Before the bell: with all the Chinese

Japanese stocks fell sharply this morning, but stock prices in China continue to rise. Warren Buffett shows us what’s best to sell next.

Last week, global stock prices were propelled by Chinese stimulus. The Bel20 closed the week 2.5% higher. Big winners on Friday were Syensqo (+5.6%), Umicore (+4.7%) and D’Ieteren (+2.8%). The Euro Stoxx 50 was up nearly 4% over a five-day period. This is of course because luxury holding companies like LVMH and Hermès account for a large portion of the index and just those stocks emerged as big winners from the recovery in China. US indices were slightly less affected by the Chinese support measures. The Nasdaq and the S&P 500 closed the week with gains of 0.7% and 0.5%, respectively. On Wall Street, of course, Chinese stocks also outperformed. For example, NIO gained a quarter in one week. Alibaba (+20%), Baidu (+19%) and Tencent (+13%) also closed the week with a dark green jacket. In China, that same jacket was bright red, because there the colors of stock prices were reversed. Red is in China the most beautiful color and stock prices that rise get that color with it.

You would think that after a hell of a ride, it would be time to take a break. But buyers of Chinese stocks aren’t thinking about that for now. In Japan, share prices are admittedly falling sharply due to fears of an interest rate hike. The Topix loses 3.4%, the Nikkei falls as much as 4.8%. But in Hong Kong, the Hang Seng index is already gaining 3.5% smoothly, and the index of the Shanghai and Shenzhen stock exchanges is up 7.8% for the day this morning. Alibaba gained 9.6% in the early hours. After Beijing, some major Chinese cities announced new stimulus and the Chinese economy also appears to be doing better than expected. In our country today, there are figures from Warehouses Estates, Hyloris, Oxurion and Sequana Medical. In the US, cruise line Carnival Corporation will soon publish its results. 

Not a people’s share 

Volkswagen is cutting its expectations. Sales and profitability at the German carmaker will be lower this year than previously hoped. The company expects to sell about 9 million cars this year, generating sales of 320 billion euros. That would represent a shrinkage from last year. Remarkably, parts sales are also disappointing. Volkswagen’s management blames the situation on deteriorating economic conditions and the fact that demand for electric cars remains low for longer than expected. Earlier this year, Mercedes and BMW also lowered their expectations. Clearly, the German auto sector is in the doldrums. Of course, this will also be due to strong Chinese competition in electric vehicles.

A bank backwards

We are facing a period of interest rate declines. So what is it best not to invest in? Warren Buffett shows us the way. Late last week, he sold a whopping 11.7 million shares of Bank of America. That parcel represents a value of $461 million. Since mid-July, when it became clear that the U.S. central bank would soon begin cutting interest rates, Buffett has already sold 230 million shares of the bank for some $9.5 billion. Berkshire Hathaway now owns just over 10% of Bank of America. Should the stake fall below 10% – and we expect this to happen soon – subsequent sales will no longer have to be reported immediately to the U.S. stock market watchdog. Do you still have a lot of bank shares in your portfolio? Then, like Buffett, you might want to push the sell button. There are better alternatives.

Did you know…

today is exactly 39 years since the NYSE changed its opening time? The New York Stock Exchange opens at 9:30 a.m. local time or 3:30 p.m. our time. Before Sept. 30, 1985, it was 10 a.m. So then traders and brokers were allowed to stay an extra half hour.