The two largest pot funds in North America are making millions with a little help from short sellers. John Davi, Astoria Portfolio Advisors Founder and CIO, joins Akiko Fujita on 'The Ticker' to discuss strong performance ETFs.
The two largest pot funds in North America are making millions with a little help from short sellers. John Davi, Astoria Portfolio Advisors Founder and CIO, joins Akiko Fujita on 'The Ticker' to discuss strong performance ETFs.
(Bloomberg) -- China is shaping up to be the first real test of Big Tech’s ambitions in the world of carmaking, with giants from Huawei Technologies Co. to Baidu Inc. plowing almost $19 billion into electric and self-driving vehicle ventures widely seen as the future of transport.While Apple Inc. has long had plans for its own car and Alphabet Inc. has Waymo, its autonomous driving unit, the size -- and speed -- of the move by China’s tech titans puts them at the vanguard of that broader push. The lure is an industry that’s becoming increasingly high tech as it pivots away from the combustion engine, with sensors and operating systems making cars more like computers, and the prospect of autonomy re-envisioning how people use will them.As the world’s biggest market for new-energy cars, China is a key battlefield. Established automakers like Volkswagen AG and General Motors Co. are already slogging it out with local upstarts such as market darling Nio Inc. and Xpeng Inc. Over the past three months, Huawei, smartphone giant Xiaomi Corp., Baidu -- which runs China’s top search engine and a mapping app -- and even Apple’s Taiwanese manufacturing partner Foxconn have joined the fray, forging tie-ups and unveiling their own carmaking plans.Nowhere was that more on display than at last month’s Shanghai Auto Show, which has become one of the world’s premier events for showcasing the hottest new trends in the automotive sector. Visitors queued for hours to access the pavilions of Huawei and Baidu, thronging their displays and snapping pictures of sensor systems, high-tech dashboards and model vehicles. But despite the intense interest, the era of the new car is a hyper-competitive one in China, and tech giants have a lot to prove.“There’s a big element of faith in the tech companies’ bets,” said Stephen Dyer, managing director of consultancy AlixPartners in Shanghai and a former Ford Motor Co. executive. “This is a matter of creating something new that doesn’t exist now. That’s where the element of faith comes into play.”Huawei has been at the fore, recently announcing plans to invest $1 billion in EVs and its own self-driving technology, which it claims has “already surpassed” electric car pioneer Tesla Inc. in some aspects.The Shenzhen-based company, better known for its mobile-phone networks and being the subject of crippling U.S. sanctions, has unveiled its first car developed with BAIC BluePark Mew Energy Technology Co. The mid-sized Arcfox S sedan uses HI, or Huawei Inside, an intelligent automotive software package that enables it to run on autonomous driving mode in city areas for more than 1,000 kilometers (620 miles) without human intervention. Delivery is slated to start in the fourth quarter.Huawei’s auto show display attracted larger crowds than nearby China Evergrande New Energy Vehicle Group Ltd., an EV upstart that took one of the biggest stands to showcase nine models despite the fact it hasn’t sold a car under its own brand. As well as the Arcfox S sedan, a Seres SF5 coupe equipped with Huawei Inside was on display, along with Huawei’s HiFin Intelligent Antenna Solution, a new generation in-vehicle communication system plus 4D-imaging radar that’s used to monitor roads and traffic.One of the biggest challenges for new entrants to the automotive sector is how capital and resource intensive it is to make cars. How tech companies negotiate that will be key, and potentially provide opportunities for established players in the sector, with Huawei repeatedly saying its plan is not to produce its own vehicles. Rather, it’s partnering with three Chinese automakers -- BAIC Motor Corp., Chongqing Changan Automobile Co., and Guangzhou Automobile Group Co. -- to make self-driving cars that will carry its name as a sub-brand.Guangzhou Auto will jointly build a “truly unmanned car” that will be produced in 2024, President Feng Xingya said last month. The carmaker will also cooperate with Huawei on big data, smart cockpits, and hardware and electronic chips, Feng said.