12 October 2016 at 8:19 GMT
- LVMH revenues improvement reflects Asian economic uptick
- German solar subsidy increase should boost Solarworld
- Positions in Teekay Tankers and Twitter also added this week
Asia's appetite for luxury leather handbags has returned. Photo: iStock
By Peter Garnry
As communicated in our morning call yesterday
, we went long LVMH (MC:xpar) and Solarworld (SWVL:xetr). LVMH has broken out of its recent range as Q3 earnings figures were better than expected with revenues at €9.14 billion vs an estimated €8.92bn and organic growth was better than expected. Especially leather goods are showing an improving demand picture. The recent uptick in Asian economies including China is helping luxury companies. Our stop in LVMH is set to €153.50 just below recent lows.
LVMH price daily chart the past year
Source: Saxo Bank
We bought a small position in Solarworld because the stock is showing strong price momentum from recent lows and due to news on Tuesday that Germany will increase solar subsidies. This could lead to a sustained repricing of solar stocks in Germany – which is what we are betting on here. The stop is set at €3.65
Below is a complete overview of all our positions. Please note that we have also added a position in Teekay Tankers (TNK:xnys) to bet on rising oil prices and improving fundamentals in the tanker segment. We also re-entered a long position in Twitter (TWTR:xnys) on Monday around the open at $17.41 with no stop for now. We will update that today. Twitter shares rose 4% in German trading yesterday.
Our portfolio has suffered a small loss of round 1.5% the past couple of trading sessions but the portfolio should recover this loss if risk sentiment improves from here.
Source: Saxo Bank
– Edited by Clare MacCarthy