💰 Markets declining, banking and energy sectors performing the best last week.
💹 $StoneCo(STNE)$/$Pagseguro Digital Ltd.(PAGS)$/$XP Inc.(XP)$: Brazil is now a "close ally" of both China and the States.
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Still worth the hype 🙌🏻
| Market recap
The alarm has not yet been lifted! Negative factors continue to dominate the market, and positive signals remain unclear. Short-term gains do not indicate a fundamental reversal of the downward trend, making further adjustments likely in the future.
Megacaps - mediation
From Monday to Thursday, $VanEck Semiconductor ETF(SMH)$ dropped by a cumulative 4.36%. On Thursday, $NVIDIA(NVDA)$ fell nearly 3%. In response to the H20 export restrictions, CEO Jensen Huang visited China. The H20 chip is specifically designed by Nvidia for the Chinese market. Following the enforcement of the ban, tech giants like Alibaba must look for alternative products, which will weaken Nvidia's position in the Chinese market. Huang's urgent visit to China after the ban highlights that "China is a crucial market," as he seeks solutions. Similar to Apple, Nvidia may continue to enhance communication with the U.S. government to seek flexibility in export control policies.
$Netflix(NFLX)$ surged over 1%. Due to strong growth in subscription and advertising revenues, Netflix's revenue and Q2 performance guidance beat market expectations, with quarterly profits reaching a historical high. Full-year advertising sales are expected to double. The stock rose more than 4% in after-hours trading following the earnings report.
MAGA - on fire
The competition for market influence centers around who can garner the most attention. This is a prolonged battle. Just as Wall Street becomes desensitized to changes in tariffs, attention shifts back to the Federal Reserve's changing stance.
This is a positive sign, as at least the market signals are not so erratic, maintaining a degree of rationality. The former president is making headlines, vocally criticizing Powell in an attempt to reclaim attention—this is currently the most scarce and decisive resource.
Top movers & IPO watch
The battle for attention is not limited to Powell alone. Bill Ackman has significantly increased his stake in Hertz, now holding nearly 20% and becoming the second-largest shareholder. The rental car company's stock surged, aligning perfectly with the announcement of auto tariffs on March 27, with $Hertz Global Holdings, Inc.(HTZ)$ up 44% and $Avis Budget(CAR)$ up 16%.
$New Fortress Energy LLC(NFE)$ rose by 2.7% while $Energy Select Sector SPDR Fund(XLE)$ increased by 3.31%, marking a second consecutive week of rebound.
$Huntington Bancshares(HBAN)$ rose 3%, while $SPDR S&P Bank ETF(KBE)$ gained 3.51%, and $SPDR S&P Regional Banking ETF(KRE)$ increased by 4.38%, also rebounding for two weeks straight.
$Chagee Holdings Limited(CHA)$ saw an opening-day IPO increase of over 20%, starting at $33.75. During the day, it peaked at $41.80, with an intraday high increase of 49.29%. By the close, Bawang Tea's IPO saw a nearly 15.86% rise.
| Amid the tariff storm
In the short term, the direct impact of Trump's tariffs on Brazil's trade is limited—quite friendly compared to other countries. Brazil faces only a 10% tariff, and major industries such as aviation, steel, and petroleum products are temporarily exempt from additional tariffs.
As the No.2 trading partner of the U.S., Brazil supplies raw materials needed for U.S. industries without significantly competing with U.S. industrial products. Currently, the U.S. is Brazil's second-largest trading partner, a position that China has held since 2010.
Amid the tariff storm, China has also extended an olive branch, accelerating the expansion of its imports of Brazilian commodities. Oil and soybeans are Brazil's primary export products, with China receiving 40% of Brazil's exported oil and 77% of its soybeans in the first quarter of this year. Thus, Brazil has become China's largest soybean supplier, replacing the U.S.
| Tropa de Elite
Fueled by the growth of the Brazilian market and gains in the financial sector, these low-priced stocks show significant potential for future appreciation.
STNE - PB ~ 1.4x
$StoneCo(STNE)$ is a Brazilian fintech company focused on providing payment processing and financial solutions for small and medium-sized enterprises.
The increasing prevalence of digital payment methods in Brazil and a large potential client base have enabled StoneCo to achieve rapid growth.
StoneCo also invests heavily in technology to provide fast and secure transaction services, establishing a leading market position.
PAGS - PB ~ 0.86x
$Pagseguro Digital Ltd.(PAGS)$ is a payment platform and digital bank based in São Paulo, Brazil.
Its advantage lies in combining payment solutions with financial services (such as loans and prepaid card services), thus enhancing customer retention and driving revenue growth.
Additionally, PagSeguro Digital has made significant progress in penetrating Brazil's rapidly growing e-commerce market.
XP - Historical low
$XP Inc.(XP)$ is a wealth management company in Brazil, with shareholders including Brazil's largest commercial bank, Itau Unibanco.
Prior to XP, the concept of Independent Financial Advisors (IFAs) did not exist in the Brazilian market. XP has provided a platform for independent financial advisors, offering trading and investment products along with training, technical support, and business development resources.
After going public in 2019, XP continued to expand its business scope, including mortgage lending, while pursuing international expansion and growth in the domestic market.
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