“China adds 30 million cars each year and the number is growing,” Huawei Deputy Chairman Eric Xu said in April. “Even if we don’t tap the market outside of China, if we can earn an average 10,000 yuan ($1,550) from each car sold in China, that’s already a very big business.”Apple appears to be considering a similar route, talking at one point with carmakers including Hyundai Motor Co. before discussions fizzled. Unlike China’s tech giants, Apple is keeping its plans largely secret. The company lost a key manager overseeing its self-driving car program in February and it’s unclear what impact that may have had on Apple’s progress on delivering a commercially viable car.The rise of smart vehicles and autonomous driving throws up a raft of possibilities for tech companies, not least access to data such as real-time insight into popular destinations and the routes taken to get there. On top of that, for some there’s the opportunity to charge for tech add-ons and system improvements, essentially treating the vehicle like a piece of computer hardware that constantly gets its software updated.“They will definitely focus on being intelligent,” said Yale Zhang, managing director of Shanghai-based consultancy Autoforesight Co. “Making a good electrified car is a ‘pass,’ while making a good intelligent car will make an ‘A-grade.’ That’s what these tech giants are good at. Their main revenue will not be from selling the car but finding other ways to earn post-sale, such as over-the-air system upgrades or software subscriptions.”Big Tech in China Is Eyeing EVs for a Reason: Hyperdrive DailyFirst MoversBaidu -- which started investing in robo-taxi technology as early as 2013 and funded Chinese EV startup WM Motors -- now plans to spend $7.7 billion over the next five years developing smart-car technology via its newly established unit Jidu Auto. The division aims to launch its first model in three years, followed by new releases every 12 to 18 months, Chief Executive Officer Xia Yiping said.“The core value of cars in the future will be how intelligent they are,” Xia said, echoing a familiar refrain. “The earlier a company plans, the more control of self-developed technologies it gains, the more advanced technology it has, the more power it will own in the market.”Jidu has a core team of about 100 staff, and will expand to as many as 3,000 personnel by the end of next year, including up to 500 software engineers, he said. The first batch of cars will be based on Zhejiang Geely Holding Group Co.’s pure EV manufacturing structure, while Jidu will collaborate with Baidu’s autonomous-driving unit Apollo, with a special focus on smart cars and the mass production of autonomous driving features. The unit will embark on its next fundraising round soon, with further investment expected from Baidu and external investors.Chinese smartphone maker Xiaomi has also announced plans to invest about $10 billion over the next decade to manufacture electric cars, though hasn’t disclosed much detail or given a timeframe for deliveries. Billionaire co-founder Lei Jun in March announced his intention to lead a new standalone division and spearhead the drive into EVs, in what he called his final major startup endeavor.“We have deep pockets for this project,” Lei, who is also Xiaomi’s chief executive officer, said when unveiling the plan. “I’m fully aware of the risks of the car-making industry. I’m also aware the project will take at least three-to-five years with tens of billions of investment.”While China’s tech giants may be late to the game and entering unfamiliar territory, that could play to their advantage, said Dyer of AlixPartners.“This isn’t an industry where you have to be the first-mover to win,” he said. “In fact, in the auto industry, the first mover typically never wins. It’s always the follower who wins. Because when you are the first mover, you’re the one paying to learn through all the mistakes.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
According to a federal indictment, Mustafa Qadiri, 38, fraudulently obtained millions of dollars to buy luxurious cars and take lavish vacations.
The legendary investor says these are the key lessons for investors and consumers.
After the initial reaction to the report and the surge to $1844.60, gold prices drifted lower then became rangebound into the close as yields firmed.
