Better to Get Chinese Stock Exposure Through the iShares MSCI Emerging Markets ETF Instead of MCHI

At $62.9 per share, iShares MSCI China ETF (MCHI) is more than 70% under its February 2021 high. In contrast, the one-month gain of 3.4% shows that there has been a regain of interest by investors for this ETF which mainly provides exposure to the Chinese consumer cyclical, communication, financial, and tech sectors. In comparison, the iShares MSCI Emerging Markets ETF (EEM) which includes about 34% of Chinese assets is up by 3.8%.

Source: Trading View

My objective with this thesis is to understand the reason for this timid rise in the value of MCHI and whether there could be a more sustained upside. I first start with China’s central bank actions which could be beneficial to the ETF’s financial sector holdings.

China’s central bank actions

The People’s Bank of China (PBOC) which had previously taken a restrained approach to monetary stimulus, appeared to change its stance on December 25, when it pledged greater support for the real economy, stating that monetary policy will be more forward-looking and targeted. One of the intended aims would be to “promote the property sector’s healthy growth as well as work to better meet housing demand”. By that time, MCHI shares had reached their lowest point, and the PBOC’s statement did produce a temporary relief for investors.

Interestingly, the central bank’s more recent announcement about lowering interest rates by 10 basis points to 2.85% on Jan 17 constitutes a more concrete step and may preclude other such actions as Chinese authorities try to mitigate the effects of the Omicron variant, and address the downturn in the property sector.

Now, the fact that the PBOC is easing monetary policy despite China’s GDP expanding by 8.1% in 2021, supposes that the economy still faces headwinds. At the same time, the U.S. and the rest of the world are looking more towards tightening. Thus, the PBOC may have a narrow window of opportunity to provide stimulus before it has to start tightening again. Hence, while there are near-term positives for MCHI’s bank and industrial holdings, the longer-term picture looks more uncertain.

Some big investors favor China for investment

Now, REITs constitute just 4% of MCHI’s holdings and the ETF provides exposure to giants like Alibaba (BABA), also referred to as the “Chinese Amazon (AMZN)”. Interestingly, Charlie Munger, the vice-chairman of Berkshire Hathaway (BRK.B) controlled by Warren Buffett has augmented his stake in Alibaba during the recent months. Now, Berkshire is considered as the “epitome of value”, and for this matter, MCHI’s uptrend also somewhat coincides with the rotation from growth to value stocks which has been gaining momentum from the beginning of this year.

Source: iShares.com

Along the same lines, billionaire investor Ray Dalio, who has reportedly raised $1.3 billion for its third China fund according to the Wall Street Journal is highly optimistic that the Asian country is winning the economic race against the U.S.

Now, Dalio’s remarks have sparked some controversy. To this end, those who have invested in Chinese tech and educational technology companies know something about the propensity of authorities in that country to bring in abrupt regulations, such as those implemented as from July last year. These quickly decimated the valuations of stocks operating in these sectors.

Exploring further, Dalio’s remarks are reminiscent of the 2005-2006 period when the U.S. had dropped from 4th to 13th position in the global rankings for broadband internet usage, all at the benefit of Japan and South Korea. At that time some Wall Street gurus predicted that this drop would result in the U.S. losing in productivity and innovation. Eventually, these predictions never materialized and twenty years later, the U.S is home to the biggest tech companies the world has ever known.

Thus, basing an investment solely on the moves of big investors makes no sense and anyone investing in China should be aware of the risks.

The risks

First, the delisting fears whereby NYSE and NASDAQ listed Chinese firms will be all removed and relisted in Hong Kong appear overblown as even if a stock delists from the U.S., possibly as a result of Chinese authorities stepping up supervision, it would eventually be converted to Hong Kong Stock Exchange shares, so one still owns the company. This was the case with ride-hailing group Didi Global (DIDI) at the start of December last year, but news about the event still trimmed some percentage points off MCHI’s share price.

Second, both the US and China are heavily invested in each other as the two countries’ supply chains are highly interdependent. On the one hand, with American citizens depend to a large extent on consumer items from China, and on the other, the latter’s factories depend on capital goods like semiconductor producing equipment from the U.S. Now, semiconductors remain highly sensitive items and the U.S. has brought in legislation which limits the type of chips which can be exported to China, out of fear that the Chinese military may use these to produce sophisticated weapons. These could be used against Taiwan, one of America’s strategic allies in the region.

Better to go for partial exposure through EEM

Therefore, in addition to economic and regulatory uncertainty within China itself, there are geopolitical risks that can impact the country’s trade with the U.S. This can result in MCHI becoming highly volatile. However, China remains the second largest economy in the world and value investors like Charlie Munger and venture capitalists like Ray Dalio have been in the game since a long time. Consequently, from the balanced risk perspective, partial exposure to Chinese stocks, either individually, or through an ETF start to make some sense.

Thus, for those wanting exposure to some of the specific Chinese tech names like Tencent (TCEHY) and Alibaba which are significantly undervalued with respect to their western counterparts, there is the EEM alternative, which is also diversified in Taiwanese, South Korean, Indian stocks as well as other countries. The ETF’s holdings should benefit from record high U.S. inflation favoring cheaper alternative products from emerging economies. This said EEM has a slightly higher expense ratio of 0.68% compared to MCHI’s 0.57% but has shown a better one-month performance.

Best Oversold Stocks to Buy for January 2022

At my research firm, MAPsignals, we track the Big Money looking for trends. We believe Big Money analysis can alert you to market and sector trends. Here’s what daily buys and sells looks like over the last six months. It’s been choppy:

Chart, histogram

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That’s what a rotational market looks like. See the red bars? Those are stocks we believe are getting sold. When red bars run rampant, good names can get crushed. They can become what I call “oversold.”

And that can mean opportunity. Let’s look at five stocks seeing lots of red that appear to be near-term oversold: ROKU, BABA, RH, ZM & ETSY.

Up first is Roku, Inc. (ROKU), the television streaming platform.

Even though great companies’ stocks can be volatile, like ROKU over the past year, they’re worthy of attention, especially on pullbacks. Check out ROKU:

  • 1-month performance (-24.2%)
  • Recent Big Money sell signals

To show you what our Big Money signals looks like on a stock, have a look at all the buys (green bars) and sells (red bars) in ROKU over the past year:

Chart, histogram

Description automatically generated

Clearly, that’s a lot of red since September.

Looking more broadly, Roku has been a high-quality stock for years. The blue bars in the chart below show when ROKU was likely being bought by a Big Money player and also a high-ranking stock, according to MAPsignals.

When you see a lot of blue, like ROKU did in 2019 (when it hovered around half of its current price), it can be very bullish:

Source: www.MAPsignals.com

Those blue signals indicate Big Buying and strong fundamentals. As you can see, Roku’s recent numbers have been strong, making it worth of attention at these levels:

  • 1-year EBITDA growth rate (+18.9%)
  • 1-year sales growth rate (+57.5%)

Next up is Alibaba Group Holding Ltd. (BABA), which is a Chinese technology giant – it’s like China’s Amazon.

Check out these technicals for BABA:

  • 1-month performance (7.5%)
  • Recent Big Money signals

It’s been getting hammered for more than a year:

Chart, histogram

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But now let’s look long-term. These are the top buy signals Alibaba has made since 2016. The Big Money has been all over it for a while:

Source: www.MAPsignals.com

Let’s look under the hood. As you can see, Alibaba has had rock-solid, double-digit growth in earnings and revenue:

  • 1-year EBITDA growth rate = (+17.4%)
  • 1-year sales growth rate = (+44.6%)

Another growth name is Restoration Hardware (RH), which is a luxury home furnishings retailer.

Strong candidates for growth usually have Big Money buying the shares. RH has historically had that. But recently, it’s full of red which could be an opportunity:

  • 1 month performance (-19.6%)
  • Historical Big Money signals

Chart, histogram

Description automatically generated

Below are the blue Big Money signals RH has made since 2015. That’s the JUICE!

Source: www.MAPsignals.com

Now let’s dig deeper. RH’s growth in earnings is impressive, as is its sales growth. I expect more of the same in the coming years:

  • 1-year EBITDA growth rate = (+10.7%)
  • 1-year sales growth rate = (+7.6%)

Number four on the list is Zoom Video Communications, Inc. (ZM), which is a video conferencing platform and popular “stay-at-home” stock.

Here are the technicals important to me:

  • 1 month performance (-12.2%)
  • Historical Big Money signals

Recently, it’s been a choppy downward slide, with more Big Money selling than buying:

Chart, histogram

Description automatically generated

But not long ago, Zoom was a Big Money darling. Below are the Big Money buy signals for ZM since it’s 2019 trading debut:

Source: www.MAPsignals.com

Let’s look under the hood. Despite its price slide, Zoom has been growing earnings nicely and generated huge sales growth:

  • 1-year EBITDA growth rate = (+6.4%)
  • 1-year sales growth rate = (+325.8%)

Our last growth candidate is Etsy, Inc. (ETSY), which is an online marketplace and commerce platform. A strong final quarter in 2021 of Big Money buying has given way to steep declines:

Chart, histogram

Description automatically generated

Check out these technicals:

  • 1-month performance (-24.1%)
  • Historical Big Money signals

Etsy is a high-quality stock since it’s made my Top 20 report. As you can see below, it’s been a Big Money favorite since 2016. Right now, it’s on a pullback and could be an opportunity.

