CNBC Pro: UBS says self-driving cars could become a $100 billion market in China — and names stocks to play it
Electric vehicles are rapidly gaining popularity, especially in China, the world’s largest market for electric vehicles.
But UBS believes self-driving will be an even bigger megatrend than electrification – with a market size in China alone of around $100 billion by 2030.
Here’s how investors can play on this megatrend, according to UBS.
Pro subscribers can learn more here.
— Zavier Ong
Xiaomi is expected to show lower revenue in the third quarter
Xiaomi is expected to see a drop in revenue for the third quarter of 2022, according to an average of Refinitiv poll estimates.
The company is expected to experience a 9.66% decline in revenue to 70.52 billion yuan ($9.87 billion) for the July-September quarter, compared to 78.06 billion yuan in the same period last year.
The expected decline is likely due to “tepid smartphone sales,” as well as weak macroeconomic environment and consumer sentiment, Daiwa Capital Markets wrote in a note.
Shares of Xiaomi fell 1.72% in morning trading ahead of the release, and were last around 1% lower.
–Lee Ying Shan
New Zealand dollar strengthens after biggest rate hike
The New Zealand dollar strengthened to 0.6192 against the dollar after the central bank raised rates by 75 basis points, its biggest rise on record.
The NZD last traded at 0.6170 against the dollar and the NZX 50 index in New Zealand fell 0.8%.
The New Zealand 10-year Treasury yield briefly touched 4.305% shortly after the decision, and last traded at 4.235%. Yields move inversely to prices and one basis point is equal to 0.01%.
– Lee Ying Shan
Singapore releases reduced GDP estimates for 2022
Singapore’s economy is expected to grow by around 3.5% in 2022, according to forecasts by the Ministry of Trade and Industry, citing an easing in the outlook for external demand following the energy crisis in Europe and the ongoing Covid-related restrictions in China.
The figure is a cut estimate from its previous projection range of between 3% and 4% – and reflects annualized growth of 4.1% in the third quarter and growth of 1.1% from the previous quarter.
The ministry also said it expects the country’s GDP growth in 2023 to be between 0.5% and 2.5%.
New Zealand’s central bank hikes rates by 75 basis points
The Reserve Bank of New Zealand raised its key cash rates by 75 basis points, its largest increase on record, to 4.25%.
The decision is in line with analysts’ expectations, according to a Reuters poll.
This is the ninth consecutive hike since the RBNZ began its rate hike cycle in October 2021, including five hikes of 50 basis points.
Inflation in New Zealand currently stands at 7.2%, just below three-decade highs.
— Lee Ying Shan
Investors should look to second-tier Chinese tech stocks: UBS Global Wealth Management
According to Eva Lee, head of China equities at UBS Global Wealth Management’s chief investment office, investors should take advantage of the bumpy rise in Chinese tech stocks to look to smaller, less established companies.
“Under current regulations, second-tier players will do better than the best. Take advantage of this opportunity to turn to second-tier companies,” such as those with resilient revenues, she told CNBC’s “Street Signs Asia”.
Additionally, tech giants are seen as “macro-reclaimers”. [proxies]and the path to an eventual full reopening “is going to be up and down, it’s going to be choppy,” she said.
“We will eventually move there, but it takes time,” she said.
Stocks rise, the S&P 500 closes above the key 4,000 level for the first time since September 2019.
Stocks rose on Tuesday, with the three major averages gaining more than 1%, with Wall Street betting that interest rate hikes and inflation will ease as the end of the year approaches. The S&P 500 also closed at a level not seen since September.
The Dow Jones Industrial Average closed at 397.82 points, or 1.18%, up at 34,098.10. The Nasdaq Composite also gained 1.36% to 11,174.41.
The S&P 500 rose 1.36% to close at 4003.58, its first close above the 4000 level since September.
84% of today’s 19 52-week highs are all-time highs in the S&P 500
Nineteen S&P 500 stocks hit 52-week highs so far on Tuesday and, of those, 16 (84%) also hit all-time highs. Three of the 19 (TRV, MRK, IBM) are also in the Dow Jones Industrial Average, and two of them are among the all-time highs:
- General Parts Co. (GPC), the highest since an IPO in 1948
- O’Reilly Auto (ORLY), historic record since IPO in 1993
- TJX Cos. (TJX), all-time high since IPO in 1987
- General Mills (GIS), historical records throughout history dating back to 1927
- Monster Beverage (MNST), all-time high since its predecessor’s Nasdaq listing in 1992
- Highest ever Pepsico (PEP), dating back to Pepsi-Cola’s merger with Frito-Lay in 1965
- Marathon Petroleum (MPC), historic record back to Marathon Oil spin-off in 2011
- Aflac Inc. (AFL), historical data from CNBC in 1973
- Arthur J Gallagher (AJG), all-time high since 1984 IPO
- Globe Life (GL), historical data record of predecessor in 1980
- MetLife (MET), all-time high since its IPO in 2000
- Progressive (PGR), all-time high since IPO in 1971
- Travelers (TRV), historical record of return to Citi spin-off in 2002
- Gilead Sciences (GILD), at its highest since April 2020
- Merck & Co. (MRK), all-time history in CNBC history from 1978
- PACCAR (PCAR), all-time high since 1971 IPO
- Quanta Services (PWR), all-time high since 1998 IPO
- Snap-On (SNA), at its highest since June 2021
- International Business Machines (IBM), at its highest since February 2020
There were two 52-week lows in the S&P 500 early Tuesday:
- Tesla (TSLA), lowest since November 2020
- Medtronic (MDT), the lowest since March 2020
—Scott Schnipper and Christopher Hayes
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