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Ant Group IPO: 3 key investment themes ahead of listing

Alibaba Group’s Hong Kong shares posted a new record price this week, ten months after launch. The Chinese e-commerce titan’s stocks hit HK$292 (US$37) a share on Thursday 03 September 2020. This follows its US listing’s performance a day earlier, when share price broke through a key resistance level to hit a new all-time high…

  • Ant Group is aiming to raise US$30 billion through dual listing
  • This will be the largest IPO ever, surpassing Saudi Aramco’s launch last December
  • Shares of Alibaba – Ant’s parent company – soared past US$300 this week

1. Alibaba stock broke through US$300 this week

Alibaba Group’s Hong Kong shares posted a new record price this week, ten months after launch.

The Chinese e-commerce titan’s stocks hit HK$292 (US$37) a share on Thursday 03 September 2020.

This follows its US listing’s performance a day earlier, when share price broke through a key resistance level to hit a new all-time high of US$301.

Ever since Alibaba Group’s fintech offshoot Ant Group announced its plans to list on the Shanghai and Hong Kong stock exchanges, the e-commerce giant’s share price has soared to record highs.

In the last two weeks alone, Alibaba’s US and Hong Kong share prices have rallied around 15% respectively.

Better-than-expected quarterly earnings have also helped to boost Alibaba’s market cap by some 20% in the month of August alone.

If Alibaba’s current stock rally is any indication of things to come, Ant Group’s upcoming IPO looks set for a big debut.

Want to know how you can trade Ant Group’s IPO?

With IG’s Grey Market, you can buy and sell Ant Group shares both before and after its initial public offering. Learn how you can do so by opening a live or demo IG account today.

2. Ant Group gunning for the world’s largest IPO crown

Ant Group is reportedly targeting a share sale of roughly US$30 billion – which would make it the largest IPO in history, overtaking Saudi Aramco’s US$25.6 billion offering last December.

Analysts have also put the flotation’s estimated market valuation at about US$225 billion.

The company stated that it plans to sell at least 10% of its enlarged share capital in the dual listing. If exercised, an over-allotment option (at 15% of total equity), called a ‘greenshoe’, could also lift the total capital raised to around US$33.5 billion.

Ant Group is also planning to raise more funds on Shanghai’s STAR Market than on the Hong Kong Stock Exchange, people close to the matter said.

While Ant did not furnish any specific details on the simultaneous listing, the sources said the IPO’s team leads have approached many Chinese institutional investors to invest in the STAR lots.

The IPO managers are hoping that these parties would come on board as strategic investors, by committing at least 1 billion yuan to 1.5 billion yuan each for a minimum lock-in period of 12 months.

Ant has also set a placeholder amount of 48 billion yuan (US$7 billion) for the Chinese tranche as a pre-sale indication of the Shanghai float size.

3. Ant Group posted a 1000% profit growth

It is worth noting for potential investors that the payments company reported a profit of 21.9 billion Chinese yuan (US$3.2 billion) on total revenues of 72.5 billion yuan (US$10.6 billion) for the first half of 2020.

This represents a more than 1000% year-on-year growth in profit. In the first half of 2019, Ant brought in 1.9 billion yuan (US$278 million) in profit, alongside a revenue of 52.5 billion yuan (US$7.7 billion).

According to an official exchange filing submitted last Tuesday (25 August 2020), the group’s flagship product – Alipay, a mobile payments app – has achieved over one billion annual active users as of 30 June 2020.

Alipay has also processed 118 trillion yuan (US$17.3 billion) worth of domestic transactions for the 12 months up to 30 June 2020.

The platform also has a growing international footprint, experiencing an annual transaction volume of 622 billion in markets outside of China during the same period.

Another detail worth pointing out is that Ant is not as dependent on Alipay’s sales as before. Two years ago, Alipay contributed 50% of Ant’s total revenue. This fell to 36% in the first half of 2020.

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Donald Trump blasts ‘fools’ who oppose good Russian ties

US President-elect Donald Trump has posted a progression of tweets censuring the individuals who contradict great relations with Russia as “‘dumb’ individuals, or nitwits”.

