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Depression grips Chinese investors as never before Congress

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(Bloomberg) — Sunday brings a historic moment for Xi Jinping’s political legacy, but investors are less enthusiastic about the prospects for a market turnaround: Chinese stocks haven’t performed badly at all in the run-up to a Communist Party congress.

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The Shanghai Composite Index has lost more than 5% over the past month, its worst bid before Congress since the gauge began in 1991. The yuan has fallen more than 10% this year against the dollar, heading for its worst annual performance since 1994. Junk bonds tumbled in China’s dollar denominated to record lows amid growing repercussions of the real estate crisis.

Rising Sino-US tensions and Beijing’s repeated call for its aggressive policy on Covid Zero sent foreign investors rushing out ahead of the twice-a-decade leadership summit, offloading $875 million in wild stocks this week, the most since July.

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While the focus in President Xi’s speech will be on whether his focus is tilting toward economic growth from risk containment, most market watchers see a clear pivot as unlikely, and expect continued volatility in the coming months. There is little hope that the event will change the fate of the CSI 300 index, which is down 22% this year and heading for its first consecutive annual loss since 2011.

“I don’t think this will be a major event that will change the market’s view of China,” said Tom Massey, New York portfolio manager at GW&K Investment Management. “We look forward to seeing a change of direction, but I don’t think all of that will be evident in the next few days, instead it will unfold over the next three to six months maybe.”

Volume on the world’s second largest stock market fell to its lowest levels this year ahead of the conference, indicating that investor confidence remains low amid an uncertain outlook for the economy and markets.

‘technical bounce’

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The pullback buyers emerged this week after the CSI 300 index fell to its lowest levels since April 2020. The gauge jumped more than 2% on Friday amid a rebound in Asian and US stocks.

This does little to stimulate optimism among long-term investors, many of whom are choosing to remain on the sidelines.

“While a technical recovery is possible, there is a lack of motivation for a sustainable recovery as the vision for an economic recovery remains low,” said Xiadong Bao, fund manager at Edmond de Rothschild Asset Management, adding that Friday’s recovery in China was low. It was technical after a similar move in the US stock market.

Beijing’s relentless pursuit of its tough policy on the Covid virus remains the biggest concern for investors like Bao. Mounting infections and a series of comments in the Communist Party’s People’s Daily advocating the strategy reinforced investors’ worst fears.

While authorities have been implementing policies to support growth, the Covid lockdowns have stifled consumption. The economy is set to expand at a slower pace than the rest of developing Asia for the first time in more than three decades.

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Any change in Covid policy may only happen after the National People’s Congress in March next year, according to Nomura Holdings Inc analysts. , when key government positions are assigned and “political adjustment is fully completed”.

“There is not much that China can do to meaningfully boost foreign investor confidence when it comes to economic management and better growth,” said Diana Chueleva, chief economist at Enodo Economics. Beijing will need to exaggerate stimulus policy measures to change perceptions. It is unlikely that this is imminent.”

‘patient’ market

Even if the pandemic eventually subsides, investors worry that the fierce rivalry between China and the United States over technology and geopolitical ambitions will continue to cloud its assets.

Hao Hong, partner and chief economist at Grow Investment Group, said the market was “sick” due to a combination of factors from the US ban on technology exports related to semiconductors, pandemic restrictions and the collapse of the real estate bubble.

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The Biden administration has unleashed sweeping restrictions to limit China’s access to American technology, a move that may deter Xi’s goal of making the nation self-sufficient in the industrial supply chain. The acceleration of tensions surrounding Taiwan is another concern.

“The long-term risk isn’t actually Zero Covid. It will have more to do with the tension between the US and China,” Nicholas Yu, head of China equities at abrdn plc, said on Bloomberg TV this week.

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Dow futures rise as inflation data is due; Tesla, Lululemon, 2 Chip Giants in focus

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Dow Jones futures rose modestly Friday morning, along with S&P 500 futures and Nasdaq futures, as a wholesale inflation report came out.




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The stock market rebounded somewhat on Thursday, with the Nasdaq rebounding from near its 50-day moving average. But the major indices have only recouped a fraction of recent losses, with the S&P 500 staying a distance from its 200-day moving average.

apple (AAPL) chip maker Taiwan Semiconductor (TSM), Boeing (BA), Tesla (TSLA), China EV maker Lee Otto (L.I), United Airlines (UAL), Lululemon Athletica (Lulu) And the from Broadcom (AVGO) were all in focus Friday morning.

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Taiwan Semiconductor reported strong revenue growth in November, despite Apple iPhone production issues. Boeing is set to announce a major deal to sell its planes to United Air. There are other reports of Tesla production cuts in China. EV startup Li Auto reported mixed third-quarter results, but is seeing booming deliveries in December. Lululemon gave weak guidance for the holiday while Broadcom outperformed Views and headed higher in the current quarter.

Dow jones futures today

Dow futures rose 0.55% against fair value. S&P 500 futures rose 0.7%. Nasdaq 100 futures rose 0.8%.

Crude oil futures rose about 1%.

The 10-year Treasury yield fell 2 basis points, to 3.47%.

The Labor Department will release the Producer Price Index for November at 8:30 a.m. ET. The PPI inflation report should show a significant decline in headline inflation and core wholesale inflation. But it is clear that commodity prices are cooling.

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The Fed’s focus has been on service prices. The November CPI report is set for December 13, with the Fed’s year-end meeting decision set for December 14.

Remember to work in overnight Dow Jones futures contracts and elsewhere that does not necessarily translate into actual trading in the next regular session Stock market session.


