Analyst Insights | Japan Market Rally, FOMC Minutes and NVDA's Surge This Week: What They Mean For Investors
M+ Online Head of Research, Loui Low has shared his insights on this week's focus, including FOMC meeting minutes, Debt Ceiling, and NVDA’s earnings.
Japan market and WB’s OXY are in focus. Loui commented on the markets globally, most of them declined on a WoW basis, but the Japanese stock market managed to trade on a positive note. We believe it might be the cheap valuations and also the Warren Buffett’s effect, where the famous value investor has increased his stakes in several Japanese companies since April 2023. Also, Warrant Buffett has been adding into OXY while the oil price is hovering around the USD70-80 zone.
The Fed to stay neutral, while Debt Ceiling issue should resolve. Meanwhile, Loui has moved over to FOMC minutes and Debt Ceiling issue. He stated that he is expecting the Fed is likely to keep the interest rate unchanged at least for the near term as the US CPI is declining while the US GDP is still in the expansionary mode. Meanwhile, he believed the US Debt Ceiling will be able to resolve by the 1st of June.
NVDA’s smashing expectations. Soon after the release of the results, NVDA has gapped up more than 20% as the company benefited from the AI trend since the release of ChatGPT early this year. Loui commented that he remains optimistic about the outlook as the use cases for AI will be higher than use cases for virtual currencies; thus translating to more upside potential in the longer run. Do note that NVDA has 80-85% of the GPUs market share and its A100 and H100 chips are the core engines for AI.
BABA’s corporate action. In March 2023, Alibaba announced that they will be spinning off the subsidiaries within the next 6-12 months. We expect this will unlock values for Alibaba, while providing more upside for Alibaba. Based on the estimation of each of their respective businesses, Loui is looking at a fair value of USD129, which represents more than a 50% upside based on the current share price of near to USD78. After the corporate exercises, Alibaba will be having its core Taobao and Tmall e-commerce operations in China, which will remain wholly owned by the company. This has been the most profitable business segment under its umbrella of businesses.
Traders may use the opportunity to take advantage of the above events via the following stocks and ETFs.
| Ticker | Name |
| NVDA | Nvidia Corporation |
| BABA | Alibaba Group Holdings Limited |
| OXY | Occidental Petroleum Corp |
| HIBISCS | Hibiscus Petroleum Berhad |
| ETFs | Name |
| EWJ | iShares MSCI Japan ETF |
| SCJ | iShares MSCI Japan Small-Cap ETF |
| QQQ | Invesco QQQ Trust |
| SOXX | iShares Semiconductor ETF |
| BOTZ | Global X Robotics & Artificial Intelligence ETF |
| ROBO | ROBO Global Robotics and Automation Index ETF |
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More about Loui:
Loui Low leads a team of analysts to perform equity and economic research and to provide investment advisory services to the organization's sales team, fund manager and retail fraternity. He has more than 10 years of experience in the stockbroking industry.
He graduated with a Bachelor of Science in Statistics from University of Malaya. He also holds an STA Diploma and is a member of the Society of Technical Analysts (MSTA) United Kingdom.
More about the Analyst Insights:
Analyst Insights is a weekly updated section where Loui, M+ Online Head of Research, shares his weekly review on hot news and stocks. Investors may grab some potential investment clues from his views.
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