Before the Bell: Share Prices Rise Today in Japan and China

Even with Wall Street closed, investors in China and Japan are charting their own course. They keep buying. European markets are closed today, but trading will resume later on Wall Street.

With both European and U.S. stock markets closed on Christmas Day, it was up to traders in Asia to set the tone. They have done so fairly successfully. In Tokyo, the Topix is flat compared with yesterday’s close, while the other major Japanese index, the Nikkei, is posting a solid gain of 0.6%. Technology holding SoftBank (+2.2%) is among the biggest risers in Tokyo today. Earlier this year, the group committed fully to an investment of tens of billions of dollars in OpenAI, which forced it in October to sell its 5.8 billion dollar stake in Nvidia. Nintendo (+2.1%) is also trading higher today. The company continues to benefit from the successful launch of the Nintendo Switch console, although investors remain somewhat concerned about rising component costs. The memory module used in the device is said to have become 41% more expensive this year, which could put pressure on Nintendo’s profit margins. While the stock is still up 14% year to date, it has fallen by roughly one third since August 18. In the automotive sector, Toyota (+0.2%) is slightly higher, while Mazda (-2.1%) is slipping. On the Chinese mainland, share prices are also rising this morning, up an average of 0.3%. Earlier in the day, gains briefly reached 0.8%. Markets in Hong Kong remain closed today.

European markets are also still closed today. Trading will resume later in the United States, where investors will be able to react to Nvidia’s latest announced investment of 20 billion dollars. U.S. equity indices are at or near record highs, and we suspect that the positive sentiment may persist for a while longer.

Long Live the Belgian SoftBank!

“Premier League” is a nickname I have used before for Sofina. To me, it is also a Rolls-Royce. You can complain that the rich keep getting richer, or you can ask yourself why that is the case. You will quickly discover that wealthy people do not leave their money sitting in savings accounts or in bitcoin. They put it to work. They invest and allocate capital to companies and innovation, helping to drive prosperity forward. Without that, we would be far worse off, and the world would look very different. Investing in technology is not without risk, however—SoftBank knows this all too well. The company started out as a software importer and distributor, a “software bank,” before becoming a major technology investor with its fair share of ups and downs. In Belgium, Sofina is a comparable story. It started in the steel industry and has since become primarily a technology holding company. Today it is worth around 10 billion euros, but if you live long enough, I believe this gem could grow to 20 billion, 50 billion, or even 100 billion euros. A top-tier company. Too bad for those who stay on the sidelines and keep complaining.

The Ugly Duckling

If Sofina is the crown jewel, then GBL (Groupe Bruxelles Lambert) earns the title of the “ugly duckling” in the same sector. I have been investing since 1988 and have followed the Frère family’s holding since then. It has been 38 years of disappointment, again and again. Something always seemed to go wrong. Wanting to follow the wealthy—and despite many missteps, the Frère family remains extremely rich—I bought some GBL shares in the late 1980s. But I never made any money on them. The Boël family, behind Sofina, has done far better. Today, GBL is actively selling off its positions, and much of the proceeds will be distributed to shareholders. Small investors, however, will pay a 30% withholding tax on those payouts. No—the Frère family, like Sofina, may have started in steel, but it has not proven to be a strong investor. The new CEO may bring improvement, but for my portfolio, I prefer proven quality.

Did you know…

that today is Boxing Day in the United Kingdom? The second day of Christmas got its name because the poor—and later domestic staff and other workers—used to receive a box of gifts on this day. Today, Boxing Day is a public holiday and also marks the official start of the sales season in shopping streets.

This article was translated from Dutch and was originally published on Spaarvarkens.be.