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China Sector Report: Q3 2020

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The Global X China Sector Report: Q3 2020 can be viewed here. The report provides macro-level and sector-specific insights across the eleven major economic sectors in China’s equity markets.

In the third quarter of 2020, China’s economic activity expanded from the manufacturing sector into service and retail-driven sectors as lockdowns eased and consumer confidence rose. After many were able to return to work, and others continued to adjust to working from home, consumers began to spend more with their incomes and confidence restored. China’s restrained reopening has meant that many Chinese workers continue to live much of their lives online while demand for discretionary good continues to recover. While many analysts have reduced their forecasts for China’s growth this year because of the bumpy recovery, China is still the only major economy forecasted to exhibit positive growth in 2020, contributing to strong equity market performance.

Within China, all of the eleven major economic sectors in China generated positive equity returns in Q3 2020, with the exception of the Financials sector. This is consistent with Q2 performance, when all but the Energy sector generated positive returns. But both Q3 and Q2 stood in stark contrast to Q1, when all 11 sectors plunged amid the initial COVID-19 outbreak. In terms of contributions to overall returns in the MSCI China Index, the Consumer Discretionary sector played the greatest role, as China’s economic recovery encouraged consumption of goods and services.

Source: Bloomberg as of Sep 30, 2020

Performance shown is past performance, based on the NAVs of the underlying sector ETFs and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. To view standard performance each of the funds, please click on the links available under “Related ETFs” below this post.

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. High short-term performance of the fund is unusual, and investors should not expect such performance to be repeated. Returns for periods greater than one year are annualized. For performance data current to the most recent month end, please call 1-888-493-8631, or visit www.globalxetfs.com.

Dispersion between China and US Sectors Normalizes

In Q3, the MSCI China Large Cap Index and the S&P 500 Index continued to rally, ending the quarter up 11.6% and 8.9%, respectively.

During Q3, Chinese sectors for the second time this year exhibited less dispersion of returns compared to US sectors, which deviates from historical patterns. Sector dispersion is the difference between the best and worst performing sectors in each country. In China, this dispersion was 30.71% in Q3, whereas in the US it was 34.72%.

Comparing and Contrasting US and China Sector Performance

In the chart below, we show performance of Global X ETFs that are designed to track China’s 11 GICS sectors, as well as their US sector index counterparts.

Performance shown is past performance, based on the returns of the indexes that the sector ETFs track and do not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted.

Consumer Sectors Drive Performance

During Q3, the Consumer Discretionary, Materials, and Consumer Staples sectors outperformed their broad market indexes in both China and the US as consumers became encouraged by a recovery as economic activity increase and jobs restored. Within consumer sectors, e-commerce companies contributed positive gains in both countries with consumers increasing their reliance on online platforms to make personal purchases and order home food delivery amid tenuous reopening efforts.

Another strong area in consumer spending in the US and in China was automobile retail, which enjoyed a recovery after a particularly difficult first half of the year. And whereas the performance of the Consumer Discretionary in the US was also led by the home improvement sub-segment, the Chinese sector benefit from a continued growth of online education platforms, with students remaining with parents working from home.

Despite the positive performance in both countries, China’s Consumer Discretionary sector more than doubled the returns of its benchmark because of strong performance throughout the sector, while the US sector only outperformed its benchmark by just over 1%. China’s travel service companies performed notably well heading into the October 1st-8th national Golden Week holidays, one of the biggest travel weeks of the year. Leading up to the event, hotel and airline bookings were above those seen prior to the pandemic last year. According to Alibaba, hotel bookings for the week were up by more than 50% compared to the same period in 2019.1

China Sector Underperformers

Sectors that underperformed the broader markets in both the US and China include Financials, Health Care, Real Estate, Utilities and Energy.

China’s Financials sector experienced slightly negative growth in Q3, underperforming the MSCI China Index by roughly 11% amid fears of the sector becoming overleveraged and the reemergence of shadow banking.

