In today’s top stories, retail traders boost AMTD shares by 520%, Alibaba is estimated to report its first-ever revenue decline and Volkswagen secures a $4bn deal with Innoviz. Meanwhile, Jefferies analysts believe that inflation could soon peak and BNY Mellon Worldwide Growth Fund beats 94% of its peers.
Reddit retail army strikes again
A little-known Hong Kong financial services provider, AMTD Idea Group [AMTD], rocketed 520% on Tuesday, according to Blomberg, with its subsidiary AMTD Digital [HKD] up more than 21,000% since mid-July. The rally was spurred by the army of Reddit retail investors who poured into AMC [AMC] and GameStop [GME] last year. AMTD’s board, which is headed up by chair and CEO Calvin Choi (pictured), published a thank you note on Tuesday but added that it was “monitoring the market closely for any unusual trading activities or abnormalities”.
Alibaba to report first revenue decline
Chinese tech behemoth Alibaba [9988.HK] is expected to report a first-ever revenue decline when it announces its earnings for the June quarter today. This is no surprise to Bloomberg Intelligence analyst Marvin Chen, who said that tech stocks must contend with lockdowns and have “also faced additional regulatory headwinds on growth prospects, which is a more structural and longer-term trend”. Revenue at Tencent [0700.HK] is expected to fall as well.
Jefferies’ inflation peak play
Amid the ongoing economic uncertainty, a recent decline in commodity prices has given analysts at Jefferies reason to believe that inflation could soon peak. In a 29 July note seen by CNBC, the bank said that “it is time to focus on quality stocks, which have derated on a relative P/E basis”. Value stocks should be put on the back burner while the risk of a recession remains, they added.
BNY Mellon likes Microsoft
It’s said that slow and steady wins the race and this is true of the BNY Mellon Worldwide Growth Fund, beating 94% of its global large stock growth peers in Morningstar’s Global Large-Stock Growth fund category, according to Barron’s. The team behind it has a long-term horizon and preference for companies with strong management. It’s owned Microsoft [MSFT] since the mid-1990s and sees plenty of growth potential in its cloud business Azure.
Volkswagen’s $4bn Lidar purchase
Shares in Israeli LIDAR maker Innoviz [INVZ] popped on Tuesday following the announcement that Volkswagen [VOW3.DE] will add its technology to all cars with autonomous driving capabilities. Innoviz will supply between five million and eight million sensors, which use lasers to enable a vehicle to detect surroundings. The contract win is worth $4bn and follows an existing agreement Innoviz has in place with BMW [BMW.DE].
Emerging markets buying opportunity
As the above chart shows, emerging markets have wildly underperformed the S&P 500 since early 2021, with the MSCI Emerging Market Index seeing roughly $5trn wiped off its valuation. Despite the decline, there may now be buying opportunities, especially in ecommerce and Chinese industrials Maria Negrete-Gruson, a portfolio manager on Artisan Partners’ sustainable emerging markets team, told Opto issue 13 that they’ve “been hit hard on valuations but still seem well positioned to deliver on earnings”.
Gold output falls at Polymetal
There’s a lot of uncertainty around the Russian gold miner [POLY.L] right now. As of 2 August, the share price has plunged 84% since the start of the year. Gold output fell 9% year-over-year to 326,000 ounces in the second quarter due to a combination of lower grades and operational shutdowns. A build-up of inventory pushed net debt $800m higher to $2.8bn.