(Bloomberg) -- China is expanding its far-reaching tech campaign into online education, issuing the maximum penalties to two of the country’s fastest-growing tutoring apps for violating competition and pricing laws.The State Administration for Market Regulation imposed fines of 2.5 million yuan ($389,000) each on Yuanfudao, backed by Tencent Holdings Ltd., and Zuoyebang, which has received funding from Alibaba Group Holding Ltd., according to a statement Monday. The firms were penalized for making misleading claims about their businesses from falsifying the qualifications of teaching staff to faking user reviews, the antitrust watchdog said.Yuanfudao and Zuoyebang said they accepted the penalties and will rectify the relevant problems.The explosive growth of private education providers during the pandemic has drawn increased scrutiny over the sector. Last month, Beijing’s market regulator fined four private education providers including GSX Techedu Inc. as well as a TAL Education Group unit for pricing violations. China’s education ministry also issued a statement reiterating limits on after-school study programs in order to ensure that students get enough sleep.“The fines are closely related to the recent crackdown on after-school tutoring institutions, focusing on their illegal activities and potential for stirring anxiety in society,” said Ye Le, Shanghai-based analyst with China Securities. “The regulatory pressure will keep building for the rest of the year.”Going forward, the SAMR will intensify its regulatory supervision of after-school educational groups and crack down on illegal activities, according to the statement. The two apps are the latest in a slew of Chinese firms from giants like Alibaba and Tencent to smaller outfits like online grocery provider Nice Tuan that have fallen afoul of the antitrust watchdog in recent months, as Beijing reins in its once-freewheeling internet sector.Both startups are said to be eyeing initial public offerings. Earlier this year, Yuanfudao was seeking at least $1 billion in fresh funding ahead of a possible initial public offering in 2022, people with knowledge of the matter have said. Bloomberg News reported in March Zuoyebang, whose backers also include SoftBank Vision Fund, Goldman Sachs Group Inc. and Sequoia Capital China, was set to recruit former Joyy Inc. chief financial officer Bing Jin to aid in its preparations for a potential listing.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Dogecoin investors had a wild ride this weekend.After hitting a record on Saturday ahead of Elon Musk’s appearance on “Saturday Night Live,” the digital currency began to fall hours before the show began and continued to drop as he delivered his opening monologue.A SpaceX deal Sunday gave the digital currency a short-lived boost. It traded at 55.5 cents as of 8:30 p.m. in New York, down 15% over a 24-hour period, according to CoinGecko, with a trading range of 43.2 cents to 66.7 cents in the past one day.In the agreement, Musk’s commercial rocket company will launch a mission to the Moon in 2022 with a so-called cubesat -- a mini satellite used for space research -- from Geometric Energy Corp. that’s been paid for entirely in Dogecoin.The trading swings began on Saturday as Dogecoin traders around the world were organizing watch parties for the broadcast featuring its most prominent supporter. Following an initial slump, the digital currency bounced back briefly toward the end of the show, after the billionaire called it a “hustle” in the “Weekend Update” segment.In the skit, Musk jumped into the character of a bow-tied, bespectacled financial expert and was repeatedly quizzed about Dogecoin. After delivering textbook answers, he was asked whether the currency was just a hoax, to which he responded, “Yeah, it’s a hustle.”He ended the skit howling, “to the moon!” -- a reference he repeated in his tweet about the SpaceX announcement on Sunday.Dogecoin, a cryptocurrency that started as an internet meme in 2013, has surged more than 21,000% in the past year, according to CoinGecko.Musk, 49, has been among its biggest boosters, along with Mark Cuban, Snoop Dogg and Gene Simmons. Still, crypto volatility has prompted urgent warnings from central bankers -- as recently as Thursday -- that people buying in should be prepared to lose all of their money.Musk’s Tesla Inc. announced in February that it had bought $1.5 billion of Bitcoin, and the head of the electric-car giant himself has spoken of the digital asset in favorable terms. He has a $183.9 billion fortune, according to the Bloomberg Billionaires Index.(Updates percentage gain.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Bargain rates are back, at least for now, giving borrowers another chance to strike.
U.S. energy firms added oil and natural gas rigs for a second week in a row as higher oil prices prompted some drillers to return to the wellpad.
