May 12, 2024

Notable market news this past week (12-May-24)

Here is the Skeptivest roundup of the latest market headlines for the week

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🇨🇳 China bull market? 

Signs of a bull market brewing: Chinese stocks have been falling in the past 3 years. In recent weeks, several of the nation’s main stock market indices have entered technical bull markets. Hong Kong’s benchmark Hang Seng Index achieved a 10-day winning streak before experiencing a retreat. The MSCI China Index has surged more than 20% from its January trough, while the CSI 300 Index hit its highest level since October.

Driver of Chinese stock demand:

• ‍‍Cheap valuations, improving macro data and Beijing's supportive policy stance have resulted in real money (less speculative fund managers like mutual funds) buying Chinese stocks.
• Julius Baer's China strategist, Richard Tang, attributes the primary catalyst to a rotation, where global investors are profit-taking from US, Japanese, or global tech holdings and transitioning into Chinese stocks to benefit from a rapid rebound.

China to switch off real-time info on foreign flows to avert poor sentiments: The Shanghai and Shenzhen exchanges intend to stop showing real-time data on trades involving local stocks via trading links with Hong Kong. This aims to shore up confidence by removing pot

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☕️ Quick fire happenings to note

🌏 Global macro

• Geopolitical tensions rise with new tariffs: According to sources familiar with the matter, the Biden administration is ready to implement tariffs on China as early as next week. These tariffs will target sectors such as electric vehicles, batteries, and solar cells, while current tariffs will remain largely unchanged. While in the UK, Rishi Sunak’s government faces pressure from banks including HSBC and Standard Chartered, as well as other major companies, to tone down proposed restrictions on doing business with China.
• Policymakers are seeking to fix Europe's widening productivity gap with the US: The discrepancy is attributed to differences in policy and ambition levels. European policymakers seek to address this gap by making energy cheaper, reducing red tape, and investing in clean tech. However, recent fluctuations in productivity raise concerns about the stability of jobs and wages, challenging the notion of a "soft landing" for the economy.
• Nonfarm payroll numbers - strong but slowing: The April report released on 3rd May indicated that the US economy added 175k jobs last month, well below the 240k estimates by economists. April's figures were also well below 1Q average of 276.33k, indicating a slowdown. Unemployment figures ticked slightly higher at 3.9%. Average hourly earnings increased 3.9% for the month, above inflation but continuing to trend lower.
  

🏦 Individual stocks/companies

• Planet Fitness raises membership prices for the first time since 1998: Planet Fitness (+8.79% past 5 days) is increasing the cost of its basic membership for new members to $15/month this summer, ending a 26-year run at $10/month. Despite acknowledging customer preference for savings, the gym chain believes this change is necessary after weaker-than-expected Q1 results.
• Cronos Group's collapse and rebound: Cronos Group, a Canadian cannabis company, is down >80% from 5 years ago. Nevertheless, it saw share price pop 13% month to date, attributable to strong earnings and potential reclassification in the US.
• Roblox disappoints with weak guidance: Roblox (-20.12% last 5 days) tumbles on disappointing Q2 guidance. Roblox expects a QoQ revenue decline to $870mn-$900mn, while analysts were looking for $929mn. Q1 was still fine, delivering a loss of $0.43/share vs expectations of $0.53/share loss.
• Airbnb's guidance disappoints too: Airbnb (-9.17% last 5 days) tanked as Q2 revenue guidance range of $2.68b - $2.74b disappoints (expecting $2.74b). This is despite beating sales and EPS estimates by 3.8% and 70.8% respectively. According to Airbnb, special events like the solar eclipse in North America helped drive platform engagement during Q1.
• TikTok to start lebeling AI-created content: TikTok introduces content labeling for AI-generated videos, signaling a move towards industry standards. Amid concerns of spam and misinformation, TikTok plans to label content created by both its own AI tools and third-party platforms like Adobe's Firefly and OpenAI's Dall-E. This initiative, utilizing a digital watermark system called Content Credentials, aims to promote authenticity, though its effectiveness relies on widespread adoption by AI tool providers.

🇸🇬 Singapore related

• HDB launches resale flat listing platform: HDB hopes to make HDB flat transactions more convenient and transparent via this new platform. Listing services will be free for now. This will be a big hit to PropertyGuru, which is almost monopolising this sector in Singapore and which only property agents can realistically get access to for marketing properties.
• Ministry of Health aims to curb excessive issuance of medical certificates by telehealth platforms: In an April 22 joint circular with the Singapore Medical Council (SMC), MOH informed doctors of feedback received regarding the "excessive issuance" of MCs following outpatient medical service consultations, especially teleconsultations.