WACKER Stock in 2018
At the start of 2018, WACKER stock climbed strongly due to the continued strength of its chemical divisions. Then in the second half-year, in particular, WACKER’s share price posted a significant decline. It was prompted by trade tensions between the USA and China, by Brexit-related uncertainties, and by regulatory changes and the amount of new solar installations in China. In the first three months of 2018, global stock markets were volatile and, on balance, declined noticeably during the quarter. That was primarily due to the mounting worries of market participants about a global trade war. At the same time, the world’s major central banks decided to prepare financial markets for an end to accommodative monetary policies. The US Federal Reserve, for instance, raised the federal funds rate by 0.25 percentage points in late March to a target range of 1.50 to 1.75 percent.
After a good start to 2018, Germany’s benchmark indices faced significant pressure as of late January. The first-quarter loss for the DAX exceeded 6 percent, while the MDAX lost more than 2 percent. WACKER stock started Q1 2018 at €162.20 (closing price on Dec. 29, 2017) and initially posted substantial gains. After reaching its year-high of €174.00 on January 26, the stock came under pressure amid the general market trend. Furthermore, market participant concerns about rising raw-material prices, a rebounding euro and contracting solar-silicon prices returned to the forefront. The share price declined and finished trading at €133.35 on March 29, down 18 percent from the start of the quarter.
From April through June 2018, global stock markets generally performed well for long stretches, declining noticeably only toward the end of the second quarter. After the price setbacks of Q1 2018, market sentiment initially became more optimistic in spite of rising US interest rates, as tension seemed to ease in the trade dispute between the US and China. At the same time, sentiment was lifted by China’s unexpectedly strong economic growth. Later in the quarter, the trade disputes escalated further between the USA, on the one hand, and China and the European Union on the other. Given the mounting uncertainty, the major stock market indices lost most of their previous gains in the last two weeks of June. At the end of June, the DAX closed 2 percent higher versus the end of March, while the MDAX gained 1 percent during the same period.
Initially, WACKER stock rebounded strongly in the second quarter. But, in June, it came under increased pressure. A key reason was China’s decision, announced June 1, to reduce solar feed-in tariffs and cap the construction of new photovoltaic installations for the rest of the year. Market participants became concerned that fewer new PV installations in China could dampen WACKER’s polysilicon volumes and earnings. As a result, the share price fell markedly. WACKER stock closed at €112.15 on June 29, down 16 percent versus the beginning of the quarter.
In the third quarter, political risks clouded stock-market sentiment, even as economic conditions remained generally robust. The world’s major central banks normalized monetary policy further. The US Federal Reserve raised the federal funds rate by 25 basis points in late September. The European Central Bank also announced that it would end its bond-buying program by year-end. Market uncertainties remained high, though, fueled by the ongoing trade disputes between the USA and both China and the European Union. Overall, the DAX finished September down 0.5 percent versus the end of June, while the MDAX edged up 1 percent during the same period.
WACKER stock initially outperformed the market in the July-through-September quarter. But, in early September, it lost considerable ground, influenced not only by the general market trend, but also by falling prices for standard silicone products in China. WACKER stock closed at €108.30 on September 28, down 3 percent versus the beginning of the quarter.
From November through December, the DAX and the MDAX fell by 14 and 17 percent, respectively. WACKER’s share price also declined in the fourth quarter, trading in line with shares of other European chemical companies. In a weak overall market and still difficult political climate, the European chemical industry came under pressure after a series of profit warnings, and investors sold off chemical stocks. Due to WACKER’s reduced market capitalization, the stock was removed from the STOXX Europe 600 Index in late December. After reaching its year-low of €71.28 on December 10, Wacker Chemie AG’s stock traded at €79.10 at year-end (Dec. 28, 2018), down 27 percent versus the beginning of October.
Discussions with capital-market participants during the year were dominated by questions about the supply /demand balance for silicones, the further trend in raw-material costs at WACKER POLYMERS and solar demand in China.