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China’s November factory growth surges to 5-month high: Caixin PMI hits 51.5

China’s manufacturing sector recorded its strongest growth in five months in November, offering fresh signs of recovery in the world’s second-largest economy.

The Caixin/S&P Global Manufacturing Purchasing Manager’s Index (PMI) hit 51.5, significantly surpassing forecasts of 50.5 in a Reuters poll.

This marks the second consecutive month the index has stayed above the 50-point threshold, indicating expansion in the manufacturing sector.

The Caixin PMI primarily tracks the performance of small- and medium-sized enterprises, as well as private firms, providing a broader view of China’s economic health beyond the large state-owned enterprises captured in the official PMI data.

The official PMI, released earlier on Saturday, also showed growth, rising to 50.3 in November from 50.1 in October, exceeding market expectations of 50.2.

Stimulus efforts begin to show results

The stronger-than-expected growth reflects the initial impact of China’s recent stimulus measures aimed at reviving its faltering economy.

Introduced in late September, these policies include increased fiscal spending, measures to stabilize the struggling property market, and a reduction in the reserve requirement ratio (RRR) by the People’s Bank of China.

This RRR cut has injected additional liquidity into the financial system by lowering the amount of cash banks must hold in reserve.

While the manufacturing data paints a positive picture, challenges persist in other sectors.

China’s industrial profits declined by 10% in October year-over-year, marking the third consecutive month of contraction.

Additionally, real estate investment dropped by 10.3% from January to October compared to the same period last year, highlighting the property sector’s ongoing struggles.

However, retail sales in October outperformed expectations, hinting at a rebound in consumer spending.

These mixed signals underscore the complexity of China’s recovery trajectory as it navigates internal and external economic pressures.

In a September Politburo meeting, Chinese leaders intensified efforts to boost growth, pledging support for infrastructure development and fiscal spending.

Early November saw the unveiling of a five-year, 10 trillion yuan ($1.4 trillion) plan to address mounting local government debt, with indications that further economic support will follow in 2024.

External challenges loom for China

Despite these positive indicators, external risks remain a concern.

Donald Trump’s re-election in 2024 has raised fears of renewed trade tensions between the US and China, particularly the possibility of higher tariffs on Chinese goods.

Such measures could weigh heavily on China’s export-driven economy, potentially offsetting gains in domestic growth.

The November data provides a cautiously optimistic outlook for China’s economy, but significant hurdles lie ahead.

Sustained recovery will depend on the continued effectiveness of stimulus measures, the stabilization of the property sector, and the resolution of external trade challenges.

As China navigates these complexities, its policymakers are likely to remain focused on fostering growth while managing risks, ensuring a balanced approach to economic revival.

The post China’s November factory growth surges to 5-month high: Caixin PMI hits 51.5 appeared first on Invezz

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France’s government crisis: A warning for financial stability

France is on the verge of a political and financial crisis, with Prime Minister Michel Barnier’s minority government under threat of collapse. 

An impending vote of no-confidence and contentious budget negotiations have rattled markets, pushing France’s borrowing costs to levels comparable to crisis-hit Greece. 

This political distress, combined with France’s rising debt levels, has placed the country’s economic trajectory under the microscope. 

What is happening in France’s government?

Prime Minister Michel Barnier faces mounting pressure to pass a 2025 budget aimed at reducing France’s deficit. 

The budget proposes €60 billion in tax hikes and spending cuts to bring the deficit from 6% to 5% of GDP next year.

However, opposition parties on both the far-left and far right have resisted these measures, accusing the government of ignoring their priorities.

Marine Le Pen’s far-right National Rally has demanded further concessions.

While Barnier has already dropped a planned electricity tax hike, the National Rally is pushing for pension increases, tougher immigration policies, and the preservation of drug reimbursements. 

Le Pen has warned that if these demands are not met, her party will support a no-confidence vote as early as next week.

How does the budget affect France’s borrowing costs?

France’s borrowing costs have risen sharply in recent months.

The yield on French 10-year bonds has climbed to 3%, matching Greece’s borrowing costs for the first time. 

This has completely shifted investor perceptions of French creditworthiness. During the eurozone debt crisis in 2012, French yields were 37 percentage points lower than Greece’s.

Source: Reuters

The gap between French and German 10-year bond yields, a key risk indicator, has widened to 82 basis points, compared to under 50 basis points before President Emmanuel Macron called a snap election in June. 

This divergence reflects investor concerns about France’s political instability and its rising debt-to-GDP ratio, currently at 112% and climbing.

