Discretion: It reappeared discreetly during the publication of third quarter results: the dollar effect. We could speak of a more general exchange rate effect since the euro has strengthened against several other currencies, including those of the emerging countries of South America or the Indian rupee, which has cost our international champions a few points of growth, but this is often in relation to the decline of the dollar itself.

For the record, the handicap of a strong euro for companies has two facets: the transaction or conversion effect, which easily weighs on the growth of companies exporting or publishing in dollars - such as Air Liquide, Danone or Teleperformance  -, and the competitiveness effect, which weighs on growth and crushes profitability due to a production base that remains in euros - such as Airbus or STMicroelectronics. The first is an immediate effect in the accounts, the second is longer-term, although it can be mitigated, or deferred, by the implementation of currency hedging (which also has a cost).

TECHNOLOGIES VS UTILITIES

Within the Cac 40, 19 companies generate more than half of their turnover outside Europe, according to figures compiled by FactSet, with 9 making between 25% and 50% of their sales in the United States. For the Next 20, the proportions are the same since 9 groups carry out more than half of their activity outside Europe and 5 more than 25% in the United States. But the effects of exchange rate fluctuations are more pronounced in some sectors. Traditionally, aeronautics and defense and technologies are mentioned where sales are made exclusively in dollars while the factories are mainly European. Soitec has, for example, built its forecasts for the current and next fiscal year on the basis of €1 to €1.13. STMicroelectronics had to revise its medium-term estimates with a dollar lowered from $1.12 to $1.16, losing growth and margin in the process (see page 10). Airbus has not made any forecasts, given the crisis in the sector, but the group is setting up impressive currency hedging that represented $ 86.8 billion (the equivalent of about 72 billion euros) at the end of September.

Other sectors, on the other hand, are logically insensitive to exchange rate fluctuations: real estate, banking, distribution and business services.

Be careful, however: "If the rise of the euro is brutal, companies do not have time to adapt, which can be more unfavorable to them and cause investors to lose interest in so-called 'dollar' stocks," recalls Christian Parisot, head of research at Aurel BGC, but "the dollar effect on a security is very difficult to isolate, especially at this time, and to apprehend. We do not know how companies are hedged against this risk and if it is more marked among industrialists, a large part of the Cac 40, certain elements can counterbalance it. Conversely, a strong exposure to the US market can be perceived as an additional risk, but rather because of the uncertainties linked to the US economy than because of the dollar."

There is no systematic dollar effect, also explains Sylvain Goyon, strategist at Oddo BHF, in a study published on December 8. "The appreciation of the euro/dollar raises fears of an erosion of the earnings growth of groups exposed to the greenback. But the reality of this impact is often less than what the observation of the dollar exposure alone suggests. Groups are adapting, using their currency hedging, or even using their pricing power to lessen the negative effects," he explains, adding that "it would be normal to think that the main exporters (as a percentage of GDP) will be the most affected. But, again, the real sensitivity depends on the elasticity of exports. If you sell high value-added goods and services, you probably won't be affected too much."

$1.45 FOR NEGATIVE STOCK MARKET EFFECTS

Taking into account the macroeconomic factors leading to this imbalance between the two currencies and estimates of an expected growth in earnings per share of European stocks of +39.6% in 2021 against +21.9% for the Americans, the financial analysis office also calculates a "pain threshold" for equities in the next three to six months, "i.e. at what level the euro could start to have a negative impact on the equity market", with one surprise: "The relative evolution of euro/dollar earnings per share is ahead of the movement implied by the evolution of parity. Better, "it is a depreciation of the order of 40% of the greenback compared to its parity measured a year ago that would be necessary to cancel the expected growth differential" of earnings per share between European and American stocks (in the benefit of fice of the first), or one euro around $ 1.45, which the strategist of Oddo BHF considers "unrealistic". He concluded: "Good news, it is therefore perfectly possible to obtain a rise in European indices with a stronger euro, as was the case between June 2003 and September 2007. »

Moreover, "the current rise of the euro is also explained by the loss of the status of safe haven of the dollar since the announcement of the arrival of vaccines and, therefore, by a renewed appetite of investors for riskier assets, emerging countries but also the euro and European stocks, which is positive for the stock markets of the Old Continent, "says Christian Parisot, who does not see the euro soaring next year either, counting on a more marked rebound capacity of the American economy, once the fiscal stimulus package has been adopted and implemented, and the epidemic has been brought under control. The dollar would then regain all its appeal.

l Shares of companies with a strong presence in the United States have slowed recently. Nevertheless, the euro/dollar parity, at the current level, does not seem to us to be decisive for changing our advice on values.