In today’s top stories, Apple plans to move 5% of iPhone 14 production to India, a survey of investors sees the Nasdaq 100 falling 10% this earnings season and Unilever’s CEO announces their exit. Meanwhile, Hong Kong’s decision to scrap quarantining lifts travel stocks and a market expert sees opportunities in shorting ETFs with large inflows.
Apple looks to India for production
Apple [AAPL] has announced it’s to move some of its production of the iPhone 14 to India. Though China has long been the desired location, tensions between Washington and Beijing mean Apple is keen to reduce its reliance on the country. JPMorgan expects 5% of production to be based in India from late this year. The price of the latest model has been jacked up as inflation and manufacturing costs soars.
Unilever CEO to step down
Unilever [ULVR.L] CEO Alan Jope is stepping down at the end of next year following five years leading the consumer goods giant. The news has come a little over three months after activist investor Nelson Peltz joined the board. “Growth remains our top priority, and in the quarters ahead I will remain fully focused on disciplined execution of our strategy, and leveraging the full benefits of our new organisation,” Jope said in a statement.
A catalyst for Hong Kong tourism
Hong Kong’s announcement that it’s scrapping mandatory hotel quarantine for overseas arrivals helped a number of domestic travel and tourism stocks to soar on Monday. Chinese travel agency Trip.com [9961.HK] closed 5.32% higher. Wang Chen, a partner at Shanghai-based Xufunds Investment Management, told South China Morning Post that the rule relaxation is “a catalyst” for travel stocks but that it’ll have a limited impact on the broader market.
Strong dollar to hit tech profits
The strengthening dollar could spell bad news for tech stocks as we head into the earnings season. More than two-thirds of the 914 respondents to Bloomberg’s MLIV Pulse survey reckon tech companies’ profits are set to disappoint. Tech earnings are predicted to lag the S&P 500 and this could result in the Nasdaq 100 plunging 10% from its current level. The index is down 31% year-to-date through 23 September.
The reason to short some ETFs
ETFs with large inflows are underperforming the broader market. That’s according to Shaun William Davies, one of authors of academic papers on the matter speaking to the Financial Times. He argues that there are opportunities out there as long as investors go against the tide, and the research suggests this means shorting those with the highest inflows and going long on those with the lowest inflows and largest outflows.
Boohoo not in vogue ahead of interim results
Boohoo’s [BOO.L] stock has been out of fashion this year, down roughly 69% year-to-date. In a bid to stave off sinking profits, the retailer introduced a £1.99 fee on returns, but this didn’t go down well. Furthermore, it has recently been accused of greenwashing. Boohoo says it has pulled its ESG socks up, but interim results reported on Thursday may not do much to bring the stock back into vogue.
Social media stocks slump
A drop in demand for digital advertising spending has dragged the tech sector down. Meta [META] and Pinterest [PINS] have slumped 58% and 38% since the turn of the year. The “impact of competition from video-centric platforms” like TikTok has also been partly to blame. Twitter [TWTR] is down around 4% year-to-date, although has pulled back from the $54.20 price that Musk might be forced to buy the company at.
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