Meanwhile, former crisis-stricken countries like Greece, Portugal, and Spain have made significant progress in reducing their debt burdens.

Greece’s debt-to-GDP ratio has fallen from over 200% during the pandemic to around 160% today, with a projected downward trajectory. France, by contrast, faces growing fiscal challenges.

Why is France’s government struggling to govern?

The June-July parliamentary elections left France with a hung parliament, divided into three major blocs: the left-wing New Popular Front, Macron’s centrists, and Le Pen’s National Rally.

None achieved an outright majority.

Macron appointed Barnier as prime minister, relying on the National Rally’s conditional support to pass legislation.

However, Le Pen has increasingly distanced herself from the government. While her party initially offered tacit backing, she has now set several “red lines” that must be met to avoid a no-confidence vote.

These include scrapping proposed cuts to social security and offering more robust policies on crime and migration.

Barnier has warned that a government collapse could lead to financial turmoil.

Finance Minister Antoine Armand echoed these concerns, likening the potential fallout to “a plane stalling at altitude.”

What are the market implications?

The political uncertainty has triggered a sell-off in French assets.

Investors fear that a no-confidence vote could derail fiscal reforms, delaying crucial efforts to reduce the deficit.

French bond yields have risen, and market volatility remains high.

However, some stabilization was seen towards the end of November, with the spread between French and German bond yields narrowing by four basis points, the largest decline since July. 

French banking stocks also saw modest gains, with Société Générale and BNP Paribas rising 1.8% and 0.9%, respectively.

Still, analysts warn that this slight recovery does not reverse the broader trend of declining investor confidence.

As Barnier faces a divided parliament and escalating demands from the National Rally, markets remain wary of prolonged instability.

What happens if the government collapses?

If the government falls, France will not face a shutdown like in the United States.

This is thanks to constitutional provisions allowing temporary tax collection and spending by decree. 

However, the political uncertainty could delay critical reforms and weaken France’s standing in the eurozone.

Barnier’s administration would continue in a caretaker capacity, but Macron would need to appoint a new prime minister to navigate a fractured parliament.

This process could further erode market confidence and drive up borrowing costs.

The European Union has also expressed concern. France’s fiscal trajectory is closely monitored by the European Commission, which requires member states to keep deficits below 3% of GDP.

Failure to comply with these rules could set a dangerous precedent for the eurozone.

Why does this matter for the eurozone?

France is the second-largest economy in the eurozone, and its fiscal health has significant implications for regional stability. 

During the 2012 debt crisis, countries like Greece and Portugal faced severe financial distress, threatening the euro’s viability.

While the European Central Bank intervened then by buying bonds, similar support is no longer guaranteed.

A rise in French borrowing costs could ripple through the eurozone, increasing financing costs for other member states.

Investors may also question the credibility of EU fiscal rules if France, a core economy, continues to exceed deficit limits without consequence.

What’s next for France?

Barnier’s next major test is the Social Security budget vote on Monday, the 2nd of December.

If the government invokes Article 49.3 of the Constitution to bypass parliament, opposition parties are likely to file a no-confidence motion.

Whether Le Pen’s National Rally aligns with the left to topple the government remains to be seen.

As markets watch closely, the stakes are high. A government collapse would deepen France’s fiscal challenges and risk further financial instability. 

The unfolding crisis also serves as a reminder of the fragile relationship between politics and economics in the eurozone.

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Blackrock stock price analysis amid the HPS, Prequin, GIP buyouts

The Blackrock stock price has done well this year as it jumped by 75% from its lowest level in January. It recently jumped to a record high of $1,067, pushing its market cap to over $158 billion.

Blackrock is going through big changes

This year is turning into Blackrock’s biggest year since 2009 when it acquired iShares from Barclays. That acquisition has made it the biggest asset manager in the world with over $11 trillion in assets.

2024 is an equally important year because of the company’s acquisitions and impact. Blackrock started the year by acquiring Global Infrastructure Partners (GIP) in a deal that was valued at about $15 billion. 

This acquisition gave it access to some key assets like the London City Airpot, Edinburg Airport, and the Port of Melbourne. Notably, it gave Blackrock a big role in the fast-growing industry of infrastructural investments. 

Blackrock then acquired Prequin, a London-based company that provides data to hedge funds, private equity companies, placement agents, and banks. This acquisition gives it more visibility in the world of alternative asset managers.

Most importantly, Blackrock is now buying HPS Investment Partners in a deal valued at over $12 billion. That deal, which could be announced this week, will have a major impact because it will bring Blackrock’s alternative assets to $500 billion. 