(Bloomberg) -- It’s back to square one for the dollar.After Friday’s worse-than-expected U.S. employment data, the Bloomberg Dollar Spot Index slumped definitively out of its 2021 uptrend and is back to little changed for the year. Posting its biggest one-day fall in five months, the greenback is now at risk of a decline toward its lowest since February 2018.The data miss is the latest blow to the world’s reserve currency that saw a brief early-year revival snuffed out by retreating Treasury yields, improving sentiment toward economies outside the U.S. and a dovish Federal Reserve. The dollar gauge has fallen almost 14% from a record high last March, and the likes of JPMorgan Asset Management and T. Rowe Price are predicting more losses ahead as the global economy recovers.“We continue to see the ‘peaking U.S. exceptionalism’ narrative playing out through a weaker dollar over time,” Citigroup Inc. strategists including Ebrahim Rahbari wrote in a note. That’s thanks to “views on a dovish Fed, benign risk appetite and a global recovery.”The dollar’s reversal gives some vindication to Wall Street bears who called for a weaker currency in January, but were left scrambling to cover their short positions when better-than-expected U.S. data pushed Treasury yields higher. That move has also faded with benchmark yields down about 18 basis points from their 1.77% high in March, denting one of the biggest appeals of the greenback.Selling the U.S. currency is now back in vogue, with aggregate net short positions versus major peers growing to about $10 billion last week from $4 billion in mid-April, according to the latest data from the Commodity Futures Trading Commission. Bearish bets totaled almost $31 billion in January.“We expect the dollar to weaken further, given its diminishing appeal as a safe-haven currency as long as the global economic picture and risk appetite improve further,” UniCredit S.p.A. strategist Roberto Mialich wrote in a note Friday.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
An up-and-coming gold exploration company in Quebec may hit the jackpot in what could end up being a story even some of the most seasoned investors only ever dream of
There is no better time in your daughter's life to struggle financially, than right after graduation, says columnist Peter Dunn.
SYDNEY (Reuters) -Australian casino operator Star Entertainment Group on Monday proposed an all-stock buyout of larger rival Crown Resorts Ltd that it valued at A$9 billion ($7 billion), taking on two private equity giants for control of the troubled company. Three months after Crown was declared unfit for a gambling licence at its new Sydney resort tower, Star said the share-swap takeover approach would create "one of the largest and most attractive integrated resort operators in the Asia Pacific region". The move presents Crown shareholders with a third option after buyout giant Blackstone Group earlier upped its all-cash indicative bid to A$8.4 billion, while Oaktree Capital Group has proposed to bankroll a A$3 billion buyback of Crown's founder's stake, removing a regulatory concern.
While Japan's biggest automakers report what analysts expect to be depressed earnings this week, investors looking for trading cues will be tuned into any assessment of the future impact of a global chip shortage that has forced a shake-up in production. Automakers worldwide have had to adjust or suspend production in the past few months as factors including a surge in demand for electronic devices plus U.S. sanctions against Chinese technology firms led to a dearth of semiconductors. Blackouts in Texas where a number of chipmakers have factories and a fire at Renesas Electronics Corp's chip plant in Japan have exacerbated the supply crunch.
(Bloomberg) -- Investors are about to get a snapshot of any price pressures building across the developing world -- the fallout of the unprecedented stimulus that’s been unleashed to revive the global economy.Heavyweights including Brazil, China and India will report inflation data this week against a backdrop of quickening growth that’s being fueled by months of easy money and fiscal largess. Citigroup Inc.’s inflation-surprise index for emerging markets spiked last month to its highest since 2008, a sign that investors may be underestimating the scale of the resurgence.Long the scourge of debt holders and a threat to currency stability, accelerating inflation has already forced policy makers in Brazil and Russia to raise borrowing costs. The Czech central bank last week signaled it could follow suit in mid-year, while Turkey’s monetary authority has pledged to keep rates elevated until there is a significant slowdown in price gains.