Source: www.MAPsignals.com

Now let’s look below the surface a bit. Earnings have been growing quite well, and there’s been enormous sales growth:

  • 1-year EBITDA growth rate = (+16.2%)
  • 1-year sales growth rate = (+110.9%)

The Bottom Line

ROKU, BABA, RH, ZM & ETSY represent the top oversold stocks for January 2022. They’ve been sold a lot lately…perhaps too much. Strong, fundamentally-sound stocks seeing near-term sell signals are worthy of extra attention because of their long-term potential.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in ROKU, BABA, ZM & ETSY in managed accounts.

Investment Research Disclaimer

https://mapsignals.com/contact/

 

Why Alibaba Stock Is Under Pressure Today

Alibaba Stock Falls As Company Is Reportedly Ready To Sell Its 30% Stake In Weibo

Shares of Alibaba moved closer to yearly lows after a Bloomberg report indicated that it was discussing a sale of its 30% stake in Weibo to a state-owned company.

According to the report, Alibaba wants to sell its stake in Weibo to reduce its influence in the media sphere. The company aims to become less powerful in this important market segment due to the pressure from Chinese authorities, who have been focused on limiting the power of Chinese tech companies this year.

The results of these efforts are highlighted by the performance of Alibaba stock, which has lost more than 50% of its value in 2021 and continues to move lower in the final days of the year. Other Chinese tech stocks have also suffered from sell-offs this year due to regulatory concerns.

What’s Next For Alibaba Stock?

The market remains focused on the activity of Chinese regulators and the company’s attempts to get out of regulatory spotlight. In case Alibaba is able to get back to “business as usual” without the constant pressure from regulators, its shares will get immediate support.

However, it remains to be seen whether Alibaba will have this opportunity in 2022. China has firmly decided to curb the power of tech companies, and the country does not look worried about financial consequences of its moves.

Alibaba stock has declined to levels not seen from 2017, but it is not clear whether speculative traders will rush to purchase the company’s shares. At this point, Alibaba’s valuation hardly matters as markets are focused on additional risks that may emerge in the next year.

However, it should be noted that Alibaba stock has already declined by more than 65% from all-time highs, so some traders could be willing to bet that the stock may have some upside at the beginning of the year when funds establish their positions for 2022.

For a look at all of today’s economic events, check out our economic calendar.

Alibaba’s Vice Chairman Admits Admiration for Cryptocurrencies

The Chinese government has effectively banned numerous cryptocurrency-related activities in the country, including trading and mining. However, that doesn’t mean that Chinese residents don’t admire cryptocurrencies and what they stand for.

Joe Tsai Says he Admires Cryptocurrencies

Joe Tsai, the vice-chairman of Chinese e-commerce giant Alibaba, recently admitted that he admires cryptocurrencies. Popular Chinese journalist and blogger Colin Wu revealed this in his latest tweet.

 

Tsai is the vice-chairman of Chinese tech giant Alibaba and also the owner of the Brooklyn Nets NBA team. Joe Tsai is also the chairman of BSE Global. Cryptocurrencies have drawn admiration from some of the most powerful entrepreneurs in the world over the past few years.

The decentralized nature of cryptocurrencies and other features such as hedge against inflation are some of the reasons why popular figures are investing in Bitcoin and other cryptocurrencies.

Alibaba Not Pro-Crypto

Alibaba, like many other Chinese companies, has been implementing anti-cryptocurrency policies in recent months. The Chinese government has banned cryptocurrency-related activities in the country.

The People’s Bank of China banned financial institutions from processing crypto-related transactions. Hence, making it impossible for cryptocurrency exchanges and other service providers to operate in the country.

The authorities also banned cryptocurrency mining activities earlier this year, leading to a mass exodus of mining farms and private miners out of China. Due to the ban, Alibaba stopped selling cryptocurrency mining hardware on its platforms.

Despite China’s recent ban on cryptocurrency-related activities, the broader cryptocurrency market continues to grow. The total cryptocurrency market is above $2.3 trillion, an indication that the adoption rate is growing.

The cryptocurrency mining hash rate has recovered from the dip following China’s ban on mining activities. According to data captured earlier this month, the hashrate of the Bitcoin network hit more than 179.5 Ehash/s, which is close to the all-time high achieved earlier this year.

Pro-Communist Party News Outlet to Launch an NFT Collection Despite China’s Crypto Stance

The Chinese government has cracked down on cryptocurrency-related activities over the past few years. However, the crackdown intensified this year as the government banned numerous crypto-related activities.

Xinhua to Release News Digital Collectibles

State-run Xinhua News Agency, the biggest media organization in China, has announced that it will release a collection of nonfungible tokens later this week. The NFT collection is set to be launched on Christmas Eve and will be the first news digital collectibles backed by NFTs in mainland China.

According to local reports, Xinhua will launch a total of 110,001 copies of selected news photos for free. There will be 11 collections, each comprising of 10,000 copies and a special edition copy. The NFTs will be available on Xinhua’s mobile app at 8 pm local time on Christmas Eve.

Xinhua said the NFTs would be the country’s first collection of digital journalistic photos issued via a blockchain. The publication said the idea is to imprint digital memories into the metaverse. The digital collection includes photos that journalists took this year, recording historical moments of 2021. Some of the historic moments include the 100th anniversary of the Chinese Communist Party.

China’s recent milestone of administering over 2.7 billion Covid-19 vaccine doses nationwide is another moment that would be captured in the NFTs.

Chinese Entities are Entering the NFT Space Despite Crypto Crackdown

This latest development comes at a time when Chinese entities are entering the NFT space. Yesterday, JD.com became the latest Chinese tech giant to launch a digital collectible platform, following the footsteps of Alibaba and Tencent.

The Chinese government increased its crackdown on cryptocurrency-related activities this year. Various provinces in China, including Sichuan, banned cryptocurrency mining activities, forcing mining farms and other independent miners to move to Europe and North America.

The government also went further to ban cryptocurrency trading activities, effectively eliminating the little crypto exchanges still operating in China. As a result, numerous crypto exchanges discontinued their services to mainland China users.

The Chinese government also went after cryptocurrency data websites Coinmarketcap and Coingecko. The data websites are no longer available to people in mainland China following the ban in September.

JD.com is Latest Chinese Firm to Enter NFT Space

Top Chinese online retailer, JD.com, has launched a blockchain-backed platform to sell “digital collectibles.”

Chinese Retailer JD Launches own NFT Platform

This comes amidst similar developments by other major tech companies in China, such as Alibaba Group and Tencent Holdings, who have also launched similar platforms despite the tough stance of the Chinese government on cryptocurrency and blockchain technology.

Although the collectibles are not labeled as non-fungible tokens (NFT), the 5 digital assets listed by the retailer on its Lingxi platform, which is part of the JD.con main app, are quite similar to NFTs. 

The fintech arm of JD.com, JD Technology, issued 10000 pieces of 5 different digital collectibles, 2000 apiece. All the digital assets are related to JOY Dog, the company mascot valued at 9.9 yuan ($1.55). According to the platform, all the collectibles were sold on Monday morning.

Chinese Interests in NFTs

These developments show Chinese companies and residents’ level of interest in metaverse and Web 3.0 despite the government’s crackdown on crypto.

“NFT” and “web3/web3.0” have become popular search queries in Asia, with interest from countries such as Singapore, South Korea, Hong Kong, and China leading the way. Data from the foremost Chinese search engine, Baidu, also corroborates this interest.

However, the People’s Daily newspaper, the official media for the ruling Chinese Communist Party, recently spoke against the heightened interest in NFTs. It questioned whether it could be another “zero-sum game hyped by cryptocurrency investors and capital.”

While regulators in China have placed a ban on Cryptocurrencies, there are no laws on NFT yet, which means companies in the country still have room to connect their business plans to the concept. But the growing popularity of metaverse-themed collectibles might lead to some regulations. 

Several Chinese firms have embraced digital collectibles directly and indirectly. The media company 36kr recently gifted 1,124 metaverse-themed digital assets at a conference in Shenzhen on Wednesday.

What Fuels The Stock Market Now?

An outstanding earnings season and signs that economic activity are picking back up are clashing with unrelenting inflation, difficulty finding more labor, and continued supply chain logjams.

Inflation

Most insiders believe inflation has further to climb, though the consensus right now is calling for a peak around the beginning of Q2 next year. With big shopping holidays in the U.S. coming up, followed closely by Chinese New Year at the beginning of February 2022, shipping and transportation logjams aren’t expected to find much relief in the near-term.

Meaning inflation pressures will likely continue. How far inflation will climb as the severe supply chain dislocations drag on is a huge unknown. Some Wall street investors are concerned that the Fed might feel compelled to end its asset purchases and hike rates much sooner than expected if monthly inflation keeps accelerating.

What might be even more worrisome is the fear that some of these price increases could be more permanent in nature, so how much overall inflation will pull back in the long run is starting to become a bigger talking point.

Demand and supply chain

Supply chain insiders warn that many companies are front-loading inventories in an effort to avoid running out of critical materials, which could bite in the long run if demand suddenly drops off. A lot of manufacturers have also increased production capacity for products that currently face shortages. The risk is that once back orders are filled and demand retreats, stockpiling and excess production could result in an oversupply situation in some areas, along with much lower profits and total revenues.

Another worry right now is that demand starts to retreats due to the current inflationary environment especially with everyday items like food and gasoline costing substantially more. That has investors anxious to see the latest Consumer Sentiment read being released today which is expected to edge higher vs. last month.

