Finance – manitimes.com

TikTok debate reveals the risks for investing in China during U.S. election year

Press Room — Mon, 18 Mar 2024 08:52:39 +0000

China retail sales, industrial data for first 2 months beats expectations

Press Room — Mon, 18 Mar 2024 02:32:18 +0000

High-rise residential and commercial buildings are being constructed near Dongyu Road, Qiantan, in the Pudong New Area of Shanghai, China, on March 15, 2024.

Nurphoto | Nurphoto | Getty Images

BEIJING — China on Monday reported economic data for the first two months of the year that beat analysts’ expectations.

Retail sales rose 5.5%, better than the 5.2% increase forecast in a Reuters’ poll, while industrial production increased 7%, compared with estimates of 5% growth.

Fixed asset investment rose by 4.2%, more than the forecast of 3.2%.

The unemployment rate for cities was 5.3% in February.

Online retail sales of physical goods rose by 14.4% from a year ago during the first two months of the year.

Investment into real estate fell by 9% in the first two months of the year from a year ago. Investment in infrastructure rose by 6.3% while that in manufacturing increased by 9.4% during that time.

Economic figures for January and February are typically combined in China to smooth out variations from the Lunar New Year, which can fall in either month depending on the calendar year. It is the country’s biggest national holiday, in which factories and businesses remain closed for at least a week.

This year, the number of domestic tourist trips and revenue during the holiday grew compared with last year as well as pre-pandemic figures from 2019. But Nomura’s Chief China Economist Ting Lu pointed out that “average tourism spending per trip was still 9.5% below pre-pandemic levels in 2019.”

Retail sales did not rebound from the pandemic as strongly as many had expected as consumers have grown uncertain about their future income.

New loans in February missed expectations and fell from the prior month, “even after adjusting for seasonality,” Goldman Sachs analysts said in a report Friday.

“The persistent weakness in property transactions and low consumer sentiment may continue to weigh on household borrowing,” the analysts said. “More monetary policy easing is needed.”

People’s Bank of China Governor Pan Gongsheng said earlier this month there was still room to cut the reserve requirement ratio, or the amount of cash banks need to have on hand.

Goldman expects 25 basis point cuts to that ratio in the second quarter of this year, as well as in the fourth quarter.

Real estate, which accounts for a significant part of household assets, has slumped over the last few years after Beijing’s crackdown on developers’ high reliance on debt for growth.

The average property price for 70 major Chinese cities fell by 4.5% in February from January on a seasonally adjusted, annualized basis, according to Goldman Sachs’ analysis using a weighted average of official figures.

That’s steeper than the 3.5% month-on-month drop in property prices in January, Goldman Sachs said.

“Our high frequency tracker suggests that 30-city new home transaction volume declined by 53.2% [year-on-year] in early March after adjusting to the lunar calendar basis,” the analysts said in a report.

Chinese authorities did not reveal significant new support for the massive real estate sector during an annual parliamentary meeting that ended last week.

Instead, Beijing emphasized the country’s focus on developing manufacturing and technological capabilities.

Data earlier this month showed China’s exports for January and February rose by 7.1% in U.S. dollar terms, beating expectations for a 1.9% increase.

Imports climbed by 3.5% during that time, also topping Reuters’ forecast for growth of 1.5%.

Here’s when the Fed may start cutting rates, investment strategists say

Press Room — Sun, 17 Mar 2024 20:04:51 +0000

Federal Reserve Chairman Jerome Powell prepares to testify before the Senate Banking, Housing and Urban Affairs Committee on March, 7 2024.

Kent Nishimura | Getty Images News | Getty Images

WEST PALM BEACH, Fla. — The U.S. Federal Reserve is likely to start cutting interest rates by the end of the second quarter despite recent “hotter than expected” inflation data, according to Kristina Hooper, chief global market strategist at Invesco.

The U.S. economy is also likely to dodge recession as the Fed calibrates interest rate policy, she and other strategists said Wednesday at Financial Advisor Magazine’s annual Invest in Women conference in West Palm Beach, Florida.

The Fed has raised borrowing costs for consumers and businesses to rein in high inflation during the pandemic era. That has pushed up rates for mortgages, credit cards, auto loans and other forms of lending.

