Investor relations blog

(Ex-dividend) illusion

“Before there can be wonders, there must be wonder”, is a saying often used by David Copperfield the famous American magician and illusionist who has been surprising and ‘deceiving’ audiences with his illusions for decades and described by Forbes as the most commercially successful magician in history. Some of his most memorable illusions include walking through the Great Wall of China, walking into one wall and out of the other side a few minutes later, and surviving Niagara Falls while being chained in a yellow raft. But arguably Copperfield’s best-known illusion was making the Statue of Liberty disappear (and then reappear) in front of a live audience.

Last Monday, investors might have thought that David Copperfield was performing one of his illusions when the Ageas share appeared to have lost -5.2%. Although it seems unlikely David Copperfield was involved, the share price decline could actually be considered as an illusion. Ageas’s shares last Monday morning went ex-dividend right or without the dividend coupon attached explaining the ‘-5.2%’ illusion with shareholders having received EUR 2.1 gross cash dividend on their account on Thursday. Correcting for the ex-dividend illusion the Ageas share on Monday was actually slightly down 0.7%, in line with the overall market. Last trading week, the volume of Ageas shares traded also seemed somewhat inflated. This illusion can be explained by on the one hand the dividend payment and the arbitraging around that (ex-right on Monday, record date on Tuesday and payment date on Wednesday) and on the other hand the reshuffling of the MSCI Equity Indexes announced on May 14th and implemented at the close of May 31st, explaining the high volume (also all over the world) at the last price last Thursday.

Investors were probably also hoping the performance of the equity markets last trading week was in fact an illusion but unfortunately this was not the case. Up until the middle of the trading week, equity markets sentiment was again dominated by political turmoil in Italy & Spain and renewed trade war fears between USA & EU leading to heavy selling on European financial markets. After Italy's anti-establishment parties abandoned plans to form a coalition government after the country's president refused to accept a controversial choice for economy minister, investors feared that repeat elections in Italy could become a de facto referendum on Italian membership of the currency bloc and the country's role in the European Union. However, Italy's anti-establishment parties revived coalition plans on Thursday, ending three months of political turmoil by announcing the establishment of a new government. As new Italian elections have been averted, a modest relief rally was witnessed on Friday slightly compensating for (heavy) losses of the beginning of last trading week.

So although at first sight Ageas’s share price lost -3.2% over THE last trading week contrary to what you would have expected Ageas actually had a pretty good week. Correcting for the ex-dividend illusion, Ageas’s actual share price performance was +1.4%, outperforming both the Euro Stoxx 50 (-1.8%) & SXIP 600 Insurance index (-2.7%).