The AEX is slightly in the green on Friday afternoon. Around half past three, the Amsterdam main index recorded approximately 941 points, a plus of about a tenth of a percent. It is a quiet session, because Wall Street only has half a trading day due to Black Friday. On the Damrak, in addition to Heineken and IMCD, attention is mainly focused on chip company Nexperia, where the conflict between the Dutch branch and the Chinese owner continues to flare up.
AEX: winners and losers on a quiet day
Heavyweights such as Universal Music Group, ArcelorMittal and Heineken amount to almost one percent. Heineken benefits from buy recommendations from Deutsche Bank and JPMorgan, which expect the brewer to make a stronger recovery. Shell, Unilever and Wolters Kluwer also recorded small profits.
IMCD and KPN are again at the bottom of the AEX index. Both shares lose more than one percent after advice cuts by JPMorgan. ING, Adyen and insurer NN Group are also turning red, although the losses there are limited.
The picture for the AEX remains weak for the entire month of November. The index is heading for a loss of approximately three and a half percent, while other European stock exchanges could still achieve their fifth consecutive month of profit.
Half day on Wall Street depresses trading volume
Many traders are deliberately keeping it quiet today. In the United States, the stock market was completely closed on Thursday for Thanksgiving. On Black Friday, the New York Stock Exchange and the Nasdaq are open, but close at 1 p.m. local time. For European investors, this means that Wall Street will close around 7 p.m. tonight and the bond market will follow an hour later.
A shorter session in New York is often associated with lower turnover and fewer major price movements in Europe. Investors are therefore mainly focusing on macroeconomic news, such as the unexpectedly higher inflation in Germany, and on the Federal Reserve meeting on December 10. The market there is counting on a new interest rate cut, which set the interest rate and currency markets in motion this week.
Nexperia-gate: open letter from Nijmegen
However, the hottest issue for Dutch policymakers remains the situation surrounding Nexperia. The chip manufacturer from Nijmegen sent an open letter to the Chinese parent company Wingtech this week. In it, Nexperia Netherlands writes that previous attempts to initiate discussions, via telephone calls, e-mails and meeting requests, have yielded nothing. Customers are now reportedly threatening production stops because parts are not delivered or are delivered too late. According to the company, this situation “cannot continue”.
The letter aims to resume dialogue with the Chinese branch and repair the disrupted supply chain. Company doctors point out that Nexperia expressly does not admit guilt in the letter, but places the responsibility for a solution on both parties. In this way, the company tries to show that it primarily wants to serve the interests of customers and employees, including in the European automotive industry.
Wingtech hits back towards the Dutch branch
The response from China was not long in coming. Wingtech accused Nexperia Netherlands in Chinese media that the Dutch branch was working on a “non-Chinese” supply chain and wanted to structurally sideline the parent company. The Dutch management is also said to have plans to significantly expand production capacity in Malaysia and other countries.
This lashing out follows a series of tensions that started in September, when outgoing Minister of Economic Affairs Vincent Karremans intervened at Nexperia. Fearing that Wingtech would withdraw technology and activities from Europe, he seized the company. The Enterprise Chamber subsequently temporarily set aside Nexperia’s Chinese CEO. Beijing reacted sharply and imposed export restrictions, prompting automakers in Europe to warn of serious production problems.
Shortly afterwards, Karremans partially suspended his intervention, but the damage had already been done. China blamed the Netherlands for “unrest and chaos” in the global chip market and called on The Hague to withdraw from the case. The open letter from Nijmegen and the fierce response from Wingtech show that relations are still tense.
What does Nexperia mean for investors?
Nexperia is not a listed company on the AEX, but it does play an important role in the European car and chip chain. Long-term disruptions could affect suppliers and car manufacturers, which could ultimately also affect sentiment around Dutch and German stock exchange companies. Analysts warn that diplomacy is at least as important as the legal battle, because both sides have an interest in a working chain.
Outgoing minister Karremans will travel to China next month to discuss the situation. Investors are keeping a close eye on that trip. A first step towards an agreement could dampen the unrest around Nexperia, while further escalation could put renewed pressure on European chip companies and car shares.
The crypto market is also playing a role in the background. In November, Bitcoin (BTC) gave back a significant portion of its previous gains, temporarily weakening risk sentiment in financial markets. For the time being, the AEX seems to be able to withstand this combination of geopolitics, interest rate uncertainty and chip stress reasonably well, although the recovery remains fragile.
Source: https://newsbit.nl/aex-vlak-in-het-groen-wingtech-valt-nederlandse-tak-nexperia-aan/
