Finimize - ☝️ The US-EU bidding war

Hi Reader, here's what you need to know for March 10th in 3:15 minutes.

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Today's big stories

JD.com’s results showed that China’s recovery is going to take patience and time
Retail investors are cheerful, even if the pros aren’t – Read Now
The EU and US are turning into lean, green, subsidizing machines in the battle for key industries

Jaded By JD

What’s Going On Here?

JD.com’s meager revenue growth overshadowed last quarter’s juicy profit, spooking investors on Thursday.

What Does This Mean?

Alibaba might be JD.com’s arch-rival, but the firms are both Chinese e-commerce giants – meaning they’re typically birds of a feather where results are concerned. So after Alibaba’s feeble revenue growth last quarter, it didn’t come out of left field when JD reported that overall revenue was disappointing and direct sales from its online platforms grew just 1%. In the firm’s defense, the cards were stacked against it: vast tracts of China remained under lockdown during the December quarter, keeping a lid on shopping. JD still managed to overshoot profit estimates, though, thanks to a raft of cost cuts. But that wasn’t enough to placate hard-to-please investors. They dumped the stock despite a tantalizing $1 billion dividend announcement.

Why Should I Care?

The bigger picture: It's going to take patience and time.
JD’s performance might improve as China's economy does, but let’s get one thing straight: the country’s not going to take off with one little wave of the government’s lockdown-lifting wand. Chinese imports and exports actually fell in January and February, and cautious spending brought last month’s inflation down to the lowest level in a year. Now JD’s betting that the rebound will be gradual, and it’s counting on consumers’ confidence (and incomes) dialing up over time.

Zooming out: China’s e-comm royal rumble.
Competition in the Chinese e-commerce market is fierce right now, with newcomers like Pinduoduo shaking the thrones of well-fed reigning champs. But JD’s been brushing off distractions to focus on the fight, saying goodbye to its Thai and Indonesian websites in favor of closer-to-home programs like a $1.4 billion discount campaign. That’s not a guaranteed recipe for success either, though: margins could get dangerously thin if the firm’s not careful, and JD’s rep as a marketplace for higher-end goods might suffer too.

You might also like: Five spicy stocks for China’s reopening.

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Analyst Take

You’re Optimistic; The Pros Aren’t. Don’t Let That Stop You.

By Paul Allison, Analyst

They’re certainly a gloomy lot, those professional investors.

More than two-thirds of fund managers recently said the market’s strong performance since October has been nothing more than a bear market rally.

And so they’ve sold their stocks, and currently are up to their eyeballs in cash.

But that doesn’t mean you have to follow suit. In fact, you might know better than the pros.

That’s today’s Insight: why you don’t need to be glum just because the pros are.

Read or listen to the Insight here

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Mr. Steal Your Industries

What’s Going On Here?

The EU’s reportedly planning some new green subsidies to outshine the US's allure.

What Does This Mean?

The EU’s got a problem, and its name is Uncle Sam – especially his deep pockets. See, the US boasts a $369 billion package of subsidies and tax incentives for green tech, and that’s got some European companies eyeing up life stateside. Cue panic among EU policymakers, who are worried the sweet Yankee dollar will deprive them of industries they’ve nurtured for years. Volkswagen, the world’s second-biggest carmaker, is a prime example. The firm announced this week that it’s putting plans for an Eastern European battery plant on hold and prioritizing a facility in the US instead – where it could claim over $10 billion in incentives. But the EU’s reportedly hitting back, making it easier for member states to match US subsidies in a last-ditch attempt to keep firms on European soil.

Why Should I Care?

Zooming in: Grand theft auto.
The US and EU are squabbling over all kinds of sectors, but Europe’s especially protective of its all-important auto industry. After all, the region’s home to some of the world’s biggest car manufacturers. And it’s cradling some valuable EV jewels too: the bloc accounts for a quarter of global EV production and 20% of the supply chain, while the US’s figures are less than half that size. Ceding that position would hit the region’s struggling economy hard, meaning the embattled EU has little choice but to cough up or shut up for now.

The bigger picture: Seeing green.
This development might have EU bureaucrats in tears, but it bodes well for the green transition – and for the world at large. The Human Development Index, which measures how long and well folk live, has been dropping off in recent years. (Yup, you’re not just aging: life actually is getting worse.) Climate change is one key culprit – but developments like this could help keep it in check.

You might also like: US investors have been dumping ESG funds.

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💬 Quote of the day

“Thirty-five is when you finally get your head together and your body starts falling apart.”

– Caryn Leschen (an American illustrator, copywriter, and cartoonist)

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📈 Five Shares For ISAs – How HL Researches: 5pm, March 20th
🌎 Three Ways Long-Term Investors Can Act On Climate Change: 12pm, March 21st
🚀 What Will Be The Next Big Thing In Artificial Intelligence?: 1pm, March 22nd
🎉 Modern Investor Summit 2023: 12pm, December 5th and 6th

🎯 On Our Radar

Snow leopard. An escaped big cat was taken to the zoo – with cocaine in its system.
“Oh, hi Mark.” They’re remaking 2003’s cult classic The Room, starring this small-screen superstar.
Tween-age angst. The world of adolescent girls is in serious decline.
Money does buy happiness. The science is in, and the proverb is wrong.
Sharing plates are so passé. Please, let’s just eat our own individual dishes.

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