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Can Chinese equities resume their momentum?
The Chinese stock market experienced its biggest fall in a few weeks on Thursday with a fall of more than 2% of the CSI 300 indices of the main Chinese stocks, canceling the gains made during the week. The benchmark still rose 0.2% on Friday.
Part of the recent weakness of first-clbad A shares is due to the sharp slowdown in inflows of foreign investors. Daily net inflows of capital by Hong Kong to Shanghai and Shenzhen have fallen to around RBr 30 million on average in recent weeks, with the latter days marked by stable net outflows. This seems to come in part from investors who make significant gains.
"A shares returned to trading at average valuations close to five years after large increases, as some foreign investors took profits on their favorite stocks as they traded valuations above the historical average," he said. explained Gao Ting, head of China strategy. at UBS Securities, in a note on Friday.
While valuations explain the decline in foreign investors, the Chinese stock market, dominated by the retail sector, is not renowned for its focus on corporate fundamentals. Some of the few titles that resisted the trend of Thursday's defeat were those related to space telescopes, which badysts described as a reaction to scientists unveiling the very first image of a black hole.
So, if not the fundamentals, what explains the recent dose of pessimism among domestic investors? The most important factor – without the threat of a crackdown on popular financing activities such as margin funding – will be the outcome of the US-China trade negotiations. Virtually all the major developments since the start of the trade war have resulted in disproportionate gains or losses for the country's benchmark indices. Hudson Lockett
Can the oil rally continue to run?
The short answer is yes.
Brent crude reached a new high for the year last week, reaching nearly $ 72 a barrel, and has risen since prices reached their lowest level at the end of December, reaching more than 35%. In the future, the price of oil could rise further.
Forecasts from all major energy organizations, including OPEC and the International Energy Agency, confirmed last week that the market was currently in a supply shortage. This is due to a combination of intentional supply cuts – notably from Saudi Arabia – and reduced production from Venezuela and Iran, hit by US sanctions.
It should be noted however that prices are still well below the October high of $ 86 per barrel achieved in four years, mainly due to the long-term market slide caused by the shale industry in the United States. United States.
Higher prices probably mean increased supplies from the United States, which has already become the largest oil producer in the world. The opening of new gas pipelines in the second half of this year should facilitate the marketing of this increased production.
Traders are also watching to see if Opec is responding to calls from US President Donald Trump to make sure prices do not go up too high. Saudi Arabia, in particular, may not be in a hurry to block the rally given its dependence on oil revenues, but it will not be completely deaf to the concerns of its biggest ally. former. In the short term, prices may have to go higher before provoking a reaction. But when that happens, the turnaround could be quite violent, which would not leave some traders in the hands. David Sheppard
What can Uber learn from the Lyft IPO?
Uber, the new venture of the latest technology boom, is reorganizing its public list with Silicon Valley's neighbor, Lyft, in the rear-view mirror and Pinterest, which is already following the process.
Lyft, Uber's rival in carpool, was listed at the end of March. After a first wave post-IPO, shares fell below the offer price of $ 72.
Pinterest, the scrapbooking website, has set a price range of $ 15 to $ 17 per share for its next listing. If Pinterest set the price of the IPO in the middle of the indicated range, it would sell its shares at 26% less than the price of $ 21.54 reached during its last private fundraiser in 2017.
Despite all the enthusiasm generated by technological "unicorns" that have become highly valued through private financing, especially those that operate consumer-oriented businesses, the initial signals regarding public funding have been measured.
Uber, too, could be conservative. Based on current estimates, the company plans to raise about $ 10 billion with a list that could give it a value of up to $ 100 billion. This would place it alongside the largest IPOs ever recorded in the US, but is lower than some earlier optimistic estimates.
After all, the company's IPO prospectus, released to the public on Thursday, portrays a company that spends a lot of money to maintain its market share as growth in its core business stagnates.
"The underlying performance of the company is much more than the initial enthusiasm generated by the IPO," said Rett Wallace, co-founder of Triton Research. "Long-term holders are sensitive to their price of entry. If you are trying to attract long-term incumbents, you should make it easy for them. " Nicole Bullock
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