Investors are closing tracking the inflation expectation gauges in the report as typically the higher those climb, the more consumers tend to pull back on spending.

Data to watch next week

Looking towards next week, the economic data flow picks up with key releases including Empire State Manufacturing on Monday; Retail Sales, Import/Export Prices, Industrial Production, Business Inventories, and the NAHB Housing Market Index on Tuesday; Housing Starts and Building Permits on Wednesday; and the Philadelphia Fed Index on Thursday.

On the earnings front, Q3 reporting is just about wrapped up with companies in the S&P 500 index reporting revenue growth of more than +17%, the second highest on record behind only Q2 2021’s growth of over +25%, according to FactSet. Earnings themselves are on track to exceed +40%. AstraZeneca is today’s earnings highlight. Earnings next week include several big retailers which will provide some more clues as to how consumer demand is trending as well as updates on supply chain struggles. Investors are also keen to hear how holiday hiring is going.

Key earnings reports next week will include Advanced Auto Parts, Lucid, Tyson, and Warner Music on Monday; Home Depot and Walmart on Tuesday; Bath & Body Works, Cisco, Lowe’s, NVIDIA, Target, TJX, and Victoria’s Secret on Wednesday; Alibaba, Applied Materials, Intuit, Kohl’s, Macy’s, Palo Alto Networks, Ross Stores, and Williams Sonoma on Thursday; and The Buckle and Foot Locker on Friday.

Checking in on the geopolitical front, the U.S. is warning that Russia may be planning a full-scale invasion of Ukraine. U.S. officials say they’ve briefed their EU counterparts about concerns over a possible military operation, citing a buildup of Russian troops along the Ukraine border. Tensions are boiling still in Belarus and Russia is fanning the flames on that front as well.

SP500 commentary

ES ##-## (Daily) 2021_11_14 (1_49_54 AM)

The bearish accumulation divergence played very well last week. Moreover, the Advance Decline Line is weaker than the price is. It is also a negative factor in the short term. Potentially SP500 started the formation of the bull flag. Finding support at lower levels would be a great buying point with a target of 4800.

The major economic indicators are still bullish despite rising inflation. 4500 level is a psychological level bears will target if 4600 fails. Current levels can be considered only for intraday trading. At the same time, lower levels are needed to get a good risk/reward ratio for swing traders.

For a look at all of today’s economic events, check out our economic calendar.

Alibaba Propels High After Jack Ma Visits Europe

As a result of reports that Alibaba’s founder Jack Ma traveled to Europe and the release of a new chip, Alibaba’s Hong Kong shares rose as much as 9% on Wednesday.

Chinese newspaper East Week reported on Tuesday that Ma had been on a sailing vacation with his billionaire business partners and friends in Spain over the weekend. Several confidential sources were cited in the report.

A South China Morning Post article reported later that Ma was in Spain for a study tour related to agriculture and technology.

The whereabouts of Ma have been the subject of intense discussion since he disappeared from the public eye last October after appearing to criticize Chinese regulators.  Market pundits had earlier predicted that Alibaba’s share price will increase if Jack Ma was no longer missing.

An IPO for Ma’s fintech company Ant Group was subsequently halted. Regulators have also been closely watching China’s technology sector since then.

Technology companies in China have seen their valuations wiped out by billions of dollars. Alibaba’s U.S.-listed shares have lost more than 23% so far this year.

Alibaba‘s shares surged on the day Ma reappeared for the first time since his October speech.

As part of its cloud business, Alibaba also announced some news this week. As part of an effort to enhance its cloud computing capabilities, the company launched a new chip on Tuesday.

Alibaba’s future growth will be dependent on the cloud. Cloud services currently make up 8% of Alibaba’s revenue.

Besides expanding overseas, the e-commerce giant announced on Wednesday that it will open new data centers next year in South Korea and Thailand.

Stocks Rise as Stagflation Fears and Energy Prices Ease

European bourses rallied off 2-1/2-month lows and Wall Street also jumped as steady crude oil and natural gas prices offered relief after a shock 4% drop in German industrial production highlighted supply chain disruptions.

German output of cars and auto parts slid 17.5% in August due to supply shortages of intermediate products, providing a telling sign of the constraints posed by the combination of rising inflation and moribund growth, or stagflation.

But the number of Americans filing new claims for jobless benefits fell the most in three months last week, suggesting the U.S. labor market recovery was regaining momentum after a recent slowdown as COVID-19 infections subside.

Stagflation fears are overdone, and investors are overly focused on weaker economic growth and higher inflation though the long-term market trend is higher, said Bill Sterling, global strategist at GW&K Investment Management.

“The journey ultimately is to a global expansion that continues intact, which recently has had this stagflation tinge to it,” he said.

The U.S. Senate took a step toward passing a $480 billion increase in Treasury Department borrowing authority, a move that would avert a catastrophic debt default later this month but set up another partisan showdown in early December.

MSCI’s all-country world index rose 1.5%, while the broad STOXX Europe 600 index closed up 1.6%.

On Wall Street, the Dow Jones Industrial Average rose 1.5%, the S&P 500 added 1.4% and the Nasdaq Composite moved up 1.6%.

Some of the negative pressures have been mitigated as investors reduced positions on concerns about a “what if” scenario concerning the debt ceiling, said Michael James, managing director of equity trading at Wedbush Securities.

“There’s still a number of black clouds hanging over the market, but the skies have cleared up a little bit in the last two days,” James said.

Euro zone bond yields fell as energy prices declined, recovering from a sharp sell-off in debt markets a day earlier that had been driven by inflationary concerns.

Yields on the benchmark German 10-year bund slid 0.3 basis point to -0.187%.

U.S. Treasury yields rose as traders awaited U.S. employment data for September on Friday. Volatility at the shortest end of the curve eased in the wake of a potential plan to avoid a default on government debt this month.

Investors anticipate employment figures that are near consensus will lead the Federal Reserve at its November meeting to indicate when it will begin tapering its massive stimulus program.

The benchmark 10-year U.S. Treasury yield was last up 4.5 basis points at 1.5654%.

Oil prices shook off initial losses to turn positive as a possible release of emergency U.S. reserves and Russia’s offer to help Europe tide over an energy crisis did little to assuage concerns of tight supply heading into the winter season.

Brent crude rose 1.1% to settle at $81.95 a barrel. U.S. crude settled up 1.1% at $78.30 a barrel.

Natural gas prices are still up more than fivefold since the start of the year, and the huge increase over recent weeks has attracted attention from policymakers across the world.

U.S. gold futures settled down 0.2% at $1,759.20 an ounce.

Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan closed up 1.8%, its biggest one-day rise since August.

Hong Kong led Asia’s gains with a 3% bounce off a year low. South Korea’s Kospi gained 1.8% and Japan’s Nikkei firmed 0.5% to snap eight days of losses.

U.S.-listed Chinese stocks jumped, mirroring a rally in Hong Kong shares and as concerns about U.S.-Sino trade relations and Evergrande’s debt crisis appeared to ease.

IShares China Large-Cap ETF and iShares MSCI China ETF both rose about 4.0%, while e-commerce giant Alibaba was on track for biggest one-day gain since April.

The dollar eased from 12-month highs hit last month against a basket of currencies and held at a 14-month high against the euro.

The dollar index, which tracks the greenback versus a basket of six currencies, fell 0.01% to 94.214.

For a look at all of today’s economic events, check out our economic calendar.

The euro was down 0.05% at $1.1550, while the yen traded up 0.19% at $111.6200.

(Reporting by Herbert Lash, additional reporting by Marc Jones in London, Alun John in Hong Kong; Editing by Chizu Nomiyama, Dan Grebler, Chris Reese and Cynthia Osterman)

Why Alibaba Stock Is Up By 9% Today

Alibaba Stock Gains Ground On News About U.S. – China Virtual Summit

Shares of Alibaba gained strong upside momentum amid optimism on U.S. – China relations.

Recent reports indicated that President Joe Biden and President Xi Jinping will have a virtual summit in 2021. This summit will be a great opportunity to ease tensions between the world’s two biggest economies, and Chinese stocks are reacting accordingly.

Alibaba stock has been declining throughout 2021 as Chinese authorities put pressure on various industries, from tutoring to online gaming, in order to solve current social problems. Fears about the potential default of China’s developer Evergrande and smaller developers have also hurt Chinese stocks, including Alibaba. Previous problems of Alibaba’s founder Jack Ma also served as a material bearish catalyst for the stock.

What’s Next For Alibaba Stock?

Currently, analysts expect that Alibaba will report earnings of $9.3 per share this year and $10.82 per share in the next year, so the stock is trading at roughly 14 forward P/E which is cheap for the current market environment.

However, earnings estimates have been trending down in recent months, which is not surprising given the recent developments in China. At this point, the key question is whether the stock has declined enough to become attractive for value-oriented investors.

It should be noted that Alibaba shares reached highs near the $320 level back at the end of October 2020, so the stock lost half of its value in just one year. Most likely, traders who are comfortable with the risks that are currently present in China will find that Alibaba shares are attractive at current levels. For others, it’s a more challenging question as earnings estimates may move further down in case the business climate in China continues to deteriorate.

For a look at all of today’s economic events, check out our economic calendar.

Chinese Tech Execs Support ‘common prosperity’, Helping SMEs at Internet Summit

Alibaba Group CEO Daniel Zhang, a prime target of the broad crackdown, told a conference organised by China’s top internet regulator that his company’s $15 billion plan to boost common prosperity in China was “steadily advancing”.

