In today’s top stories, BlackRock invests in infrastructure and Netflix outperforms global stocks. Meanwhile, fund managers highlight stocks set to outperform both in the near-term amid earnings announcements and the China tech stock rout, as well as in the long-term when the next bull market begins.
BlackRock to launch infrastructure fund
Investors are increasingly looking to buy green assets amid the inflationary environment. The largest asset manager globally, BlackRock [BLK], is to take advantage of this by launching a new infrastructure fund with the target of raising up to $7.5bn and has already secured $4.5bn. The fund will be structured “to survive well in an inflationary time,” the firm’s head of diversified infrastructure, Mark Florian, told Bloomberg.
Netflix is the top MSCI World performer
Last week’s stock bounce was led by top performers in the MSCI World index, according to FactSet data collated by CNBC. Netflix [NFLX] gained 25.9%, while Roblox [RBLX] jumped 20.4% and Just Eat Takeaway [TKWY.AS] closed 20% higher. Investors shouldn’t get too carried away, however. Any relief rally is expected to be limited and there will no doubt be further declines in the coming months.
Buy China big tech
Xi Jingping taking office for a third term and stacking his leadership team with loyalists has spooked foreign investors, with the exception of Foord Asset Management’s Brian Arcese. Speaking to CNBC on Monday, Arcese said that “China, in particular, is an attractive market [when stocks are] under 10 times earnings”. His top three picks are Alibaba [BABA], Tencent [TCEHY] and JD.com [JD].
Earnings strength drives rally
Heading into earnings season investors were fearing a mass equity sell-off, yet this hasn’t materialised so far. “Earnings are sharply better than expected,” which has been “driving the market’s newfound strength,” Jim Cramer said Monday on CNBC’s Mad Money. He identified 13 companies whose earnings reports are leading the rally. They include Goldman Sachs [GS], Johnson & Johnson [JNJ], Procter & Gamble [PG], Tesla [TSLA], and IBM [IBM].
Themes to lead the bull market
Tech stocks may seem the obvious choice for a bet on the bull market. However, “history has shown us that the leaders of the last bull market are not the leaders of this bull market, at least in the last 50 years,” Kevin Barry, chief investment officer at Summit Financial, told CNBC. Energy, aerospace and defence are sectors that could lead the charge this time around, according to Barry.
Lloyds likely to get a boost
Investors will be hoping that the Lloyds share price can rally following Q3 earnings on Thursday 27 October having sunk amid the madness in the mortgage market. Rising interest rates should boost its net interest margin and profits, but also increases the risk of customers defaulting on loans. Lloyds is “especially exposed” in such an environment “because of its reliance on traditional banking,” according to Hargreaves Lansdown equity analyst Sophie Lund-Yates.
Shopify’s Q3 to surprise
Falling demand for online shopping as customers watch their pennies has dragged the Shopify [SHOP] share price down 78.4% year-to-date ahead of Q3 earnings tomorrow. Despite revenue increasing in Q2, net loss widened and its operating costs increased due to the rise in traffic. The challenge for Shopify has been trying to figure out how it can expand its services into new realms to buffer against its mounting costs.