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China's stocks plummeted. Other markets are faring better – CNN

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For stocks in Shanghai and Shenzhen, it was bad day of epic proportions.
The Shanghai Composite nosedived 7.7% in its first day of trading following an extended Lunar New Year holiday — its biggest drop since August 2015’s notorious “Black Monday,” when global markets were rattled by China slowdown fears.
The tech-heavy Shenzhen Composite plunged 8.4%, its worst decline since 2007. Taken together, $445 billion in market value was wiped out as the deadly coronavirus continues to spread globally, my CNN Business colleague Laura He reports.
The latest: The outbreak has killed at least 362 people and infected more than 17,300 around the world. Hong Kong just announced further border closures, part of efforts to restrict travel from China.
Chinese stocks plunged 8% as coronavirus fears took hold. It's the worst day in years
A massive sell-off was expected. Chinese markets, which had been closed since January 23, needed to play catch up with the rest of Asia, whose shares were battered last week. Plus, business closures throughout the country are expected to dramatically knock earnings for the first quarter of 2020.
That may be one reason that stocks in Europe are higher Monday. US stock futures also point to gains.
But another shock on Tuesday could reverberate globally. The daily limit for most stocks to fall in China is 10%, so markets there could face another dramatic dive — leaving investors rattled.
Tai Hui, JPMorgan’s chief market strategist for the asset management division in Asia, told clients Monday that the bank still thinks economic activity “should recover swiftly once the number of new cases comes under control,” while warning of a “challenging time ahead” for stocks.
“As the number of infections is still likely to rise in the weeks ahead, we would expect the Chinese onshore equity market to come under pressure,” he said.
Much depends on the Chinese government’s ability to maintain liquidity. The People’s Bank of China said Sunday that it would inject tens of billions of dollars into Chinese markets to keep cash flowing to banks. Protecting the country’s financial markets and economy is a top priority for the government, Laura points out.

Alphabet to cap off a stellar earnings season for Big Tech

Alphabet (GOOGL), the parent company of Google, reports results for the final three months of 2019 after US markets close on Monday — finishing a strong earnings season for Big Tech that’s further boosted the market clout of companies like Amazon (AMZN).
What’s expected: Analysts are looking for Alphabet’s revenue to have jumped by at least 19% last quarter. Goldman Sachs strategists note that the company is pioneering a longer term shift toward sources of revenue beyond advertising, such as Google Cloud — so expect investors to pay attention to growth there.
Potential sticking points: Any comments on privacy and regulation and the update on Google Pixel sales, according to Bank of America.
It’s also a big moment for Alphabet CEO Sundar Pichai, who took an expanded role after co-founders Larry Page and Sergey Brin stepped down from their executives jobs in December. The shakeup has been popular with investors.
Investor insight: Alphabet shares are up more than 17% in the past six months. The S&P 500 has gained roughly 8% in the same period. The company recently joined the club of $1 trillion public companies, but its market value has since slipped back down to $988.7 billion.
Even so, Alphabet, Facebook (FB), Microsoft (MSFT), Amazon and Apple (AAPL) now account for 19% of the S&P 500’s market cap.

Ryanair troubles highlight Boeing’s deep crisis

Ryanair wanted to carry 200 million passengers by 2024. But that goal could be pushed out by as much as two years due to delayed deliveries of the Boeing 737 Max, the company said Monday.
The budget airline, which expected only six months ago to add 30 737 Max jets to its fleet by summer 2020, thinks its first delivery will now come in September or October, my CNN Business colleague Hanna Ziady reports.
That’s bad news for Ryanair, but also for Boeing (BA) — damaging its relationship with one of the plane maker’s biggest European customers. Ryanair is already seeking compensation for its losses.
In its most recent earnings report, Boeing detailed nearly $19 billion in costs associated with the 737 Max crisis. Yet that price tag could still increase significantly. Ryanair’s problems show why.
Alphabet reports results after US markets close.
Also today:
  • The January ISM Manufacturing Index, a key gauge of the sector, arrives at 10 a.m. ET. US construction spending for December posts at the same time.
  • The Democratic presidential primary kicks off in Iowa.
Coming tomorrow: Earnings season rumbles on with results from BP (BP), Snap (SNAP) and Disney (DIS).

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Japan’s SoftBank returns to profit after gains at Vision Fund and other investments

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TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.

Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.

Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).

SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.

The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.

WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.

SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.

SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.

SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.

The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.

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Yuri Kageyama is on X:

The Canadian Press. All rights reserved.

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Trump campaign promises unlikely to harm entrepreneurship: Shopify CFO

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Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.

“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.

“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”

Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.

On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.

If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.

These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.

If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.

However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.

He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.

“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.

Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.

The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.

Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.

Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.

Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.

Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.

Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”

In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.

“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.

This report by The Canadian Press was first published Nov. 12, 2024.

Companies in this story: (TSX:SHOP)

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RioCan cuts nearly 10 per cent staff in efficiency push as condo market slows

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TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.

The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.

The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.

RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.

The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.

RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.

This report by The Canadian Press was first published Nov. 12, 2024.

Companies in this story: (TSX:REI.UN)

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