Trade of the Day: stocks, yuan and dollar retreat on trade talk doubts; oil slips on better supply expectations; gold climbs
Quote of the Day: ““We are in ‘unchartered territory’ – not only is this due to being in the longest expansion in over 70 years but also as very low, or even negative, interest rates are likely to persist. We have a constructive outlook for stocks in 2020. Corporate earnings will increase as will dividends and buybacks, pushing share prices higher which should transform the gloom of 2019 into a less fraught outlook for the economy and stock markets,” Frédérique Carrier, head of investment strategy at RBC Wealth Management.
Stock of the Day: Hong Kong-listed Artgo Holdings collapsed 98% within minutes of trading on Thursday. The company, which is in the business of mining, processing, distribution and sales of marble stones, saw $5.6 billion of market capitalization erased within an hour of trading on a report that MSCI would not include it in its index.
Number of the Day: 4.5% – Barclays forecast for India’s third-quarter GDP – a six-year low.
Tip of the Day: Investors need to look beyond headline yield and focus on income sustainability and growth potential. Old tech remains highly attractive as more tech names move up the quality spectrum; stable, predictable cash flows enable management to distribute a higher proportion of their earnings. Payout ratios in the US tech sector stand at just 36%, providing plenty of room to grow, compared to traditional income payers such as utilities at 74% and telecommunications at 69%: Schroders
Asian market sentiment was dampened by concerns that the much-anticipated US-China trade deal would not happen this year amid worries that Beijing may retaliate after the passage of the “Hong Kong Bill of Rights on Human Rights and Democracy” by the United States. Losses were recouped after China’s chief trade negotiator, Vice Premier Liu He, said he was “cautiously optimistic” about reaching a phase one deal with the US.
The Hang Seng index retreated 1.57% with technology, basic materials and telecoms leading the losses. Technology shares had outperformed until the pricing of e-commerce giant Alibaba’s Hong Kong listed shares. The shares will begin trading on November 26.
“Alibaba is not consider a tech stock anymore as it is now considered a consumer discretionary stock given its importance in being a key e-commerce provider similar to other Chinese e-commerce companies like JD.com and Trip.com (CTRIP),” said Ken Wong, client portfolio manager, Equities at Eastspring Investments.
“Chinese tech stocks are now trading at very attractive valuation multiples. Over the past year, given the tensions that most Chinese tech companies have faced as a result of the US-China trade war, there has been a significant sell down of a number of Chinese IT-related stocks as their share prices have de-rated. Some of these Chinese tech related stocks are now looking very attractive even from a value investing standpoint. A number of Chinese IT stocks are now considered value stocks instead of growth stocks given their attractive valuation multiples relative to its own history,” Wong said.
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