That will make it the fifth-biggest alternative manager after Blackstone, KKR, Apollo Global, and Brookfield Asset Management. 

HPS is seen as a top player in the alternative investment because of its specialty in the private credit industry that has grown substantially in the past few years. It manages about $123 billion and $22 billion in private credit.

Blackrock’s business is doing well

These acquisitions will help to supercharge Blackrock’s business trajectory that is doing significantly well. A good example of this is in the crypto industry, where the company has become the biggest provider of ETFs. 

Data shows that the iShares Bitcoin Trust (IBIT) has accumulated over $48 billion in assets. Its iShares Ethereum Trust (ETHE) has gained over $5.3 billion in assets this year. These trends are expected to continue doing well this year as demand from institutional investors rise.

Another notable asset in Blackrock’s business is the iShares S&P 500 ETF (IVV), which has attracted over $56 billion in inflows this year. This growth has brought its total assets under management to over $577 billion, meaning that it will pass the popular SPDR S&P 500 ETF (SPY), which has over $627 billion in assets. 

This growth has also translated to its financial results. The most recent financial results showed that Blackrock had over $360 billion in net inflows, bringing its total assets under management to over $11.5 trillion. 

These are substantial sums that are equivalent to about 46% of the US GDP. Blackrock benefits from higher assets because it makes its money through fees. 

Blackrock’s financials showed that its revenue and margins are growing, helped by its scale and assets. Total revenue rose to over $5.19 billion, while its net income jumped to $1.63 billion.

Analysts are optimistic on BLK stock

Analysts are optimistic that Blackrock’s business will continue doing well. The estimate is that its revenue will rise by about 14% to over $20.7 billion. This revenue will jump by 15.1% to $23.4 billion. 

The same growth trajectory is expected in the coming years. Analysts expect that the earnings per share will be $43.22 this year, followed by $48.3 in the next financial year. There are odds that Blackrock’s business will do better than estimates as it has done in the past few years. 

Most analysts are bullish on the Blackrock stock price. The average stock target is $1,088, which is much higher than the current $1,022. Some of the most bullish analysts are from Deutsche Bank, Evercore ISI, Barclays, and Morgan Stanley. 

Blackrock is also a future dividend aristocrat that has raised dividends in the last 14 years. It has a low payout ratio of 49.16% and a yield of 2%.

Blackrock stock price analysis

BLK chart by TradingView

The weekly chart shows that the BLK share price has been in a strong bullish trend in the past few months. It has formed a cup and handle pattern, a popular bullish sign. By measuring the distance between the upper side and the lower side of the cup, we estimate that the stock will rise to $1,356, which is about 32% above the current level.

Blackrock share price has remained above the 50-week and 100-week moving averages. Also, the Relative Strength Index (RSI) and the MACD indicators have continued rising, a sign that it has a bullish momentum. 

The alternative scenario, which is also possible is a situation where the stock drops and retests $900 and then resumes the bullish trend. This pattern is known as a break and retest pattern and is one of the most bullish signs.

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Here’s why the Honda Motor stock price has crashed

Honda Motor stock price has remained under pressure this year as it moved into a deep bear market. It has dropped by over 30% and was trading at ¥1,300, its lowest level since August 5. This performance makes it one of the worst-performing stocks in the Nikkei 225 index.

Honda Motor stock price formed a death cross

The daily chart shows that the Honda Motor share price retreated sharply in the past few months. 

On the daily chart, the index has formed a death cross pattern as the 200-day and 50-day Exponential Moving Averages (EMA). In most periods, this is one of the most bearish patterns in the market. 

The Honda Motor stock price retreated below the key support level at ¥1,325, its lowest level on November 14. It has also crashed below the support at ¥1,332, its lowest level in December last year. This price was the lower side of the head and shoulders chart pattern.

The Honda share price has also dropped below the Ichimoku cloud indicator. Also, the MACD indicator has moved below the zero line, while the Relative Strength Index (RSI) has continued falling and is near its oversold level. 

Therefore, the path of the least resistance for the Honda Motor stock price is bearish, with the next point to watch being at ¥1,136, its highest point in August 2022. On the flip side, a move above the resistance at ¥1,400 will invalidate the bearish view.

Honda chart by TradingView

Why Honda shares are falling

Honda Motor share price has crashed because of the ongoing challenges in the automobile industry and its business in China. 

