Finimize - 🇨🇳 China got off to a flying start

Hi Reader, here's what you need to know for March 16th in 3:12 minutes.

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Today's big stories

China reported a better-than-expected increase in retail sales
Stocks that split tend to outperform the market straight away, and our analyst has figured out why – Read Now
Volkswagen reported strong results despite supply disruptions

Jumped The Gun

What’s Going On Here?

Fresh data out on Tuesday showed that Chinese retail sales grew by more than expected at the start of the year, but the country might be headed straight back to its starting point.

What Does This Mean?

The Chinese economy was off to a flying start at the beginning of the year, as folk in the country splashed out to celebrate Lunar New Year and Beijing’s Winter Olympics. And they weren’t fussy about what they bought: spending was up in all but one of the retail categories from the same time last year. The biggest rises were in fuel and jewelry, but car sales – which actually fell during a lot of last year – chipped in too. Overall, retail sales in January and February – combined to even out the Lunar New Year’s impact since it can fall in either month – grew by 6.7% from the same time last year, much higher than the 3% analysts expected.

Why Should I Care?

Zooming in: Not too fast…
China’s strong start mightn’t last long: the country’s now battling its biggest surge in Covid cases since the start of the pandemic, with over 45 million people back in lockdowns as a result (tweet this). Add in that Goldman Sachs predicted last week that rising oil prices could cut China’s economic growth by 0.5%, and plenty of economists now doubt the country’s economy will hit its goal of growing 5.5% this year. And that – along with fears of new sanctions over its ties to Russia – might be why an index tracking some of China’s biggest companies fell 5% on Tuesday.

The bigger picture: Apple’s feeling it.
Lockdowns in China – the world’s biggest manufacturing hub – have been shutting down production plants around the country, and that’ll have a major impact on global supply chains. Foxconn, for one, just closed its Chinese production sites that were busy whipping up the latest iPhone 13. That could really hurt Apple’s sales, and investors know it: they sent Apple’s shares down to their lowest since November this week.

You might also like: Global stock markets have fallen, so should you buy the dip?

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Analyst Take

Why Stocks Beat The Market After A Split – And How You Can Profit From It

Stéphane Renevier, Analyst

What’s Going On Here?

Plenty of the world’s biggest companies have been splitting up their stocks in recent years.

And when we say big companies, we mean it: Apple, Tesla, Alphabet, and Nvidia have all done it.

And sure, the fact that stocks significantly outperform the market after a split probably has to do something with it.

Thing is, a stock split only redistributes shares, and doesn’t directly affect profit, revenues, or dividends. That begs the question: why does a split often boost a business?

That’s today’s Insight: why stocks that split outperform the market, why that matters, and how you can profit from it.

Read or listen to the Insight here

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