Defense, Novo and Nestle: 2024 Highs and Lows in European Stocks

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(Bloomberg) — A massive rally in defense stocks, bank-backed gains and a surge in Siemens Energy AG shares were among the highlights of European stocks in 2024, a year that once again saw the region struggle to catch up with the US. .

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Many major Europeans remained on the fence, including luxury bellwether LVMH Moet Hennessy Louis Vuitton SA and food maker Nestle SA, whose shares are set for their biggest annual decline on record. Like LVMH, automakers like Stellantis NV were weighed down by China concerns, while drug addiction began to fade, evidenced by Novo Nordisk A/S posting a profit of more than 40% in the first half of the year.

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“European equities are calling for a lot of bad news,” said Aliki Rouffiac, sustainable portfolio manager at Robeco. “We see, under our baseline scenario, an estimate that could open by 2025.”

Here’s a look at some of the biggest winners and losers in 2024:

Siemens Energy Stars

Siemens Energy AG’s 317% surge outpaced all other members of the Stoxx Europe 600, its gains even surpassing Nvidia Corp. in dollars. The German renewable energy giant saw growth in off-grid technology offset weaknesses in its wind turbine business, leaving rivals Iberdrola SA and Enel SpA in the dust, according to the stock market.

The Luxury Laggards

It was a tough year for luxury stocks. The market value of LVMH – not long ago Europe’s largest company – fell by almost 50 billion euros ($52 billion) as concerns about weak Chinese demand grew.

And Gucci owner Kering SA hit its lowest level since 2017 as its sales performance disappointed investors again. “The work to support the product recovery is ongoing, with little sign so far of positive developments to come,” said an analyst at JPMorgan Chase & Co. Chiara Battistini in the book.

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Security Support

Conflicts in Ukraine and the Middle East are supporting defense stocks, while Donald Trump’s victory in the US election has signaled potential pressure on NATO member states to increase their spending. Norway’s Kongsberg Gruppen ASA is up nearly 178% on the year, while Germany’s Rheinmetall AG also posted triple-digit gains.

However, BAE Systems adjusted its circle in the last two months of the year, and analysts at Bank of America Corp. downgraded the British defense equipment maker due to the risk of possible US government spending cuts directed by Elon Musk.

Banking Boost

Banking has been the best-performing sector in Europe this year, with the Stoxx subindex up 25%, boosted by higher interest rates fueling shareholder returns. Banca Monte dei Paschi di Siena SpA led the rally, doubling as the Italian lender resumed paying dividends after 13 years and as domestic rival Banco BPM SpA participated as part of the government’s privatization.

Deals also provide profit fuel. UniCredit SpA began pursuing Commerzbank AG, while Banco Bilbao Vizcaya Argentaria SA made an aggressive takeover bid for smaller Spanish rival Banco Sabadell SA.

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“Everything that can go wrong has gone right for banks,” said Marija Veitmane, head of equities at State Street Global Markets.

Stellantis Leads Default Loss

The auto industry has been hurt by the growing power of Chinese rivals such as BYD Company Ltd while US president-elect Trump proposed his money-focused economic plan after the election, exacerbating the sector’s woes. The Stoxx auto index is down 12% year to date compared with the broader benchmark’s 5.9% gain.

Stellantis NV has been the worst in the sector, falling 40% amid a plunge in US stock prices and the departure of both CEO Carlos Tavares and Chief Financial Officer Natalie Knight within a few months.

Novo Bubble Worries

Novo Nordisk A/S suffered a sluggish year-end as data for its experimental obesity drug disappointed. Patients on CagriSema lost an average of 20.4% of their body weight in the 68 weeks of the study, less than the 25% the company predicted. The stock made a record 29% within the first hour of the news and has recovered slightly.

“Novo’s obesity bubble has well and truly burst,” Intron Health analyst Naresh Chouhan said in a note to clients. Shares are now down 8.9% year to date.

Blockbuster Potential for UCB

Weight loss drugs were not the only drugs that attracted investors. Shares of Belgian biotech company UCB SA have more than doubled in 2024, reflecting more optimism about the potential of skin disease treatment Bimzelx.

The rally also prompted the acquisition of Financiere de Tubize SA, an investment vehicle owned by the family of Emmanuel Janssen, who founded UCB as a Belgian chemical manufacturer nearly 100 years ago.

—With help from Jonas Ekblom, Lisa Pham, Kit Rees and Bre Bradham.

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