Connect with us

Investment

How have investment factors performed during the coronavirus stock market turmoil? – Benefits Canada

Published

on


During 2020’s second quarter rebound, U.S. equities saw stronger performance than other developed markets like the U.K. and the rest of Europe.

However, during the coronavirus pandemic so far, factors have moved largely in tandem in those geographies, according to Philip Lawlor, managing director and head of global investment research at FTSE Russell, during a webinar hosted by the firm last week. “We actually had a much more consistent profile across regions with a fairly uniform rotation out of the low-volatility factor and the yield factors into size or smaller-cap stocks.” 

The trend toward size came through strongly during the first few weeks of the second quarter but fizzled out into June, he said.

Read: Back to basics on factor investing

Over the first half of the year, factors performed similarly across regions with a positive skew towards quality and momentum, while size, value and yield underperformed in most regions. In particular, momentum has been on a wild ride, said Lawlor, noting it performed well during the initial stages of the market meltdown, slipped in May as restrictions began to ease worldwide and is now climbing again as optimism deteriorates. “We’ve seen a very similar profile in terms of this roller-coaster ride for the performance of quality and profitability factors in year-to-date data.”

Part of momentum’s outperformance lies in its sector exposure, he added. “We can see in the case of the U.S., momentum factor benefited from being long technology and health care, which we can see are two sectors that have delivered positive performance contributions, most notably technology. And also the factor benefited from being short the financial, oil and industrials sectors which underperformed.”

Looking at the last 12 months, quality and value have been on a long-term divergence trend, with quality outperforming across the U.S., the U.K. and Europe. The effects of the pandemic have served to strengthen this trend, with the notable exception of quality’s outperformance somewhat muted in the U.K. during 2020 so far, said Marlies van Boven, head of global investment research for Europe, the Middle East and Africa at FTSE Russell, also speaking in the webinar.

Read: Institutional investors turn to AI, data science to yield alpha

Quality tends to be overweight technology, which has been driving the gap between quality and volatility throughout the pandemic, she said. But for the U.K., the quality factor’s performance was stifled by heavier exposure to oil and gas and basic materials than appears in quality in the U.S. market or the rest of Europe.

Let’s block ads! (Why?)



Source link

Continue Reading

Investment

Baidu tops revenue estimates, will keep up heavy investment – BNN

Published

on


Baidu Inc. posted a smaller-than-forecast drop in revenue after its online advertising business bounced back from the pandemic. The company said it will keep investing heavily in technology to boost growth, and the stock slipped in extended trading.

China’s leading search engine reported sales declined 1 per cent to 26.03 billion yuan (US$3.75 billion) in the June quarter, versus an average forecast for 25.7 billion yuan. Net income was 3.58 billion yuan, versus the 2 billion yuan projected, the company said Thursday in a statement.

Baidu is riding a gradual post-COVID 19 recovery in its home market but, at the same time, is trying to ward off increasingly aggressive competition in media and advertising from the likes of Tencent Holdings Ltd. and ByteDance Ltd. The company is diversifying ad revenue sources and investing in content for its Netflix-style iQiyi Inc. to keep users and marketers from migrating to hotter formats like ByteDance’s Douyin, TikTok’s local equivalent.

“With COVID-19 becoming more manageable in China, Baidu’s business is steadily rebounding,” Chief Executive Robin Li said in the statement. “We plan to continue heavy investments in technology to maximize Baidu’s future growth potential.”

What Bloomberg Intelligence Says

“Baidu’s 2Q online marketing sales could contract less than 1Q’s 19 per cent drop as the company emerges from the worst of China’s coronavirus outbreak. The second quarter has been seasonally strong for advertising in the past, and this time Baidu will benefit from the rebound in offline business activity and improved advertiser sentiment.”
– Vey-Sern Ling and Tiffany Tam, analysts

Once the runaway leader in desktop search, Baidu is trying to adapt its business to the mobile era but losing ground piecemeal to rivals such as ByteDance. To compete, it plans to offer subsidies to influencers and direct more traffic to them across its family of apps, including in live-streaming. Longer term, the search giant is investing in artificial intelligence technology, and betting on the commercialization of that through smart speakers and self-driving cars.

Rising geopolitical tensions are another source of concern. Baidu’s apps were among dozens of Chinese services targeted in India’s sweeping ban last month, while U.S. entities will soon be blocked from dealing with TikTok and Tencent’s WeChat. The U.S. Congress is moving closer to passing legislation that could effectively bar Chinese companies from trading on U.S. exchanges. Billionaire Baidu founder Li told state media earlier this year that the company is considering relisting in regions including Hong Kong.

Baidu’s U.S. shares fell about 7 per cent in extended trading following the report. The stock also came under pressure after Iqiyi disclosed Thursday after U.S. markets closed that the U.S. Securities and Exchange Commission is seeking some financial and operating records going back to 2018 and documents related to certain acquisitions and investments. Iqiyi, which is backed by Baidu, said it’s cooperating with the investigation. The company’s U.S. shares dropped as much as 19 per cent.

Baidu also said its board approved an increase of its share-repurchase program to $3 billion from $1 billion, effective through 2022.

Let’s block ads! (Why?)



Source link

Continue Reading

Investment

Baidu Tops Revenue Estimates, Will Keep Up Heavy Investment – Yahoo Canada Finance

Published

on


(Bloomberg) — Baidu Inc. posted a smaller-than-forecast drop in revenue after its online advertising business bounced back from the pandemic. The company said it will keep investing heavily in technology to boost growth, and the stock slipped in extended trading.

China’s leading search engine reported sales declined 1% to 26.03 billion yuan ($3.75 billion) in the June quarter, versus an average forecast for 25.7 billion yuan. Net income was 3.58 billion yuan, versus the 2 billion yuan projected, the company said Thursday in a statement.

