FT : China’s Golden Week offers economic bump but property ills persist

China’s Golden Week offers economic bump but property ills persist
Policymakers urged to take stronger action to boost growth as tourists spend less on luxury goods and services

China’s Golden Week holiday provided some relief for the world’s second-largest economy as it struggles to recover from the coronavirus pandemic but policymakers will have to take action to spur stronger growth, economists say.

Domestic tourism numbers and revenue during the eight-day holiday, which combined the mid-Autumn festival and National Day, were slightly higher than 2019 levels before the pandemic, official figures showed.

But activity in the stricken property market, which analysts say lies at the heart of China’s economic woes, remained lacklustre, with fewer people than expected inspired by the holiday cheer to buy a new home.

With China’s third-quarter gross domestic product data expected next week, analysts will be looking for signs that Beijing will continue to support the recovery with sustained stimulus measures.

“The economy is resilient,” said Heron Lim, greater China economist at Moody’s Analytics. “But in terms of strong growth, that is still missing.”

China’s economy was expected to rebound decisively this year after Covid lockdowns in 2022 but a weak property market has undermined consumer confidence, while lagging foreign demand for the country’s exports has hit trade and manufacturing.

Policymakers have responded with cuts to mortgage requirements and interest rates, but have implemented piecemeal stimulus measures in a bid to avoid adding to growing public debt.


State media lauded the Golden Week holiday as a success, noting “bustling scenes” across the country as “the latest sign of . . . China’s steady economic recovery, in stark contrast to the dire predictions made by western media and politicians”.

But initial estimates for domestic tourism fell short of forecasts. The Ministry of Culture and Tourism said the number of domestic travellers during the break was 4.1 per cent above 2019 levels, and domestic tourism revenue was 1.5 per cent higher. Prior to the holiday, the government had projected visitor numbers would rise 7.8 per cent and revenue 3.7 per cent, Goldman Sachs said.

Tourism revenue per head was 2 per cent below 2019 levels — an improvement from the minus 16 per cent recorded during the Dragon Boat public holiday in June. Box office revenue was also well below pre-pandemic levels.

In the real estate sector, average daily sales volumes by area fell 17 per cent compared with 2022, according to data from China Index Holdings, which tracks 35 cities.

“The property sector showed signs of weakening again, despite the raft of easing measures rolled out in September,” Nomura economists wrote in a research note, adding that the easing of buyer restrictions in China’s top-tier cities might come at the expense of demand in smaller cities.


In Hong Kong, a popular destination for mainland tourists, the daily average of visitors from across the border reached 70 per cent of comparable figures from 2017 and 2018, before Covid and anti-government protests rocked the territory.

But mainland visitors spent less per capita on high-value luxury goods and services, analysts said.

Tourists “now prefer social media check-ins over shopping” during holiday trips, according to Oliver Tong, head of retail in Hong Kong for real estate services firm JLL. “Retailers are losing their confidence in the business prospects of the Chinese new year in 2024.”

Ray Chui, chair of Kam Kee Holdings, which runs more than 40 restaurants across the city, said holiday revenue was about 75 per cent of 2018 levels.

“It is more about getting the experience than spending now,” Chui said. In the past tourists spent an average of up to HK$300 ($38) per person, he said. “Now it is around HK$80.”


In Macau, the gambling hub that relies heavily on mainland tourists, visitor numbers reached 932,000, with average daily arrivals hitting about 84 per cent of the equivalent figure for 2019, the city’s tourism authority said.

Average daily gross gaming revenue during the holiday was estimated at 830mn patacas ($103mn), up nearly 30 per cent from the Labour Day holiday this year, JPMorgan analyst DS Kim said.

The figures were “much better than we and the market had feared”, Kim said, pointing to a faster recovery of mass market gamblers.

While casinos benefited, JLL said visitors did not splash out at the enclave’s jewellers and boutiques.

Analysts warned that signs of stabilisation remained fragile given the weakness in the property services sectors, while elevated interest rates in China’s trading partners would hit demand for its exports.

Nomura raised its gross domestic product forecast for 2023 to 4.8 per cent from 4.6 per cent, but maintained a projection of 3.9 per cent for the following year and a “cautious growth outlook”.

“We expect Beijing will have to do more to stabilise growth in the near future,” analysts said.

FT : Why Mohamed El-Erian favours cash over equities for now

Why Mohamed El-Erian favours cash over equities for now
Top economist reveals his personal investment strategy on the FT’s Money Clinic podcast

Mohamed El-Erian, a leading economist, has said he feels “uncomfortable” investing his personal wealth in the stock market and has diversified away from equities as central banks battle to tame inflation.

In an interview with the FT’s Money Clinic podcast, El-Erian said he had adopted a “barbell approach”, allocating more of his personal portfolio to low-risk cash and cash equivalents paying decent rates of interest, while at the same time increasing his exposure to much higher risk distressed debt situations to balance this out.

“If you are uncomfortable in the stock market — as I am, by the way — then there’s a really good place to park your money where you can get paid 4 to 5 per cent on your money and that will compound,” he said, extolling the virtues of top interest-paying cash savings accounts.

