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Beijing Bounces Back: China Posts Positive Q3 Growth Numbers

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Beijing Bounces Back: China Posts Positive Q3 Growth Numbers

The Briefing

  • The Chinese economy grew by 4.9% year-on-year in the third quarter of 2020.
  • Growth for the first three quarters of 2020 is now up 0.7% from a year ago.

China Posts Positive Q3 Growth Numbers

China became the first major economy to return to its pre-virus growth trajectory, posting positive growth numbers in Q2 2020. Now, China’s National Bureau of Statistics has reported third-quarter GDP growth that is up 4.9% from a year ago.

The Road to Recovery

Like the rest of the world, China’s economy took a hit when pandemic-induced lockdowns shut down businesses and factories across the country.

However, the world’s second largest economy was one of the first to put COVID-19 restrictions in place, which could explain why it was the first major country to report growth as stores and factories began to reopen post-lockdown.

Here’s a look at China’s GDP growth in recent times:

QuarterChina GDP Annual Growth Rate
Q3 20176.9%
Q4 20176.8%
Q1 20186.9%
Q2 20186.9%
Q3 20186.7%
Q4 20186.5%
Q1 20196.4%
Q2 20196.2%
Q3 20196.0%
Q4 20196.0%
Q1 2020-6.8%
Q2 20203.2%
Q3 20204.9%

Are These Numbers Good?

Many countries around the world see China as a barometer of what post COVID-19 recovery could potentially look like, so new quarterly numbers have taken on some significance.

Not only did China show a speedy recovery—its initial bounce-back was also higher than predicted. While experts had projected a 2.4% increase between April and June, China’s National Bureau of Statistics reported a 3.2% rise.

Though the 4.9% increase reported in Q3 is good news for China, it still falls short of predictions from Chinese economists of 5.2% growth in the third quarter.

Is it an upward trajectory from here, or will China’s economy experience another dip? The experts have varying opinions, but the majority are relatively optimistic.

If China’s COVID-19 cases remain under control, it’s possible that growth is on the horizon.

Where does this data come from?

Source: National Bureau of Statistics of China
Details: This data was released on October 18th, 2020.

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Datastream

Which Industry Boasts the Most Billionaire Wealth?

After the coronavirus-related market crash in early 2020, billionaires across every sector saw a double-digit increase in wealth.

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which industry boasts the most billionaire wealth

The Briefing

  • In every single sector, billionaire wealth saw positive growth from 2019 to 2020
  • Billionaire wealth in technology reached $566 billion after growing 41%, while healthcare reached $548 billion, growing 36%

It’s a Billionaires World

During the pandemic, billionaire wealth has shot up an average of 27% across various industries. Concurrently, the middle and working class have struggled, U.S. unemployment reached record highs, and millions of Americans are worried about facing eviction or foreclosure in the near future.

Tech and Healthcare Pull Ahead of the Pack

The industries that historically promote wealth creation for billionaires have undergone a number of changes in recent times.

Technology and healthcare have surged ahead of the pack, as companies in these industries possess qualities that have made innovation a huge value and growth driver. Innovative factors include AI, big data analytics, and a digital and cloud footprint.

IndustryWealth Per Industry ($ Billions)Growth Rates between April-July 2020
Technology$565.741.1%
Health industries$548.036.3%
Industrials$376.944.4%
Real estate$342.512.9%
Consumer & retail$300.126%
Other/diversified$268.120.7%
Financial services$229.112.8%
Materials$206.129.6%
Entertainment & media$204.120.7%

The pandemic enabled those well equipped to pivot towards the new environment and business landscape, while those without these advancements were forced to haphazardly adjust.

As a result, billionaires in these two industries have reaped great rewards. Between April-July 2020 they generated $164.8 billion and $145.7 billion in wealth between technology and healthcare respectively.

Playing Catchup

The graphic shows the two leading industries building a considerable spread between them and those lagging behind. As these innovative technologies take the mainstream, it may suggest the other industries will have the chance to catch up.

In real estate for instance, the wave of innovation is least prevalent according to the original report, yet disruption and innovation are already on their way. Consider two stocks in Zillow and Redfin: the first operates in residential real estate services exclusively through web and mobile, while the latter is a digital real estate brokerage that has the potential to undercut real estate agents.

Could these industry wealth results in a post-pandemic world look very different?

Where does this data come from?

Source: PWC Billionaires Report.
Notes: This data was released in the summer of 2020

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Tesla Bears: A Short Short Story

Tesla has gained infamy for the sheer depth of short seller activity on its stock. After years of 20% of shares short, the 2020 rally has led to capitulation for Tesla bears.

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The Briefing

  • Tesla, Inc has gained infamy for the sheer depth of short seller activity on its stock. At its peak in 2019, over 200 million shares were short
  • However, short sellers have recently capitulated, thanks to Tesla’s monster year
  • TSLA shares are up roughly 600% YTD

Tesla Bears: A Short Short Story

Short selling is often said to be the Wild West of financial markets. Where there’s a short seller, there can be whipsawing asset prices just around the corner. Tesla is no exception.

In some cases billions of dollars pour behind these short ideas—conducted by some of the world’s most sophisticated investors.

The efficient market hypothesis suggests short selling is a necessary evil that helps the market reflect on all the information of a given security and obtain its true market value. Yet most market participants are anything but receptive to short sellers.

The market—which tends to be long, often panics when a short seller enters the arena and takes the opposite stance. What typically follows is an avalanche of legal and regulatory action from corporate lawyers to the SEC.

In the case of Tesla, short sellers couldn’t have gotten it more wrong – at least for now. Some market commentators call it the most unprofitable short witnessed. The data shows that approximately 20% of Tesla shares have been held short since 2016. This year a reported $27 billion has been lost betting against Tesla.

DateShares Sold ShortDollar Volume Sold Short
October 30th, 202047,800,000$19 billion
October 15th, 202052,960,000$22 billion
September 30th, 202057,130,000$25 billion
September 15th, 202059,040,000$24 billion
August 31st, 202054,890,000$20 billion
August 14th, 202012,310,000$5 billion

Tesla’s short thesis is often anchored around a few compelling narratives. The first is that Tesla’s present day fundamentals are poor—a $530 billion company delivered 139,300 vehicles in Q3’20 and turned a $331 million profit. That’s after government subsidy programs.

The second, the electric vehicle market is expected to be competitive with many players, and short sellers make the point Tesla is currently priced as the sole-winner in this space.

We don’t know how the future EV market will transpire, but with Tesla shares up 600% year-to-date, and with the company set to join the S&P 500, some bears look to be calling it quits.

Where does this data come from?

Source:Ycharts
Notes: Financial data is as of December 2nd, 2020

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