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Main earnings

Broadcom earnings Earnings were better than expected. The chip and software giant also led to higher revenue for the current quarter and AVGO’s earnings increased. AVGO stock rose slightly before the open, indicating a move above the 200-day line.

Lululemon’s earnings topped the views, too. But the yoga apparel and retail index fell slightly in the main holiday quarter. LULU stock fell 7% before the open, indicating a pullback below a buy point.

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Top five Chinese stocks to watch now


Tesla stock

Reuters reported Friday that Tesla Shanghai will suspend Model Y production for the last week of the year, only producing 20,000 Y crossovers in the last three weeks of December. That would be about half of Shanghai’s typical Model Y production during that period. It comes amid widespread reports of production cuts, and shorter shifts at Tesla’s largest assembly plant.

A major expansion in Shanghai was completed in August, but Tesla’s backlog has fallen to zero. Tesla cut prices in late October and announced a series of rebates and incentives to boost demand before government support ends on December 31.

Tesla stock rose more than 1% Friday morning. TSLA stock is down 11% so far this week, just above the bear market’s lows.


Tesla vs. BYD: Which EV giant is the best to buy?

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me stock cars

Li Auto reported a larger-than-expected loss in the third quarter while revenue growth fell short. The hybrid SUV maker has faced Covid-related issues as well as a shift to newer models.

But Li Auto speeds up production and delivery. And you see Q4 deliveries of 45,000 to 48,000 hybrids. Li Auto delivered 10,052 and 15,034 units in October and November. This implies December delivery of 19,914 to 22,914.

Li Auto shares fell 1% before the open. LI stock has been rallying along with other China makers and Chinese stocks in general over the past few weeks.

Apple Chipmaker Taiwan Semiconductor

Taiwan Semiconductor reported November revenue jumped 50% year-over-year to $7.27 billion, outpacing a slowdown in much of the semiconductor business Taiwan Semi is one of the world’s largest contract manufacturers, making chips for other companies. including Apple, nvidia (NVDA) And the Qualcomm (QCOM).

Apple iPhone production has been hit by Covid shutdowns and disruptions at Foxconn’s massive assembly plant in China. China Covid restrictions are being eased, as Foxconn has ended the “closed loop” process at the iPhone factory.

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TSM stock rose 1% before the open, near the 200-day line. Apple shares rose 1%.

Boeing and United Airlines deal

Boeing and United Airlines said late Thursday that they plan to make a “historic announcement” on Tuesday. This appears to confirm a recent report in the Wall Street Journal that United Airlines will order dozens of 787 Dreamliners.

Boeing shares rose 1% early Friday, while United Airlines rose. BA stock closed in a buy range, while UAL stock pulled back again from a buy point amid broader travel concerns.

Read The Big Picture Every day to keep up with the market trend, stocks and leading sectors.

Please follow Ed Carson on Twitter at @tweet For stock market updates and more.

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Serbian parliament adopts 2023 budget, sets growth at 2.5% and deficit at 3.3% By Reuters

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© Reuters.

BELGRADE (Reuters) – Serbia’s parliament on Friday approved next year’s budget, projecting growth of 2.5% of national output and a deficit of 3.3%, down from 3.9% set for 2022, as the country grapples with a crisis stemming from the war in Ukraine.

The spending plan sets revenues at 1,843.4 billion dinars ($16.61 billion) and expenditures at 2,107.4 billion dinars.

The deficit will be covered by borrowing at home and abroad, while the public debt is expected to reach 56.1% of GDP.

Prime Minister Ana Brnabic said the budget, approved by 156 deputies in the 250-seat parliament, was designed to protect financial stability and living standards.

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“We will continue to fight for continuous increases in (public sector) salaries and pensions,” Brnabic told parliament.

The spending plan also states that 6.8% of the total funds will be allocated to capital investments, mainly in infrastructure.

The budget projects economic growth for 2023 at 2.5%, the same as in 2022. Last month the International Monetary Fund said it expected Serbia’s economy to grow 2.25% next year.

Last month, Serbia and the International Monetary Fund agreed a 2.4 billion euro ($422.08 million) two-year loan deal to help it absorb the impact of the global economic slowdown caused by the war in Ukraine.

The government’s financial council’s advisory body has warned that financing expenditures for the loss-making state-run energy utility EPS and retail gas retailer Srbijagas at 1.8% of GDP are too high.

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“The flaming problems of Serbia’s public finances … catastrophically bad operations of EPS and losses of Serbiagas,” the board said in its report.

Serbia is completely dependent on Russian gas, and its oil monopoly in Israeli shekels is owned by Gazpromneft and Gazprom (MCX:).

EPS suffers from decades of mismanagement, particularly at the coal-fired power plants that generate about 70% of the country’s electricity.

($1 = 110.9800 Serbian dinars)

($1 = 0.9477 euros)

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Your wallet is drained by subscriptions. Wall Street thank you.

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Try to calculate the number of subscriptions you have. We’ll wait.

There’s your Amazon Prime and your Spotify — the ones you married. How about that Apple TV+ subscription you’ve been meaning to cancel since you watched Ted Lasso… last summer? Scroll through your cellphone (it’s the same as another subscription) and you might find a Calm app your doctor recommended that you haven’t actually used, or a dating app you’ve used and hated, but will likely use again. There is a Chewy subscription to feed your dog DoorDash Subscribe to Feed Yourself and sign up for Peloton to work on the food you just ate. And of course, there’s also a Wall Street Journal subscription necessary to read this article.

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