China, which has been one of its top markets, is facing substantial challenges as many local brands have gained market share. Some of the most notable car brands in China are Nio, BYD, Li Auto, and XPeng. And recent data shows that China’s vehicle exports have continued growing in the past few months. Honda’s sales in China have retreated by over 30% this year. 

The Honda stock price has also dropped because of its late entry into the electric vehicle (EV) industry. While growth in the EV sector continues is slowing, many EV players are gaining market share. Also, its deal with General Motors fell apart. That deal involved manufacturing affordable compact vehicles for the US market. 

It has also declined as concerns about Donald Trump won the election and hinted that he will impose tariffs on top imports. Such tariffs would hurt the company because it is one of the top exporters to the US. 

The most recent financial results showed that the company’s revenue for the first six months of the year stood at over ¥10 trillion, a 12% increase from the same period. Its operating profit rose by 6.6% to ¥742 billion. 

However, the company’s profits dropped by 15.6% to ¥741 million, while its profit attributable to owners fell by almost 20% to ¥494 billion. 

Honda Motor estimates that its revenue for the six months to March 2025 will be ¥21 trillion, a 2.8% annual increase. Its operating profit is expected to jump by 2.8% to ¥14 billion, while its profit before taxes will drop by 12.6% to ¥12 trillion.

For starters, while Honda Motor is known for its vehicles, it is a big player in motorcycles and power products. It sold over 5.32 million motorcycles, 910,00 vehicles, and 831,000 power products.

Analysts now believe that Honda may decide to merge or do a joint venture with Nissan Motor, another troubled company. Nissan has said that it was open to have Honda buy the stake owned by Renault, the giant French automaker. Honda Motor stock price has also coincided with that of other companies. Toyota Motor share price has dropped by over 30% from its year-to-date high, while Mazda Motor has fallen by 48%. In Europe, Renault and Stellantis share prices have also collapsed.

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SCHD ETF is firing on all cylinders: could its stock hit $50?

The Schwab US Dividend ETF (SCHD) stock price has done well this year and is hovering near its all-time high of $29.70. It has jumped by 16.5%, a notable performance for a fund that has no exposure to the fast-growing technology sector. 

Top Schwab US Dividend ETF stocks are doing well

The SCHD ETF has soared this year, helped by the strong performance of some of its top companies. 

  • Cisco stock is up by 20% this year – The biggest company in the fund has soared, helped by its strong performance following the acquisition of Splunk, a leading player in the cybersecurity industry. 
  • Blackrock – Blackrock stock price has soared this year after its assets under management jumped to over $11.5 trillion. The company has also benefited from its acquisitions of Global Infrastructure Partners, Prequin, and the rumored buyout of HPS. 
  • Home Depot – The HD stock price has jumped by almost 30% this year as the company returned to growth. HD benefits from its scale and the fact that its products are seen as being of a high quality and affordable price. It also acquired SRS Distribution in a $18.2 billion deal.
  • Verizon – Verizon and other large technology companies have soared this year, helped by their strong dividends and cost cuts. Verizon shares have jumped by almost 20% this year.
  • Altria – MO, a leading company in the tobacco industry, has jumped by 50% in sync with other large players in the industry like Philip Morris and British American Tobacco. Its performance is mostly because of its strong profits and dividends. 
  • Bristol-Myers Squibb – BMY, a top player in the pharmaceutical industry, has risen by almost 20% this year.

Other top companies in the Schwab US Dividend Equity ETF like Coca-Cola, Oneok, Fastenal, and Best Buy have done well this year.

The SCHD’s performance still lags that of the S&P 500 and the Nasdad 100 indices. Data shows that its total return, which is made up of the stock return and the returned dividends, has risen by 19.7% this year. In contrast, the SPDR S&P 500 (SPY) and the Invesco QQQ ETF (QQQ) ETFs rose by 28% and 25% this year.

Read more: Love the SCHD ETF? USA is a great 10% yielding alternative

The latter two funds always beat the SCHD because of their exposure to the technology industry. The technology sector accounts for about 31% of the S&P 500 index. Its biggest constituent companies are firms like Apple, NVIDIA, Microsoft, and Amazon.com. 

Similarly, the Invesco QQQ tracks the Nasdaq 100 index, and is made up of the biggest tech companies in the US. The most notable companies are in the tech sector and is followed by consumer discretionary, healthcare, telecommunication, and consumer staples. 

Therefore, while the SCHD ETF is a cheaper ETF than QQQ and SPY, I believe that the latter two are better investments. Besides, SCHD’s dividend yield of 3.3% is not all that bigger than the other 2.