Common prosperity – China’s term for narrowing the gap between rich and poor – is “not just a number”, Zhang said, stressing the importance of helping local talent in poor regions to “teach a man to fish”.

The World Internet Conference in Wuzhen in eastern China is organised by the Cyberspace Administration of China. The conference in the past has drawn such foreign executives as Tim Cook and Sundar Pichai, but overseas attendance was hurt this year by COVID-19 protocols and souring U.S.-China relations.

Qualcomm Inc CEO Cristiano Amon, Intel Corp CEO Patrick Gelsinger and Tesla Inc founder Elon Musk provided taped remarks.

China’s regulatory crackdown has hit sectors from cryptocurrencies and the internet, to entertainment, education and property, wiping hundreds of billions off the market value some of its largest companies and putting investors on alert over who may be next.

The listing of Alibaba’s financial affiliate was halted and the e-commerce giant was fined a record $2.75 for anti-competitive behaviour.

Policymakers and executives at the conference did not address the crackdown directly, though Liu He, China’s vice premier, said the digital economy can at times stifle competition. Common prosperity has re-emerged as a slogan this year after President Xi Jinping used it in public remarks.

Xiaomi Corp CEO Lei Jun called on large tech companies to help more small and midsize firms, saying they must “not let any group fall behind”.

In videotaped remarks, Neil Shen, the founding partner of Sequoia Capital China, which has backed tech giants such as ByteDance and Didi Global Inc, praised a planned tech bourse in Beijing as helping smaller firms.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Josh Horwitz; Editing by William Mallard)

In Fresh Regulatory Move, China Tells Tech Giants to Stop Blocking Rivals’ Links

The comments, made by the Ministry of Industry and Information Technology (MIIT) at a news briefing, mark the latest step in Beijing’s broad regulatory crackdown that has ensnared sectors from technology to education and property and wiped billions of dollars off the market value of some of the country’s largest companies.

China’s internet is dominated by a handful of technology giants which have historically blocked links and services by rivals on their platforms.

Restricting normal access to internet links without proper reason “affects the user experience, damages the rights of users and disrupts market order,” said MIIT spokesperson Zhao Zhiguo, adding that the ministry had received reports and complaints from users since it launched a review of industry practices in July.

“At present we are guiding relevant companies to carry out self-examination and rectification,” he said, citing instant messaging platforms as one of the first areas they were targeting.

He did not specify what the consequences would be for companies that failed to abide with the new guidelines.

The MIIT did not name any companies, but the 21st Century Business Herald newspaper reported on Saturday that Alibaba Group Holding Ltd and Tencent Holdings Ltd were among the firms told to end the practice by an unspecified time last week.

Shares in Alibaba Group and Tencent Holdings fell on Monday by over 6% and 3% respectively against a 3% decline in the Hang Seng Tech Index.

The practice targeted by the MIIT is common.

Tencent restricts users from sharing content from ByteDance-owned short video app Douyin on Tencent’s instant messaging apps WeChat and QQ. In February, Douyin filed a complaint with a Beijing court saying that it constituted monopolistic behaviour. Tencent has called those accusations baseless.

In other cases, Alibaba’s Taobao and Tmall e-commerce marketplaces do not allow Tencent’s payment service WeChat Pay to be used as a payment option.

Tencent said it supported the MIIT’s guidance and would make the necessary changes in phases.

An Alibaba spokesperson referred Reuters to remarks made by CEO Daniel Zhang on Aug. 3, when he said rectification was “highly necessary”.

“Forced cracks in China’s walled gardens has the potential to re-write China’s digital advertising and e-commerce landscapes,” said Michael Norris, research and strategy manager at Shanghai-based consultancy AgencyChina.

“In the short term, all eyes will be on Tencent as it comes to grips with what it means to open WeChat to Alibaba and ByteDance.”

The MIIT also said on Monday that China had “too many” electric vehicle (EV) makers and the government will encourage consolidation.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Brenda Ghoh and Shen Yan; Editing by Christopher Cushing, Kenneth Maxwell and Ana Nicolaci da Costa)

Global Equities Hit Record Highs; Oil Closes Higher

MSCI’s benchmark for global equity markets hit a record. The S&P 500 .SPX and Nasdaq also rose to all-time highs as dovish remarks from the Federal Reserve last week bolstered optimism in an economic rebound and eased fears of a sudden tapering in monetary stimulus.

The Dow Jones Industrial Average rose 5.8 points, or 0.02%, to 35,461.6, the S&P 500 gained 26.47 points, or 0.59%, to 4,535.84 and the Nasdaq Composite added 154.43 points, or 1.02%, at 15,283.93 by 3:06 p.m. ET (19:06 GMT).

The Europe-wide STOXX 600 rose 0.07% and was on course to end August with a rise of more than 2% – its seventh month of gains in what would be its longest such winning run in over eight years.

Asian stocks hit a two-week high and Japan’s blue-chip Nikkei closed up 0.5%.

Positive sentiment in equity markets was underpinned by Friday’s Jackson Hole speech by Fed Chair Jerome Powell in which he said tapering of stimulus measures could begin this year, but added the central bank would remain cautious.

“The questions now should pivot from the timing of the taper to its speed. How fast will the Fed reduce its purchases from the current $120 billion monthly rate?” said Christopher Smart, chief global strategist & head of the Barings Investment Institute.

“That will likely be determined by some of the data coming in this week, including U.S. consumer confidence and jobs, but also European inflation and Chinese PMIs.”

With the market focused on the “medium-term,” traders have seen any weakness as buying opportunities, said Pictet Wealth Management strategist Frederik Ducrozet.

“We are going from great to good – the outlook is not as great as it was earlier this year but it’s still consistent with further equity market gains,” he added.

Chinese shares remained the outlier, with the U.S.-listed shares of gaming firms such as NetEase Inc dropping on signs of further regulation.

Chinese regulators cut the amount of time players under the age of 18 can spend on online games to an hour on Fridays, weekends and holidays, state media reported.

The new rules come amid a broad crackdown by Beijing on China’s tech giants, such as Alibaba Group and Tencent Holdings that has hammered Chinese shares traded at home and abroad.

OIL OFF HIGHS

Oil prices edged higher but were off a four-week high as Hurricane Ida weakened into a Category 1 hurricane within 12 hours of coming ashore.

Nearly all U.S. offshore Gulf oil production, or 1.74 million barrels per day, was suspended in advance of the storm.

Focus turned to a meeting of the Organization of the Petroleum Exporting Countries and its allies on Wednesday, with sources telling Reuters the group is likely to keep its oil output policy unchanged and continue with its planned modest production increase.

Brent crude futures settled up 71 cents at $73.42 a barrel after touching four-week highs. They rose more than 11% last week in anticipation of disruptions to oil production from Hurricane Ida.

U.S. oil rose 47 cents to $69.21 a barrel, having jumped a little more than 10% over the last week.

“Hurricane Ida will dictate oil’s near-term direction,” said Jeffrey Halley, senior market analyst at OANDA. “If Ida weakens and its path of destruction is lower than expected, oil’s rally will temporarily lose momentum here.”

In bond and currency markets, it was the Fed’s dovish tone that held sway, with Friday’s key U.S. jobs report in focus.

U.S. Treasury yields retreated as the market looked ahead to the release this week of the August employment report and the possibility it could factor into the timing of the Fed’s tapering announcement.

The 10-year U.S. Treasury yield was around 1.2852% , while the dollar index – which measures the greenback against a basket of currencies – edged higher after touching a two-week low.

The euro edged up to $1.18, off a three-week peak touched earlier in the session.

“If we get a (U.S. payrolls) number close to a million that would increase the odds of taper being announced in September, but if the number is line with expectations then there’s a 50-50 chance for a September move,” said Vasileios Gkionakis, global head of FX strategy at Lombard Odier Group.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Chris Prentice and Dhara Ranasinghe; additional reporting by Alex Lawler in London; editing by Mark Potter, Bernadette Baum, Pravin Char and Richard Chang)

S&P 500, Nasdaq nab all-time closing highs as Powell soothes taper fears

All three indexes posted weekly gains.

“I see two things happening,” said Mike Zigmont, head of research and trading at Harvest Volatility Management in New York. “I see a reflexive dip-buying validation and I see the market embracing a dovish Fed.”

Regarding the indexes’ recent string of all-time highs, including the S&P 500’s 52nd record high close so far this year, Zigmont said “The march north has been very consistent. The drawdowns are super shallow, and the recoveries are very fast.”

In his prepared remarks, Powell stopped short of providing a clearer picture regarding the timing of the central bank’s tapering of asset purchases or hiking interest rates, the key elements of its dovish monetary policy aimed at helping the economy recover from the pandemic recession.

Indeed, Powell appeared to strike a more dovish tone than other Federal Open Market Committee (FOMC) officials, including St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester, who said earlier in the day that they expect the tapering process to begin soon and wind down next year.

“The market is very happy that the Fed is pumping more liquidity into the economy every month,” Zigmont added. “The Fed is enabling asset prices to climb and the market is pleased with that.”

Economic data released on Friday delivered, in large part, precisely what economists expected – a pullback in consumer spending and sentiment due to the COVID-19 Delta variant, and signs that the current wave of price spikes will not morph into long term inflation, inline with Fed assurances.