Baidu is riding a gradual post-Covid 19 recovery in its home market but, at the same time, is trying to ward off increasingly aggressive competition in media and advertising from the likes of Tencent Holdings Ltd. and ByteDance Ltd. The company is diversifying ad revenue sources and investing in content for its Netflix-style iQiyi Inc. to keep users and marketers from migrating to hotter formats like ByteDance’s Douyin, TikTok’s local equivalent.

“With Covid-19 becoming more manageable in China, Baidu’s business is steadily rebounding,” Chief Executive Robin Li said in the statement. “We plan to continue heavy investments in technology to maximize Baidu’s future growth potential.”

What Bloomberg Intelligence Says

Baidu’s 2Q online marketing sales could contract less than 1Q’s 19% drop as the company emerges from the worst of China’s coronavirus outbreak. The second quarter has been seasonally strong for advertising in the past, and this time Baidu will benefit from the rebound in offline business activity and improved advertiser sentiment.

– Vey-Sern Ling and Tiffany Tam, analysts

Click here for the research.

Once the runaway leader in desktop search, Baidu is trying to adapt its business to the mobile era but losing ground piecemeal to rivals such as ByteDance. To compete, it plans to offer subsidies to influencers and direct more traffic to them across its family of apps, including in live-streaming. Longer term, the search giant is investing in artificial intelligence technology, and betting on the commercialization of that through smart speakers and self-driving cars.

Rising geopolitical tensions are another source of concern. Baidu’s apps were among dozens of Chinese services targeted in India’s sweeping ban last month, while U.S. entities will soon be blocked from dealing with TikTok and Tencent’s WeChat. The U.S. Congress is moving closer to passing legislation that could effectively bar Chinese companies from trading on U.S. exchanges. Billionaire Baidu founder Li told state media earlier this year that the company is considering relisting in regions including Hong Kong.

Baidu’s U.S. shares fell about 7% in extended trading following the report. The stock also came under pressure after Iqiyi disclosed Thursday after U.S. markets closed that the U.S. Securities and Exchange Commission is seeking some financial and operating records going back to 2018 and documents related to certain acquisitions and investments. Iqiyi, which is backed by Baidu, said it’s cooperating with the investigation. The company’s U.S. shares dropped as much as 19%.

Baidu also said its board approved an increase of its share-repurchase program to $3 billion from $1 billion, effective through 2022.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For more articles like this, please visit us at bloomberg.com” data-reactid=”24″>For more articles like this, please visit us at bloomberg.com

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Subscribe now to stay ahead with the most trusted business news source.” data-reactid=”25″>Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.

Let’s block ads! (Why?)



Source link

Continue Reading

Investment

Investment dealer GMP Capital reworks wealth management takeover to reflect pandemic impact – The Globe and Mail

Published

on


Investment dealer GMP Capital Inc. has reworked its proposed $420-million takeover of a wealth management subsidiary to reflect the realities of a postpandemic market.

Back in February, Toronto-based GMP Capital unveiled plans to swap its publicly traded stock for shares in partly owned subsidiary Richardson GMP. Winnipeg’s Richardson family is a significant shareholder of both companies, and the restructuring has been playing out over the past two years.

On Thursday, GMP Capital announced that, as part of the transaction, its shareholders will receive an additional 15 cents a share, or a total of $11.3-million, in a special dividend. It also said the Richardson clan will leave additional capital in the company to fund expansion by keeping $32.1-million invested in preferred shares, a holding the family was required to redeem.

Story continues below advertisement

In addition, GMP Capital changed the terms of the share swap with Richardson GMP’s owners, who include the firm’s 165 financial adviser teams. The company was planning to trade one GMP Capital share for every two shares of privately held Richardson GMP; now the ratio is one share for every 1.875 shares.

GMP Capital executives said the changes reflect a decline in Richardson GMP’s value after the sharp drop in interest rates in March, which cut into the profits it earns on its clients’ cash balances. In February, the transaction valued the entire franchise at $500-million; now the figure is $420-million.

“The revised terms to the previously announced transaction in February, 2020, strike what, we believe, is an appropriate balance taking into account the effects of the global pandemic, feedback raised by various stakeholders and retaining the appropriate level of capital to execute our long-term value creation strategy,” said Donald Wright, chair of the board at GMP Capital, in a news release.

Shareholders are scheduled to vote on the transaction on Oct. 6. If the deal is approved, the Richardson family will own approximately 40 per cent of Richardson GMP, the company’s financial advisers will have a 28.5-per-cent stake and existing GMP Capital shareholders will hold 31.4 per cent.

Last year, GMP Capital sold its capital markets business to St. Louis-based investment dealer Stifel Financial Corp., raising $42.2-million, in order to focus on managing money for high net worth individuals. Richardson GMP advisers currently oversee $29-billion of client assets, up from $23.5-billion when the stock market slumped in March.

“After a multiyear process to transform GMP, we can begin to capitalize on the considerable opportunities in the multitrillion-dollar wealth management industry in Canada,” said Kish Kapoor, interim president and chief executive of GMP Capital. He said that once the deal is completed, the company plans to recruit financial advisers from rival dealers, including the bank-owned firms, and will attempt to acquire small wealth management platforms.

“We believe, and the Richardson family believes, that the financial services ecosystem needs strong, high-quality independent firms,” Mr. Kapoor said. “Amongst many things, the health crisis has reminded us about the importance and demand for high-quality, face-to-face advice, especially during a period of volatile and uncertain markets.”

Story continues below advertisement

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Let’s block ads! (Why?)



Source link

Continue Reading

Trending