SCHD ETF analysis

SCHD chart by TradingView

The daily chart shows that the SCHD stock has done well in the past few months. It has jumped from $24.73, its lowest level in April this year to $29.70. 

The stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA), a popular bullish sign. Also, the Relative Strength Index (RSI) and the MACD indicators have continued soaring.

It has formed a rising wedge chart pattern, a popular bearish sign. Therefore, the odds of the SCHD ETF rising to $50 in the near term are a bit limited. However, in the long term, the stock will bounce back and hit that level in the next few years. 

Read more: Very bad news for the popular SCHD ETF

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Adobe stock price triangle pattern points to big moves ahead

Adobe stock price has been a top laggard this year as the company became a top laggard in the artificial intelligence (AI) industry. The ADBE share price was trading at $520 after falling by 13% this year. It has retreated by over 26% from its highest level in 2021, while the tech-heavy Nasdaq 100 index has soared to a record high.

Adobe is lagging in the AI space

The AI industry has been the fastest-growing theme in the technology industry in the past two years. This technology has helped to boost some of the best-known players in the industry, like NVIDIA, Microsoft, Palantir, and Google.

Naturally, Adobe would be one of the top beneficiaries of the industry because of its business. Adobe is involved in the creativity, marketing, and commerce industries that are easy to disrupt with the AI technology.

However, in reality, while Adobe has launched several AI tools, many investors believe that its business is not doing well. The fear is that these AI tools are not leading to more demand for its solutions. 

Adobe’s business growth has been fairly weaker than expected. A good example is how its business performed in the last quarter. The report showed that Adobe’s revenue stood at $5.41 billion, a 11% year-on-year growth rate. This growth was driven mostly by the creative cloud, document cloud, and experience cloud.

Most of Adobe’s revenue came from its digital media segment whose revenue rose to $4 billion. As part of this division, its creative revenue rose to $3.19 billion, while the document cloud business revenue was $807 million. 

Adobe’s Digital Media segment had an annualised recurring revenue rose to $504 million, while the digital experience was $1.35 billion.

Adobe’s advantage over the years has been the strength of its brands like Photoshop and Illustrator. These are some of the best-known applications in the respective industries. 

The challenge is that these businesses are seeing strong competition from the likes of Figma and Canva. Figma is now valued at over $12.5 billion, while Canva is now valued at almost $50 billion. These are notable developments since the two companies were established in 2012.

Read more: Adobe issues tepid guidance: ‘I’m not that surprised’

Is Adobe overvalued or a bargain?

There are two schools of thought when it comes to its valuation. Some analysts believe that the company’s $227 billion valuation makes it highly overvalued. Other analysts see it as a dirt cheap bargain. 

Looking at the numbers, we see that Adobe has a forward price-to-earnings ratio of 28.2, slightly higher than the sector median of 25.5. The trailing twelve months P/E ratio is about 28.86, also slightly higher than the sector median of 25. These numbers are much lower than the five-year averages of over 35.

Adobe’s forward EV to EBITDA ratio is 20, higher than the sector median of 15. This is an important number that looks at a company’s enterprise value compared to its EBITDA.

Therefore, using these metrics, there are signs that the company is relatively overvalued. 

For a SaaS company like Adobe, the best way to look at its valuation is known as the rule-of-40. This is an important rule that compares a company’s growth and its margins. 

In its case, its revenue growth is about 11%, while the net income margin is 26%. These figures brings the rule-of-40 figure to 37, meaning that the company is a bit pricey. 

Read more: Adobe stock tanks 10% as Q1 earnings beat but guidance disappoints

Adobe stock price analysis

The weekly chart shows that the ADBE share price has moved sideways in the past few months. It remains much lower than the all-time high of $700. 

The stock is consolidating at the 50-week and 100-week Exponential Moving Averages (EMA). Most importantly, it has formed a symmetrical triangle pattern, which is nearing its confluence level.

Therefore, the stock will likely have a big move in the next few weeks. The key support and resistance levels to watch will be at $470 and $590. A break above the resistance level at $590 will point to more gains, potentially to $650. On the flip side, a drop below the support at $470 will signal more downsides to $470.

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China’s November factory growth surges to 5-month high: Caixin PMI hits 51.5

China’s manufacturing sector recorded its strongest growth in five months in November, offering fresh signs of recovery in the world’s second-largest economy.

The Caixin/S&P Global Manufacturing Purchasing Manager’s Index (PMI) hit 51.5, significantly surpassing forecasts of 50.5 in a Reuters poll.