The Dow Jones Industrial Average rose 242.68 points, or 0.69%, to 35,455.8, the S&P 500 gained 39.37 points, or 0.88%, to 4,509.37 and the Nasdaq Composite added 183.69 points, or 1.23%, to 15,129.50.

Ten of the 11 major sectors of the S&P 500 advanced, with energy shares enjoying the largest percentage gain.

Chipmaker Nvidia’s shares rose 2.6% after sources said it would likely seek antitrust approval from the European Union to take over British chip designer Arm.

Workday Inc jumped 9.1% as brokerages upped their price targets after the company beat second-quarter revenue estimates.

Stay-at-home darling Peloton Interactive Inc slid 8.5% following its profit warning and its announcement it was being probed by U.S. regulators over an accident involving the safety of its treadmills.

Beijing continued its crackdown on its tech companies, threatening to curb their ability to list on U.S. exchanges.

U.S.-listed shares of Alibaba Group and Tencent Music Entertainment fell 3.5% and 1.4%, respectively, while the Invesco Golden Dragon ETF dropped 1.1%.

Advancing issues outnumbered declining ones on the NYSE by a 5.21-to-1 ratio; on Nasdaq, a 3.40-to-1 ratio favored advancers.

The S&P 500 posted 60 new 52-week highs and one new low; the Nasdaq Composite recorded 132 new highs and 37 new lows.

Volume on U.S. exchanges was 8.67 billion shares, compared with the 8.95 billion average over the last 20 trading days.

(Reporting by Stephen Culp; Additional reporting by Devik Jain in Bengaluru; Editing by Marguerita Choy)

Half a Trillion Dollars Wiped from China Markets in a Week as Clampdowns Shatter Confidence

More than $560 billion in market value has been wiped off Hong Kong and mainland China exchanges in a week as funds capitulate out of once-favoured stocks, unsure which sectors regulators will target next.

The Hang Seng fell 1.8% and its weekly drop of 5.8% was the largest since the height of the pandemic panic in financial markets in March 2020.

Stocks in Shanghai also fell, while investors sold risky corporate debt and the Chinese currency. The yuan was poised for its biggest weekly loss in two months as investors rushed to safety amid global coronavirus concerns.

U.S.-listed shares of China-based tech-related companies gained ground as bargain hunters took advantage of recent sell-offs resulting from Beijing’s ongoing regulatory crackdown, which has wiped half a trillion dollars from Chinese markets this week.

Alibaba Holding Group, Tencent Music Entertainment Group, Didi Global and iQiyi Inc advanced between 1% and 4.5%.

“There isn’t really one trigger, but many bits and pieces that add to the narrative to stay away from China,” said Dave Wang, a portfolio manager at Nuvest Capital in Singapore.

“Almost on a daily basis you have negative news coming out, so it forms the impression there’s no end in sight.”

This week alone China announced tougher rules on competition in the tech sector, summoned executives at property developer Evergrande to warn them to reduce the firm’s massive debt and state media reported looming regulations for liquor makers, a favourite tipple for foreign fund managers.

On the heels of crackdowns spanning from steelmaking to e-commerce and education, the moves are sapping faith in a market that seems yet to find a floor after months of selling.

The Shanghai Composite dropped 1.1% to its lowest close in more than two weeks on Friday and blue chips fell 1.9%, with liquor makers leading losses.

China Telecom was a rare bright spot and surged on its debut in Shanghai.

The epicentre of the selloff has been the tech sector, which had been popular with foreign investors who are now afraid they can’t quantify the regulatory risk and are selling in droves.

Hong Kong’s Hang Seng Tech index, comprised of many one-time darlings, dropped 2.5% on Friday to a new record low and has shed about 48% since February.

E-commerce titan Alibaba’s Hong Kong shares fell 2.6% to a record closing low and have halved from an October peak. Internet giant Tencent touched a 14-month low and food deliverer Meituan hit a one-year low.

“There’s a herd mentality at the moment,” said Louis Tse managing director of Hong Kong brokerage Wealthy Securities. “People see one person selling and then they do the same.”

As a result, Alibaba now commands its lowest price-to-earnings ratio since its listing in New York in 2014 and Tencent its lowest in more than eight years.

“Tencent and Alibaba wouldn’t be trading around 20 times earnings if the general mood around them was optimism,” said Tariq Dennison, managing director at GFM Asset Management in Hong Kong, who was actually a buyer of both on Friday.

Adding to regulatory worries are concerns that China’s economic recovery is losing momentum and debt risks are rising, as data points to slowing demand and factory output and suggests authorities are cracking down at a delicate time.

Policymakers’ persistence with curbing red-hot property prices, for example, has markets on edge and corporate credit fell further on Friday with the news that heavily-indebted Evergrande had been rebuked by regulators.

The yuan has fallen through its 200-day moving average against a broadly rising U.S. dollar and weakened past the psychological 6.5 per dollar mark, hitting a three-week low of 6.5059 during onshore trade on Friday.

The Hong Kong dollar sits close to its weakest in a year and a half, also suggesting money is moving out of the city.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Tom Westbrook in Singapore, Alun John in Hong Kong and Samuel Shen in Shanghai; Additional reporting by Stephen Culp in New York; Editing by Ana Nicolaci da Costa, Kim Coghill and Nick Zieminski)

Rocked by Sexual Assault Allegation, Alibaba Launches Investigation, Suspends Several Staff

The woman’s account, published via an eleven-page PDF that went on to circulate widely online, prompted a social media storm on China’s Twitter-like microblogging website Weibo. Police in the city of Jinan said on Sunday morning that they were investigating the incident.

Alibaba Group has a zero-tolerance policy against sexual misconduct, and ensuring a safe workplace for all our employees is Alibaba’s top priority,” a spokesperson said in a statement.

“We have suspended relevant parties suspected of violating our policies and values, and have established a special internal task force to investigate the issue and support the ongoing police investigation.”

Late on Saturday, a female Alibaba staffer’s account of an incident she said took place while on a business trip went viral on Chinese social media, with responses to her account figuring among the top-trending items on Weibo as of Sunday morning.

The woman, who did not reveal her identity, alleged that her boss coerced her into going on a business trip with him to meet one of her team’s clients in the city of Jinan, about 900 kilometres (560 miles) from Alibaba’s headquarters in Hangzhou.

According to the woman, on the evening of July 27, the client kissed her. After consuming alcohol, she woke up in a hotel room the following day with her clothes removed and no memory of what happened the evening before.

CCTV footage she obtained from the hotel showed that her boss entered the room four times over the course of the evening, she added.

Upon returning to Hangzhou, she said she reported the incident to human resources and upper management on Aug. 2, asking her boss be fired and for time off. While human resources initially agreed, ultimately they did not follow through, she said.

Alibaba CEO Daniel Zhang responded to the uproar late on Saturday on the company’s internal message board, according to a person who saw the post, though the company did not officially disclose the material posted on its intranet .

“It is not just Human Resources who should apologize. The related business department managers also hold responsibility and should apologize for their silence and failure to respond in a timely manner,” Zhang wrote.

“Starting from me, starting from management, starting from human resources, everyone at Alibaba must empathize, reflect, and take action.”

Alibaba announced on its intranet that the woman’s supervisor, her contact at human resources, and direct management of those individuals had been placed on suspension, according to the person who saw the posts.

Last month another sex scandal rocked China when Chinese-Canadian pop singer Kris Wu was publicly accused by an 18-year-old Chinese student of inducing her and other girls, some of them under the age of 18, to have intercourse with him.

The incident revived discussions of the #MeToo movement in China, and police in Beijing subsequently arrested Wu, who has denied the allegations.

(Reporting by Josh Horwitz in Shanghai and Hallie Gu in Beijing; Editing by Simon Cameron-Moore)

Key Events This Week: US Jobs Report Front and Centre

Monday, August 2

Tuesday, August 3

Wednesday, August 4

Thursday, August 5

Friday, August 6

For the US nonfarm payrolls print that’s due on 6 August, markets are forecasting that 900,000 jobs were added last month. Anything higher than 850,000 would be the highest NFP print since August 2020 and would score a third consecutive month of faster jobs growth.

A larger-than-expected July jobs increase (think closer to one million jobs added) could translate into more upside for the equally-weighted US dollar index, and put it on a path back towards its year-to-date high.

Otherwise, a lacklustre print this Friday could ensure that this dollar index remains below its 200-day simple moving average for a while longer and pare more of its gains since the hawkish surprise at the June FOMC meeting.

Markets still guided by Fed’s tapering predictions

Arguably, the biggest theme in play across global financial markets right now is the predictions over the Fed’s tapering.

Considering the robust US economic recovery, the US central bank is expected to ease up on its bond purchases that have supported financial markets since the pandemic. Exactly when the Fed will embark on such a process, at what pace (how quickly it will unwind its bond purchases), and under what economic conditions – all those remain vague at this point in time.

What we do know is that, following last week’s July FOMC meeting, the Fed reiterated that it wants to see “substantial further progress” in the ongoing US economic recovery before it will taper. However, it remains unknown exactly what constitutes “substantial” enough for the Fed.

Conflicting tapering cues within FOMC and markets

This past Friday (30 July), Fed Governor Lael Brainard reminded global investors that the US jobs market is still a long way off from pre-pandemic levels. She highlighted the “shortfall of 6.8 million jobs” that needs to be restored before the Fed tapers.

