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Market Views

Alibaba drops 8% amid regulator’s clampdown on Ant Group

Alibaba shares dropped about 8% in value, trading at a 6-month low in Hong Kong amid a proposed stock repurchase program of between $4 billion to $10 billion.

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Alibaba office

The leading Chinese e-commerce company, Alibaba Group, experienced record sell-offs at the first trading session of the week.

What this means

The plunge in its share price is largely attributed to fears of antitrust scrutiny from the Chinese government that threatens to harm Jack Ma’s internet empire and curb the influence of China’s most powerful corporations.

Alibaba shares dropped about 8% in value, trading at a 6 month low in Hong Kong amid a proposed stock repurchase program of between $4 billion to $10 billion, that had a duration of two years.

The company has lost more than $230 billion from its record highs, brutalized by the heightened scrutiny and allegations of monopolistic practices

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  • “The Chinese government is putting more pressure or wants to have more control on the tech firms,” Jackson Wong, asset management director at Amber Hill Capital Ltd., said by phone in an interview seen on Bloomberg.
  • There is still very big selling pressure on firms like Alibaba, Tencent, or Meituan. These companies have been growing at a pace deemed by Beijing as too fast and have scales that are too big.”

Recall some days ago the e-Commerce juggernaut got into hot waters over its affiliate company, Ant Group, as Chinese antitrust regulators plan to review if it was in anyway monopolistic.

Such a move by the Chinese regulators is seen by some market commentators as a huge hit to Jack Ma’s e-Commerce and fintech empire.

What you should know

At the time Ant Group’s IPO got suspended, Alibaba, which has a majority stake of about 33% in Ant Group, saw its shares fall. It lost more than 5% in U.S. premarket trading.

  • Ant Group’s Controller, Jack Ma; Executive Chairman, Eric Jing; and CEO, Simon Hu, were scrutinized by regulators in China, according to a statement seen from the China Securities Regulatory Commission.
  • The probe is part of a sudden and quick crackdown on monopolistic behavior suspected to be in China’s booming internet ecosystem, and the latest setback for Jack Ma, the 56-year-old former school teacher, who founded Alibaba and became China’s richest man in the modern era.

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Follow Olumide on Twitter @tokunboadesina or email [email protected] He is a Member of the Chartered Financial Analyst Society.

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Cryptocurrency

List of Cryptos expected to outperform many financial assets in 2021

A list of cryptos expected to do very well in 2021 has been unveiled by a renowned crypto expert.

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4 cryptos gain over 400% in a month, far outperforming Bitcoin

Widely respected crypto trader, Michaël van de Poppe recently unveiled the list of cryptos expected to do very well in 2021 amid the prevailing bullish run in the Crypto verse.

He started by mentioning Polkadot (DOT) and looking at levels where investors can buy on dips.

“We do see these retests at $15. That was one of the levels I discussed. Another one is this $13-level which is lower timeframes and then we’ve got this area around $10.50,” he said.

READ: Crypto experts reveal their favourite Cryptos 

Polkadot protocol connects private and public chains, oracles future technologies, and permission-less networks allowing such independent networks to share information and transactions through the Polkadot relay chain,

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Van de Poppe expects the next leg of the bull run to catapult DOT to his targets at $25, $29, and $45.

In addition to Polkadot, the analyst says he’s also bullish on smart contract platform Cardano (ADA), blockchain for enterprise solutions Zilliqa (ZIL), hybrid blockchain platform ICON (ICX), high throughput blockchain Elrond (EGLD), and interoperable blockchain network Cosmos (ATOM).

READ: DeFi crypto market value gains over 1000% from June

Cardano is a type of blockchain that permits people to receive and send funds.

  • ADA coin is the name of the cryptocurrency.
  • It uses the Cardano blockchain and it also allows people to design smart contracts just like Ethereum.

Elrond is a type of blockchain architecture, created to facilitate a 1000-fold cumulative improvement in the execution of speed.

Its architecture combines a secure Proof of Stake (PoS) algorithm facilitating unlimited scalability.