This marks the second consecutive month the index has stayed above the 50-point threshold, indicating expansion in the manufacturing sector.

The Caixin PMI primarily tracks the performance of small- and medium-sized enterprises, as well as private firms, providing a broader view of China’s economic health beyond the large state-owned enterprises captured in the official PMI data.

The official PMI, released earlier on Saturday, also showed growth, rising to 50.3 in November from 50.1 in October, exceeding market expectations of 50.2.

Stimulus efforts begin to show results

The stronger-than-expected growth reflects the initial impact of China’s recent stimulus measures aimed at reviving its faltering economy.

Introduced in late September, these policies include increased fiscal spending, measures to stabilize the struggling property market, and a reduction in the reserve requirement ratio (RRR) by the People’s Bank of China.

This RRR cut has injected additional liquidity into the financial system by lowering the amount of cash banks must hold in reserve.

While the manufacturing data paints a positive picture, challenges persist in other sectors.

China’s industrial profits declined by 10% in October year-over-year, marking the third consecutive month of contraction.

Additionally, real estate investment dropped by 10.3% from January to October compared to the same period last year, highlighting the property sector’s ongoing struggles.

However, retail sales in October outperformed expectations, hinting at a rebound in consumer spending.

These mixed signals underscore the complexity of China’s recovery trajectory as it navigates internal and external economic pressures.

In a September Politburo meeting, Chinese leaders intensified efforts to boost growth, pledging support for infrastructure development and fiscal spending.

Early November saw the unveiling of a five-year, 10 trillion yuan ($1.4 trillion) plan to address mounting local government debt, with indications that further economic support will follow in 2024.

External challenges loom for China

Despite these positive indicators, external risks remain a concern.

Donald Trump’s re-election in 2024 has raised fears of renewed trade tensions between the US and China, particularly the possibility of higher tariffs on Chinese goods.

Such measures could weigh heavily on China’s export-driven economy, potentially offsetting gains in domestic growth.

The November data provides a cautiously optimistic outlook for China’s economy, but significant hurdles lie ahead.

Sustained recovery will depend on the continued effectiveness of stimulus measures, the stabilization of the property sector, and the resolution of external trade challenges.

As China navigates these complexities, its policymakers are likely to remain focused on fostering growth while managing risks, ensuring a balanced approach to economic revival.

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JEPI ETF forecast: here’s why the stock could reverse soon

The JPMorgan Equity Premium Income ETF (JEPI) stock is firing on all cylinders this year, helped by the strong performance of American equities. Its total return has been 17.7%, lower than that of the S&P 500 index, which has risen by 26%, and the Schwab US Dividend Equity’s (SCHD) 19%.

Strong stock market performance

The JEPI ETF has done well this year, helped by the strong performance of American equities. 

Broadly, the top equity indices like the Nasdaq 100 and S&P 500 have rallied to a record high, mostly because of the technology sector.

For example, NVIDIA stock price has jumped to a record high, bringing the market cap to over $3 trillion, making it the second-biggest company in the world.

Apple stock has also jumped by over 31% this year, making it the biggest firm in the world in terms of market cap. 

Other AI-focused companies like Meta Platforms, Palantir, and Alphabet have also jumped by double digits this year. 

This performance is notable for the JEPI ETF because of what the fund does. It has invested in about 100 companies in the S&P 500 index. In addition to those mentioned, other top players in the fund are Trane Technologies, The Southern Company, NextEra Energy, UnitedHealth, Thermo Fisher Scientific, and Linde. 

Most of these companies have published strong financial results this year. Data by FactSet shows that 95% of all companies in the S&P 500 index have published their financial results. 75% of these reported a positive EPS surprise and 61% had a positive revenue surprise.

The blended earnings growth of these companies was 5.8%, the fifth quarter of consecutive growth. These numbers mean that earnings growth are relatively strong in the United States, a trend that may continue.

America’s earnings growth continued even as concerns about the American economy remained. 

These concerns were invalidated as the economy continued growing this year. A report released last week showed that the economy expanded by 2.8% last quarter, helped by strong consumer spending. Analysts see the economy growing by 2.4% this year. 

JEPI limited by strong S&P 500 growth

The JEPI ETF performance has been hindered by its use of the covered call strategy. Covered call is a situation where investors buys assets and then sell call options on the same.

In this case, the JEPI fund has invested in companies in the S&P 500 index and then sold call options on it. A call option is a trade that gives investors a right but not the obligation to buy an asset. 