“Inflation has reared its head as a key market narrative once again,” said Emily Weis, a Boston-based macro strategist at State Street Global Markets. “This is partly driven by concerns around extreme monetary accommodation, fiscal largess and their combined impact on the green shoots of recovery.”The prospect of tighter monetary conditions in emerging markets still hasn’t changed the overall calculus for many investors, with behemoths including Pacific Investment Management Co. and BlackRock Inc. focusing on the growth story instead. Developing-nation inflation remains near a record low, with the economic rebound making assets look “increasingly interesting,” according to Dan Ivascyn, Pimco’s group chief investment officer in Newport Beach, California.Yet there’s a growing sense that the forces behind the recovery will eventually feed through to higher prices if left unchecked. One harbinger could be the rally in commodities, with a key index of raw materials this month jumping to a five-year high.“If the stimulus continues, at some point it will become inflationary,” said Sanjiv Bhatia, the chief investment officer at Pembroke Emerging Markets in London. “At some point, we believe it will become a problem.”For now, assurances from the Federal Reserve that inflation in the U.S. is unlikely to get out of control have supported the bulls. The Fed appears in no rush to raise interest rates, a move that would siphon capital out of emerging economies currently enjoying the windfall from U.S. stimulus.That major central banks currently view inflation as transitory should boost developing-nation currencies as a whole, according to Henrik Gullberg, a London-based macro strategist at Coex Partners Ltd.MSCI Inc.’s emerging-market currency index has climbed to a record high, while the benchmark equity gauge just posted its biggest two-day rally in almost two weeks amid a rally in energy and technology shares. On Friday, risk assets got further support when U.S. job growth data significantly undershot forecasts.“On the one hand, the valuations of growth stocks look meaningfully less demanding after recent underperformance coupled with earnings upgrades,” said Kate Moore, the head of thematic strategy at BlackRock in New York. “On the other, rising inflationary pressures from the broad economic restart and low inventories should be supportive of cyclicals and commodity producers.”Inflation:Data on Tuesday may show China’s inflation accelerated 1% y/y in April from 0.4% a month prior, according to a Bloomberg surveyThe offshore yuan climbed to its strongest since February last weekIn Brazil, the median estimate in a Bloomberg survey shows inflation probably accelerated to 6.74% y/y in AprilConsumer prices probably rose 4.1% y/y in India in April, slowing from 5.52% the previous monthWhile inflation may have slipped below 4% in April, it’s likely to be transitory as base effects turn unfavorable in May, Citigroup economists led by Johanna Chua wrote in a reportThe rupee is the worst performer in Asia this quarter as the country battles its biggest wave of Covid-19 infectionsArgentina and Israel will also release inflation figures next weekOther Events:The Turkish lira may face renewed pressure should current-account data on Tuesday show the deficit is widening. The gap may have risen to $3.8 billion in March, according to economists surveyed by BloombergRussia, Colombia and Poland will also announce current-account or trade balances next weekThe central banks of Mexico, Chile, the Philippines, Chile, Peru and Uruguay are all expected to leave borrowing costs unchangedMalaysia and the Philippines will probably report Tuesday that their economies remained in contraction during the first quarter, highlighting a growth divergence with Southeast Asian economies lagging behind northern counterparts, according to Bloomberg EconomicsTighter mobility curbs after a surge in coronavirus infections will also weigh on their outlooks this quarterBenchmark stock indexes in both countries have fallen this year and are among the worst performers in AsiaSouth Korea reports its latest unemployment rate on WednesdayIn Colombia, a reading of retail sales for March comes on Thursday and first-quarter gross domestic product is due on FridayThe peso slid the most among emerging-market currencies last week amid days of violent protests, which a central banker warned will hurt the economic recoveryFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Though first-quarter earnings season is winding down, a handful of major companies will still be reporting results this week, including some of the newly public names like Airbnb, Roblox and Bumble. The Commerce Department's retail sales report is also set for release, offering another update on the strength of consumer spending during the economic recovery.
It’s a particularly quiet day ahead on the economic calendar, with no major stats to provide the majors with direction. The lack of stats will leave corporate earnings and COVID-19 news in focus.
