Money
China crackdown wipes billions off top companies
China’s regulatory crackdown has wiped hundreds of billions off the market capitalisations of some of its largest companies and put investors on alert over who may be next
China is cracking down on some of its largest companies with regulatory stings wiping hundreds of billions of dollars off their market value.
From technology, to education and property – it seems no sector is safe from Beijing’s far reaching tentacles.
Let’s take a closer look at who’s been affected so far.
First up is Alibaba.
China’s biggest e-commerce company was founded by this man, once China’s richest person – Jack Ma.
Ma made a speech back in October 2020 blasting the country’s regulatory system.
Those stinging comments are widely viewed as the trigger for what came next. Beijing abruptly suspended the record $37 billion stock market debut of Alibaba’s financial affiliate Ant Group.
Later, Chinese regulators fined the company $2.75 billion for abusing its market dominance. Alibaba’s U.S.-listed shares have shed more than $400 billion in value since Ma made that speech.
Next up is China’s largest gaming and social media company Tencent. It was fined for failing to report past deals to anti-trust regulators.
Tencent has also been affected by China’s latest efforts to combat gaming addiction among minors.
In August under-18-year-olds were banned from playing video games for more than three hours a week. The company has lost nearly $350 billion in market value since February.
The food delivery company – Meituan – became another target of an antitrust probe in April, after its founder and Chief Executive Wang Xing posted an ancient poem on social media.
Some perceived it as criticizing the government and President Xi Jinping. Meituan has lost more than $150 billion in value since February.
The company has also been accused of violating consumer rights and mistreating delivery drivers.
China’s largest provider of private educational services has seen its value tumble following a policy shift in Beijing.
In July, the Communist Party issued new rules barring for-profit tutoring on the school curriculum.
Since then, the market value of New Oriental Education and Technology Group’s U.S. listed shares has fallen by $7.4 billion.
Beijing wants to ease pressure on school children and reduce a cost burden on parents.
But analysts warn that the new rules threaten to decimate the country’s private education sector.
So what’s the motive behind Beijing’s regulatory crackdown?
President Xi Jinping has called for China to achieve “common prosperity.”
The campaign seeks to narrow the yawning wealth gap between the rich and the poor.”Common prosperity” as an idea is not new in China, but a sharp escalation in official rhetoric and a crackdown on excesses in industries has rattled investors in the world’s second-largest economy.
Reuters.
Money
Inflation rise reduces chances of Reserve Bank rate cut
Inflation spikes, drastically reducing chances of a Reserve Bank rate cut amid economic pressures and rising costs
Inflation spikes, drastically reducing chances of a Reserve Bank rate cut amid economic pressures and rising costs
– Rate cut likelihood by the Reserve Bank has decreased due to a rise in annual inflation to 3.2 per cent.
– Significant price increases in housing, recreation, and transport are raising concerns for the Reserve Bank.
The likelihood of a rate cut by the Reserve Bank has decreased significantly after a surge in annual inflation.
The Australian Bureau of Statistics reported that inflation for the year ending September rose to 3.2 per cent, reflecting a 1.1 per cent increase.
Trimmed mean inflation, a crucial measure for the Reserve Bank, was recorded at 1 per cent for the quarter and 3 per cent for the year. The bank anticipates inflation to reach 3 per cent by year-end, while trimmed mean inflation is expected to slightly decrease.
The quarterly rise of 1.3 per cent in September exceeded expectations. Governor Bullock noted that a deviation from the Reserve Bank’s projections could have material implications.
Financial markets reacted promptly, with the Australian dollar rising against the US dollar, while the ASX200 index fell.
The most significant price increases were observed in housing, recreation, and transport, indicating widespread price pressures that concern the Reserve Bank.
Despite the unexpected inflation rise, some economists believe the Reserve Bank may still consider rate cuts in December, viewing current price spikes as temporary due to the winding back of subsidies.
Economic Pressures
Broad-based economic pressures suggest that the Reserve Bank may not reduce interest rates at its upcoming meeting. Analysts highlight the need for ongoing support for households facing cost-of-living challenges.
Money
Wall Street hits record highs on low inflation
Wall Street hits record highs on cool inflation and strong earnings ahead of key Federal Reserve interest rate decision
Wall Street hits record highs on cool inflation and strong earnings ahead of key Federal Reserve interest rate decision
– U.S. stocks rose to record highs on Friday due to lower inflation and strong corporate earnings.
– Key earnings reports from major companies are expected next week, influencing market trends.
The Labor Department reported that the Consumer Price Index was slightly cooler than analysts’ predictions, easing concerns about inflation impacts from tariffs. This development suggests a likely interest rate cut by the Federal Reserve at its upcoming meeting.
Ryan Detrick from Carson Group noted the positive inflation news may facilitate forthcoming Fed rate cuts. Despite the ongoing government shutdown affecting data releases, this CPI report provided much-needed clarity.
Earnings reports are continuing, with 143 S&P 500 companies having reported results. Growth expectations for third-quarter earnings have risen to 10.4%. Detrick indicated a strong opening to the earnings season with a significant percentage of companies exceeding expectations.
This coming week, key earnings will be reported from Meta Platforms, Microsoft, Alphabet, Amazon, and Apple, alongside industrial companies like Caterpillar and Boeing.
The Dow rose 472.51 points to 47,207.12. The S&P 500 increased by 53.25 points to 6,791.69, while the Nasdaq gained 263.07 points, reaching 23,204.87.
Alphabet gained 2.7% following a deal expansion with Anthropic. Coinbase saw a 9.8% increase from a JPMorgan upgrade. In contrast, Deckers Outdoor’s shares fell 15.2% after lowering sales forecasts.
Market Trends
Advancing stocks on the NYSE outnumbered decliners by 2.18 to 1. The S&P 500 had 34 new highs, with the Nasdaq recording 124.
Trading volume was 19.04 billion shares, lower than the average of the past 20 days.
Money
US stocks face tests from Tesla, Netflix earnings
US markets brace for Tesla and Netflix earnings amid rising volatility and delayed inflation data
US markets brace for Tesla and Netflix earnings amid rising volatility and delayed inflation data
– Earnings reports from Tesla and Netflix might affect U.S. stock performance next week amid high inflation concerns.
– Increased market volatility arises from U.S.-China trade tensions and fewer S&P 500 stocks in an uptrend.
The S&P 500 entered its fourth year of growth amidst these fluctuations, having previously experienced a period of calm. Experts suggest market risks are intensifying as valuations reach peak levels.
Market Volatility
Concerns regarding U.S.-China trade relations escalated last week when the U.S. threatened to raise tariffs by November 1 over China’s rare-earth export policies. President Donald Trump is scheduled to meet with President Xi Jinping in two weeks to discuss these issues.
Despite these challenges, major stock indexes gained ground over the week, with the S&P 500 up 13.3% year-to-date. However, a noticeable decline in the number of S&P 500 stocks in an uptrend raises caution among investors about underlying market weaknesses.
The upcoming third-quarter earnings will be closely monitored, especially as the government shutdown halts economic data releases. Companies like Procter & Gamble, Coca-Cola, RTX, and IBM are due to report. The delayed U.S. consumer price index is also expected to provide crucial insights ahead of the Federal Reserve’s monetary policy meeting on October 28-29.
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