“And then on the other side, there’s a lot of opportunities in what’s called distressed investing in private credit and things like that.”

He stressed that he was able to take this position as an experienced investor, cautioning that the barbell approach would not be suitable for novice investors.

El-Erian is chief economic adviser at Allianz, the parent company of Pimco, a big provider of bonds and fixed income investments, where he formerly served as chief executive. He is a contributing editor to the Financial Times.

“The time will come when I’ll be much more comfortable increasing my equity exposure, but I’ve been quite cautious,” he added, referring to volatility in both the equity and bond markets as rates are expected to stay higher for longer.

“Slowly, over the next few years, we’re going to go back to something more normal where traditional correlations and therefore traditional risk mitigation come back . . . I can tell you about the destination, but the journey is really painful.”

Given the current outlook, he said, the three qualities investors needed the most were resilience, optionality and agility.

“Resilience, meaning you can absorb a mistake. Optionality, an open mind. You need to recognise that there are certain things you don’t know. You need to think differently. Finally, agility; the ability to move quickly, and just to be clear, this is not just for investing. I think both governments and CEOs have to ask themselves every day. How’s my resilience? How’s my optionality? How’s my agility?”

El-Erian also spoke about the themes of his latest co-authored book Permacrisis: A plan to fix a fractured world, and revealed that his earliest money memory was playing games of blackjack with his uncle growing up in Egypt as a young boy of five or six. “He had, compared to me, an infinite amount of money, so ultimately he always prevailed,” he said.

To listen to the full episode, click on the podcast player above or search for “Money Clinic” wherever you get your podcasts.

>>> US After Hours Summary: H +6.6% soaring on S&P MidCap 400 inclusion; OII +3.

After Hours Summary: H +6.6% soaring on S&P MidCap 400 inclusion; OII +3.2% up on Petrobras contract; PD -6.1% sinking after convertible note offering; U -0.4% edging lower on Chairman and CEO retirement

After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: None
Companies trading higher in after hours in reaction to news: AKRO +21.5% (to present SYMMETRY Phase 2b results), LXRX +17% (INPEFA receives preferred formulary status), H +6.6% (replacing NATI in the S&P MidCap 400), OII +3.2% (five-year contract from Petrobras), CRS +1.6% (increasing specialty alloy portfolio prices), BKD +1.5% (reports September 2023 occupancy), INMD +0.6% (affirms management, employee safety), FLR +0.1% (five-year contract extension from U.S. Naval nuclear program), CYRX +0.1% (new partnership with Be The Match BioTherapies)

After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: U -0.4% (guidance and Chairman and CEO retiring)
Companies trading lower in after hours in reaction to news: VTYX -20.4% (positive results from VTX002 Phase 2 trial), PD -6.1% ($350 mln convertible senior notes), NDAQ -2.1% (September and Q3 metrics), XENE -0.7% (publishes XEN1101 Phase 2b results), AC -0.6% (prelim September book value), CNS -0.1% (prelim AUM at the end of September)

>>> US Close Dow +0,59% S&P+0,63% Nasdaq +0,39% Russell +0,60%

Closing Stock Market Summary
The stock market opened on a lower note as investors reacted to news that Israel declared war on Hamas after a surprise attack launched by Hamas over the weekend. Stocks rallied in the afternoon trade, however, to finish the session near their highs of the day, albeit on light volume that reflected the uncertainty associated with the Israel-Hamas war.

Some flight to safety action seen in Treasury futures, which traded today while the Treasury market was closed for Columbus Day, was cited as a catalyst for the afternoon rally. Other support factors included the dollar giving back its early gains and the stock market's overall resilience to selling efforts.

That resilience likely triggered some short-covering activity and invited additional buying on the belief that stocks are due for a bounce from an oversold condition.
Oil prices traded higher in response to the Israel-Hamas conflict, which some fear could turn into a wider regional conflict. Today's move in oil prices, however, did not have a

The move in oil helped drive a 3.5% gain in the S&P 500 energy sector. The industrials sector (+1.6%) was the next best performer, benefitting from outsized gains in its defense components like Northrop Grumman (NOC 471.61, +48.37, +11.4%), L3Harris (LHX 180.21, +16.32, +10.0%), and Lockheed Martin (LMT 436.53, +35.80, +8.9%).

There was no U.S. economic data of note today. Tuesday's economic data is limited to the September NFIB Small Business Optimism at 6:00 a.m. ET and the August Wholesale Inventories report at 10:00 a.m. ET.

  • Nasdaq Composite: +28.8% YTD
  • S&P 500: +12.9% YTD
  • S&P Midcap 400: +1.8% YTD
  • Dow Jones Industrial Average: +1.4% YTD
  • Russell 2000: -0.3% YTD

FT : Odey to close wealth management business

Odey to close wealth management business
Move comes after the group’s eponymous founder was accused in June of sexual assault

Odey Asset Management’s wealth business is to close and return assets to clients months after founder Crispin Odey was accused of sexual misconduct.

The wealth business is closing in both Guernsey and the UK, according to people familiar with the matter.

