The 'Granolas,' a collection of 11 stocks representing the European stock market, failed to maintain the upward trend from early last year and ended the year mostly in decline. Among the 11 stocks, 8 saw their prices fall compared to the beginning of the year, indicating a lack of momentum. Experts noted that Europe's stock market may continue to show instability even in 2025 with the inauguration of former President Donald Trump's second administration in the United States.
According to the financial investment industry on the 2nd, as of the 31st of last month, only three corporations among the 11 Granolas companies saw their stock prices rise compared to the beginning of the year: the Swiss pharmaceutical company Roche, the German software company SAP, and the French pharmaceutical company Sanofi.
The Granolas, named by the U.S. investment bank Goldman Sachs, emerged as a relative concept to the U.S. leading stock group M7. The 11 European corporations that fall under Granolas include the British pharmaceutical company GSK, Roche, the Dutch semiconductor equipment firm ASML, the Swiss food company Nestlé, the Swiss pharmaceutical firm Novartis, the Danish pharmaceutical company Novo Nordisk, the French cosmetics company L'Oréal, the luxury goods company LVMH, the British pharmaceutical company AstraZeneca, SAP, and Sanofi.
The Granolas garnered attention in Korea as it led a surge in the European stock market in the first half of last year. At that time, the European stock market exhibited strength, fueled by expectations that the manufacturing sector had passed its low point and speculation that the European Central Bank (ECB) would enter a rate-cutting cycle ahead of the U.S. The Euro Stoxx 50 index, which includes Granolas, even surpassed 5,100 points in early April last year, driven by the rally of representative stocks from European countries.
As the European stock market soared, securities experts cited the fact that Granolas had a commonality of being 'quality growth stocks,' offering a positive analysis. Lee Jae-man, a researcher at Hana Securities, noted, 'Similar to the U.S., expectations for a policy rate cut in the first half of the year diminished rapidly, which highlighted quality. In Europe, expectations for profit growth are relatively low. This can be seen as a result of the scarcity of growth.'
The researcher also pointed out that European large companies possess 'monopoly-like market dominance.' He stated, 'In the U.S., where there are many stocks to buy, growth potential is more important; however, in Europe, the scarcity of companies with significant market power can be as crucial a variable as growth potential. Companies with high market dominance generally have greater pricing power.'
However, the celebration ended there. Following this, continued economic recession in the eurozone and rising chances of a Republican Donald candidate winning the U.S. presidential election began to sap investor sentiment in the European stock market. The stock price of ASML, which closed 2023 at $756.92, plummeted below $700, while L'Oréal's stock, which was above €450 at the start of last year, also sank below €340. The Euro Stoxx 50 index did rise compared to the beginning of the year, but most of the gains have been surrendered.
The Granolas, centered around consumer goods companies such as luxury items and food, are likely to continue their weak performance for the time being. The soon-to-be-launched Trump second administration could exacerbate trade tensions, and political turmoil within Europe is expected to persist. According to the global market capitalization tracking platform Companies Market Cap, LVMH's market capitalization rank has already fallen from 19th to 28th, while Nestlé's market cap has dropped from the top 20 to the top 50. In contrast, 8 out of the top 10 companies by market capitalization are American big tech firms.
On the 12th of last month (local time), the ECB implemented a third consecutive rate cut. Analysts suggest that the ECB took preemptive action in response to various adverse conditions. Choi Bo-won, a researcher at Korea Investment & Securities, remarked regarding the Euro Stoxx 50 index, 'Short-term trading responses will be more effective than medium-to-long term investments.'