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BenzingaEditorial

The US Election – Wall Street’s View

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Election Wallstreet

Politics is keeping investors awake. It is not difficult to guess that instability in the world’s largest economy would bring significant market volatility. As a result, investors retreat by purchasing gold and Treasuries while dumping high-flying stock. The fact that President Trump tested positive for COVID-19 thirty-two days before the election has only added to the uncertainty as this jeopardizes his ability to campaign.

The United States is found amid the worst pandemic in a century and the economy is struggling to dig out of the worst turmoil on record. The S&P 500 lost 4% in September, marking the benchmark index’s worst month since the March lows, with other two major indexes also recording a monthly drop. And yet, Wall Street’s is mostly concerned by who will America vote for.

Trump Vs Bidden

Given the position in the polls and the time that remains, Trump’s chances of winning are slim whereas Biden has about an 80% chance of winning, according to the FiveThirtyEight election forecast.

Prolonged uncertainty?

83% percent of the portfolio managers surveyed by RBC find that a contested election would be a “negative event” for the stock market. Moreover, only 14% believe the results will be known on November 3.

The possibility of a contested election significantly adds to investor anxiety.

President Donald Trump has explicitly refused to commit to a peaceful transition of power in case he loses.  During the recent debate, Trump baselessly argued that mail-in voting would cause a “fraud like you’ve never seen”, making a case for rigged elections. Greg Valliere, chief US policy strategist at AGF Investments found that these statements make it clear that Trump is willing go all the way to the Supreme Court if he loses. This scenario implies investors need to brace for several weeks of prolonged uncertainty.  Moreover, this delay could also potentially lead to civil unrest as Trump did not make any effort to calm his far-right supporters.

A relatively close election or dragged on results could cause a lot of havoc

Charles Schwab’s Randy Frederick told Business Insider that under this scenario, the markets would potentially sell off and result in severe volatility. The best outcome for markets would be to find out who won as soon as possible. Moreover, a contested result is the widest concern among portfolio managers who were surveyed by RBC Capital Markets, with as many as 76%, citing it as their primary concern. Therefore, contested elections ranked higher than a second wave of layoffs (66%), a slower pace of economic recovery (64%) and even a second wave of COVID-19 (63%). Please note that these surveys took place prior to Tuesday’s debate which only amplified election concerns.

Possible remake of 2000

It is impossible to quantify how much would a contested election impact financial markets. But, the current scenario can be compared to that of 2000 when the presidential election results between George Bush and Al Gore were contested. Back then, markets sold off immediately after election day, they levelled off for about a week, and self off for a second time the results were declared on December 12. According to Frederick, history could repeat itself.

What sector is a ‘strong buy’ amid this uncertain climate?

Right now, the only sector that Charles Schwab considers as a strong buy are financials due to the fact that it has been a relative underperformer when compared to others. The bank sector 22% this year, a sharp contrast to 25% gain in technology stocks. Moveover, due to outperforms such as Nike (NYSE: NKE), Amazon (NASDAQ: AMZN) and Target (NYSE: TGT), even consumer discretionary stocks rose 17% . As a result, the bank sector is trading at more reasonable valuations. At the same time, Frederick expects the bull market will continue with other leading sectors like tech doing fairly well.

What does Wall Street think?

Sophisticated portfolio managers think that Joe Biden will eventually emerge as the winner, although their confidence is slightly weakening, falling from 63% in June to 57% percent, as polled by RBC.

53% of investors think Trump’s reelection would be either bullish or very bullish for stocks. The concept is simple as Trump is laser-focused on the stock market and would bring low taxes and light regulation over the next four years.

On the other hand, the former vice president has vowed to raise taxes on corporations and wealthy individuals, along with ambitions plans to invest in clean energy, benefiting the renewables and EVs such as Tesla (NASDAQ: TSLA) and many new upcomers. 41% of portfolio managers  think Biden would be bearish or very bearish for stocks, which is less than 60% in June so it seems that concerns are fading in Biden’s favor. RBC reported that 46% find Biden would be neutral for the market.

