Bitcoin struggles above $77,000 as rising exchange reserves weigh on sentiment
Market Scorecard
After all the strength of the last week, markets took a breather yesterday. Interestingly, the JSE All-share and the S&P 500 both closed down exactly 1%. Warnings from central banks that a vaccine won't solve the pandemic from day 1 seems to have reminded the market that we still have some way to go until 'normal' returns. We are also back to the 'will there or won't there' be a stimulus package coming from the US Congress. There was meant to be a blue wave, making it easy for the Democrats to pass the legislation that they wanted, but we are now back to the pre-election stale-mate.
On the local front, the unemployment numbers released by Stats SA yesterday show how hard Covid has hit our economy. Our official unemployment rate is 30.8%. The number that really matters though is that there are 1.7 million fewer people employed now, than there were last year. That is a massive problem, especially if you consider that we have a growing population. South Africa desperately needs GDP growth and an increase in local demand - how to kick start that is the difficult question.
Yesterday the JSE All-share closed down 1.00%, the S&P 500 closed down 1.00%, and the Nasdaq closed down 0.65%.
One Thing, From Paul
My favourite business story of the week is the one about the Turkish-German couple who run BioNTech, the company which is developing the new mRNA vaccine for treating Covid-19. This high powered partnership, between Ugur Sahin (55) and Ozlem Tureci (53), will change the world.
BioNTech began work on the vaccine in January after Sahin figured that the coronavirus spreading quickly in parts of China would explode into a full-blown pandemic. He knew right away that his company might be able to use messenger RNA technology to make a vaccine. Scientists at the company, based in Mainz, Germany, cancelled vacations and set to work.
These two are not just geeky scientists. They previously sold a pharma start-up called Ganymed for $1.4 billion in 2016. Last year, BioNTech sold shares to the public and in recent months, its market value has soared past $21 billion, making the couple among the richest in Germany.
The two billionaires live with their teenage daughter in a modest apartment near their office. They ride bicycles to work. They do not own a car.
Read about them here: The Husband-and-Wife Team Behind the Leading Vaccine to Solve Covid-19.
Byron's Beats
We have been covering regulations over big Chinese tech a lot recently. Both Alibaba (NYSE:BABA) and Tencent (HK:0700) have fallen quite hard on the news. Amongst all the noise Tencent reported outstanding results yesterday.
Revenues rose by 29% to $18.9bn for the quarter ending September 2020 lead by the gaming division. Mobile gaming increased a whopping 61% in the quarter, online gaming increased 45% and Value Added Services increased 38%. Even ad sales started to show a come back after a big drop due to lockdown.
Tencent remains a phenomenal business that continues to grow off a very high base. I like to look at the regulatory environment they face more holistically. Yes, the Chinese government can be unconventional and interfering. But at the same time they have prevented any competition from entering China and competing against big Chinese tech. You cannot have it all.
We are still happy owners of this business through Naspers (JO:NPNJn), Prosus and directly.
Michael's Musings
On Wednesday it was Singles Day in China - 11/11. It is the biggest shopping day of the year and was created by Alibaba in the early days of the website. This year Alibaba raked in $74 billion worth of sales, and their competitor, JD.com managed $41 billion.
Originally, I thought that between the two companies, they had sales of over $100 billion in a single day. The special actually ran from the 1 November until the 11 November, but still, $115 billion of sales in 11 days is massive! To give context, those two websites, in 11 days, have sold the equivalent of the annual GDP for Kenya + Zambia + Malawi. The stat highlights how big China is, and how much catching up Africa still needs to do.
All of that shopping has resulted in around 3 billion packages needing delivery over the next week. That in itself is a massive task. Think about the logistics of getting parcels to the more rural parts of China.
This year there are about 30% more orders, but more than double the amount spent. Alibaba says that the reason for the increased value on sales is due to Covid travel restrictions. People who would have travelled, and bought luxury items while abroad, were now spending that money on singles day shopping instead. I wonder if South Africa will see a similar shopping trend this December? Particularly for some bigger ticket items.
Bright's Banter
As mentioned earlier in the week, Apple had their third product launch event on Tuesday, mostly focused on the new MacBooks which will run Apple's own chips instead of Intel (NASDAQ:INTC)'s chips. Mac used to be Apple's bread and butter, until the iPod and then iPhone success. In 2020 though, Apple sold over $28.6 billion worth of computers, four times more than it did in the year 2000.
According to our friends at Statista, Mac sales might have quadrupled in the past two decades, but Apple's total sales increased more than 30-fold over the same period. The business enjoyed more growth outside selling computers, which is why the company renamed itself from Apple Computer Inc. to just Apple.
Steve Jobs released the first iMac in 1998 when he rejoined Apple, this helped lay the groundwork for what will make Apple the most valuable company just two decades later. Mac has since lost its importance as it only accounts for just 10.4% of Apple's sales.
Signing Off
It is a rather boring day today, there is no election to follow and no major economic news. That means there is more time to watch The Masters this weekend! Asian markets are red this morning and the Rand is currently sitting at $/R 15.65.
