China President Xi Jinping stood firm on his policies in a two-hour speech at the 20th National Congress of the Communist Party of China on Sunday. Xi said that per-capita GDP would rise to the level of a “medium-developed country” in a “giant new leap” by 2035. While he did not give a specific number, economists told Bloomberg that would mean doubling GDP and per-capita income, with an average GDP growth rate of 4.7%.
Standing firm: Xi focused on economic development that he said would not sacrifice national security. Importantly, he announced no changes to his Zero-COVID policy. “In responding to the sudden attack of COVID-19, we put the people and their lives above all else and tenaciously pursued a dynamic Zero COVID policy,” Xi said. “We have protected the people’s health and safety to the greatest extent possible and made tremendously encouraging achievements in both epidemic response and economic and social development.” Still, there is a chance that policy evolves.
“What happens to Hong Kong and Macau following the Zero Plus Three initiative may hint at what would likely occur inside China,” Gordon IP, Chief Investment Officer, Fixed Income at Value Partners Group, told Seeking Alpha.
Xi also hit the regular themes of economic development as a priority and “common prosperity”. “High-quality development is the top priority of building a socialist modern country in all aspects. Development is the party’s top priority in governing. We will promote equality of opportunity, increase the income of low income earners and expand the size of the middle income group. We will keep income distribution and the means of accumulating wealth well regulated.”
Global impact: The speech did little to quell concerns about an adversarial relationship between China and the West. Chip stocks were rattled last week, as companies and investors continued to suss out the implications of new U.S. rules designed to keep certain semiconductor technologies out of the hands of the Chinese military. The regulations that went into effect earlier in the month prevent U.S. companies from working with Chinese chip manufacturers. By midweek, several U.S. chip-equipment makers such as Lam Research (LRCX) and Applied Materials (AMAT) had reportedly begun pausing their operations in China in order to get in line with the new American guidelines. However, despite a brief reprieve on the stock market, the sector swooned on Friday.
SA contributor ZMK Capital wrote Sunday that for “punters looking to take a bet on such a cloudy Sino-economic panorama, Direxion Daily FTSE China Bear 3x Shares (YANG) may be an attractive option.” ZMK is bearish on China, but is neutral on the leveraged YANG, which looks more like a “punctual play” on China downside rather than a long-term investment.
“Despite all the short term negatives, in our view China will continue to grow and develop, albeit at a slower pace than before,” SA Contributor Binary Tree Analytics said. “We are currently experiencing the first innings of a global recession, recession which in our opinion China has been experiencing since the start of 2022.”
ETFs: (FXI), (KWEB), (CQQQ), (MCHI), (ASHR), (YINN), (TDF), (CHIQ), (GXC), (EWH), (KBA), (YANG), (CXSE), (CAF), (CWEB), (PGJ), (KURE), (CHIX), (CYB) (4 comments)
Goldman Sachs (GS) will reshuffle its major businesses into three separate divisions, The Wall Street Journal reported Monday. Goldman’s investment banking and trading businesses, the company’s flagships, will combine into one unit, the Journal said, citing people familiar with the matter.
Another division will comprise the asset and wealth management businesses, which will also include the consumer banking business, Marcus. The third division will be made up of financial technology platforms like GreenSky. (1 comment)
HBO Max (WBD) and Amazon Prime Video (AMZN) have a pair of dueling premium-fantasy programs rolling out week by week, but they still have a formidable challenge from Netflix’s (NFLX) binge-it-all approach, lately exemplified by the hit new season of “Cobra Kai.”
The show, an offshoot of the Karate Kid film franchise, repeated atop Nielsen’s most recent weekly streaming ratings (for Sept. 12-18) – and actually grew its audience, streaming 1.918B minutes to easily outpace competition. That competition came from the aforementioned high-profile fantasy series: No. 2 on the list was “The Lord of the Rings: The Rings of Power” on Amazon Prime Video (AMZN), which streamed 988M minutes for the week, just ahead of HBO Max’s “House of the Dragon,” which streamed 960M.
Twitter poll: Would you watch Netflix with ads? Take our poll and let us know. (30 comments)
Couchbase (BASE), Duck Creek Technologies (DCT) and New Relic are viewed as possible takeout candidates in the software space, according to RBC.
The most likely takeover candidates for strategic buyers include Couchbase, Dropbox (DBX), Fastly (FSLY), New Relic (NEWR), Nutanix (NTNX), Qualys (QLYS), Smartsheet (SMAR), Splunk (SPLK), Sumo Logic (SUMO) and Zoom Video (ZM), analyst Rishi Jaluria wrote in a note.
The most likely companies to be targeted by private equity firms include Box (BOX), Coupa Software (COUP), Duck Creek Technologies (DCT), N-able (NABL), New Relic, SolarWinds (SWI) and Teradata (TDC). (2 comments)
Exxon Mobil (XOM) is making more money than at any time in its 1440-year history, but the company’s “long-simmering toxic culture has employees heading for the exits” to the tune of 12K departures in the past two years, according to a Bloomberg analysis published this week.
An investigation involving interviews with more than 40 current and former employees, as well as reviews of dozens of internal documents, reveals one overriding reason talent is fleeing, according to Bloomberg: “a culture that’s increasingly out of step with the world around it… [an] insular and fear-based culture… [that] has become a drag on innovation, risk taking, and career satisfaction.” (173 comments)
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