China Health Care’s recent slowdown may be attributed to its strong performance during earlier quarters this year, as the sector was up 37.13% year to date (YTD) – more than double the MSCI China Index’s returns.

Although the Energy sector began demonstrating a strong recovery in Q2, the sector underperformed during Q3, as oil prices remained range-bound at low levels.

Conclusion

COVID-19 continues to reshape the global economic outlook with performance across global markets, including major economies like the US and China. Sectors are impacted by this uneven recovery in uneven ways and over the past several quarters, have divergence significantly in performance. And as we’ve seen throughout this year, mixed economic responses to and recoveries from COVID-19 create a bumpy recovery, elevating the importance of monitoring and adjusting sector exposures to China.

FOOTNOTES

1. Reuters, “Sick of staying home: China expects a Golden Week tourism rebound,” Sep 27, 2020.

Investing involves risk, including the possible loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Securities focusing on a single country and narrowly focused investments may be subject to higher volatility. The Global X International Access Suite Funds are non-diversified.

Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Global X NAVs are calculated using prices as of 4:00 PM Eastern Time. The closing price is the Mid-Point between the Bid and Ask price as of the close of exchange. Closing price returns do not represent the returns you would receive if you traded shares at other times. Indices are unmanaged and do not include the effect of fees, expenses or sales charges. One cannot invest directly in an index. Carefully consider the funds’ investment objectives, risks, and charges and expenses. This and other information can be found in the funds’ full or summary prospectuses, which may be obtained at globalxetfs.com. Please read the prospectus carefully before investing.

Global X Management Company LLC serves as an advisor to Global X Funds. The Funds are distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Global X Management Company LLC. Global X Funds are not sponsored, endorsed, issued, sold or promoted by MSCI nor does MSCI make any representations regarding the advisability of investing in the Global X Funds. Neither SIDCO nor Global X is affiliated with MSCI.

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Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.





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AstraZeneca says its Oxford vaccine deal allows it to add up to 20% of manufacturing costs By Reuters

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© Reuters. FILE PHOTO: The company logo for pharmaceutical company AstraZeneca is displayed on a screen on the floor at the NYSE in New York

By Kanishka Singh

(Reuters) – AstraZeneca Plc (L:) said on Friday its coronavirus vaccine deal with Oxford University will allow it to add up to 20% of manufacturing costs to cover additional expenses required to be incurred by the British drugmaker.

“In addition to the manufacturing costs, the company is incurring costs in excess of $1 billion globally that include clinical development, regulatory, distribution, pharmacovigilance and other expenses”, an AstraZeneca spokesman said in a statement.

“To cover these additional expenses, the company will add an amount equivalent to a maximum of 20% of the manufacturing costs to ensure there is no material impact on its finances this year while continuing efforts to provide the vaccine at no profit during the pandemic,” the statement added.

AstraZeneca has previously signed multiple supply-and-manufacture deals for more than 3 billion doses globally.

These agreements are with companies and governments as the company gets closer to reporting early results of a late-stage clinical trial. Developed by the University of Oxford and licensed to AstraZeneca in April, the vaccine is expected to be one of the first from big pharma to secure regulatory approval.

The company had said earlier it has created multiple supply chains to ensure that access to its vaccine is timely, broad and equitable for high- and low-income countries alike.

Pricing and supply of experimental COVID-19 vaccines have been widely debated as richer countries pump billions of dollars into funding, and AstraZeneca has also been granted protection from future liability claims.

Separately, AstraZeneca resumed the U.S. trial of its experimental COVID-19 vaccine after approval by regulators, the company said on Friday.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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U.S. stocks mixed at close of trade; Dow Jones Industrial Average down 0.10% By Investing.com

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© Reuters. U.S. stocks mixed at close of trade; Dow Jones Industrial Average down 0.10%

Investing.com – U.S. stocks were mixed after the close on Friday, as gains in the , and sectors led shares higher while losses in the , and sectors led shares lower.

