Finimize - 📉 Uh oh, China

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Today's big stories

Chinese retail sales rose at their slowest pace in 12 months in August
There could be stock market winners even if the US's newly proposed tax plan goes ahead – Read Now
UK inflation hit a nine-year high in August

What The Gel?

What’s Going On Here?

Data out on Wednesday showed Chinese retail sales rose at their slowest pace in a year in August, as the country’s efforts to kill off Covid leave behind a sticky situation.

What Does This Mean?

China’s done a pretty solid job of keeping the pandemic in check, with the country quick to clamp down on any outbreaks as and when they spring up. But that efficiency’s come at a price: retail sales rose just 2.5% last month compared to the year before – well below the expected 7%. That’s got analysts worried that the country’s overall economic recovery is at risk, especially since any more outbreaks are bound to interrupt consumer spending and supply chains all over again. Investment bank Goldman Sachs is so worried, in fact, that it’s lowered its forecasts for the country’s economic growth from 5.8% to 2.3% this quarter.

Why Should I Care?

For markets: A change of tactics might be in order.
China’s resisted relying on broad-brush support packages like other developed economies, instead choosing to focus on targeted programs for small businesses. But economists think this recent data might encourage its government to try a different approach: cutting the amount of cash banks are required to hold in reserve in an effort to boost lending and, in turn, spending. It might help increase investment in Chinese stocks too, which would be good news for the country’s ailing stock market: it’s fallen 8% this year.

The bigger picture: So much for “safe as houses”.
China’s property market has been having a tough time of it too: the government’s been rolling out restrictions across the sector, making it a lot harder for developers and homebuyers to take out loans. That might be why home sales fell 20% in August compared to the year before – the biggest drop since the pandemic hit last year.

You might also like: Are Chinese stocks a bargain?

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Analyst Take

There Are Ways To Profit From The US’s Proposed Tax Hikes – If You Squint A Little

What’s Going On Here?

If the US government has its way, tax hikes are coming.

And the companies in the key US stock index are set to pay the price, with profits expected to be at least 5% lower as a result.

But not all stocks are necessarily going to suffer. In fact, there’s a certain type of company that’ll carry on business as usual.

What’s more, there might be babies thrown out with this bathwater. That is to say, some stocks might take a hit when they’re not actually at risk.

So that’s today’s Insight: the short and mid-term opportunities created by higher taxes, and the stocks that are effectively tax-proof.

Read or listen to the Insight here

RIP Cable TV

According to research firm PwC, revenue from media and entertainment will hit $2.6 trillion by 2023.

But if you suspect Disney or one of the many other streaming-parents will scoop it all up, The Motley Fool thinks you’d be off the mark.

It doesn’t reckon the real winner will be Netflix, Hulu, or Amazon Prime Video, but a player in the advertising market, and that market is 10 times the size of the online streaming industry.

In fact, The Motley Fool believes this company’s crucial technology could represent the final nail in the coffin for traditional cable.

It’s The Motley Fool’s latest stock pick: head over to The Motley Fool to find out what it is.

Get The Stock