(Bloomberg) -- A China-focused hedge fund led by a 30-year-old who started trading as a teenager returned 120% in the first quarter, thanks in part to the unraveling of Bill Hwang’s Archegos Capital Management.Bullish bets on a pair of Chinese fintech consumer lending platforms accounted for more than half of the quarterly return for Henry Liang’s Seahawk China Dynamic Fund, he said in a telephone interview. Additional gains came from wagers against a “bubble basket” of over-hyped new-economy companies, including GSX Techedu Inc., the Chinese after-school online tutoring firm later caught up in the Archegos-induced selloff.The profits more than doubled the fund’s assets to nearly $700 million. Liang has given back $120 million to investors this year to manage the pace of asset growth and maintain performance. A Bloomberg index tracking hedge funds of all strategies advanced 4.6% in the first quarter. A gauge of hedge funds focused on Greater China rose 1.5%, according to Eurekahedge Pte.Unburdened by the scrutiny of more risk-averse institutional investors, Seahawk was able to make concentrated bets for its ultra-rich mainland Chinese and Hong Kong clients, including Liang’s long-time followers since his university days. His approach highlights how foreign asset managers with lower risk appetites have been struggling to woo wealthy Chinese customers, who are willing to stomach short-term losses for outsized gains.Read more on the struggles of global asset managers in ChinaSeahawk began to buy shares in FinVolution Group in the third quarter of 2019 and 360 DigiTech Inc. in the first quarter of 2020, adding more throughout the year when their stock prices were languishing.Liang is betting that the Shanghai-based duo has an edge in risk management that will help them emerge as winners from the multi-year Chinese crackdown on internet lending.The regulatory tightening has resulted in the demise of online peer-to-peer lending platforms that once numbered 5,000, according to data from the China Banking and Insurance Regulatory Commission. FinVolution and 360 DigiTech operate in a different space, using technology to connect borrowers and financial institutions.Their share prices have at least doubled this year. Seahawk is now among FinVolution’s largest shareholders with a 13.5% stake at the end of February, according to data compiled by Bloomberg.Bubble ‘Stretched’In February, Seahawk dramatically boosted bearish bets against the “bubble basket,” including electric vehicle makers Tesla Inc. and Nio Inc., GSX Techedu, fintech firm OneConnect Financial Technology Co., toymaker Pop Mart International Group Ltd. and short-video platform operator Kuaishou Technology, Liang said.The “new-economy bubble has been stretched to an unprecedented level, where valuation of quite a few internet and consumer stocks can hardly be justified even with the wildest 10-year assumptions,” he wrote in his first-quarter newsletter.The collapse of Archegos led its prime brokers to dump shares including GSX Techedu. That contributed to the stock’s more than 80% tumble from this year’s peak, accelerating gains for Liang.Seahawk has largely covered the new-economy shorts while barely trimming its bullish wagers on FinVolution and 360 DigiTech, even when the two fintech firms have fallen at least 30% from this year’s peaks in mid-March.The Chinese antitrust clampdowns could benefit smaller players, especially fintech giant Ant Group Co.’s strongest second-tier rivals that aren’t part of larger platforms, Liang said.His optimism isn’t shared by everyone. Jefferies Financial Group Inc. analysts expect growth of second-tier fintech platforms to slow now that China’s policy makers are seeking to curb household leverage rather than encourage consumer borrowing. China now also requires platforms to obtain licenses to collect data for personal credit reports that they provide to banks for higher fees, and new rules limit behavioral data collection, the analysts wrote in a note.Pocket MoneyA Guangzhou native who is now based in Hong Kong, Liang began to trade stocks at 13, with pocket money from his parents. In his final year in high school, he began to manage assets for clients who found him through word of mouth. By the time he shut those accounts to join a Goldman Sachs Group Inc. long-short equity hedge fund as an analyst, he was overseeing $9 million with a nearly 25% annualized return over six years, he said.He started Seahawk in October 2017. Marketed as a macro fund, it has the flexibility to invest in all asset classes ranging from stocks and credit to currencies and derivatives. Liang sees the vanishing breed of bold investors including George Soros, Stanley Druckenmiller and Julian Robertson as his role models. When investors dumped the high-yield dollar-denominated bonds of Chinese property companies during the March 2020 market correction, he swooped in to buy, pocketing a gain of almost 20% that month.It hasn’t all been smooth sailing. The fund lost 11% in 2019, according to a newsletter.“We are naturally very contrarian,” Liang said. “We are embracing volatility.”(Updates with performance of China-focused hedge funds in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- The Indian rupee’s recent gains could be short-lived as pressure grows on Prime Minister Narendra Modi’s administration to announce a nationwide lockdown to curb a deadly wave of coronavirus infections.The prospect of stricter curbs is reviving memories of last year when similar measures dragged India’s economy into its worst contraction in four decades. It’s also threatening to weaken the rupee, which is among Asia’s top three performers this month, thanks to heavy foreign inflows for initial public offerings, a dovish Federal Reserve and a glut of dollars at state-run banks.