Zilliqa is a type of cryptocurrency that focuses on making blockchains more scalable and much faster; It uses sharding technology to simplify the consensus process so that blockchains like Ethereum can provide fast transaction processing successfully.

READ: Ethereum miners earning more than their Bitcoin rivals

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Another solid crypto on the crypto expert’s radar is Celer Network (CELR). He says the layer-two scaling platform can potentially rise to $0.035, representing a potential return of 400% from its present value of $0.007.

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Last but not least is chainlink on the bias it has more room for upsides as its still upcoming crypto and has a solid fundamental;

“Chainlink itself has a very big market share of the oracle niche. Other oracles are just starting up their first,” Poppe said.

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READ: ChainLink, now most valuable DeFi Crypto by market value

Chainlink is a blockchain that is designed to bridge the space between blockchain technology-based smart contracts (created by ETH), and other user programs.

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Market Views

Analysts pick Nigerian stocks Warren Buffett may likely buy

Financial market experts talk on what Nigerian stocks Warren Buffet may likely consider, based on his unique principles.

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warren-buffett, Young Investors, Here’s why Warren Buffet's $4.6m lunch with Bitcoin entrepreneur is experiencing delay , What Warren Buffet will do if he traded Nigerian stocks

Warren Buffett’s strategy as regards investments has earned him the popular nickname the “world’s greatest investor.”

The global investment community holds the 90-year-old man with so much high esteem when his successful investment strides is considered and the fact that he is now worth about $88.4 billion, and seats on the boards of so many blue-chip companies.

Buffet has long believed in the value-based investing model, as he only invests in companies that exhibit solid fundamentals such as strong earning power, the potential for continued growth, and most importantly, selecting those with low or no debt.

READ: Why Warren Buffett’s company is buying shares of a gold mining company

Consequently, Nairametrics has sought the opinions of selected financial market experts on what Nigerian stocks the world’s most powerful investor may likely consider, based on his unique principles.

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Angela Aya, Head, Institutional Sales at Alonati in an exclusive interview with Nairametrics spoke on key insights Buffett usually looks out for when selecting stocks.

“Warren Buffet’s investment philosophy centers around traditional yet intricate qualities like company debt profile, profitability, historical performance, exposure to commodities, product offerings, and historical dividend payouts.

“He is considered a value investor focusing on high dividend-paying blue-chip companies that show robust earnings characterized by strong balance sheets holding investments over the long term,” Aya said.

READ: Why You Should Not Invest Like Warren Buffet

She elaborated on the impressive performance of the Nigerian Stock market in relation to the value they bring in the long haul by stating;

“Despite the Nigerian All Share Index outperforming the rest of the world in 2020, Nigerian stocks are relatively cheap from a purchasing power parity standpoint.

“Therefore, in a long-term strategic value investment play, bellwether stocks that offer stability, show profitability, and are resistant to systemic shocks will be the picks. They may not be trendy or might seem out-right boring, but they are reliable and proven to outperform given time. “

READ: Is Zenith Bank thriving on the strength of sound financial indices?

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Adetayo Teluwo, a Portfolio Manager at one of Nigeria’s most valuable firms spoke on key metrics accustomed to Warren Buffet’s investment style;

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Teluwo said, “I will focus on the long term, adopt a buy-and-hold mentality and prioritize blue-chip dividend-paying stocks that have proven their worth over decades.

Since I do not have bottomless pockets, I will make out time to shortlist based on ROE, D/E, and a blend of perceived ‘intrinsic value’

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ROE = Net Income ÷ Shareholder’s Equity

Debt-to-Equity Ratio = Total Liabilities ÷ Shareholders’ Equity

READ: What Warren Buffet will do if he traded Nigerian stocks

Following Buffett’s investment principle, Adetayo went further by revealing the type of Nigerian stocks he would select. He said;

“According to Warren, if you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.

