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Category Archives: Stock

Chart: S&P 500 Bear Markets

See large image . . . . . .

Source : New York Times

Chart: China Banks Are Now Valued Like US Peers at Depths of 2008 Crash

Source : Bloomberg

Infographic: The Shrinking Trillion Dollar Market Cap Club

See large image . . . . . .

Source : Visual Capitalist

Chart: Total Market Cap of Shanghai, Shenzhen and HK Exchanges Rebound

Source : Reuters

Annual Performance of FAANG Stocks

Source : Wall Street Journal

Charts: Mark Zuckerberg Lost $100 Billion in One Year – Probably the Greatest Wealth Loss in History by an Individual

Source : Bloomberg

Charts: The Rise of Dow Jones and U.S. Total Debt from 1970’s

Source : Trading Economics and FRED

Chart: European Equities Are Testing a Long-term Technical Level

The benchmark has broken below the key 400 points level

Source : Bloomberg

Hong Kong Stocks Tumble to Decade Low on Fed, Geopolitical Risks

John Cheng, Jeanny Yu and Ishika Mookerjee wrote . . . . . . . . .

The world’s most acute market risks from the Federal Reserve’s monetary tightening to Beijing’s Covid Zero pursuit are hammering Chinese stocks, pushing a key gauge to the lowest in more than a decade as analysts struggle to predict a bottom.

Hong Kong’s benchmark Hang Seng Index fell 1.6% to close at the lowest level since December 2011. The Hang Seng China Enterprises Index, a gauge of Chinese stocks traded in the city, slid 1.1% after earlier touching levels last seen in 2008. Both equity gauges are among the world’s worst performers this year.

While Thursday’s jolt was part of a global rout spurred by the Fed’s hawkish interest-rate hike, China’s stocks are fraught with unique challenges that reduce the odds of an imminent turnaround despite monthslong policy stimulus.

Beijing remains determined to root out Covid-19 at all costs, while the nation’s property market is going through an unprecedented crisis. Meanwhile, tension with the US runs high over thorny issues including trade and relations with Taiwan and Russia, which raise the risk of Western sanctions.

“Hong Kong stocks are suffering from all these bad news from both China and the US,” said Paul Pong, managing director at Pegasus Fund Managers Ltd. in Hong Kong. “I’m raising my cash level in the portfolio. I think there will be more downside for Hang Seng before we see any meaningful recovery in the second half.”

The Hang Seng Index has lost more than 22% so far this year, extending last year’s decline. Since a market crash at the onset of the pandemic in March 2020, the benchmark has underperformed the MSCI World Index by a whopping 69 percentage points. Mainland companies account for about two-thirds of stocks listed on the Hong Kong gauge.

The losses are particularly jarring in a year when Beijing holds its twice-a-decade Communist Party Congress, an event that has typically boosted the stock market in the past.

It’s not as if Beijing hasn’t acted. The People’s Bank of China is an outlier amid a global wave of aggressive tightening, having lowered a key policy rate twice this year. Authorities have also stepped up fiscal stimulus and loosened home purchase restrictions in some cities to arrest a slump in the property market.

But even as the Hang Seng benchmark’s valuation has plunged to the lowest since Bloomberg data going back to 1993, it’s not looking cheap enough to some investors when pricing in mounting risks.

“It’s not time to buy yet as Hong Kong’s stock gauges fall to new lows, with aggressive US interest-rate hikes adding to pessimism around Covid Zero and the ongoing property crisis in China,” said Manish Bhargava, fund manager at Straits Investment Holdings in Singapore.

Unsurprisingly, economists have been revising down their forecasts on the nation’s economic strength. Goldman Sachs Group Inc. lowered its view for China’s 2023 growth to 4.5% from 5.3%, expecting Beijing to stick to its stringent Covid Zero policies through at least the first quarter of next year.

And the growing hostility between Beijing and Washington is a key overhang that caps the potential for any meaningful rebound.

China has been ramping up its rhetoric toward Taiwan, saying it has the patience to someday bring the island nation under control. Beijing’s close ties with Moscow are drawing greater scrutiny from Western leaders for any signs of support.

Despite the gloom, some investors are pinning hopes on the upcoming leadership congress for more policy stimulus, even though the odds of a pivot away from Covid Zero is low.

Mainland stocks have been more resilient than those in Hong Kong on Thursday, with the CSI 300 Index falling 0.9%.

“Any acceleration of policy easing may offset part of the market pressure,” said Richard Tang, head of Hong Kong research at Julius Baer Group Ltd. “Investors will be monitoring for any signs of policy shift from Chinese policymakers during the 20th Congress of the Chinese Communist Party in October.”

Source : BNN Bloomberg

China Households Could Cut Property Assets in $18 Trillion Shift

Lisa Du wrote . . . . . . . . .

China’s households are expected to shift 127 trillion yuan ($18.1 trillion) into financial products over the next nine years, an opportunity ripe for financial institutions as the country’s property sector sours, brokerage CLSA Ltd. said.

The share of Chinese household assets allocated to property will fall to 26% by 2030 from 37% in 2021, according to estimates from Hans Fan, the head of China financial research at CLSA. In contrast, the share of money allocated to investments such as mutual funds, wealth management products and insurance will grow to 21% from 13% in the same period.

In the coming years, “a huge pie of new money will go toward professional managed products. What this means for financial institutions is that the household balance sheet is a goldmine,” Fan said Thursday at the CITIC CLSA Flagship Investors’ Forum.

The shift would signal a sea change from decades of Chinese consumers putting their money into real estate as the surest way to grow their wealth. It would underscore both the longer-term impact of China’s housing downturn and the potential that lies in China’s nascent financial sector — a market estimated to be worth around $57 trillion.

Wealth Management

Revenue from household assets at financial institutions could more than double to 2.1 trillion yuan by 2030, Fan said. Mutual funds and fintech companies are expected to grow their market share as more money shifts to financial products.

“In the past 10 years, financial institutions have mainly explored revenue from the household liabilities side with lending to them,” he said. “In the future, revenue from the household asset side — meaning providing wealth management services, earning fees — will become a new driver for financial institutions.”

In the past year, China’s property sector, which had been a red-hot growth engine, has been beset by challenges as highly indebted developers paused construction projects and the country’s strict Covid Zero policy dented economic activity.

China’s new-home sale prices have fallen for 12 months straight, most recently dipping 0.29% in August from July. Tensions are high over a simmering mortgage boycott in recent months by homebuyers who are waiting for cash-strapped developers to complete delayed projects.

Source : BNN Bloomberg