763.678.3
Microchip Technology Inc38,83621.634.537.3103.7
STMicroelectronics NV36,28324.954.250.3168.7
Will Semiconductor Co Ltd Shanghai30,69332.8NA55.8NA
GLOBALFOUNDRIES Inc31,31535.879.929.0NA
ON Semiconductor Corp24,92528.389.127.7278.6
Tianjin Zhonghuan Semiconductor Co Ltd24,12090.5NA34.2479.3
Skyworks Solutions Inc21,56228.728.941.444.5
Kyocera Corp20,17518.675.226.38.0
Unigroup Guoxin Microelectronics Co Ltd20,15445.3NA37.8585.4
Aggregate / median3,643,12132.854.937.4263.8
Source: Bloomberg and Saxo Group

Theme basket review: Crypto shreds three companies

We have also reviewed our Crypto & Blockchain theme basket and have decided that three companies will be removed. Voyager Digital is being removed because it is at reduce only in our trading systems. Monex Group is removed because we have decided that it does not have enough exposure to the crypto market. Future FinTech Group has too small a market so this company has also been removed.

The table below shows the new updated table of constituents in the crypto & blockchain basket.

NameSegmentMarket Cap (USD mn.)Sales growth (%)Diff to PT (%)YTD return (%)5yr return
Coinbase Global IncCrypto exchange37,963513.774.9-31.5NA
Signature Bank/New York NYBank19,35515.242.3-4.2107.3
MicroStrategy IncInvestment firm4,7536.251.6-22.7125.2
Galaxy Digital Holdings LtdCrypto services4,141NA146.2-28.3542.9
Silvergate Capital CorpBank4,14377.845.0-11.6NA
Marathon Digital Holdings IncCrypto mining2,5513,353.0129.6-24.717.2
Bakkt Holdings IncDigital assets platform1,408NA31.6-37.5NA
Riot Blockchain IncCrypto mining1,9251,497.4168.8-26.1438.5
Northern Data AGInfrastructure *1,16462.7357.1-40.9NA
Hut 8 Mining CorpCrypto mining921203.9222.7-30.4-12.7
Hive Blockchain Technologies LtdCrypto mining754426.5172.5-29.72,240.0
Bitfarms Ltd/CanadaCrypto mining6907.0NA-30.6NA
Canaan IncInfrastructure *8611,013.9NA-2.7NA
Stronghold Digital Mining IncCrypto mining507NA212.4-18.2NA
Argo Blockchain PLCCrypto mining396131.5236.1-34.0NA
Coinshares International LtdDigital asset management541NANA-6.3NA
Bit Digital IncCrypto mining231NA321.7-45.4NA
Bitcoin Group SECrypto broker198163.2NA-11.7387.7
DMG Blockchain Solutions IncInvestment firm852.7NA-17.7333.3
Digihost Technology IncCrypto mining70NANA-39.9NA
Taal Distributed Information Technologies IncBlockchain platform84NA207.9-14.0NA
Quickbit EU ABCrypto payment services45-3.756.0-12.5NA
Safello Group ABCrypto broker13NANA-22.1NA
Aggregate / median82,798131.5157.5-24.7333.3
Source: Bloomberg and Saxo Group
* Infrastructure segment means physical computing applications for crypto mining
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