On the other hand, there was the famed hawk, Federal Reserve Bank of St. Louis President James Bullard, who also on Friday expressed his desire for the tapering to begin this fall and wrapped up by March 2022. Most economists expect the tapering to only commence next year.

Amidst all these conflicting views, it remains to be seen how the forthcoming economic data guides, not just the consensus within the FOMC, but also investors’ predictions for when the tapering will actually commence.

More gains for stocks likely until tapering draws closer

As long as the Fed’s ultra-accommodative stance remains intact, that should allow for more upside for US equities in the interim. The S&P 500 is striving to carve out a sustainable presence above the psychologically-important 4400 mark, a feat made more achievable considering that bond yields have been relatively subdued of late.

However, a stellar US jobs report this Friday would shorten the runway for equity bulls, as an NFP print that far exceeds the media forecast (900k) would ramp up markets expectations that the Fed would have to ditch its dovish stance sooner rather than later.

Written by Han Tan, Market Analyst at FXTM

For more information, please visit: FXTM


Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

A Post-Covid Hangover – Should You Worry About Your Portfolio?

Amazon executives noted shifting consumer habits as the pandemic eases and people become more mobile. Amazon forecasted the next quarter’s sales at between $106 billion and $112 billion, compared to Wall Street expectations for right around $119 billion.

Amazon’s projections would still represent growth of +10% to +16%. Keep in mind, bears are also pointing to ongoing fears of supply chain hiccups, higher-trending inflation, and new coronavirus outbreaks. Earnings come at a busy pace again today with results from Caterpillar, Cerner, Chevron, CNH Industrial, Colgate Palmolive, Enbridge, Exxon Mobil, Johnson Control, and Procter & Gamble.

The worry on Wall Street is that this new normal rate of growth will be slower than many analysts and trading firms are forecasting coupled with higher inflation and or supply chain dislocations corporate profits could fall under some pressure or in this case be less than Wall Street is forecasting for the next few quarters. Bulls expect more consumer spending will shift from goods and pandemic-related services (delivery, video games, cloud/collaboration software) but are still betting on pent-up demand for things people missed out on during lockdowns, as well as goods and services that are currently in short supply.

Data to watch

Updated inflation data is also on tap with the ISM Manufacturing Index on Monday and the Services Index on Wednesday.

There will be plenty more earnings next week too, including Simon Properties and Zoom on Monday; Activision Blizzard, Alibaba, Amgen, Clorox, ConocoPhillips, Eli Lilly, Fidelity, Match Group, Monster Beverage, Occidental Petroleum, and Phillips 66 on Tuesday; Allstate, CVS, Etsy, General Motors, Kraft Heinz, Marathon Petroleum, MetLife, MGM Resorts, Rocket Companies, Roku, Trane, and Uber on Wednesday; Adidas, AMC, Carvana, Cigna, Cloudflare, Corteva, Duke Energy, Kellogg, Moderna, Nintendo, Novo Nordisk, Siemens, Square, Wayfair, Zillow, and Zoetis on Thursday; and Dish Network, Dominion Energy, and DraftKings on Friday.

Insider Accumulation

ES ##-## (Daily) 2021_08_01 (19_25_02)

I have mixed feelings about SP500. There are a few signs of weakness. However, it might be the result of low summer activity. Advance-Decline Line is clearly bearish. Insider Accumulation is also not that strong. Moreover, the Volatility Index is very low and potentially it could bring a pullback. In any case, SP500 futures failed to close the week above Gann resistance. And that is also a negative sign.

The Federal Reserve policy is still supportive. But keep in mind, that SP500 has rallied around 100% since the pandemic bottom without any pullback. And the retest of key support zones near 4200 and 4000 is realistic.

On the other hand, the continuation of the rally is also possible but only if price sustains above 4400. If that happens, bulls will target 4500 and 4600 in extension.

Earnings to Watch Next Week: Ferrari, Alibaba, Allstate and Nice Systems in Focus

Earnings Calendar For The Week Of August 2

Monday (August 2)

IN THE SPOTLIGHT: FERRARI

The luxury sports car maker Ferrari is expected to report earnings of $1.26 per share for the second quarter, representing a 3,050% increase over $0.04 per share a year earlier.

The company, known for its prancing horse logo, would post revenue growth of over 107% to around $1.3 billion. According to ZACKS Research, the company has beaten earnings per share (EPS) estimates in three of the last four quarters.

“Growth potential and strong execution. Global shipments of >11k units in 2021, growing at a 9.1% CAGR to 2030 ending at ~22k shipments. Adj. EBITDA margins rise to 35% in 2021 on improved mix and pricing after launching 5 new models in 2020 and 2 in 2021,” noted Adam Jonas, equity analyst at Morgan Stanley.

Ferrari trades at a justified premium to luxury brands, in line with luxury leader, Hermes, albeit with more opportunity to grow organically via: new customers, new segments and geographically in China & Asia-Pac, as well as exhibiting a unique moat with a world-renowned brand and a 12+ month customer order book.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 2

Ticker Company EPS Forecast
HSBA HSBC Holdings £0.13
HSBC HSBC $0.86
ON ON Semiconductor $0.49
GPN Global Payments $1.90
L Loews $0.83
CNA CNA Financial $1.12
TKR Timken $1.44
SPG Simon Property Group $1.12
SBAC SBA Communications $0.66
PXD Pioneer Natural Resources $2.56
WMB Williams Companies $0.28
AWK American Water Works $1.08
ANET Arista Networks $2.55
O Realty Ome $0.38
TTWO Take Two Interactive Software $0.90
NXPI NXP Semiconductors $2.31
ITUB Itau Unibanco $0.12
EMN Eastman Chemical $2.35
FANG Diamondback Energy $2.23
CLR Continental Resources $0.55
BRKR Bruker $0.38
TREX Trex $0.53
MOS Mosaic $1.00
OHI Omega Healthcare Investors $0.44
VNO Vornado Realty $0.14
VRNS Varonis Systems -$0.03
COLM Columbia Sportswear -$0.07
LEG Leggett & Platt $0.54
NSP Insperity $0.66
AWR American States Water $0.71
KMT Kennametal $0.40
RMBS Rambus $0.31
UCTT Ultra Clean $0.97
OTTR Otter Tail $0.54
ACHC Acadia Healthcare $0.63
BRX Brixmor Property $0.14
OGS One Gas $0.52
WWD Woodward $0.97
RIG Transocean -$0.16
RACE Ferrari $1.26
BCC Boise Cascade $4.75
RARE Ultragenyx Pharmaceutical -$1.31
SANM Sanmina $0.91
TGTX TG Therapeutics -$0.55

Tuesday (August 3)

IN THE SPOTLIGHT: ALIBABA

China’s Alibaba Group Holding, the largest online and mobile e-commerce company in the world, is expected to report its fiscal first-quarter earnings of 1.86 yuan per share, up from 1.85 yuan per share seen in the same period a year ago.

China’s biggest online commerce company’s revenue to surge more than 35% to 209.928 billion yuan. The company has beaten earnings per share (EPS) estimates in three of the last four quarters.

“All-in investments in domestic consumption, globalization and technology are likely to weigh on profitability but pave the way to reach long-term target of 2bn global AAC. Alibaba hopes to achieve growth in the user base, enhanced engagement as well as the provision of more value to merchants,” noted Gary Yu, equity analyst at Morgan Stanley.

“In cloud, Alibaba will continue to drive market share leadership and will focus on providing more AI-driven industry solutions and improving Data-as-a-Service (DaaS). We see limited near-term catalysts but F22e P/E valuation remains attractive. We also see further downside support from additional disclosure to separate losses from new investments from profitable core e-commerce businesses.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 3

