February 23, 2025

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Notable market news this past week (23-Feb-25)

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

🇨🇳 China tech stocks revival

Hang Seng Tech Index Surge: Jumped +6.53% at close, reaching highest levels since 2022 and is up 33% YTD

Earnings-driven rally and platform hedge funds buying in: Alibaba soared 15% on strong sales and consensus estimate beat, with Bilibili, Lenovo, and AI chipmaker Cambricon also posting gains on better than expected results. Global managers such as Marshall Wace, DE Shaw, and Millennium Management have been key drivers of share price surges in US-listed Chinese companies, according to public filings. Other notable investors include Two Sigma Investments, Driehaus Capital Management, Arrowstreet Capital, and Light Street Capital, who were among the top buyers of the top performers in the Nasdaq Golden Dragon China Index.

Policy shift boosts sentiments: In September, investor sentiment toward Chinese tech stocks improved as the government introduced a series of economic, financial, and market-support measures to restore confidence in the world's second-largest economy. The rally lost steam temporarily but regained momentum in mid-January, spurred by AI startup DeepSeek’s breakthrough, which reignited interest in China's top internet firms. More recently, President Xi Jinping’s meeting with Alibaba founder Jack Ma and other executives strengthened expectations of a more accommodative approach from Beijing.

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🇺🇸 Consumer inflation expectations surge

Consumer expect prices to surge at the back of trade war risk: Consumers expect prices to rise at an annual rate of 3.5% over the next 5–10 years, the highest since 1995, per the University of Michigan's February survey. Inflation expectations have gained significance as trade war risks loom, with economists warning that tariff threats alone are fueling economic uncertainty.

All five components of the index weakened, with worsening sentiment on big-ticket purchases and >50% of respondents anticipating a higher unemployment rate—the most since 2020. The 5 components are: 1) current economic conditions; 2) index of consumer expectations; 3) personal finances; 4) buying conditions for major household items; 5) business conditions.

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☕️ Quick fire happenings to note

🌏 Global macro

• Trump signals potential trade deal with China: Donald Trump suggested that a new trade deal with China is possible, indicating a willingness to avoid an escalating trade conflict. While offering no specifics, Trump praised Xi Jinping, emphasizing their “great” relationship.
• Trump’s DOGE proposal and market reactions: Trump proposed distributing 20% of DOGE savings to Americans and using another 20% to reduce the national debt, echoing Elon Musk’s earlier suggestion of a “DOGE dividend” in the form of $5,000 tax refunds.‍
• Trump's potential debt restructuring plans: Jim Bianco recently discussed with clients the possibility of President Trump forcing US foreign creditors to swap Treasuries for ultra long-term bonds to ease the country’s debt burden, after rumors of a so-called Mar-a-Lago Accord surfaced. While Bianco doesn’t expect this to happen soon, he warned that Trump could reshape the global financial system over the next four years, with a focus on revamping global trade, weakening the dollar, and reducing borrowing costs to boost US industry.
• "Trump trades" fizzles: 1) Small-Cap Stocks initially seen as winners, have seen gains in the Russell 2000 Index fade, now only 1% above its Nov. 5 close; 2) The dollar’s strength, driven by expectations of tariffs and inflation, has weakened, with the Bloomberg dollar index down 1.5% since mid-January after a 4.5% rise post-election; 3) The bet on higher yields tied to tariffs and debt issuance has softened, as the Treasury plans steady bond sales and deficit concerns ease, pulling long-term yields down. 4) Digital assets, especially Bitcoin, saw initial post-election surges but have cooled, with Bitcoin hovering around $97,000, while scandals involving memecoins like Libra have dampened sentiment.
• Walmart cautious on 2025 outlook: Walmart issued a cautious outlook for 2025 - expecting lower-than-expected profits reflects ongoing uncertainties in consumer behavior, as noted by CFO John David Rainey. While recent US inflation data may contribute to the cautious outlook, the company emphasized that potential trade disruptions, including the threat of tariffs from the White House, are not yet a major concern. However, the possibility of new trade wars could make 2025 even more volatile.‍
• New bat coronavirus discovered in China: Researchers in China identified a new bat coronavirus that uses the same cell entry mechanism as Covid-19. While not yet detected in humans, the discovery raises concerns about potential animal-to-human transmission, according to a study published in Cell. ‍
• Mexican central bank pursues easing despite uncertainty: Mexican central bank officials committed to continuing monetary easing, even amid uncertainty surrounding Trump’s unresolved tariff threats on Mexico’s exports. Earlier this month, Banco de Mexico reduced its key rate by 50bps to 9.5%, signaling a “new stage” of monetary policy. Some policymakers indicated they may consider another half-point cut at the next meeting on March 27, aiming to bring inflation closer to the bank’s 3% target.

🏦 Individual stocks/companies

• Bumble (-38.27% past 5 days) tanks on disappointing earnings: Q4 revenue dropped 4.4% to $273.6 million, with no EPS reported. The company projected a 5.1% QoQ revenue decline for Q1, its best-case scenario. Bumble app revenue grew 3.8% YoY in Q4 but is expected to fall about 6% in Q1. Founder and former CEO Whitney Wolfe Herd is set to return with a plan to expand Bumble into a “lifestyle brand.” However, the challenge remains—online dating lacks the natural feel of in-person connections.
• Etsy (-8.22% past 5 days) struggles with Q4 miss and rising competition: Etsy reported Q4 sales of $852.2mn, missing Street estimates of $862.8mn, while EPS of $1.03 beat expectations of $0.93. The online marketplace, known for its unique offerings, is facing increased competition from TikTok Shop, Shein, and Temu, contributing to the miss. The company is likely eyeing the potential impact of tariffs as it navigates the competitive landscape.
• Baidu (-7.64% past 5 days) struggles despite strong earnings: China’s digital advertising sector continues to struggle, with Baidu failing to attract buyers despite surpassing EPS expectations at $2.63/sh, well above the $1.78 estimate. However, Q4 revenue declined 2% YoY to $4.68bn. IQIYI, Baidu's 53%-owned "Chinese Netflix," saw even worse performance, with a 14% YoY revenue drop to $906mn. The country’s economic slowdown is causing advertisers to tighten their budgets.
• Airbnb (+9.63% past month) popped on ambitious "Amazon-Like" plans: While it has corrected slightly already, Airbnb reported strong Q4 earnings, with EPS of $0.73 on $2.48bn in revenue, surpassing estimates of $0.58 and $2.42bn, respectively. However, shares surged after the company teased plans to launch new businesses aiming to become "kind of similar to Amazon," positioning itself as a one-stop shop for travel and living needs. While details were vague, the potential for $1bn in revenue from these ventures excited investors.
• Intel surges on M&A rumors: Intel’s struggles have led to a 16% surge in its stock price following rumors that Broadcom and Taiwan Semiconductor Manufacturing Company (TSMC) may bid to break up the company. Once dominant with an 80% market share, Intel has faltered due to manufacturing issues and missed opportunities, including rejecting offers from Steve Jobs, OpenAI, and Nvidia. In recent years, it has been overtaken by competitors like Nvidia and AMD, leading to job cuts and a 37% drop in stock value over the past year.

🇸🇬 Singapore related

• Singapore's 2025 Election Budget: Budget 2025 was presented on 18 Feb, with the govt proposing a surplus budget. 1) Household transfers were the primary stimulus, with S$2.02bn in SG60 vouchers and S$1.1bn in CDC vouchers, totaling 0.4% of GDP; 2) The MOF approved tax-related recommendations from the Equities Market Review Group, including incentives aimed at boosting listings and liquidity on the SGX.