Displaying items by tag: China

While oil prices fluctuate constantly, there is a broad consensus that prices will rise throughout 2023. For instance, Forbes' Bill Sarubbi noted that the technical data of oil trading suggests prices are going to go higher. In a recent article, Sarubbi said that historical data shows oil prices tend to rise between March and May most of the time, therefore it makes sense to expect prices to rise this year as well. Data analytics firm Refinitiv singled out two factors that will drive prices on the supply and demand sides, Russia and China. Refinitiv expects Brent crude to rise above $100 per barrel by the end of the year and average $90 for the full year. The company said at a recent industry event that oil demand this year will surge by 2 million barrels daily and that China will account for half that. In addition, Russia's supply will tighten this month and maybe remain tight, which adds upward pressure to oil prices. Plus, Goldman Sachs senior energy economist Daan Struyven recently reiterated the bank's forecast for higher oil prices due to the lag between an oil market shock and the effect of the shock manifesting in futures prices.

Finsum:There is a broad consensus that oil prices will rise through the year due to technical data of oil trading suggesting prices are going to go higher, demand from China, tightened Russian supply, and the lag between an oil market shock and the effect of the shock manifesting in futures prices.

Oil stocks were some of the best investments last year as the energy sector gained 64.56%. Oil stocks could once again have another good year if oil prices rise as investors and firms expect them to. According to the latest Bloomberg MLIV Pulse survey, both professional and retail investors see higher oil prices over the next six months, with retail traders, in particular, even more bullish than professional investors. Investors are not alone in predicting a rise in oil prices. The Federal Reserve Bank of Dallas recently surveyed 152 energy firms in Texas, Louisiana, and New Mexico. Based on the results of the survey, the industry is expecting marginally higher oil prices in 2023. When asked what they believe the price of WTI would be at the end of the year, the average answer was $84 per barrel. The spot price for WTI was $73.67 at the time of the survey. The are several reasons for companies and investors to be bullish on oil this year. Oil prices could rise on optimism that China reopens its economy after implementing severe COVID restrictions. In addition, both OPEC and the International Energy Agency (IEA) see the global oil market tightening in the second half of the year. With the supply of global oil below the demand, prices should rise.

Finsum:Both investors and energy firms expect the price of oil to rise based on China's reopening and OPEC and IEA’s view that the global oil market is tightening.

If your clients are invested in Chinese companies and have a preference for ESG, it may be time for a change in their portfolios. It appears sustainability rules in western countries are at odds with what’s happening in China. While Chinese equities offer strong growth potential, their ESG ratings rank lower than western nations and most emerging markets. For instance, Sustainalytics, a sustainable rating agency owned by Morningstar, downgraded three Chinese big-name tech companies on its watchlist in October. The three stocks, Tencent, Weibo, and Baidu, were moved to the category of “non-compliant with UN principles.” In addition, Hong Kong Watch, a UK-based group that researches investment and human rights issues in China, recently said in a report that “many of the biggest asset management, state pension, and sovereign wealth funds were passively invested in companies allegedly involved in the repression of Uyghur Muslims in China’s Xinjiang region.” The report found three major stock indices provided by MSCI included at least 13 companies that “have allegedly used forced labor or have profited from China’s construction of internment camps and surveillance apparatus in Xinjiang.” Another problem is that Chinese companies are less likely to respond to queries from ESG rating agencies.

Finsum:With ESG investing continuing to gain momentum, it appears that many Chinese companies are at odds with ESG due to censorship and repression in China.

Franklin Templeton has partnered with Futu Securities International, a Hong Kong-regulated operation of digital brokerage Futu, to offer three risk-based model portfolios. The two companies have worked together since 2019 when Futu rolled out its mutual fund business to help expand its client base. The new model portfolios will help the China-based company strengthen its strategic relationship with Franklin Templeton. The model portfolios will have various risk levels to fulfill the client's needs and risk appetites. Futu is leading the brokerage industry in Hong Kong with a high market penetration rate. According to the company, its average user spends 1.5 hours per day on the Futubull app. The company also claims that its Hong Kong users accounted for more than 40% of Hong Kong’s adult population.

Finsum:Franklin Templeton is renewing its partnership with Hong Kong-based Futu Securities with the launch of three risk-based model portfolios.

Tech stocks are suffering and pushing the Hong Kong broad market index lower early this week. Companies like Alibaba and JD.com were driving this slump. Overall, economic data has been positive for China though. The latest report showed that dollar-based exports grew by almost 20% in July. The region as a whole is experiencing diverging patterns in equity performance as South Korea and China excluding Hong Kong both grew. Still with currency risk higher than usual as a direct result of Fed tightening and higher inflation emerging market investors are having a difficult time finding North in the current environment.

Finsum: If covid is starting to slow as a result of the climate it could be great for countries relying on trade.