Finimize - 🇨🇳 Lunar New Year, New China

What’s going on here?

China’s revelers traveled more this Lunar New Year than last, which could finally get the country moving in the right direction.

What does this mean?

China’s shoppers and travelers have been discovering their thriftier sides lately, eager to keep cash aside in case the economy stays on the slide. But the Lunar New Year brought them back to old habits, with locals making 61% more train trips during the first six days of the holiday than last year. Early indicators seem to show more traffic on the road and skies as well, while the country spent 60% more on online hotel bookings than last year. Although it’s true, Covid lockdowns meant last year wasn’t hard to beat. That said, folk did spend an average of 36% more on Meituan – a one-stop-shopping platform selling everything from dinners to travel to cinema tickets – every day compared to the pandemic-free holiday period of 2019.

Why should I care?

Zooming in: China’s on a budget.

The Lunar New Year is China’s biggest holiday, drawing hundreds of millions home to celebrate with family. That makes it a telling indicator of folks’ financial confidence: if they can afford to spend and travel, they will. There’s an emphasis on “spend”, though. Chinese travelers moved around on a budget last year, so even though they took as many journeys as before the pandemic, they spent far less. If they were just as frugal this year, then all that traveling might not pay off – literally – for the economy.

The bigger picture: Analysts are window shopping.

Mind you, Wall Street reckons China has something going for it either way. Analysts believe that China’s chipmakers will become bigger and better now that the US has banned chip exports, not least because the Chinese government is funneling cash into local producers. Wall Street’s already picking favorites, eyeing up companies like Naura Technology Group and Hygon Information Technology.

What’s going on here?

Short sellers took aim at Temenos AG after a scandalous report, wiping $2.1 billion in value from the Swiss fintech firm.

What does this mean?

Activist investment firm Hindenburg Research has successfully taken on empires owned by the likes of Gautam Adani, Jack Dorsey, and Carl Icahn, wiping billions from their stock and often collapsing entire firms. This time, Hindenburg has accused Tenemos – which sells software to the banking sector – of seriously bad management. After a four-month investigation and interviews with 25 ex-employees, Hindenburg has alleged that Tenemos fiddled with earnings figures. The allegations alone have pushed Temenos’s shares into freefall, so much so that the fintech firm is now only worth a third of its 2019 peak.

Why should I care?

For markets: Not-so-dumb money.

Activists like Hindenburg can cash in by “short selling” – borrowing stocks from a broker, selling them, and buying them back for a cheaper price later to pocket the difference. Savvy retail investors have used that to their advantage. Empowered by social media platforms like Reddit, they collectively buy shares of those heavily shorted stocks. That pushes their prices higher, forcing short sellers to buy back shares to cover their losing bets. And that keeps the stocks heading upward. Problem is, these “short-squeeze” strategies produce rallies as fast as they are tall, with stocks soon tumbling from their newfound heights.

The bigger picture: Stock sellers are market Marvels.

Short sellers often get the villain edit, but they’re needed to keep the market in check. They essentially send out a red alert when they bet against a stock. Investors tend to heed the warning, selling at least some of their shares in the company. So long as the short sellers’ research is legit, the resulting lower stock price should more accurately represent a company’s true value. That keeps the market fair and makes bubbles less likely – all in all, pretty heroic efforts.