Ticker Company EPS Forecast
EXPD Expeditors International Of Washington $1.62
LPX Louisiana Pacific $4.30
AKAM Akamai $1.38
YMZBY Yamazaki Baking ADR $1.06
SABR Sabre -$0.52
PSX Phillips 66 $0.64
PSXP Phillips 66 Partners $0.88
PACB Pacific Biosciences Of California -$0.21
CMI Cummins $4.07
MITSY Mitsui & Company $13.06
ATI Allegheny Technologies -$0.19
CLX Clorox $1.32
IGT International Game Technology $0.23
LSCC Lattice Semiconductor $0.22
LDOS Leidos $1.58
IX Orix $2.25
PSA Public Storage $1.92
ETRN Equitrans Midstream Corp $0.15
AMGN Amgen $4.09
ZBRA Zebra Technologies $4.12
LHX L3Harris Technologies Inc $3.18
LLY Eli Lilly $1.89
NNN National Retail Properties $0.39
BP BP $0.58
ZBH ZIMMER BIOMET HDG. $1.86
WAT Waters $2.27
UAA Under Armour Inc $0.06
XYL Xylem $0.63
UA Under Armour C share $0.06
DISCB Discovery Communications Discb $0.82
DISCK Discovery Communications Disck $0.82
DISCA Discovery Communications $0.82
MAR Marriott International $0.47
INGR Ingredion $1.59
WEC Wisconsin Energy $0.79
INCY YTE $0.58
SEE Sealed Air $0.78
ROCK Gibraltar Industries $0.87
PEG Public Service $0.71
SWI Solarwinds $0.11
RL Ralph Lauren $0.88
NE Noble Corporation -$0.31
MKL Markel $15.50
MYGN Myriad Genetics -$0.09
EC Ecopetrol $1,851.52
KAI Kadant $1.53
BEN Franklin Resources $0.78
EDU New Oriental Education Tech $0.02
HSIC Henry Schein $0.97
IT Gartner $1.73
PCRX Pacira $0.69
ETN Eaton $1.57
KKR KKR & Co LP $0.87
WLTW Willis $1.97
AY Atlantica Yield $0.40
IPGP IPG Photonics $1.40
FIS Fidelity National Information Services $1.55
COP ConocoPhillips $1.08
BABA Alibaba $14.37
RHP Ryman Hospitality Properties -$1.62
CWH Camping World Holdings $2.38
AME Ametek $1.10
DD DuPont $0.95
SUN Sunoco $0.95
J Jacobs Engineering Group Inc $1.53
ALNY Alnylam Pharmaceuticals -$1.60
WLK Westlake Chemical $3.49
LGIH LGI Homes $3.92
OMI Owens Minor $0.97
DNB Dun & Bradstreet $0.24
HEP Holly Energy Partners $0.48
JAZZ Jazz Pharmaceuticals $3.52
NBIX Neurocrine Biosciences $0.51
RDN Radian $0.70
RPAI Retail Properties Of America -$0.01
H Hyatt Hotels -$0.85
NCR NCR $0.62
OXY Occidental Petroleum -$0.01
FICO Fair Isaac $2.81
OKE ONEOK $0.74
MANT ManTech International $0.87
SATS EchoStar $0.07
LYV Live Nation Entertainment -$1.15
LYFT Lyft Inc -$0.24
KAR Kar Auction Services $0.19
PAYC Paycom Software $0.84
MTCH Match Group $0.54
TX Ternium $3.48
QTS QTS Realty $0.03
MCHP Microchip Technology $1.91
PSB PS Business Parks $0.84
SRC Spirit Realty Capital New $0.26
MRCY Mercury Systems $0.67
HPP Hudson Pacific Properties -$0.01
CZR Caesars Entertainment -$0.12
ENLC EnLink Midstream $0.01
DVA DaVita Healthcare Partners $2.17
GDOT Green Dot $0.42
HLF Herbalife $1.29
HST Host Hotels & Resorts -$0.22
BKH Black Hills $0.38
DVN Devon Energy $0.52
INFN Infinera -$0.05
FMC FMC $1.78
ATVI Activision Blizzard $0.75
XP XP Inc $1.27
OI Owens-Illinois $0.47
LPSN LivePerson -$0.13
PEAK Healthpeak Properties Inc $0.15
SHO Sunstone Hotel Investors -$0.21
LSI LIFE STORAGE $0.69
RNG RingCentral $0.28
DEI Douglas Emmett $0.06
CAR Avis Budget $1.22
CW Curtiss-Wright $1.54
AIZ Assurant $2.42
BLKB Blackbaud $0.70
TTEC TeleTech $0.97
VRSK Verisk Analytics $1.33
EVTC Evertec $0.57
IOSP Innospec $0.89
MCY Mercury General $1.17
KWR Quaker Chemical $1.44
SPWR SunPower $0.04
RGA Reinsurance Of America $1.90
UNM Unum $1.12
PRU Prudential Financial $3.11
APAM Artisan Partners Asset Management $1.25
BBD Banco Bradesco $0.13
AFG American Financial $1.67
FCNCA First Citizens Bancshares $11.98
FNF Fidelity National Financial $1.43
ARNC Arconic Inc $0.47

Wednesday (August 4)

IN THE SPOTLIGHT: ALLSTATE

The Northfield Township, Illinois-based insurance company is expected to report its second-quarter earnings of $3.17 per share, which represents year-over-year growth of about 30% from $2.46 per share seen in the same quarter a year ago.

“Acquisition of National General marks shift towards independent agent channel. The dominant captive auto underwriter has been losing market share to direct channel. We expect this to continue, but NGHC transaction and increased focus on direct channel should mitigate its impact. Allstate also continues to diversify overall portfolio offering by growing non-traditional segments,” noted Michael W. Phillips, equity analyst at Morgan Stanley.

“Margin challenges from focus on growth. Near-term core combined ratio benefit from recession-induced decrease in driving, partially offset by restructuring charges. Auto margins worsen modestly in 2021e-2023e, reflecting competitive operating environment.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 4

Ticker Company EPS Forecast
FLT Fleetcor Technologies $2.93
WYNN Wynn Resorts -$1.51
CENTA Central Garden Pet $1.01
MTG MGIC Investment $0.43
DOX Amdocs $1.18
TRMB Trimble Navigation $0.60
ETR Entergy $1.40
SBRA Sabra Health Care Reit $0.15
TRNO Terreno Realty $0.24
RICOY Ricoh Company $0.05
TM Toyota Motor $4.48
ATRC AtriCure -$0.34
CLH Clean Harbors $0.82
CDW CDW $1.80
MPLX MPLX $0.66
HZNP Horizon Pharma $0.87
CVS CVS Health $2.06
YAMCY Yamaha DRC $0.38
MPC Marathon Petroleum $0.39
CRTO Criteo $0.46
PBR Petroleo Brasileiro Petrobras $0.72
BWA Borgwarner $0.80
EXC Exelon $0.68
SSUMY Sumitomo ADR $0.44
ITOCY Itochu ADR $2.04
IONS Ionis Pharmaceuticals -$0.54
CIM Chimera Investment $0.34
NYT New York Times $0.27
HWM Howmet Aerospace Inc $0.22
AVA Avista $0.26
SBGI Sinclair -$4.34
JLL Jones Lang LaSalle $1.73
SPR Spirit AeroSystems -$0.72
GM General Motors $1.69
BGCP BGC Partners $0.16
GGB Gerdau $0.36
ENBL Enable Midstream Partners $0.18
HFC HollyFrontier $0.61
NXST Nexstar Broadcasting $3.71
CRL Charles River Laboratories $2.37
BDC Belden $0.93
NI NiSource $0.13
EMR Emerson Electric $0.98
VMC Vulcan Materials $1.65
KHC Kraft Heinz $0.72
ABC AmerisourceBergen $2.03
APO Apollo Global Management $0.70
ODP Office Depot $0.54
SMG Scotts Miracle-Gro $3.50
MAC Macerich -$0.09
UE Urban Edge Properties $0.07
AEIS Advanced Energy Industries $1.27
DOC Physicians Realty $0.09
FUN Cedar Fair -$1.60
ALE Allete $0.60
MFC Manulife Financial USA $0.62
ETSY ETSY Inc $0.63
CPA Copa -$1.29
FOX Twenty First Century Fox $0.57
ALB Albemarle $0.84
WU Western Union $0.47
WCN Waste Connections $0.77
EA Electronic Arts EA $0.62
MRO Marathon Oil $0.17
STAA STAAR Surgical $0.07
BFAM Bright Horizons Family Solutions $0.35
FRT Federal Realty Investment $0.39
TS Tenaris $0.16
WDC Western Digital $1.51
CCU Compania Cervecerias Unidas $83.30
GMED Globus Medical $0.44
NSTG NanoString Technologies -$0.59
PDCE PDC Energy $1.24
MCK McKesson $4.14
MWA Mueller Water Products $0.16
APA Apache $0.56
TWO Two Harbors Investment $0.19
BKNG Booking Holdings Inc -$1.98
TNDM Tandem Diabetes Care -$0.08
SLF Sun Life Financial USA $1.17
ANGI Angie’s List -$0.04
FOXA Twenty-First Century Fox $0.57
TTGT TechTarget $0.48
MGM MGM Resorts International -$0.38
ATO Atmos Energy $0.73
LHCG LHC $1.55
AMED Amedisys $1.67
EGHT 8X8 $0.00
RVLV Revolve $0.21
QTWO Q2 $0.07
CDAY Ceridian HCM Holding Inc $0.03
EOG EOG Resources $1.54
QRVO Qorvo $2.45
HI Hillenbrand $0.77
UHAL Amerco $7.95
ANSS Ansys $1.56
CCMP Cabot Microelectronics $2.00
RYN Rayonier $0.10
MET MetLife $1.68
LNC Lincoln National $2.46
ACAD Acadia Pharmaceuticals -$0.30
RCII Rent-A-Center $1.36
ORA Ormat Technologies $0.27
NUS Nu Skin Enterprises $1.05
HR Healthcare Realty $0.06
UGI UGI $0.10
MED Medifast $3.31
KLIC Kulicke And Soffa Industries $1.36
REGI Renewable Energy $1.28
SJI South Jersey Industries $0.00
STN Stantec USA $0.47
CMP Compass Minerals International -$0.06
JACK Jack In The Box $1.48
WTS Watts Water Technologies $1.28
KW Kennedy Wilson -$0.09
CPK Chesapeake Utilities $0.70
PTVE Pactiv Evergreen $0.19
ICUI ICU Medical $1.64
HHC Howard Hughes -$0.41
UBER Uber -$0.54
DXC DXC Technology Co $0.75
ALL Allstate $3.17
CIB Bancolombia $0.50
BAK Braskem $2.83
ADT ADT $0.25
RCL Royal Caribbean Cruises -$4.35
HMC Honda Motor $0.54
UTHR United Therapeutics $3.02
SRPT Sarepta Therapeutics -$1.30

Thursday (August 5)

IN THE SPOTLIGHT: NICE SYSTEMS

NICE, the worldwide leading provider of software solutions, is expected to report its second-quarter earnings of $1.51 per share, which represents year-over-year growth of over 10% from $1.37 per share seen in the same quarter a year ago.

