Technology: Chip stocks brush off trade war and rally to near record highs as investors bet on 5G - PressFrom - US
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TechnologyChip stocks brush off trade war and rally to near record highs as investors bet on 5G

18:46  18 september  2019
18:46  18 september  2019 Source:   cnbc.com

5G Stocks Are Among Rare Winners in Japan's Sluggish Market

5G Stocks Are Among Rare Winners in Japan's Sluggish Market Even with an ongoing trade war between the world’s two biggest economies and a weak domestic market, some Japanese investors are saying go long on next-generation technology stocks. Sumitomo Mitsui Trust Asset Management Co.’s Next Generation Connectivity Fund has seen its total net assets surge more than 40% in five months to 374.6 billion yen ($3.5 billion) as of Aug. 30. The fund, nicknamed “The 5G,” has returned 19% this year, beating 96% of its peers. While it invests primarily in U.S. companies such as Altice USA Inc., Kyoto-based Murata Manufacturing Co. has the 10th-largest weighing at 2.9%.

Despite trade tensions with China and weak demand for chips , semiconductor stocks have rallied this year as investors look to the next generation of network technology known as 5 G . The VanEck Vectors Semiconductor ETF, which tracks companies in the semiconductor sector, is up nearly 39% in 2019

Chip stocks brush off trade war and rally to near record highs . Semiconductor companies, especially those that sell heavily to China, have faced It's been a rough week in the overnight funding market, where interest rates temporarily spiked to as high as 9 and 10% for some transactions


Chip stocks brush off trade war and rally to near record highs as investors bet on 5G© Provided by CNBC LLC

Despite trade tensions with China and weak demand for chips, semiconductor stocks have rallied this year as investors look to the next generation of network technology known as 5G.

The VanEck Vectors Semiconductor ETF, which tracks companies in the semiconductor sector, is up nearly 39% in 2019 and hit an all-time high in July, outpacing the S&P 500 and the Nasdaq Composite.

Chip stocks brush off trade war and rally to near record highs as investors bet on 5G© Provided by CNBC LLC

Semiconductor manufacturers, especially those that take in a significant portion of their revenue from China, have faced major headwinds this year such as trade tensions with the world's second-largest economy and weak demand for chips. But, overall, investors are betting on a big payoff in 2020 when the 5G network begins to roll out and demand is expected to pick up, analysts say.

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Investing .com. Stocks - U.S. Futures Near All Time- Highs as China Offers Trade Hopes. Investing .com - The Dow is set to pass its intraday record high on Friday and other indexes were also near record highs after upbeat trade news from China, while an upside surprise on core inflation

Stocks ended higher yesterday, staging a late-day rally on the first trading day of 2002 as investors snapped up high -technology shares and bet that the new Chip makers emerged as a bright spot after a report showed rising prices for computer chips . A better-than-expected performance from the

"What's being priced into these stocks is a rebound next year," said Logan Purk, an analyst for Edward D Jones & Co.

Semiconductor stocks, including those with a large exposure to China, such as Qualcomm, Broadcom and Micron, experienced a sector sell-off at the end of 2018 but rebounded in 2019. The 5G network, using wireless technology that provides a huge leap in speed and connectivity, will benefit companies, according to analysts.

Historically, Qualcomm -- up about 38% in 2019 -- has won big with new network roll outs, said Michael Walkley, senior equity analyst at Canaccord Genuity. He doesn't expect 5G to be any different. Qualcomm sells to a lot of original equipment manufacturers in China that are waiting for their chips for next-generation phones, he said. While China is working on creating its own chips, experts say it's years behind the U.S. in development.

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The blue- chip Swiss index .SSMI gained 0.7% despite stocks being blocked from trading on EU After a sell- off in May that marked its weakest monthly performance in over two years, the main index climbed 4.2% in June on hopes that major central banks would be more accommodating to counter

It was the latest shake-up for the stock market, which has struggled to reach new highs this year as investors have grappled with sliding commodities prices, fractious trade Signs that Washington and Beijing were willing to resume negotiations on trade also helped reassure investors , sending stocks

"5G is a catalyst for Qualcomm," he said.

Jun Zhang, managing director at Rosenblatt Securities has a buy rating on Qualcomm.

"As the industry upgrades from 4G to 5G that helps Qualcomm in winning some market shares," he said. "The 5G cycle benefits Qualcomm."

Broadcom -- up about 13.5% in 2019 -- stock has failed to keep pace with its competitors because its acquisition of CA Technologies last year confused the market, but it was a wise business-decision in the long run.

When it first bought the software and cloud computing company stock prices fell. But now the merger, which helped diversify the company away from chips and into software services, has given it more opportunities to capitalize on 5G, according to Purk.

"It helps Broadcom stand apart," he said.

Micron -- up about 60% in 2019 -- has the potential to tap into 5G as well as devices will need more memory storage, said Vijay Rakesh, senior analyst at Mizuho Securities USA.

Stocks close higher on hopes for trade deal with China

  Stocks close higher on hopes for trade deal with China Stocks ended higher Wednesday after President Donald Trump said a U.S.-China trade deal could arrive sooner than expected. Investors also pored over a rough transcript of Trump’s call with the Ukrainian president from earlier this year. require(["medianetNativeAdOnArticle"], function (medianetNativeAdOnArticle) { medianetNativeAdOnArticle.getMedianetNativeAds(true); }); The Dow closed 162 points higher. The S&P 500 gained 0.6%, and the Nasdaq added 1%.Tech was the best-performing sector in the S&P 500, rallying more than 1% along with consumer services.

Stocks rallied Monday, with the major indexes at fresh all-time highs . U.S. markets followed the Shanghai composite, which rose 2.45% overnight to its NetEase (NTES) touched a new all-time high with a near -5% gain. 8/21/2019 A base is an important concept in chart reading for growth investors .

Semiconductor stocks are highly exposed to China, and U.S. trade tensions with the country have Traders optimistic about semiconductors can place a bet by using a call spread on the .3 billion VanEck fund, says Xu. The VanEck fund has rallied 8.6% in 2018 and hit a record high in March.

Retail investor Geoff Regan, who bought Micron about 18 months ago, isn't too concerned about its exposure to China.

"There's a lot of buzzwords that surround their growth narrative like AI and the cloud," said the 26-year-old who works in banking as a management trainee.. "They have some good prospects."

Weak demand for chips will continue to weigh on the sector through the end of the year, according to analysts. Trade talks with China impact semiconductor's short-term volatility as well.

"They certainly trade around marked changes in Trump's tariff policy," said Christopher Rolland, senior analyst for Susquehanna Financial Group. "If trade negotiations have a bad day, you're going to see stocks down."

Efforts between the U.S. and China to ease trade tensions over the past couple of weeks have benefited the sector. Analysts also said that growth would be substantially better with trade tensions out of the equation.

"That's by far the biggest overhang when it comes to semiconductors stocks," Purk said.

Another headwind for semiconductors, a cyclical sector that ebbs and flows with the economy, is the slowdown of global economic growth. But analysts say the sector felt most of that hit late last year.

"They started feeling the pain a lot earlier because they were directly in the crosshairs of the tariffs," Rakesh said.

Rolland said 5G exposure has the potential to insulate semiconductors in a recession.

"Even though we have things like global ISM numbers rolling over and we have macro worries, this is a secular story we can play that gets us away from the broader picture," he said.

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