Mr Trump promised to work with Russia “to comprehend a portion of the numerous… squeezing issues and issues of the WORLD!”

His remarks came after an insight report said Russia’s leader had attempted to help a Trump race triumph.

Mr Trump said Democrats were to be faulted for “gross carelessness” in permitting their servers to be hacked.

In a progression of tweets on Saturday, Mr Trump said that having a decent association with Russia was “no terrible thing” and that “lone “idiotic” individuals, or simpletons, would believe that it is awful!”

He included that Russia would regard the US increasingly when he was president

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Bulls and Bears Took on More Currency Exposure in Week Through January

he most striking improvement among theoretical situating toward the finish of a year ago and the primary session of 2017 is not that modification were little. There was just a single gross theoretical position modification of more than 10k contracts. With sterling apparently not able to maintain even humble upticks, the bears added 13.1k contracts to the gross short position, lifting it to 120.2k contracts.

Or maybe, it is eminent that examiners for the most part added to positions, long and short, as opposed to close positions at the very end of the year. Examiners added to net long outside cash prospects positions, aside from in the Japanese yen and Swiss franc where 2.6k and 2.5k contracts were exchanged separately. Examiners likewise added to gross short positions. Here there was just a single exemption, the Japanese yen. Despite the fact that the dollar shut comprehensively higher in front of the end of the week, every one of the monetary forms we track here, spare the Mexican peso, picked up against the dollar in the three sessions since the finish of the CFTC reporting period.

Every once in a while it is helpful to review why many market members take a gander at the theoretical situating in the cash fates advertise. It is not that the outside trade is essentially a prospects showcase. It is principally an over-the-counter market in which every day turnover midpoints in abundance of $5 trillion a day.

Trade exchanged monetary forms and alternatives represented around 3% of the normal day by day turnover as indicated by the BIS study. Be that as it may, past reviews have discovered some contemporaneous connection between’s market heading and net position changes. We think it additionally offers knowledge into a specific market section of pattern supporters and energy brokers. It is not by any means the only device, yet one of a few data sources.

One ramifications of this is albeit theoretical positions in the money fates market are moderately extensive, it is still little contrasted and the money showcase. Along these lines, it is difficult to see the genuine essentialness of a record vast position, as though there is some market top. At some point, examiners are not driving the costs, possibly there is another fragment, national banks, enterprises, as well as genuine cash that is more essential at any given minute.

We invest some energy taking a gander at gross positions instead of just net theoretical positions, which is the more customary approach. We think a more granular look is frequently fundamental. There is a distinction between short-covering, for instance, and new purchasing, however it appears to be identical in the net. Additionally, the gross position is the place the introduction is not the net position. A net position of zero does not mean the market is nonpartisan. Net positions could be huge, which implies a short press or a negative stun could in any case troublesome. The positions that must be balanced are captured in the gross measure not the net figure.

We find numerous customers are likewise keen on theoretical situating in the US Treasuries and oil. The net and gross short theoretical Treasury position has swelled to new records. The bears added 23.8k contracts to the as of now record net short position, lifting it to 616.2k contracts. The bulls attempted to pick a base and added about 20k contracts to the gross long position, which now remains at 471.2k contracts. These modification prompted to a 3.8k contract increment in the net short position to 344.9k contracts.

The bulls delayed in the oil prospects toward the finish of 2016. They exchanged short of what one thousand contracts, leaving 608.1k gross in length contracts. The bears added 4.1k contracts to the gross short position, giving them 168k. These conformities trimmed the net long position by very nearly 5k contracts to 440.1k.

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3 ways to profit in the ‘year of the dollar’

In December, the Federal Reserve raised loan fees for the second time since the Great Recession and included the desire of a 2017 financing cost climb to its gauge. Furthermore, only a couple days prior, the abundantly anticipated minutes from the most recent Fed meeting demonstrated the most hawkish tone from the national bank in two years.

In the meantime, Europe has been dove into political turmoil after a year ago’s Brexit vote and the later abdication of Italy’s leader. Somewhere else, the Bank of Japan proceeds down the way of negative rates and forceful security purchasing.

