1.8 trillion financial package: Profiteers and losers: Investors should keep an eye on these stocks according to the EU package of measures message
Shares in this article
Forex in this article
indices in this article
“Green” stocks are among the clear winners
Corporations in the field of AI and digitalization also benefit
Commodity and l stocks are among the losers
The global corona pandemic has prompted the heads of state and government of the 27 EU member states to support the economy of the European Union with an economic and investment program worth 1.8 trillion euros. The level of the budget and financial package has reached a dimension that far outshines even the rescue packages that were adopted as a result of the financial crisis.
A historic opportunity for Europe
The multi-billion dollar financial injection is now to help the EU internal market in particular to weather the historic economic downturn triggered by the virus pandemic. The package of measures of the member states is divided into an amount of 1,074 billion euros, which are to complement the EU budget framework in the next seven years, and a further 750 billion euros, which are to be used directly for an investment and economic stimulus program to combat the consequences of the pandemic.
“We now have the chance to achieve something historic for Europe together.  We now have massive and unprecedented financial clout – 1.8 trillion euros. This is how we can ensure that NextGenerationEU drives the double change – the green and the digital revolution. 30 percent of NextGenerationEU and the multi-year financial framework are used for climate-related projects. NextGenerationEU can become one of the largest drivers for investments and reforms worldwide – for investments in 5G expansion, artificial intelligence and digitalization of industry, in renewable energies, in sustainable transport, in energy-efficient buildings “, said Ursula von der Leyen, the EU -Commission President, on 23 July 2020 in front of the European Parliament regarding the adopted package of measures.
NextGenerationEU – “the green and the digital turn”
Based on the speech by the President of the European Commission, it is easy to see which economic sectors within the European Union should receive special support in the future. The money from the 750 billion euro reconstruction fund for Europe, called “Next Generation EU”, is primarily intended to help advance the European Green Deal and digitalization within all member states.
In this context, Ursula von der Leyen spoke of a “double change”, which should make the entire Union greener and more digital in the future. Accordingly, it can now be assumed that a large part of the 1.8 trillion euro auxiliary injection will flow into the implementation of this green deal.
The goals of the European Green Deal
The focus of the European Green Deal is above all on climate protection, ecology and sustainability. This deal is intended to help the European Union assume a global pioneering role in the fight for climate neutrality by 2050.
The ambitious plan of the 27 member states provides for far-reaching changes for certain economic sectors. If the whole of Europe wants to become climate neutral by 2050, this means a fundamental reorganization of the energy supply, agriculture, industry, construction and transportation. In this context, the EU is also planning lower CO2 limit values and higher taxation of fossil fuels, such as Coal, natural gas and oil
Profiteers of the green turn
Investors who now want to build a future-oriented portfolio should now specialize primarily in “green” or sustainable companies within Europe. Since in the future these corporations should be favored by politics. A real classic in this segment are companies that already focus entirely on the generation of sustainable electricity, such as through photovoltaic, wind power and hydropower plants. This includes groups such as Verbund from Austria or ENCAVIS and 7C Solarparken from Germany.
However, not only the shares of the operators of wind and solar parks offer a lot of potential, but also those of the manufacturers of wind turbines and solar panels. In this segment, for example, a look at the shares of Nordex, Vestas, SMA Solar and Siemens Gamesa could be worthwhile.
Furthermore, various companies from the waste and recycling industry should become interesting in the future. In this context, investors can take a close look at Veolia, Umicore and Tomra Systems shares.
In addition to the renewable energy sector, other sectors will also benefit from the European Green Deal. At the present time, however, it is not yet clear which European real estate group or car manufacturer will play a pioneering role in the field of energy-efficient construction or sustainable and climate-neutral transport. Basically, however, it can be assumed that the share prices of companies that are considered to be so-called climate polluters, i.e. groups with a high CO2 emissions, will develop less well than the prices of companies with a balanced climate footprint.
Profiteers of the digital turn
In addition to climate neutrality, the EU Commission is now also focusing on increasing digitization of the member states, which is associated with the nationwide expansion of a 5G network, as well as the promotion of projects in the field of artificial intelligence.
While companies such as Vodafone, Telefonica and Telekom find some strong European companies in the field of 5G technology, things are getting a bit more difficult in the artificial intelligence sector within Europe. This area is currently almost exclusively dominated by US companies such as IBM, Apple, Alphabet, NVIDIA, Microsoft and Zebra. With companies such as SAP, Infineon and AIXTRON, however, there are at least a few larger groups from Germany that can participate in this trend. As a result, it is conceivable that part of the money from the EU package of measures will be used to support startups in this area.
The losers of the green turn
While investors will focus on environmentally friendly and sustainable stocks in the coming years, it is likely that climate-damaging corporations will lose popularity. The biggest losers are therefore all companies whose business is inherently associated with a high environmental impact. Above all, energy suppliers and raw material companies, which primarily rely on fossil fuels, are among the biggest losers.
Accordingly, groups such as BP, Shell, TOTAL and BHP Group should be counted among the losers in the European Green Deal. In addition, the entire shipping and aviation industry within Europe is not exactly one of the beneficiaries of a green wave. The shares of large shipping companies such as Frontline and Maersk as well as large airlines such as Ryanair, Lufthansa and Air France-KLM are therefore also on the loser list.
Opportunity for realignment
However, innovative ideas and new technologies could ensure that part of today’s climate change will soon be among the winners of the European Green Deal. For example, the use of natural gas or hydrogen could help the shipping and aviation industries to quickly lose their bad image. In addition, the British-Dutch l-giant Shell, together with TOTAL and the Norwegian group Equnior, recently developed a carbon separation process that enables almost CO2-neutral oil production.
Even if many such projects are currently still at the very beginning, they clearly show that the issues of climate and environmental protection have now also reached the executive floors of the largest European groups and therefore no longer play a major role only in politics.
Pierre Bonnet / Forex-news.com.net
More news about AIXTRON SE
Image sources: Symbiot / Shutterstock.com, jorisvo / Shutterstock.com