SHARE PRICES AND MARKET ANALYSIS

A snapshot of motorcycle and ATV industry share performance across key manufacturers and major global markets at the trading week closure on Friday 4 August 2023. BDN financial editor Roger Willis reports.

After a fairly bright start to the week, US equities tumbled across a three-session run for cover. Wall Street sentiment was initially soured by data showing high interest rates were weighing heavily on American economic activity. Then it worsened after the Fitch ratings agency unexpectedly downgraded US sovereign debt from triple A to double A, citing the expansion of Washington’s debt burden. However, some strong quarterly corporate figures released late on Thursday helped to ameliorate this sell-off’s extent.

Nevertheless, New York market indices all finished in negativity. The blue-chip S&P 500 and tech-oriented NASDAQ Composite were hit hardest, respectively closing 2.3% and 2.8% down. The Dow Jones Industrial Average got away with a much smaller 1.1% loss and S&P’s MidCap was 1.3% in arrears. Leading powersports stocks, having revealed Q2 sales declines during the previous week, joined this overall losing streak.

A pattern similar to the US angst swing also afflicted European stock trading. Investors began by greeting good news with enthusiasm. The eurozone economy had evidently grown by 0.3% in Q2, following stagnation in the previous quarter. And annualised inflation across the 20 eurozone countries had dropped to 5.3% in July. But then Wall Street’s sell-off echoed from across the Atlantic, driven by the menace of equally high borrowing costs to economic recovery in much of Europe.

So confidence rapidly evaporated and major market indices were spanked. The Xetra Dax in Frankfurt and Milan’s Borsa Italiana FTSE MIB fell in unison, both losing 3.1% by close of play. BMW shares sank much further, a mark of investor disapproval for the company’s executive management board chairman Oliver Zipse, who had gratuitously upgraded his automotive segment forecasts immediately prior to unveiling slightly dubious half-year corporate report details.

American economic disquiet infected Japanese confidence too, and Tokyo’s Nikkei 225 index slumped by 1.7% on the back of contagion risk — given Japan’s dependence on its US export market.

Indigenous motorcycle manufacturers are now on the cusp of revealing their quarterly numbers. Suzuki, which makes both cars and bikes, had the honour of being the first to deliver Q1 data. But its details, which included declining profitability despite unit sales volume growth for the latter, were only announced on Friday afternoon, when stock traders had packed up and gone home for the weekend.

For a second consecutive week, Mumbai’s BSE Sensex 30 market index retreated, this time falling by 0.7%. Political issues were to the fore, in the shape of a fast-approaching general election threatening hegemony of the BJP government. But there was also a mounting scandal in the motorcycling firmament.

Indian bike market leader Hero MotoCorp offices in New Delhi were raided by BJP-motivated financial regulators, extending an investigation into tax avoidance and alleged money-laundering. Unsurprisingly, its share price slumped sharply, upon rumours that Hero chief executive Pawan Munjal had been arrested.

Globally, good news was the exclusive preserve of China, where both key market indices were positive. Shanghai’s all-share SSE Composite finished 0.4% up and the CSI 300, featuring blue-chip stocks on both the Shanghai and Shenzhen exchanges, put on 0.7% — incidentally reaching its highest level since early May.

Motivator was a pledge by central bankers at the People’s Bank of China to urgently divert financial resources to the struggling private manufacturing sector. This decision was their response to July’s Caixin manufacturing PMI, a survey tracking independent factory activity, which had descended into negative territory.

However, this message of hope didn’t gain the attention of investors concerned with motorcycle manufacturing. Most listed Chinese bike producers continued to lose value.