Put it all together, and it isn’t astounding that the U.S. Dollar Index is up against 14-year highs.

Speculators may have missed so much discussion on account of babble about the Dow Jones Industrial Average at the end of the day almost hitting 20,000. Be that as it may, paying little respect to your assignment to stocks or your venture skyline, this sort of huge picture incline in the dollar implies right now is an ideal opportunity to position your portfolio to benefit and, maybe most critical, to keep away from a portion of the pitfalls that can originate from a solid local cash.

Here are a couple ideas dollar exchanges ought to consider:

Residential plays over multinationals

There’s a considerable measure of seek after shopper stocks in 2017 on account of an enhancing work market and any desires for a jolt under a GOP-controlled Congress and President Donald Trump. In any case, remember that not all retailers are made equivalent especially those with abroad operations that are adversely affected by the wide dissimilarity in monetary standards at this moment.

For example, retailer Wal-Mart Stores Inc.(WMT) said troublesome money trade rates shaved very nearly 2.5% off profit for each partake in the second quarter of 2016. On the other hand consider that in the monetary final quarter of 2016, athletic attire goliath Nike Inc.(NKE) saw its income development cut down the middle because of forex weights, from 12% year-over-year in consistent cash measures to only 6% including real money changes.

To take advantage of the “reflation” exchange that numerous financial specialists are counts on in 2017, you need to represent the headwinds that a solid dollar are making for multinationals at this moment. The most ideal approach to do that is to consider customer plays that do by far most of their business here in the U.S. – for example, Foot Locker Inc.(FL), which has been an uncommon splendid spot in retail throughout the most recent couple of years.

Supported money ETFs

Obviously, in the event that you need a steady portfolio, you can’t just purchase just local centered values. Geographic expansion is similarly as imperative as enhancement crosswise over parts and resource classes. Such a large number of financial specialists keep on holding worldwide plays in light of a legitimate concern for a balanced portfolio, regardless of the possibility that it implies battling a daunting struggle as a result of a solid dollar.

The uplifting news, notwithstanding, is that you don’t need to leave yourself to torment through a solid dollar and a powerless euro when you put resources into Europe. Nor do you need to stress over the yen-dollar conversion standard when you put resources into Japan. That is on account of there’s an entire group of cash supported ETFs to permit financial specialists to put their cash in outside business sectors yet keep away from forex issues.

Consider that Japan’s Nikkei 225 file is up around 25% from its July 2016 lows. The WisdomTree Japan Hedged Equity Fund(DXJ) is up 35% in a similar period on account of assurance from forex issues and a somewhat better-performing rundown of stocks – while the non-supported iShares MSCI Japan ETF(EWJ) is up only 10% in a similar period because of battling a difficult task against a solid dollar.

In the event that you need to differentiate your portfolio comprehensively, you ought to consider supported assets that incorporate the Japan-centered DXJ, the WisdomTree Europe Hedged Equity Fund(HEDJ) to play Europe or the iShares money Hedged MSCI EAFE ETF (HEFA) for developing markets.

Dollar list ETF

In the event that you are searching for an immediate play on a rising dollar as opposed to putting resources into stocks, figuring out how to exchange remote trade can appear like an overwhelming undertaking. Gratefully, there’s the PowerShares DB US Dollar Index Bullish Fund(UUP).

This ETF is attached to the U.S. Dollar Index, which is a measure of the greenback against a wicker container of other worldwide monetary standards including the yen and the euro. It’s a straight money play, however that doesn’t make it straightforward or hazard free. In the event that the dollar debilitates, you’ll lose cash similarly as though you’re putting resources into a stock that has fallen on difficult circumstances. Furthermore, obviously, PowerShares takes a little cut of your speculations en route that indicates 0.8% yearly, or $80 a year on each $10,000 contributed.

Still, in the event that you need to conjecture on the dollar or support against a solid U.S. cash keeping down other worldwide ventures on your rundown, it’s maybe the least demanding approach to do as such for generally financial specialists.

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