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Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

Inflation has declined significantly from its peak in mid-2022. However, it’s still well above the Fed’s 2% target level.

The question has become, at what point — and how quickly — does the central bank start to cut rates in order to avoid plunging the economy into a downturn?

Fed Chair Jerome Powell said last week that the Fed may not be far off from throttling back.

Despite hotter-than-expected inflation data issued this week, the central bank is likely to start reducing borrowing costs by the end of June, with cumulative cuts of 0.75 percentage point or 1 point in 2024, Hooper said.

History may be a guiding principle, she said. The Fed last raised interest rates in summer 2023; in prior interest-rate-hiking cycles, the Fed began cutting rates about 8½ months later, Hooper said.

Jenny Johnson, president and CEO of Franklin Templeton, also expects the central bank to begin cutting rates this year, though in the second half of 2024 at Fed policy meetings in July or September.

Forecasts have changed from prior months.

Moira McLachlan, senior investment strategist in AllianceBernstein’s wealth strategies group, said the firm had earlier expected five or six cumulative rate cuts this year, but now anticipates three or four.

The firm’s “base case” is cumulative cuts of 1 percentage point in 2024, she said Wednesday.

Strategists expect the U.S. to dodge a recession as it navigates interest rate policy, experiencing what’s known in economic parlance as a “soft landing.”

“A soft landing is our best guess in terms of where we’re going to be,” McLachlan said.

“We’re likely to avoid a recession,” Hooper echoed.

“I do worry [the Fed] may be too late to start cutting,” she said.

Talk of recession is dying down in corporate America

Press Room — Sun, 17 Mar 2024 13:50:04 +0000

HSBC is ‘very positive’ about the future of China’s economy, CFO says

Press Room — Sun, 17 Mar 2024 07:10:30 +0000

The Hong Kong observation wheel and the HSBC building in Victoria Harbour in Hong Kong.

Ucg | Universal Images Group | Getty Images

HSBC is “very positive” about the mid- to long-term outlook for the Chinese economy despite current headwinds, the British bank’s chief financial officer told CNBC.

Growth in China has been weighed down over the past year by a slump in the country’s traditional economic pillars of real estate, infrastructure and exports. This prompted Beijing to ramp up its efforts to bolster manufacturing and domestic tech in a bid to modernize its economy and remain globally competitive.

Speaking to CNBC’s Karen Tso on Wednesday, HSBC CFO Georges Elhedery said the lender — which is headquartered in London but does a lot of its business in Hong Kong and across the Asia-Pacific — was confident that the world’s second-largest economy would overcome its short-term headwinds.

“We’re looking at major economic transition, which is taking place, which gives us very strong grounds to be very positive about the medium- and long-term outlook,” Elhedery said.

He suggested that China’s economic maturity has reached such a stage that now is the “right time to transition into what more mature economies are.”

Elhedery characterized this maturity as being more heavily reliant on consumers, the services industry and high-value and sustainability-driven products, such as electric vehicles and batteries, aspirations he said were evidenced by the Chinese government’s recent massive push toward these sectors.

“That transition will mean that China will avoid falling in this middle income trap and be able to continue the growth pattern,” he added.

“Some of the Western economies have gone through those transitions in the past, [and] China is going through a transition today. That gives us a lot of positive outlook for the medium- to long-term for China.”

The more immediate economic challenges may last “a few quarters to a couple of years,” Elhedery said, but expressed confidence that China will be in a better position for the long run, as the country puts itself on a “materially better forward-looking track.”

HSBC missed its full-year 2023 pretax profit forecasts on the back of a $3 billion write-down on its 19% stake in China’s Bank of Communications, while the lender cut its overall exposure to Chinese commercial real estate by $4.6 billion year on year.

Yet, Elhedery on Thursday insisted that most of the challenges related to the ailing Chinese property market were “behind us,” even as he said the sector is not “out of the woods” so far.

“We think the trough of that sector is behind us. We think in our case, our exposure and our ECL (expected credit losses) covers the bulk of the charges behind us, but that still means there will be lingering effects as the sector continues to adjust, and we may continue to see some impact but not to the tune that we’ve seen last year on our credit charges,” he said.

