By Phil Rosen, Originally published in Business Insider
Good morning. I’m senior reporter Phil Rosen, reporting from Manhattan. Today we’re going over what the ongoing protests in China mean for markets and investors.
Before that, here’s a helpful calendar from Insider’s Personal Finance team that tells you what days the stock and bond markets are closed for the rest of the year.
Now let’s get to the news.
1. Anti-government protests have erupted from Shanghai to Beijing as citizens rise up in opposition of China’s zero-COVID policies. Demonstrations follow the death of 10 people in an apartment fire in Urumqi, which some locals said couldn’t be extinguished because of virus control barriers.
Protesters have begun holding up blank pieces of paper in defiance, symbolizing their inability to speak out. Some protesters, too, have taken aim directly at President Xi Jinping.
Some of Apple’s key production facilities have been hit by the protests. The tech giant, which has deep manufacturing ties to China, has seen $114 billion in market value erased as investors grow concerned about iPhone shortages stemming from disruptions caused by the demonstrations.
Arthur Laffer Jr., president at Laffer Tengler Investments, said he’s surprised it took this long for protests to emerge, given how long China’s maintained its strict pandemic lockdowns.
“Markets don’t like bad news, and protests are bad news,” Laffer told me on a phone call yesterday. “The housing sector is in shambles, people can’t go to work, manufacturing is down…that with the COVID lockdowns present fundamental investing issues.”
He said his firm right now has no direct exposure to Chinese investments, and likely won’t add any unless Beijing signals a dramatic easing of its zero-COVID policy.
Laffer would turn more bullish if President Xi capitulates and opens the economy back up, he said, but even that wouldn’t yield much more than a short-term pop in Asian markets.
UBS analysts echoed Laffer’s caution, warning that Chinese equities are poised to struggle amid persistent economic headwinds.
Any recovery will be sluggish and remains some way off, the firm believes, despite Beijing’s efforts to stimulate the world’s second-largest economy.
“Policy support remains focused on stabilizing the economy, rather than spurring growth, in our view,” UBS said. “As a result, we remain neutral on Chinese equities.”
2. US stock futures rise early Tuesday, after Chinese authorities said they were launching a drive to boost senior vaccination rates, raising hopes that the country may relax its zero-COVID strategy. Honk Kong stocks were also up on the news, jumping as much as 5%. Here are the latest market moves.
3. Earnings on deck: Intuit Inc., Hewlett Packard Enterprise Co., and Carlyle Group, all reporting.
4. Money managers said this batch of stocks is showing buy signals amid rampant inflation and lingering recession fears. According to Morningstar analysts, certain large-cap stocks ranging from energy to industrials can still provide value in the current landscape. See the 10 names here.
5. Crypto lender BlockFi filed for bankruptcy on Monday, just weeks after Sam Bankman-Fried’s FTX collapsed. Hours after the filing, BlockFi also sued a holding company for Bankman-Fried, seeking to seize shares in Robinhood, the Financial Times reports. Notably, earlier this year, BlockFi received a $400 million credit line from FTX.
6. China protests over lockdown measures could mean inflation gets stuck at 4%, according to Mohamed El-Erian. The top economist warned that high prices won’t ease to the Fed’s target rate of 2% as a result of the unrest. Specifically, he emphasized that supply chain snags will drag on the global economy.
7. Goldman Sachs strategists said stocks have not yet bottomed out and investors should dial back exposure to equities in the near-term. Despite a relief rally this month, indexes still have further to fall, the bank maintained: “Without depressed valuations, for markets to trough investors need to see a peak in inflation and rates, or a trough in economic activity.”
8. This real estate investor who retired in his 40s doubled his portfolio during the 2008 housing market crash. Mike Zuber made it out of the financial tumult better than where he started — he broke down his top four tips for investors heading into 2023.
9. A couple on track to retire in their 30s share their best advice for reaching financial freedom. They believe that even without a big salary, or even if you have tons of debt, you can still achieve lofty financial goals. Here are their three best strategies for saving money and house-hacking.
10. Billionaire investor Mark Mobius said bitcoin could plunge to $10,000 and investing in cryptocurrency is dangerous. The co-founder of Mobius Capital Partners expects the crypto winter to worsen still, as the world’s largest token has shed 21% since FTX filed for bankruptcy on November 11. On the year, the coin is down roughly 66%.
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