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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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Here’s What $1,000 Invested in Vaccine Stocks Would Be Worth Now

Ever wonder what you would have gotten if you invested $1,000 into the different vaccine stocks at the start of the pandemic?

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Vaccine stocks performance during the pandemic

The Briefing

  • Three of seven COVID-19 vaccine stocks have outperformed the S&P 500 since the beginning of the global pandemic
  • Novavax is the highest performing vaccine stock, returning 1,549% to shareholders

Vaccine Stocks During a Pandemic

It’s often said that with every crisis comes great opportunity.

While such catastrophes do create upheaval and uncertainty in financial markets, they can also lead to new opportunities for investors, as asset classes react to different environments.

Since the World Health Organization (WHO) declared COVID-19 to be a pandemic on March 11, 2020, the performance of vaccine stocks have been varied—but with some notable winners that notched triple or quadruple digit returns.

Here’s how much a $1,000 investment would be worth as of March 31, 2021, if you had put money into each vaccine stock at the start of the pandemic:

StockValue of Investment% GrowthMarket Cap ($B)
Novavax$16,4911,549.1%$14.3
Moderna$5,019401.9%$59.9
BioNTech$3,247224.7%$31.3
Johnson & Johnson$1,25225.2%$419.8
Pfizer$1,12212.2%$207.2
AstraZeneca$1,12112.1%$93.8
Sanofi$1,0969.6%$105.2

The Business of Vaccines

The returns on vaccine stocks have varied greatly. They are staggering in the case of Novavax and Moderna, but also seem quite underwhelming, when considering the likes of Sanofi, AstraZeneca, and Pfizer.

One factor for the discrepancy in stock price performance is the revenue potential from vaccine sales relative to the rest of the existing business, as vaccine sales will have a much greater impact on the fundamentals of smaller companies.

For example, before the pandemic, Novavax had revenues of just $18.7 million—this meant that capturing any portion of global vaccine sales would create massive value for shareholders. On the flipside, vaccine sales are much less likely to impact the fundamentals of Sanofi’s business, since the company already is generating $40.5 billion in revenue.

To put it into perspective, analysts are expecting total sales from COVID-19 vaccines to be around $100 billion, with $40 billion in post-tax profits.

Vaccine Stocks vs the S&P 500

Even in a booming and valuable industry, it’s difficult to identify the long-term leaders. For example, in the mobile phone market, there was a time where the likes of Motorola, Nokia, and Blackberry appeared untouchable, but eventually lost out.

Similarly, with the limited information available at the start of the pandemic, few, if any, could have separated the winners and losers from this group with accuracy.

In the past year, the S&P 500 grew 44.9%—meaning that only three of the seven vaccine stocks have seen their share prices outperform the market.

Nobody said helping solve a global pandemic guarantees a pay off.

Where does this data come from?

Source: S&P Global Market Intelligence
Notes: Investment growth is calculated between March 11, 2020-March 31, 2021. All market capitalization values are as of March 31, 2021.

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Bitcoin is the Fastest Asset to Reach a $1 Trillion Market Cap

Bitcoin is now part of a select very few assets that hold a market cap greater than $1 trillion. How long did it take to get there?

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Bitcoin fastest asset to $1 trillion

The Briefing

  • Bitcoin (BTC) hit a $1 trillion market cap in just 12 years, making it the fastest asset to do so
  • Investor sentiment towards BTC appears to be at extreme bullishness, with the asset adding roughly $500 billion in market cap just in 2021

Bitcoin is the Fastest Asset to Reach $1 Trillion

The world is moving forward at an accelerated pace. Historically, it’s taken multiple decades for companies to be worth $1 trillion. For bitcoin, it took just 12 short years to reach such a milestone.

To help put things into perspective, here’s a look at how long it took America’s biggest tech companies to reach the $1 trillion market cap.

AssetTime To Reach $1 TrillionCurrent Market Cap
Microsoft44 years$1.9 trillion
Apple42 years$2.2 trillion
Amazon24 years$1.7 trillion
Google21 years$1.5 trillion
Bitcoin12 years$1.1 trillion

Market caps as of April 12, 2021

Extreme Bullish Sentiment

Bitcoin has been subject to widespread commotion in markets.

At the start of 2021, the cryptocurrency had a more modest market cap of $500 billion, but has gained more than another $500 billion since. An onslaught of headlines has contributed to extremely bullish investor sentiment, including:

1. CEOs begin to show interest
Elon Musk and Jack Dorsey have made sizable investments in bitcoin through Tesla and Square, respectively. It’s estimated the gain from Tesla’s $1.5 billion bitcoin investment was greater than the profits from the entirety of their business in 2020.

2. New ETFs on the block
Multiple Bitcoin ETFs focused were recently approved by Canadian regulators and some have already launched on the Toronto Stock Exchange (TSX). For many years, the Grayscale Bitcoin Trust (GBTC) was the only readily accessible investment vehicle trading on equity markets that had exposure to BTC.

3. Financial institutions finally joining in?
Mastercard, Visa, and Bank of New York Mellon have made announcements to make it easier for customers to use cryptocurrencies.

On to the Next Trillion?

Future projections for the price of bitcoin are garnering more extreme and widening price targets.

The accelerated rate of change today has many of the Big Tech companies already inching closer to the next trillion in value. Will bitcoin follow suit?

Where does this data come from?

Source: coinmarketcap.com
Notes: Financial data is as of April 12, 2021

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