Tracy Britt Cool is making her name in midsize firms

Press Room — Sun, 17 Mar 2024 00:56:24 +0000

Key Points

Tracy Britt Cool has been busy acquiring midsize companies, and now she wants to build a close-knit community for these smaller businesses.
The 39-year-old investor struck out on her own in 2020 after working for Warren Buffett for a decade.
Her private equity firm Kanbrick focuses on companies with $5 million to $50 million in earnings before interest and taxes, in industries ranging from consumer to industrial to business services.

Bitcoin may lose its reputation as a volatile asset. Here’s why

Press Room — Sat, 16 Mar 2024 18:54:47 +0000

Bitcoin may start to lose its reputation as a volatile asset.

According to Bitwise Asset Management’s Matt Hougan, the cryptocurrency’s wild price swings have come down substantially over the past decade.

“What’s driving the bitcoin market right now is a simple demand-supply imbalance,” the firm’s chief investment officer told CNBC’s “ETF Edge” on Monday. “We have this huge new source of demand from these ETFs, and we have supply that’s inelastic.”

On Jan. 11, the first bitcoin exchange-traded funds began trading. Since then, the asset is up more than 50%. Bitcoin hit an all-time high this week of just under $74,000.

Yet, Hougan acknowledges it may not be for everyone.

“It moves around a lot. Some people find it difficult to understand,” Hougan said.

While Bitwise is betting on bitcoin’s growth, ProShares has an ETF looking to profit from losses with its Short Bitcoin Strategy ETF. It’s down 42% so far this year and has plummeted almost 70% over the past year.

“To quote Mark Twain, ‘The reports of our death have been quite exaggerated,'” ProShares’ Simeon Hyman told CNBC. “We’re happy to be here, and we think we’re serving as a key alternative.”

Hyman, the firm’s global investment strategist, notes bitcoin’s historic strength has been going on a lot longer than the launch of the spot bitcoin ETFs.

“This is the month of the anniversary of the collapse of crypto-linked financial institutions. Last year, bitcoin was going up then, too,” Hyman said. “I think there are longer-term folks who are starting to come in for asset allocation and diversification purposes.”

Hyman’s ProShares also operates a long-bitcoin ETF: ProShares Bitcoin Strategy ETF. It’s up 55% since Jan.1 and has gained 111% in the past year.

As of Friday evening, bitcoin is up 180% over the past 12 months.

Dick’s, Lennar, Robinhood and more

Press Room — Sat, 16 Mar 2024 12:51:43 +0000

RIVN, MU, ADBE, ULTA and more

Press Room — Sat, 16 Mar 2024 06:12:53 +0000

Bitcoin shows its volatility once again in steep overnight decline, now back below $70,000

Press Room — Sat, 16 Mar 2024 00:01:47 +0000

Bitcoin offices are seen in Istanbul, Turkey, on February 28, 2024.

Umit Turhan Coskun | Nurphoto | Getty Images

Bitcoin suffered a steep drop in overnight trading, showing that the world’s largest cryptocurrency hasn’t shaken its tendency for big drops despite continuing to gain acceptance within the mainstream financial world.

Data from Coin Metrics shows bitcoin was trading above $72,000 late Thursday night before falling to about $67,000 on Friday, a decline of roughly 7%. The price had rebounded to about $68,900 on Friday afternoon.

Bitcoin fell sharply overnight after trading above $72,000 on Thursday.

It was not immediately clear what caused the drop in bitcoin, which trades 24 hours a day.

Bitcoin is still up about 60% year to date, and the overnight drop came from near record highs. The cryptocurrency has climbed over the past few months, in part due to anticipation and then demand from the new bitcoin ETFs that launched in the U.S. in January.

“I think it’s a healthy move. We’re removing some of the leverage that has built up in the system,” Crypto.com CEO Kris Marszalek said on CNBC’s “Squawk Box” on Friday, adding that the selling pressure was likely coming from the options market.

Rapid rallies and steep drops have been a recurring feature of bitcoin’s history. In its previous bull market, bitcoin surged above $68,000 in November 2021 but was trading below the $20,000 mark roughly a year later.

Crypto optimists say that the volatility of the asset class should decline as bitcoin matures. The advent of the bitcoin ETFs, which makes it easier for a wider swath of investors to gain exposure to crypto, could in theory help reduce that volatility.