Before the bell: gains in Hong Kong, losses in Tokyo

The Dow Jones sets another record, while the Nasdaq suffers from Apple’s fall. On the Hong Kong Stock Exchange, a new entrant gains 8% immediately and Microsoft announces a major share buyback.

The Dow Jones rose 0.6% yesterday. Good for yet another new historical record. In the index, Intel (+6.4%) was the strongest riser, while Amazon (-0.9%) and Apple (-2.8%) were the worst performers. The latter also pulled down the Nasdaq (-0.5%). At Boeing (-0.8%), workers but not sellers went on strike. The Euro Stoxx 50 (-0.3%) started the new stock market week in a minor way, courtesy of the Dutch ASML (-1.9%) and Adyen (-2.1%). The Bel20 ended unchanged. In the Brussels index, Umicore (-2.6%) and D’Ieteren (-2.7%) gave way while Ageas (+1.9%) shone. The awakening of clean sleeper Tubize (+2.4%) did not make the stock much more expensive, as the mono-holding also saw its 70.5 million shares of UCB (+0.9%) rebound in value.

In mainland China, stock markets are closed for the second day in a row due to the mid-autumn festival. In Hong Kong, however, trading is taking place. The index is up 1.4% there. In Tokyo, on the other hand, there are losses. Both the Topix and the Nikkei lose 1.7% there this morning. The strong yen is the reason. In barely two months, the Japanese currency has already risen 13%, which is not good news for Japanese exporters. Universal Music may bring some good news today. The company will soon treat investors to an update from Abbey Road Studios in London.

Substantial gains on first day of trading 

We are a cool lover of IPOs. On the one hand, we do understand that new shares on the stock market are good, because they provide more choice and therefore more opportunities to diversify our portfolio. But on the other hand, the timing of an IPO is often very well-chosen by the stock provider. Therefore, you often see an IPO at the top of the market. Now in Hong Kong we can hardly speak of a top. Sentiment there is underwhelming. Nobody wants Chinese shares anymore. So it is all the more remarkable that a new stock was launched on the Hong Kong Stock Exchange this morning with great success. Midea, a producer of home appliances, signed on for the largest new share issue this year by raising nearly $4 billion. The introductory price was already at the upper end of the price range, yet another 8% was added this morning.

Buyback of own shares

Should Kamala Harris win the U.S. election, she wants to quadruple the tax on share repurchases. President Biden introduced the new tax under the Inflation Reduction Act, which now makes companies pay 1% on the amounts they spend on buying back their own shares. But Kamala Harris would thus like to raise that tax to 4%. For a company like Microsoft, that would add to its tax bill. The software giant just announced a buyback program of as much as $60 billion yesterday, aftermarket. Microsoft already has the money for it. In the fiscal year ending June 30, the company posted a net profit of $88 billion. At the end of June, the company had more than $111 billion in cash and short-term investments on its balance sheet.

Did you know…

Microsoft has already repurchased and destroyed 3.4 billion of its own shares over the past 20 years? Currently, there are still 7.4 billion shares of Microsoft stock, but soon that number will thus decrease.