When the call option happens, the fund receives cash, which it distributes to its shareholders in the form of a dividend. Its dividend distributions also come from the payouts that it receives from the companies it has invested in.

The JEPI ETF, however, has underperformed the market because of the S&P 500 index’s performance. Ideally, when the S&P 500 index surges, it reduces its potential payouts because it hits the strike price.

JEPI ETF analysis

The daily chart shows that the JPMorgan Equity Premium Income ETF has been in a strong bullish trend in the past few months. It has remained above the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bulls are in control.

The MACD and the Relative Strength Index (RSI) indicators have continued rising in the past few months. However, it has formed a risky rising wedge pattern, which is made up of two ascending and converging trendlines. 

Therefore, there is a risk that the stock will suffer a sharp reversal to about $55.90. This target is about 8% below the current level.

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Blackrock stock price analysis amid the HPS, Prequin, GIP buyouts

The Blackrock stock price has done well this year as it jumped by 75% from its lowest level in January. It recently jumped to a record high of $1,067, pushing its market cap to over $158 billion.

Blackrock is going through big changes

This year is turning into Blackrock’s biggest year since 2009 when it acquired iShares from Barclays. That acquisition has made it the biggest asset manager in the world with over $11 trillion in assets.

2024 is an equally important year because of the company’s acquisitions and impact. Blackrock started the year by acquiring Global Infrastructure Partners (GIP) in a deal that was valued at about $15 billion. 

This acquisition gave it access to some key assets like the London City Airpot, Edinburg Airport, and the Port of Melbourne. Notably, it gave Blackrock a big role in the fast-growing industry of infrastructural investments. 

Blackrock then acquired Prequin, a London-based company that provides data to hedge funds, private equity companies, placement agents, and banks. This acquisition gives it more visibility in the world of alternative asset managers.

Most importantly, Blackrock is now buying HPS Investment Partners in a deal valued at over $12 billion. That deal, which could be announced this week, will have a major impact because it will bring Blackrock’s alternative assets to $500 billion. 

That will make it the fifth-biggest alternative manager after Blackstone, KKR, Apollo Global, and Brookfield Asset Management. 

HPS is seen as a top player in the alternative investment because of its specialty in the private credit industry that has grown substantially in the past few years. It manages about $123 billion and $22 billion in private credit.

Blackrock’s business is doing well

These acquisitions will help to supercharge Blackrock’s business trajectory that is doing significantly well. A good example of this is in the crypto industry, where the company has become the biggest provider of ETFs. 

Data shows that the iShares Bitcoin Trust (IBIT) has accumulated over $48 billion in assets. Its iShares Ethereum Trust (ETHE) has gained over $5.3 billion in assets this year. These trends are expected to continue doing well this year as demand from institutional investors rise.

Another notable asset in Blackrock’s business is the iShares S&P 500 ETF (IVV), which has attracted over $56 billion in inflows this year. This growth has brought its total assets under management to over $577 billion, meaning that it will pass the popular SPDR S&P 500 ETF (SPY), which has over $627 billion in assets. 

This growth has also translated to its financial results. The most recent financial results showed that Blackrock had over $360 billion in net inflows, bringing its total assets under management to over $11.5 trillion. 

These are substantial sums that are equivalent to about 46% of the US GDP. Blackrock benefits from higher assets because it makes its money through fees. 

Blackrock’s financials showed that its revenue and margins are growing, helped by its scale and assets. Total revenue rose to over $5.19 billion, while its net income jumped to $1.63 billion.

Analysts are optimistic on BLK stock

Analysts are optimistic that Blackrock’s business will continue doing well. The estimate is that its revenue will rise by about 14% to over $20.7 billion. This revenue will jump by 15.1% to $23.4 billion. 

The same growth trajectory is expected in the coming years. Analysts expect that the earnings per share will be $43.22 this year, followed by $48.3 in the next financial year. There are odds that Blackrock’s business will do better than estimates as it has done in the past few years. 

Most analysts are bullish on the Blackrock stock price. The average stock target is $1,088, which is much higher than the current $1,022. Some of the most bullish analysts are from Deutsche Bank, Evercore ISI, Barclays, and Morgan Stanley. 

Blackrock is also a future dividend aristocrat that has raised dividends in the last 14 years. It has a low payout ratio of 49.16% and a yield of 2%.

Blackrock stock price analysis

BLK chart by TradingView

The weekly chart shows that the BLK share price has been in a strong bullish trend in the past few months. It has formed a cup and handle pattern, a popular bullish sign. By measuring the distance between the upper side and the lower side of the cup, we estimate that the stock will rise to $1,356, which is about 32% above the current level.