At the close in NYSE, the fell 0.10%, while the index gained 0.34%, and the index added 0.37%.

The best performers of the session on the were UnitedHealth Group Incorporated (NYSE:), which rose 1.50% or 4.87 points to trade at 330.60 at the close. Meanwhile, Walgreens Boots Alliance Inc (NASDAQ:) added 1.41% or 0.53 points to end at 38.04 and Verizon Communications Inc (NYSE:) was up 1.10% or 0.63 points to 57.96 in late trade.

The worst performers of the session were Intel Corporation (NASDAQ:), which fell 10.58% or 5.70 points to trade at 48.20 at the close. American Express Company (NYSE:) declined 3.64% or 3.81 points to end at 100.98 and Chevron Corp (NYSE:) was down 1.13% or 0.83 points to 72.57.

The top performers on the S&P 500 were Nordstrom Inc (NYSE:) which rose 5.60% to 14.33, SVB Financial Group (NASDAQ:) which was up 3.97% to settle at 296.38 and Flowserve Corporation (NYSE:) which gained 3.93% to close at 31.75.

The worst performers were Intel Corporation (NASDAQ:) which was down 10.58% to 48.20 in late trade, Robert Half International Inc (NYSE:) which lost 8.26% to settle at 51.67 and TechnipFMC PLC (NYSE:) which was down 5.69% to 6.47 at the close.

The top performers on the NASDAQ Composite were Socket Mobile Inc (NASDAQ:) which rose 74.66% to 2.550, Marin Software Inc (NASDAQ:) which was up 62.74% to settle at 3.450 and Youngevity International Inc (NASDAQ:) which gained 55.15% to close at 0.729.

The worst performers were BiondVax Pharmaceuticals Ltd ADR (NASDAQ:) which was down 86.27% to 5.20 in late trade, Iterum Therapeutics PLC (NASDAQ:) which lost 44.71% to settle at 0.53 and Limelight Networks Inc (NASDAQ:) which was down 31.98% to 4.20 at the close.

Rising stocks outnumbered declining ones on the New York Stock Exchange by 1878 to 1153 and 104 ended unchanged; on the Nasdaq Stock Exchange, 1726 rose and 1152 declined, while 95 ended unchanged.

Shares in SVB Financial Group (NASDAQ:) rose to 52-week highs; rising 3.97% or 11.32 to 296.38. Shares in Socket Mobile Inc (NASDAQ:) rose to 52-week highs; up 74.66% or 1.090 to 2.550. Shares in BiondVax Pharmaceuticals Ltd ADR (NASDAQ:) fell to 52-week lows; losing 86.27% or 32.68 to 5.20. Shares in Iterum Therapeutics PLC (NASDAQ:) fell to all time lows; losing 44.71% or 0.42 to 0.53.

The , which measures the implied volatility of S&P 500 options, was down 1.99% to 27.55.

Gold Futures for December delivery was down 0.03% or 0.60 to $1904.00 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in December fell 2.19% or 0.89 to hit $39.75 a barrel, while the December Brent oil contract fell 1.93% or 0.82 to trade at $41.64 a barrel.

EUR/USD was up 0.39% to 1.1862, while USD/JPY fell 0.10% to 104.72.

The US Dollar Index Futures was down 0.26% at 92.722.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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U.S. tentatively approves Delta, WestJet alliance By Reuters

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2/2
© Reuters. Delta Air Lines passenger planes parked in Birmingham

2/2

WASHINGTON (Reuters) – The U.S. Transportation Department said on Friday it had tentatively approved a proposed alliance agreement between Delta Air Lines (N:) and Canada’s WestJet that is expected to expand travel options between the United States and Canada.

The department said it would require the carriers remove Swoop, an ultra low-cost carrier affiliate of WestJet, from the alliance, and divest 16 takeoff and landing slots at New York’s LaGuardia Airport.

WestJet is owned by private equity firm Onex Corp (TO:).

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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