Macron Wins Big In France — Here’s What Happens Next In Stocks; Four Chinese Stocks To Buy Now; Winners And Losers In A Dangerous Season For Tech Stocks

Macron Wins Big In France — Here’s What Happens Next In Stocks; Four Chinese Stocks To Buy Now; Winners And Losers In A Dangerous Season For Tech Stocks

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     As predicted, young, upstart, outsider Emmanuel Macron is France’s next President.  The 39 year-old garnered 65 percent of the vote, sounding defeating his more conservative opponent, Marine Le Pen.  Karen Gilchrist, writing on CNBC’s webpage this evening, notes that “Macron’s win is a victory for pro-Europeans/European Union (EU),” and he is expected to be “sworn into office within the week, with May 11, 2017 being cited,” as the most likely day to assume the office of the Presidency.  Ms. Gilchrist added that “French voters will once again, head to the polls for two rounds of voting next month (June 11/18) to elect the country’s 577 members of Parliament.”  How the Parliament plays out will determine how much power President Macron will wield in his early days in office.  Ms. Gilchrist writes that “the latest “OpinionWay-SLPV Analytic polls — the first for the June elections — suggests that Macron is on track to win 249-286 seats; which would put him ahead of centrist and conservative parties’ 200-210 seats; the Socialist Left’s 28-43; and, the Far-Right, National Front’s [Ms. Le Pen’s party] 15-25 seats.  Once these seats have been filled on June 18, President Macron’s next task will be to appoint his Prime Minister.”

What Does This Mean For World Stock Markets?

     Most traders and institutions believe that a Macron victory will be bullish for world equities; and, will put a damper, at least for now, om those who favor a breakup of the EU.  We’ll get our first read on world market reaction when trading will begin on the Hang Seng, and Hong Kong, as well as Australia, New Zealand, and Singapore around 9 pm EDT this evening.  Then, around 4 am EDT tomorrow morning, European trading will kick in.  But, since a Macron win was already priced into stocks last week — one wonders if we get a “sell the news” kind of reaction.  If we do, I do not think it by itself will precipitate a meaningful selloff.  Something more profound, such as any kind of hostilities on the Korean peninsula, or nuclear weapons testing by North Korea could well prompt a flight to safety by investors — into gold and precious metals Exchange Traded Funds (ETFs).  But, gold and precious metals ETFs could be volatile, as those who hedged their bets in case of a Le Pen win, will have to unwind/sell out of those safe-haven trades.

     In the longer run, this does not signal the end of the populist wave that has been sweeping the globe, in my estimation.  The anti-Euro types will lick their wounds; but, I believe they will live to fight another day.  The most profound refugee situation since WWII is still reverberating and playing out, and will continue to do so for years.  The issues of terrorism, militant Islam, cross-border travel, and so on, as well as chronic unemployment among the youth, and a sclerotic economy, have not gone away, and will continue to fester and plague France, and much of the rest of the EU.  Failure to adequately address these issues, will aid the forces that Ms. Le Pen represented.  Stay tuned, this movie hasn’t even made it to intermission.

Four Chinese Stocks To Buy Now

     Daniel Shane had an article in last weekend’s (May 1, 2017) Barron’s, with the title above.  Francois Perrin, a portfolio manager at East Capital, told Mr. Shane/Barron’s, that should Chinese economic reform continue on the path it is on — especially with respect to opening up their stock market — he believes “large-cap, liquid stocks, mostly listed in Shanghai, but a few in Shenzhen, too,” will be the big beneficiaries. 

        Barron’s picked four stocks they think “stand to win, if China gets the thumbs up to list China’s A shares as an index compiler on the MSCI.  A decision on whether to include China’s A shares in the MSCI Emerging Index Fund is expected next month/June.  China’s A shares have been given a thumbs down each of the last three years; but, there is more optimism that Beijing may finally be given the go ahead.  If that happens, Mr. Perrin likes:  Hangzhou Hikvision Digital Technology (ticker: 002415/China), which is the world’s largest maker of high-tech surveillance gear;  SAIC Motor, (600104.China), is the largest auto group in China; Zhengzhou Yutong Bus (600066-China) could greatly benefit from Beijing’s campaign to clean up the environment, and, especially address air pollution.  Zhengzhou Yutong Bus is one of China’s largest electric bus manufacturers; and, Kweichow Moutai (600519-China) one of the largest domestic liquor producers on the mainland.

     None of these companies are available for us here in the U.S. to invest in.  But, if China gets a thumbs up next month, they will be.

Winners And Losers In A Dangerous Season For Tech Stocks

     Tiernan Ray had an article in this weekend’s Barron’s (May 8, 2017) with the title above.  Mr. Ray was positive on Apple (APPL), FitBit (FIT), especially the company’s plans to unveil its first SmartWatch (that also tracks fitness) this fall; Lumentum Holdings (LITE) which makes a device that can be used in smartphones to enable what’s known as “3-D sensing.”  Mr. Ray notes that this device may makes its way into Apple’s next i-Phone; Universal Display (OLED), a maker of chemicals that go into smartphones and television displays; Fabrinet (FN), a fiber optic’s maker; and, Acacia Communications (ACIA), which has 60 percent short interest.  if anything surprises to the upside on ACIA, the shorts would have to cover and the stock price would soar — also known as a ‘short-squeeze.’  And lastly, SNAP (SNAP), makers of the SnapChat messaging program, which will report its first quarter as a public company, this coming Wednesday, May 10, 2017.  Expectations are low heading into Wednesday’s release, so any unexpected positive news on the 10th is likely to send the shares considerably higher.  FYI, I do own shares of SNAP, the only one I do own, of all the one’s mentioned.  But, after doing some due diligence this week; and with a thumbs up on China’s A shares, that may change.  V/R, RCP

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