The company which provides enterprise software solutions worldwide in the previous quarter lifted its fiscal year 2021 EPS forecasts in the range of $6.19 and $6.39 per share, higher than the previous guidance of $6.12 to $6.32 per share. Full-year 2021 Non-GAAP total revenues are expected to be in a range of $1,800 million to $1,820 million, up from the previous guidance range of $1,790 million to $1,810 million.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 5

Ticker Company EPS Forecast
HL Hecla Mining $0.06
NTLA Intellia Therapeutics Inc -$0.63
VSAT Viasat $0.22
MNST Monster Beverage $0.68
RVNC Revance Therapeutics -$0.96
PFSI Pennymac Financial Services $3.42
CVCO Cavco Industries $2.14
CYRX Cryoport Inc -$0.13
VGR Vector $0.26
ARNA Arena Pharmaceuticals -$2.20
STMP Stamps $1.84
PRTA Prothena $1.00
ZTS Zoetis $1.08
CNP CenterPoint Energy $0.25
TRI Thomson Reuters USA $0.43
VER VEREIT $0.31
MFA MFA Financial $0.10
NICE Nice Systems $1.51
NFG National Fuel Gas $0.87
HIMX Himax Technologies $0.57
IRWD Ironwood Pharmaceuticals $0.22
HBI Hanesbrands $0.39
HII Huntington Ingalls Industries $2.52
MAURY Marui ADR $0.27
NWSA News Corp $0.04
ABMD Abiomed $1.05
MRNA Moderna Inc $5.96
EPAM EPAM Systems $1.93
NWS News $0.04
ARWR Arrowhead Research -$0.14
VST Victory Square Tech $0.54
TECH Bio Techne $1.70
APTV Aptiv PLC $0.67
AL Air Lease $0.83
NRG NRG Energy $1.07
TYOYY Taiyo Yuden ADR $2.65
PPL PPL $0.33
GTN Gray Television $0.30
BCRX BioCryst Pharmaceuticals -$0.23
AES AES $0.29
WCC Wesco International $1.91
FOCS Focus Financial Partners Inc $0.95
AU Anglogold Ashanti $0.90
IHRT Iheartmedia -$0.10
ADNT Adient PLC $0.16
TOELY Tokyo Electron Ltd PK $1.22
ACIW ACI Worldwide $0.07
XRAY Dentsply International $0.67
BAYRY Bayer AG PK $0.46
BCE BCE (USA) $0.63
WPP WPP ADR $1.95
NJR New Jersey Resources -$0.13
ARW Arrow Electronics $2.96
MDU MDU Resources $0.53
NVO Novo Nordisk A Fs $0.78
SHCAY Sharp ADR $0.04
RMD ResMed $1.27
LXP Lexington Realty $0.03
BDX Becton, Dickinson and Co. $2.45
IRM Iron Mountain $0.35
CI Cigna $4.96
MMS Maximus $1.09
OGE OGE Energy $0.52
SRE Sempra Energy $1.59
DUK Duke Energy $1.10
BIP Brookfield Infrastructure $0.06
PENN Penn National Gaming $0.92
BLDR Builders Firstsource $1.63
CCOI Cogent Communications $0.21
PH Parker-Hannifin $4.33
K Kellogg $1.03
ITRI Itron $0.48
WRK WESTROCK $0.97
UFS Domtar USA $1.28
IDCC InterDigital -$0.09
BERY Berry Plastics $1.50
CHH Choice Hotels International $0.90
WD Walker & Dunlop $1.97
STWD Starwood Property $0.51
STFC State Auto Financial $0.00
EPC Edgewell Personal Care $0.83
GIL Gildan Activewear USA $0.51
TAL TAL International -$0.14
THS TreeHouse Foods $0.26
FLS Flowserve $0.42
EXPE Expedia -$0.60
INSM Insmed -$0.89
PZZA Papa John’s International $0.72
NKTR Nektar Therapeutics -$0.73
CNNE Cannae $0.01
XLRN Acceleron Pharma -$0.87
PHI Philippine Long Distance Telephone $0.69
VG Vonage $0.04
ROLL Rbc Bearings $1.00
ED Consolidated Edison $0.62
HTA Healthcare Of America $0.10
ENV Envestnet $0.54
OLED Universal Display $0.87
MTZ MasTec $1.23
CSOD Cornerstone OnDemand $0.52
POST Post $0.97
IOVA Iovance Biotherapeutics -$0.51
PCTY Paylocity $0.29
DIOD Diodes $1.11
ZNGA Zynga $0.09
BCH Banco De Chile $0.41
JCOM J2 Global $2.02
RBA Ritchie Bros. Auctioneers USA $0.61
ILMN Illumina $1.36
CGNX Cognex $0.42
ALTR ALTAIR ENGINEERING $0.01
Z Zillow $0.24
TRIP TripAdvisor -$0.10
FOXF Fox Factory $1.02
QDEL Quidel $1.25
IFF International Flavors Fragrances $1.48
VOYA Voya Financial $1.48
YELP Yelp -$0.09
TDC Teradata $0.46
MSI Motorola Solutions Msi $1.92
SQ Square $0.31
LOPE Grand Canyon Education $1.09
MUR Murphy Oil $0.31
CAH Cardinal Health $1.20
AMRS Amyris -$0.13
SEAS SeaWorld Entertainment $0.31
BLL Ball $0.83
BKI Black Iron Inc. $0.54
PRI Primerica $2.92
HASI Hannon Armstrong Sustnbl Infrstr Cap $0.38
SYNA Synaptics $2.00
FEYE FireEye $0.09
NNI Nelnet $1.64
MDRX Allscripts Healthcare Solutions $0.17
OUT Outfront Media -$0.11
SEM Select Medical $0.56
SFM Sprouts Farmers Market $0.45
RLJ RLJ Lodging -$0.32
AEL American Equity Investment Life $0.50
CYTK Cytokinetics -$0.66
NVAX Novavax -$3.63
BECN Beacon Roofing Supply $1.25
AAON AAON $0.32
TPL Texas Pacific Land $7.37
EXEL Exelixis $0.06
AIG AIG $1.20
LNT Alliant Energy $0.56
ITT ITT $0.90
AMH American Homes 4 Rent $0.05
PODD Insulet $0.13
REG Regency Centers $0.31
Y Alleghany $14.72
BRKS Brooks Automation USA $0.69
G Genpact $0.54
APLE Apple Hospitality -$0.01
AGO Assured Guaranty $0.76
PNW Pinnacle West Capital $1.63
PBH Prestige Brands $0.87
REGN Regeneron Pharmaceuticals $17.91
NSIT Insights $1.85
PWR Quanta Services $1.03
W Wayfair Inc. $1.17
XEC Cimarex Energy $1.89
EVRG Evergy Inc $0.74
COMM CommScope $0.43
TRGP Targa Resources $0.29
LAMR Lamar Advertising $0.86
CNQ Canadian Natural Resource USA $0.76
IBP Installed Building Products $1.47

Friday (August 6)

Ticker Company EPS Forecast
AEE Ameren $0.79
SGAMY Sega Sammy ADR -$0.01
MGA Magna International USA $1.42
D Dominion Resources $0.77
CHBAY Chiba Bank ADR $0.74
ING Ing Groep $0.35
NCLH Norwegian Cruise Line -$1.97
SRCL Stericycle $0.69
SPB Spectrum Brands $1.58
NUAN Nuance Communications $0.17
ESNT Essent $1.26
AMCX AMC Networks $1.80
LBRDA Liberty Broadband $1.03
LBRDK Liberty Broadband Lbrdk $1.03
MD Mednax $0.32
LEA Lear $2.40
FLR Fluor New $0.05
LSXMK Liberty Media SiriusXM C $0.36
LSXMA Liberty Media SiriusXM A $0.48
GT Goodyear Tire & Rubber $0.18
VTR Ventas -$0.08
IEP Icahn Enterprises -$0.05

 

China Tourism Aims for $7 Billion Hong Kong Listing

By Scott Murdoch

The Shanghai-listed company plans to sell 5% to 10% of its stock in the listing, which could take place as soon as the third quarter of this year, one of the people said.

The people declined to be identified as the information is not yet public. China Tourism did not respond to a request for comment on the size of the deal.

China Tourism, which Refinitiv data showed has market capitalisation of 577.9 billion yuan ($89.43 billion), filed for the listing with the Hong Kong bourse late on Friday.

Its Shanghai shares were trading 4% higher on Monday on news of the application. The stock is up 9.6% so far in 2021, versus the benchmark CSI300 index’s 0.6% increase, yet remains 23% below its 52-week high reached on Feb 18.

At $7 billion, the listing would be Hong Kong’s largest in nearly two years since Alibaba Group Holding Ltd raised $12.9 billion in November 2019.

The listing would also exceed the initial public offering of Kuaishou Technology – the largest in Hong Kong this year – which raised $6.2 billion in January.

In its filing, China Tourism said it was China’s only retail operator to cover all duty free channels – such as sales at airports and on cruise ships. It said it has 188 stores in 90 cities plus six outlets in Hong Kong, Macau and Cambodia.

The company recorded a 31% rise in net profit at 7.1 billion yuan in 2020, its filing showed.

($1 = 6.4621 Chinese yuan renminbi)

(Reporting by Scott Murdoch in Hong Kong; Additional reporting Sophie Yu in Beijing; Editing by Christopher Cushing)