Outlook

According to Jeff Buchbinder, an equity strategist for LPL Financial, markets appear to be increasingly pricing Joe Biden in as the favorite but Trump could gain support from a quick recovery. The UK Prime Minister Boris Johnson benefited from this trend as he battled COVID-19.  The bottom line is that Wall Street is more worried about a contested election than a global pandemic that plunged the economy into a recession and froze the world we know as it placed it to a virtual standstill.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

The EV Industry Is Worth More Than The Traditional Automakers

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Many things that were considered to be impossible actually happened in 2020. One of them is that electric vehicle makers became more valuable than traditional automakers and by about by about $100 billion, according to Barrons. EV makers are now worth about $1.3 trillion whereas traditional car makers combined have a market capitalization of about $1.2 trillion. This figure includes 100 auto makers around the globe with market caps ranging from $10 million all the way to Tesla’s (NASDAQ: TSLA). Based on its fully diluted share count, Tesla is worth about $1 trillion.

This feat is even more impressive if you consider that this is a much smaller industry based on actual number of cars. The last year taught us that the connection between the stock market and the economy is imprecise at best. However, the fact that technology enabled batteries to overpass ICEs is the kind of disruption that investors look for. Even though Tesla is the main contributor to the value of the EV market, the overall image is just as impressive as three of the top five most valuable are EV makers, with Tesla being followed by NIO (NYSE: NIO) and BYD (OTC: BYDDF). As for traditional automakers, Volkswagen (OTC: VWAGY) and Toyota (NYSE: TM) are the most valuable ones with both undergoing serious investments into electrification.

Traditional automakers are going electric

On Friday, BMW said it aims to double its sales of fully-electric vehicles this year. Including plug-in hybrids, it aims for a 50 percent increase in sales of electrified vehicles versus 2020. It did not give sales volumes for its fully electric vehicles but in data released on Tuesday, BMW said it sold close to 193,000 electrified vehicles, including fully electric and plug-in hybris in 2020. As a reminder, Tesla delivered almost half a million all-electric models last year, which is 75% of General Motor’s (NYSE: GM) third-quarter deliveries.

The automotive industry is at an inflection point

BEVs take approximately 1% of the total market for light vehicles, but the figure rises to about 3% if we include hybrid and plug-in hybrids. Why exactly it takes a relatively small market share to disrupt an industry is a bit of a mystery, but one reason is that more investment capital tends to flow in when market share come is within the 3% to 5% range. As more capital drives more innovation and improvement, investors are lured by high growth rates, bringing in even more capital and this is how success is made. Over the past year, EV makers have raised more than $20 billion in fresh capital, which is a fraction of what traditional auto companies spend on plants and equipment. However, on a per car basis, the EV industry is investing at roughly 10 times the rate of the traditional industry. Add to this President Joe Biden’s aim of a carbon-free future by 2035 and the drive toward adoption of EVs which is already seeing impressive results in Europe, the all-electric future is around the corner.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Europe and EVs- A Blossoming Relationship

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Tesla (NASDAQ: TSLA) delivered around 96,000 units to the key European EV market in 2020. But in Europe, Tesla’s cars were overtaken in popularity by Volkswagen (OTC: VWAGY) and Renault (OTC: RNLSY). Sales of electric vehicles by European car makers accelerated rapidly in 2020 amid severe fines for car markers whose fleets don’t meet new emissions targets and generous incentives for buyers to trade in their ICE vehicles.

Volkswagen

Volkswagen reported it delivered 212,000 electric cars across the globe in 2020, which is 158% more than in the year prior. 134,000 of those vehicles were battery-electric vehicles, which grew 197% compared with 2019. Volkswagen also said that its ID. 3 model was the top-selling car in Sweden in December by absolute numbers. All-electric Volkswagen models were on top the Netherlands and Germany, taking approximately 23% of each country’s BEVs market.