The Financial Conduct Authority, the UK regulator, said of the closure: “We are aware of Odey Wealth Management’s intention to wind down the business. We will work closely with the firm as it winds down, to ensure clients are treated fairly.” 

The decision to wind down the business comes after the FT published an investigation in June that included detailed allegations from 13 women of sexual assault and harassment by the firm’s eponymous founder.

The allegations triggered a tumultuous period for the hedge fund group, prompting it to suspend or shut certain funds and vacate its longstanding Mayfair office. Odey was ejected from the firm he founded three decades ago within days of the investigation being published.

Odey Wealth, which was launched in Guernsey in 2008 and opened its London office in 2010, provides investment advisory services to clients. It is part of the Odey Group, which also includes Odey Asset Management and Brook Asset Management. 

The subsidiary wrote to clients in June to say it was “considering several options” for the business as it dealt with the fallout from the allegations against its founder, which prompted many of its prime brokers to sever ties. 

In the same month, the FCA placed restrictions on Odey Wealth and its parent company, which included an obligation to submit details of its bank accounts to the regulator each week, and to seek regulatory approval for “extraordinary” payments above £20,000.

Odey has strenuously disputed the allegations from the 13 women. Since then, a further six women alleged they were sexually harassed or assaulted by the financier. He did not respond to requests for comment on these subsequent allegations.

Last month, Odey admitted for the first time an incident of sexual misconduct after the 20th woman to accuse him came forward alleging he groped her breasts in the office. Odey said the incident did occur but that it was an “aberration” he blamed on the after-effects of an anaesthetic he had been given that day at the dentist.

FT : Nelson Peltz in fresh push for Disney board seats

Nelson Peltz in fresh push for Disney board seats
Veteran activist investor has increased Trian’s stake in US entertainment group since burying hatchet in February

Nelson Peltz, the billionaire founder of activist firm Trian Partners, has increased his stake in Disney and is set to revive a campaign for board seats at the US entertainment group.

Trian, which in February called off its fight against Disney, has in the past two months boosted its stake in the company to a position worth more than $2.5bn, making it one of its largest shareholders, according to people with direct knowledge of the matter. The firm is planning to request seats on the Disney board including one for Peltz, said the people. 

“Trian believes it’s now time to have a seat at the table,” one of the people said. Disney’s shares are “significantly undervalued” and the board needs to be “more focused, aligned and accountable”. 

New York-based Trian, which manages around $9bn, declined to comment. News of Peltz’s fresh push for board seats was first reported by the Wall Street journal.

Peltz called off his fight against Disney two months after Bob Iger returned as Disney chief executive and a day after the company unveiled a plan to cut 7,000 jobs and reinstate the dividend suspended during the pandemic. Trian had called Disney’s succession planning process “broken”, attacked cost inefficiencies in the streaming business, and criticised the group’s 2018 acquisition of 21st Century Fox.

Since February, however, Disney’s stock has declined by 25 per cent. Trian, which owned 6.4mn shares in August, now owns more than 30mn shares, the people said.


Peltz, known for his activist campaigns against Unilever, Procter & Gamble and Wendy’s, wants Disney to get overheads “in line” and have “a clear strategy going forward”, said one of the people familiar with the 81-year-old financier’s thinking.

Disney, like all the large streaming services, has been under pressure from investors to curtail profligate spending on TV and film content amid a slowdown in new subscribers numbers. Analysts have been concerned about “peak streaming” in markets such as the US.

Disney’s direct-to-consumer streaming operations, which includes Disney+, made a large loss last year, and the company does not expect the business to return to profit until 2024. Disney+ subscriber numbers continued to fall last quarter, more than analysts had expected. The unit posted a rare quarterly loss due to one-off charges and impairments from taking content from its streaming platform and ending licensing agreements.

Recent blockbuster movies such as Little Mermaid have underwhelmed, while forthcoming releases have been hit by the writers and actors’ strikes in Hollywood.

Investors and analysts are also questioning whether the company should sell off some of its “crown jewel” assets, such as streaming service Hulu or sports network ESPN.

ESPN has been hit by cancellations of cable subscriptions, while rivals such as Apple are seeking to acquire rights to high profile sports to show alongside their entertainment content. Trian, however, does not want Disney to sell the sports network, the person familiar with Peltz’s thinking said.

Investors have also questioned the future of the Hulu streaming service, including whether Disney should buy out the one-third stake owned by Comcast as early as next year in a multibillion-dollar transaction.

Meanwhile, the company’s television business, still profitable, has also suffered, with demand eroded by online and streaming rivals as well as a sharp fall in advertising revenues.

Iger, 72, has said he would cut $5.5bn in costs, which has already translated into thousands of job losses. Disney has also committed to investing more in its parks, experiences and products division, which continues to grow.

Another big question concerns Iger himself. The entertainment veteran has extended his contract for another two years, raising doubts over his commitment to finding a successor. “The challenges are greater than I anticipated,” Iger told CNBC in July.

If Disney rejects Trian’s request for board seats, the activist would have the option to put forward its candidates for shareholder approval at its annual meeting next spring.