“The recovery in the rupee in recent weeks reflects the softer dollar and weaker import demand as restrictions were imposed,” Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. “If a nationwide lockdown were to be implemented, we could see some near-termweakness in the rupee.”A technical gauge is also signaling that the rupee’s advance maybe losing momentum. The dollar-rupee’s slow stochastics, a momentum indicator, shows that the currency pair is in oversold territory. The rupee rose 0.8% last week to 73.51 per dollar.Goh forecasts the rupee to fall to 76 per dollar in the second quarter but expects further declines to be limited by a reduction in imports.India’s capital extended its lockdown for another week while the nation reported 403,736 new virus cases on Sunday, and more than 4,000 Covid-19 deaths for a second day. Modi’s political allies, top business leaders and even U.S. President Joe Biden’s chief medical adviser have said lockdowns could be the only way to stem the world’s worst virus outbreak.Analysts have already trimmed India’s growth forecasts as individual states tightened restrictions, but a nationwide curb could deal a much larger blow to the economy. The Reserve Bank of India stepped in last week to provide loan relief and pledged to inject 500 billion rupees ($6.8 billion) of liquidity to support growth.Inflation data on Wednesday is expected to provide more economic cues. Consumer prices are forecast to have climbed 4.1% in April from a year earlier, the slowest pace since January, to stay within the RBI’s 2%-6% target range, which would provide room for more support measures. However, signs of more quantitative easing would be bad news for the rupee.The currency could remain supported as expectations of a surge in IPOs this year keeps inflows coming, although its near-term trend points to a downside as virus cases show no sign of slowing.Below are the key Asian economic data and events due this week:Monday, May 10: Australia business confidence and retail salesTuesday, May 11: New Zealand retail card spending, Japan household spending, China CPI and PPI, Philippine 1Q GDP, Malaysia 1Q GDP and BoP current account balanceWednesday, May 12: India CPI and industrial productionThursday, May 13: Japan BoP current account balance, BSP rate decisionFriday, May 14: New Zealand businessNZ manufacturing PMIFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Investors are bracing for market fallout as state after state locks itself down in India to contain the spread of the coronavirus as infections and deaths surge.More than two thirds of states are shut if assessed by their contribution to national output, analysts at Jefferies calculated last week. Tamil Nadu, which houses foreign manufacturers including BMW and Dell, will also close from Monday, while Delhi extended its lockdown for another week. The measures come as pressure builds on Prime Minister Narendra Modi to impose strict nationwide curbs as he did last year.All of that is forcing a reassessment among investors who had hoped that less-severe curbs would soften the blow to economic growth. Earlier in May, India’s central bank assured markets that it expects the dent in aggregate demand to be moderate in comparison with a year ago, with “containment measures being localized and targeted.”The news of strict lockdowns in several states may hurt sentiment ahead, Ajit Mishra, vice president for research at Religare Broking Ltd., wrote in a report. Investors will be watching key macroeconomic data including inflation and factory output this week as well as the vaccine drive, he said.Vaccine shortages have complicated efforts to tame the outbreak, leaving investors assessing Modi’s next moves and guessing how long states will have to remain shut. Amid the uncertainty, foreign investors pulled $1.9 billion from India’s stocks and debt in April, the biggest outflow in a year, according to data compiled by Bloomberg.“While India has refrained from a national lockdown thus far given its huge economic costs, the scales are tipping fast towards humanitarian benefits of curbing mass transmission, as new infections continue to rise with no peak in sight,” said Chang Wei Liang, an analyst at DBS Bank. “Even without a lockdown, mobility data for Indian cities are already showing that less and less people are moving out of their homes. This implies a natural brake to retail spending and business investment, until mass viral transmission ceases.”Here’s how the crisis is impacting markets:Sovereign BondsRecent interventions from the Reserve Bank of India have kept yields on 10-year sovereign bonds in check. But, the lockdowns could make it hard to keep borrowing costs low for much longerAny revenue shortfall would stoke fears of a further rise in government borrowings, already near records, adding upward pressure on yieldsEarlier this month, the central bank announced the second tranche of its Government Securities Acquisition Programme -- India’s version of quantitative easing -- under which it will buy 350 billion rupees ($4.8 billion) of sovereign bonds on May 20. Read about more steps that the RBI can take hereThe lockdowns risk higher prices for everything from essential drugs to cars, due to the disruption of supply chains. Consumer-price inflation was already on