Blackrock share price has remained above the 50-week and 100-week moving averages. Also, the Relative Strength Index (RSI) and the MACD indicators have continued rising, a sign that it has a bullish momentum. 

The alternative scenario, which is also possible is a situation where the stock drops and retests $900 and then resumes the bullish trend. This pattern is known as a break and retest pattern and is one of the most bullish signs.

The post Blackrock stock price analysis amid the HPS, Prequin, GIP buyouts appeared first on Invezz

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Asia-Pacific markets edge higher as investors eye key economic data from the region

Asia-Pacific markets traded slightly higher on Monday, kicking off a data-packed week with investors closely watching economic indicators from China, Japan, South Korea, and other regional economies.

Fresh manufacturing and retail figures, coupled with updates on trade and inflation, are expected to provide insights into the region’s economic recovery amid global uncertainties.

China’s PMI signals growth

China’s official manufacturing purchasing managers’ index (PMI) for November rose to 50.3, its highest since April and above economists’ expectations of 50.2, according to a Reuters poll.

This marked an improvement from October’s reading of 50.1.

However, the non-manufacturing PMI dipped slightly to 50.0 from 50.2, indicating stagnation in the service sector.

The composite PMI held steady at 50.8, signaling moderate expansion.

Meanwhile, the Caixin/S&P Global manufacturing PMI, which focuses on smaller manufacturers, showed further growth with a reading of 51.5, exceeding the forecast of 50.5.

These figures highlight the impact of China’s recent stimulus measures in bolstering industrial activity, even as challenges remain in other sectors, including real estate and consumer spending.

Asia-Pacific market indices

Elsewhere, Australia reported a robust 3.4% year-on-year rise in retail sales for October, the fastest pace since May 2023.

Monthly, sales grew by 0.6%, beating the forecasted 0.4% increase.

The data reflects strong consumer confidence despite global economic uncertainties.

In South Korea, the Kospi index traded near the flatline, while the small-cap Kosdaq rose 0.13%.

Preliminary trade data showed exports grew by 1.4% year-on-year in November, falling short of expectations for 2.8% growth and marking a sharp decline from October’s 4.6% increase.

The data suggests a slowdown in the country’s export-driven economy.

Japan’s Nikkei 225 and the broader Topix index posted modest gains, with the Topix rising 0.68%.

Investors in Japan are looking forward to updates on domestic economic policies and external trade developments.

Hong Kong’s Hang Seng index rose 0.21%, while mainland China’s CSI 300 gained 0.26%.

The Hang Seng Mainland Properties Index advanced 0.5%, supported by accelerating growth in China’s new home prices in November, offering some respite to the struggling property sector.

US markets close on a high note

On Friday, US markets ended a shortened trading session on a strong note.

The S&P 500 and Dow Jones Industrial Average recorded their best monthly performances of 2024.

The Dow rose by 0.42%, while the S&P 500 and Nasdaq Composite gained 0.56% and 0.83%, respectively.

A surge in semiconductor stocks contributed to the rally after reports suggested that potential restrictions on semiconductor equipment sales to China might be less stringent than initially feared.

Notable gains included Lam Research, up over 3%, and Nvidia, which rose more than 2%.

GQG Partners stock tumbles after UBS downgrade

Shares of Australian-listed investment firm GQG Partners, a significant investor in India’s Adani Group, plunged by over 15% on Monday.

The drop came after UBS downgraded the stock from “buy” to “neutral” and slashed its target price from AU$3.30 to AU$2.30.

This marks UBS’s first-ever downgrade of GQG since it began coverage in 2022. The stock was trading at AU$2.08 as of the afternoon in Sydney.

GQG is the fourth-largest investor in Adani Enterprises, and the downgrade reflects growing caution over the firm’s investment portfolio amidst heightened scrutiny of Adani Group’s financial practices.

Investors are bracing for more economic data as the week unfolds.

Indonesia is set to release its November inflation numbers, providing insights into price stability in Southeast Asia’s largest economy.

Additionally, PMI readings from various Asian economies will offer a clearer picture of manufacturing activity across the region.

As global markets grapple with uncertainties ranging from inflation to geopolitical tensions, Asia-Pacific remains a focal point for investors seeking signs of economic resilience and growth opportunities.

By closely tracking economic indicators and market trends, analysts hope to gauge the region’s recovery trajectory and the potential implications for global trade and investment.

The post Asia-Pacific markets edge higher as investors eye key economic data from the region appeared first on Invezz

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