In today’s top stories, shares in XPeng and Li Auto were driven higher by the release of July delivery figures. Meanwhile, Alibaba was added to the SEC’s delisting watchlist and investors profited from emerging markets amid a weakening euro. Analysts at Credit Suisse and UBS also released their stock watchlists for the second half of the year.
China EV sales gather pace
China’s electric vehicle sales continue to gather pace, helped somewhat by a ramp up in production following brief lockdowns in Beijing and Shanghai. Li Auto [LI] delivered 10,422 vehicles in July, up 21.3% year over year, while XPeng [XPEV] delivered 11,524 units, up 43% from July 2021. While both numbers were down from June, this is a typical season pattern and not an indication of a drop in demand.
Alibaba a step closer to delisting
China’s big tech behemoth Alibaba [9988.HK] has inched closer to being deleted from the NYSE after the SEC added it to its delisting watchlist last week. The company will “strive to maintain” its dual listing but is also seeking to switch its Hong Kong listing from secondary to primary. This would allow it to apply to Stock Connect, making it easier for mainland China investors to access shares.
Credit Suisse picks to ride the rally
The stock market had its best month since 2020 in July and Credit Suisse believes the bullish run could continue. Analysts led by Credit Suisse’s Patrick Palfrey wrote in a note seen by CNBC that the Fed could turn dovish towards the end of the year. Stocks that are speculative, expensive, beaten down, volatile and highly shorted could rise from here, including Etsy [ETSY], Intuit [INTU], Salesforce [CRM] and Penn National Gaming [PENN].
Carry traders profit from weakening euro
With the dollar strengthening and US borrowing costs rising, carry traders are benefiting from a weakening euro. According to data aggregated by Bloomberg, those investing in emerging market currencies using borrowed euros are seeing profits of up to 29%. The EU falling into the recession before the US is likely to make funding carry trades by selling borrowed euros a more attractive option.
UBS lists high conviction stocks
UBS analysts have drawn up a list of stocks that should do well in the second half of the year. They include DuPont [DD], as “the market is not currently appreciating the significant shift in DuPont's exposure and growth following a series of strategic actions”. Walmart [WMT] is another pick as “it’s now approaching an inflection point, where it can leverage technology to reduce expenses and speed up its productivity loop”.
PayPal could cut guidance
PayPal [PYPL] was in the headlines last week following reports that Elliott Management was building a stake. It’s thought that the activist investor wants to accelerate cost-cutting measures. The payment processor lowered its full-year guidance back in April and another guidance cut is not out of the question when it reports Q2 earnings today. The call should be an opportunity to hear how it’s improving operational leverage.
Jay Jacobs on why a long-term mindset is key to success
The US head of thematics and active equity at BlackRock spoke to Opto magazine in its latest issue about his experience in investing. From where he goes to get investment insights to the most memorable moment from his career, Jacobs answered five of Opto’s top questions in this Q&A. When it comes to finding alpha, he believes there’s one main factor that investors should look out for.