course to test the upper limit of the RBI’s 2%-6% target, and recent gains in wholesale prices signal more pressure. If those strains build, the RBI may struggle to sell bonds to investors at current yieldsRupeeRelative progress fighting the pandemic has been an important factor in global currency markets. India and South Africa present a case study in that among the so-called Fragile Five emerging-markets: Turkey, Brazil, South Africa, India and IndonesiaIndia’s rupee is down about 0.5% against the dollar this quarter even after a recent rebound, while South Africa’s rand has gained 5.1%. Read more about the rupee outlookIndia is facing the world’s worst outbreak, contributing to half of the fresh infections in the world, while South Africa has seen new cases fall about 90% from a recent peak in January. India reported 669 infections per 100,000 people over the past month, about 10 times that of South Africa, according to Bloomberg calculations based on data compiled by Johns Hopkins UniversityThe rupee has slipped down the rankings relative to Asian peers after leading the pack in the first quarter. Any national lockdown could deal a further blowStocksJefferies forecasts India’s economy will grow 10.2% in the year through March 2022, down 3 percentage points from its initial outlook. The figure already must be taken with a grain of salt given the contraction in the year-ago period. Any slowdown could weigh on corporate earningsAnalysts have started to cut price targets for stocks of some of the biggest banks and automobile giants“Markets will correct if the government announces a nationwide lockdown,” said Naveen Kulkarni, chief investment officer at Axis Securities Ltd. “However, the critical factor will be the duration. The longer any lockdown is, the greater will be the correction.”Corporate BondsGoldman Sachs turned neutral on Indian credits last month, expecting limited room for outperformanceCiting headwinds due to lockdowns, research firm CreditSights also changed its recommendation last month on local companies including Indian Oil Corp. and Reliance Industries Ltd. to underperformDBS Bank warned that the market is getting complacent after India’s dollar bonds showed some signs of recovery after a sell-off in the first half of AprilInvestors may be too optimistic given the likelihood of a more persistent impact from the pandemic fallout on the finances of companies and households, it saidFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Sony Group Corp. warned a group of analysts the PlayStation 5 will remain in short supply through 2022, suggesting the company will be constrained in its ability to boost sales targets for its latest games console.While reporting financial results in late April, the Japanese conglomerate said it had sold 7.8 million units of the console through March 31, and it is aiming to sell at least 14.8 million units in the current fiscal year. That would keep it on pace to match the trajectory of the popular PlayStation 4, which has sold in excess of 115.9 million units to date.In a briefing after those results, Sony told analysts it is challenging to keep up with strong demand. The PS5 has been difficult to find in stock since its release in November, in part because of shortages in components such as semiconductors, and the company hasn’t given an official estimate for when it expects supply to normalize.“I don’t think demand is calming down this year and even if we secure a lot more devices and produce many more units of the PlayStation 5 next year, our supply wouldn’t be able to catch up with demand,” Chief Financial Officer Hiroki Totoki said at the briefing, according to several people who attended and asked not to be named as it wasn’t public.A Sony spokesman declined to comment.Sony said it would buy back up to 200 billion yen ($1.8 billion) of its own shares after reporting profit for the March quarter that fell short of analyst estimates. It forecast that operating profit would slide about 4% in the current fiscal year, but analysts have been weighing whether the company could exceed the conservative outlook with the help of strong demand for the new console and games.Shares have dropped about 8% since the earnings report on April 28, after rising 75% over the previous year.Read More About Sony’s Plans For The Year AheadTotoki told analysts that Sony needs to ramp up production as soon as possible and make sure there are consoles on store shelves. Demand will remain high regardless of the Covid-19 situation, the CFO assured an analyst wary about Sony’s ability to fully capitalize on the stay-at-home entertainment surge triggered by lockdowns and emergency orders.“We have sold more than 100 million units of the PlayStation 4 and considering our market share and reputation, I can’t imagine demand dropping easily,” he said.Still, the company’s latest earnings report suggests that stay-at-home demand is leveling off. Sony said monthly active users on PlayStation Network fell to 109 million at the end of the January-March period from 114 million a quarter earlier and sales of full games also declined in the period from a year earlier.Rival Nintendo Co. warned last week that component shortages could affect production. It’s officially targeting sales of 25.5 million consoles in the year ending March 2022, down slightly from the previous year. But internally, Nintendo’s management is said to be shooting for production of between 28 and 29 million consoles, Bloomberg News has reported.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.