Mercedes Benz

On January 8th, Mercedes-Benz-owner Daimler (OTC: DDAIF) said that the brand sold more than 160,000 plug-in hybrids and all-electric vehicles in 2020, representing growth of more than 228% from 2019. The share of EVs in Daimler’s sales mix rose drastically from 2% in 2019 to more than 7% in 2020. Also, Mercedes-Benz brand remained the world’s top-selling luxury carmaker for the fourth consecutive year.

Renault

Renault reported that it doubled its electric-vehicle sales in Europe. While group sales fell more than 21% in 2020, its EV sales grew 100% growth from 2019 to 115,888 vehicles. Moreover, total orders at the end of December 2020 were up by 14% compared to December 2019, which was attributed to new hybrid offerings. EVs were the only good news in an otherwise bleak 2020 for the French carmaker, which underperformed both global and European car markets. At the very least, Renault avoided fines as it met its 2020 EU emissions targets. On January 14th, its chief executive officer Luca de Meo will present a strategy update which is expected  to include reviving some older best-selling models as all-electric models.

BMW

BMW (OTC: BMWYY) which also owns Mini, said that its two brands combined sold 192,646 electric vehicles in 2020 marking an increase of nearly 32% from last year. BMW also met its 2020 EU emissions targets.

Takeaway

European governments have created generous incentives to speed up the adoption of EVs, making them much more affordable. Come 2025 when emission targets become more stricter and threat of fines for not respecting them even greater, Tesla will certainly be playing against fully-fit opponents and could even potentially struggle. An EV-only future looks closer than ever in Europe as the race is now on to challenge Tesla’s leadership.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Lenovo Makes Its Star Market Debut

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The COVID-19 pandemic had completely changed the way people work and learn. Operating from home actually turned around declining PC sales. Smartphones have been picking more and more market share from PCs and if there was no pandemic, this would probably still be the case. But instead of decreasing demand, there was record growth in PC sales as video collaboration software was needed to fulfill the need caused by closed offices and schools. The demand generated months and months of production. According to Reuters, sales of desktops, laptops, and tablets are expected to reach the level of 300 million shipments, the first time after its peak in 2008. This made all the PC manufacturers like Dell Technologies Inc. (NYSE: DELL), HP Inc. (NYSE: HPQ), and Lenovo Group Ltd. (OTC: LNVGY) very happy.

Lenovo CDR story

China’s Lenovo Group is listed at the Hong Kong stock exchange, with about 12.04 billion shares outstanding in total as of January 12th. The company decided to issue Chinese Depository receipts (CDRs) which will be up to 10% of the total number of shares to be listed on the Star Market of the Shanghai Stock Exchange. The proceeds from the issuing of CDRs is planned to help the company’s research and development of new technologies, development of new products and solutions, and overall strategic investments in core segments. On Wednesday, the news caused to stock to drove the stock to its highest level since 2015.

The Star Market

The Star Market was launched in 2019 aiming for innovative technology companies that need more relaxed listing rules. In December, the Star Market counted 200 companies. A CDR or Chinese Depositary Receipt is a way for non-Chinese companies to list their shares in China. This is the equivalent to American depositary receipts (ADRs) which allow non-U.S. companies’ shares to trade on American exchange markets. Technically, CDRs and ADRs are not companies’ shares, but they represent an equity interest in a company. Besides Lenovo, an AI startup that specializes in facial recognition called Megvii Technology Ltd will also be among the first companies to benefit from this new structure.

Conclusion

Lenovo’s listing should be a breakthrough for Shanghai’s Science Technology and Innovation Board. Lenovo, a flagship of the Star Market, should attract much more followers and clear a path for many Chinese start-ups to raise capital in their home country. The company’s strong and growing global presence should continue to demonstrate the boom of China’s capital market and attract more investors to invest.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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