“If I had the conviction of Warren, these will be my top stock picks:

“Julius Berger, UBA, Zenith Bank, GTBank, Custodian, NAHCO, CHI Plc, NEM, Jaiz Bank, WAPIC, Unilever, GSK, MANSARD, Dangote Sugar, Afrinsure”

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READ: Import substitution, devaluation spur revenue growth for Dangote Sugar

Silas Ozoya, President/CEO, SUBA Capital adds up to our remarkable respondents as he discloses that Nigeria’s stock market’s most liquid sector would be on Buffett’s top list, not forgetting his love for consumer staple stocks;

“Banking stocks for a start would be his first pick because he has a history of investing in financial institutions.

“So, he would go with stocks like Zenith Bank, GTBank, and FCMB because of profitability in the case of Zenith. Cutting edge technology in the case of GTBank, and versatile banking products in the case of FCMB.

“Warren Buffet is also big with daily consumables and beverages. So, he would go with the stocks of Nigerian Breweries Plc, Dangote Sugar, and Guinness Nigeria Plc.

“I’ve been following Warren Buffet’s investment strategy for a while and three things I’ve noticed are that he says the money would always exchange hands, financial institutions would always make money, and people would always consume daily consumables.”

READ: Why Warren Buffett is making less money now

Bottom line

  • It’s key to highlight the rarity of Warren Buffet’s tenets in selecting stocks on the account that he has remained relatively consistent over many decades.
  • Still, it remains critical for readers to understand that applying Buffet’s strategy takes a whole lot of discipline and patience.
  • However, the few who have followed the founder of the world’s biggest conglomerate, (Berkshire Hathaway) on applying his analytical investment tools have had no regrets in the long term.

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Market Views

Netflix gains 17% after beating investors expectation

Netflix for the first time ever passed the 200 million subscriber mark and had an impressive reserve of  $8.2 billion in cash.

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Netflix supporting education by offering some free shows

Netflix’s share price bounced about 17% higher after it beat market expectation, powering the video streaming stock to close high after adding more customers than expected and revealed it no longer needs debt in building its entertainment empire.

The positive upbeat guidance on free cash prompted bullish remarks from Wall Street analysts, though some questioned how much of the subscriber growth was pulled forward.

Stock traders increased their buying pressure on Netflix stock because of the surprisingly strong growth, as well as news that Netflix balance sheets are solid enough for Netflix considering share buybacks. Shares jumped 17% percent to $586.34 in recent trading Wednesday.

Netflix for the first time ever passed the 200 million subscriber mark and had an impressive reserve of $8.2 billion in cash.

READ: Netflix, Amazon, Zoom, Shopify drop over 10%

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COVID-19 pandemic has aided Netflix’s business, forcing people in spending more time indoors coupled with curbing other traditional entertainment options like movie theaters and concerts.

Netflix added 25.9 million customers in H1, 2020, and ended up adding 36.6 million customers in all – a record.

“Investors come out of the fourth quarter incrementally more bullish on the potential of a powerful developing shareholder return story for Netflix in the coming years,” Evercore ISI analyst, Lee Horowitz wrote in a note to Bloomberg News.

READ: McCaleb, co-founder of Ripple sells 28.6 million XRP

Analysts at J.P. Morgan Securities said the company is likely to begin share buybacks in the second half of the year.

Quick fact: Netflix is an American streaming company that allows subscribers to watch movies, documentaries, different popular TV shows, and many more through internet-connected hardwires.

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Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics also spoke on the impressive gains sighted in the $259 Billion valued company;

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“Earnings reports also underpinned equity sentiment. Netflix rose 16% after noting its subscriber numbers increased by a record 37 million in 2020. Serenely, it seems lockdowns and TV go hand in hand.

READ: Nigeria leads the world in Bitcoin searches on Google

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“A testament to the maximum policy overdrive, investors wasted little time getting their feet wet after Janet Yellen espoused by the Biden “go big” policy approach to repair the economic damage caused by the pandemic, which also highlights the importance of helping small businesses and the unemployed.”

What to expect: The Stock market is seeing through longer lockdowns on the premise that COVID vaccinations will lead us out of the pandemic quickly and had helped triggered significant buying pressure on stocks like Netflix taking advantage of reduced social mobility in play

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