How Public Companies are Perceived by Investors
Kalin Georgiev from BenchMark Finance commented on how public companies are perceived by investors. According to him, the interest rate policies of central banks, which have resulted in higher levels of the base interest rate, are starting to show results. This comment was made during the reporting season on the show “In Development” on Bloomberg TV Bulgaria. Kalin Georgiev, a financial analyst at BenchMark Finance, emphasized that any decision – whether it is to increase or decrease interest rates – takes time to reflect on the real economy and on companies.
Impact of High Interest Rates on Corporate Results
The recent rise in interest rates, especially by the ECB, is already reflected in corporate results. It is expected that US companies will outperform European ones due to the stronger growth of the American economy. However, we should not underestimate the reports from big tech companies that have yet to be released. They have invested significant amounts in new technologies and AI. If they fail to meet investors’ expectations, this could lead to…
Auto Industry Faces Significant Losses
Georgiev reported that shares in the automotive sector are experiencing serious losses. Companies like Mercedes-Benz, BMW, and Volkswagen are all seeing significant losses on an annual basis – over 10%. This, he explained, is largely due to higher interest rates, which are making loans more expensive and affecting car purchases.
Financial Analysis of Luxury Goods Companies
According to financial analysts, the luxury goods sector is facing serious losses, with companies like LVMH failing to meet revenue and profit expectations. This has led to a decrease in their stock prices.
On the other hand, Hermes has been a positive surprise, as their revenue and profit have exceeded expectations. This success can be attributed to their strong brand and loyal customer base.
The Impact of Decreased Demand on Luxury Goods Market
A wide customer base. “For their high-class products, there are usually reservations, they are waited for, and that is the reason they had a good performance. Revenues exceeded expectations,” he stated.
Reasons for the Decrease in the Luxury Goods Sector
As a reason for the decline in the luxury goods sector, the financial analyst identified a drop in demand by Chinese consumers by nearly 14%. “The shocks experienced by the Chinese economy are serious. The problem with real estate continues to weigh. Consumer confidence is low, and the country continues to…
Kalin Georgiev has been fighting deflation for the past five quarters, listing the reasons behind it. He identified the development of the second largest economy as crucial for the future and improvement of the luxury goods market.
The financial analyst noted that weak corporate results are leading to a decrease in stocks. “Many of these companies reacted with a decline, and by the end of trading – on Friday – many companies and sectors managed to compensate for some of their losses. The reason for this was also inflation in the United States, which showed a persistent decrease.”
The Speculation Surrounding Central Banks’ Interest Rate Decisions
Speculation abounds regarding the potential actions of central banks in the coming months. Analysts suggest that the Federal Reserve may implement its first interest rate cut in September, a move that the market typically responds positively to. In contrast, the European Central Bank has already lowered rates, a decision that was largely anticipated due to slowing inflation in the eurozone approaching the target level of 2%.
Looking ahead, it is expected that the ECB may implement one or two more rate cuts by the end of the year. The situation with the Federal Reserve is more intriguing, as the future decisions of the Fed remain uncertain.
Interest Rates and Inflation in the Country
For quite some time, interest rates have been held within the range of 5.25 – 5.5%, but what we are observing as a trend in the country is their inflation approaching 2%,” he stated.
Expectations for Interest Rate Cuts
According to him, expectations for the first rate cut in September are already prevailing, but until then, there are two more CPI index reports to come. If there are any unpleasant surprises regarding inflation, this could postpone the interest rate cut. Georgiev believes that we will rather see a quarter percent decrease in September. “The more important question is by how much more will they be reduced?”
September Brings More Opportunities for Discounts
A financial expert commented that there may be more discounts available after September, as there are still two more rounds of discounts to come. However, it is important to note that this conversation is not a recommendation for any investment decisions.
Watch the Full Comment on Bloomberg TV Bulgaria
For more insights, you can watch the full comment on Bloomberg TV Bulgaria in their video material.
Stay Informed with Investor.bg
Every news is an opportunity, so make sure to follow Investor.bg for the latest updates and news on Google News Showcase.