Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Access both platforms from your single Saxo account.
Baidu disappoints on guidance and Coupang widens losses
Peter Garnry
Chief Investment Strategist
Summary: Baidu is surprising the market with a weaker than estimated Q3 revenue guidance which is both large reflecting increased uncertainty over short-term growth opportunities in China but also the possibility of a negative Q3 revenue growth q/q which would be the first time since 2016. Coupang is seeing healthy 71% revenue growth in Q2 but operating losses are widening due to investments in expanding the business to Japan and Singapore on top of losses related to a fire at one of its largest fulfillment centers in South Korea.
Earlier this week SoftBank Group, one of the largest technology investors in the world, reported a large hit to profits driven due to lower share price of its investment in Coupang, called the “Amazon of South Korea”. Coupang is indicated down in US pre-market at around $33.90 which is below the IPO price at $35 and thus down 51% from its all-time high reached on its first day of trading. For a good rundown of Coupang we can highly recommend this analysis from TechCrunch back in March. Key to Coupang’s success has been its massive logistics operations and its ability to get new customers to steadily increase their spending on its e-commerce platform in the years following being a new customer.
Coupang reported last night after the US market close Q2 revenue of $4.48bn vs est. $4.46bn up 71% from a year ago, but adjusted EPS was $-0.30 vs est. $-0.15 surprising investors. The increased losses were driven by massive investments fueling its expansion domestically and abroad (Japan and Singapore are the two first markets outside South Korea) and fire damaging one of its largest fulfillment centers in South Korea. Weighing on its shares is the increasing competition from Naver, another South Korean e-commerce company, and a recent investigation into its business practices of prioritizing its own products over suppliers (similar investigation that is under way against Amazon in both the US and Europe). Sell-side analysts covering the stock remains positive with a price target of $44.70.
Baidu hints of economic slowdown and uncertainty
Baidu reports Q2 revenue of CNY 31.4bn up 20% y/y while EPS are down 12% y/y driven by increased costs due to investments in future growth areas and mark-to-market losses on its long-term investment in Kuaishou Technology. But investors are sending Baidu shares lower in pre-market trading due to its Q3 revenue guidance of CNY3 30.6-33.5bn vs est. CNY 33.1bn. The revenue guidance leaves room for a q/q decline in Q3 which seasonally is a strong quarter and negative q/q revenue growth between Q2 and Q3 has not happen since 2016 when Baidu experienced a minor revenue decline between the two quarters of that year. The wide range in its revenue guidance also shows that the slowdown in the Chinese economy and uncertainty over delta outbreaks in the country could stall core advertising revenue. The slowdown in revenue growth comes at a time when the Chinese technology sector is experiencing increased uncertainty over technology regulation by the government. Read our recent research notes (see below) for more insights into this topic:
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)