Date Issued – 19th November 2024

Goldman Sachs Joins Morgan Stanley in S&P 500 Target of 6,500 by 2025

Goldman Sachs has set a year-end 2025 target of 6,500 for the S&P 500, projecting a 10.3% increase from its recent close of 5,893.62. This forecast aligns with Morgan Stanley’s outlook, which anticipates strong U.S. economic growth and robust corporate earnings. Both firms expect the Federal Reserve to cut interest rates, further supporting business expansion.
Goldman highlighted the ‘Magnificent 7’—Amazon, Apple, Alphabet, Meta, Microsoft, Nvidia, and Tesla—as key drivers of growth, though their outperformance margin will narrow to the lowest level in seven years. The bank also foresees a potential 11% growth in corporate earnings and 2.5% real GDP growth by 2025, while cautioning about risks from higher bond yields and tariff policies under the newly re-elected Trump administration.
Investment Insight: Goldman’s outlook underscores the importance of balancing exposure between tech giants and broader market opportunities. Investors should be mindful of macroeconomic risks, including potential tariff impacts and bond yield fluctuations.
Market price: S&P 500: $5,893.62

Chinese Courier SF Holding Aims to Raise $793 Million in Hong Kong Listing

SF Holding, China’s largest express-delivery company, is looking to raise up to HK$6.2 billion ($793 million) through a Hong Kong listing, offering 170 million shares at HK$32.30 to HK$36.30 each. The share sale, expected to close on November 27, offers a roughly 29% discount to its Shenzhen-listed stock. SF Holding has already secured $205 million from cornerstone investors, including Xiaomi and Oaktree Capital.
Despite a slight recovery in Chinese investor sentiment after government stimulus measures, volatility persists amid ongoing U.S.-China trade tensions. Hong Kong IPOs have raised over $9 billion in 2024, yet the total remains below historical highs.
Investment Insight: SF Holding’s planned listing offers exposure to China’s logistics sector but comes with risks tied to trade tensions and market volatility. Investors should weigh the discounted pricing against the broader economic uncertainties.
Market price: S.F. Holding Co Ltd.: CNY 42.26

China Restricts Local Funds from Buying LGFV Bonds via Hong Kong Link

China has directed domestic investors to halt purchases of offshore yuan bonds issued by local government financing vehicles (LGFVs) through the Bond Connect program with Hong Kong, according to sources. The move comes as part of Beijing’s efforts to mitigate risks from the heavily indebted LGFV sector, which borrowed extensively during past infrastructure booms. This follows a recent $1.4 trillion debt swap initiative aimed at reducing “hidden” local government debt.
Local governments, hit by falling land sale revenues due to China’s property market crisis, are grappling with debt servicing challenges. LGFVs have been major issuers in the dim sum bond market, which has seen record issuance in 2024. The average coupon for LGFV dim sum bonds this year is 5.8%, significantly higher than their onshore equivalents.
Investment Insight: China’s tightening of restrictions on LGFV debt underscores the growing concerns about financial stability. Investors should be cautious of elevated yields in this sector, as further regulatory interventions may lead to increased volatility.

Delivery Hero Aims to Raise $1.5 Billion from Talabat’s Dubai IPO

Delivery Hero SE is targeting up to $1.5 billion through an IPO of its Middle Eastern unit, Talabat, in what could be one of 2024’s largest deals in the region. The company is offering a 15% stake, or 3.49 billion shares, at a price range of 1.50 to 1.60 dirhams each. The offering values Talabat at up to $10.2 billion, just below Delivery Hero’s $11 billion market cap. Major investors, including the UAE Strategic Investment Fund and Abu Dhabi Pension Fund, will contribute $250 million as cornerstone investors.
Investment Insight: Talabat’s IPO offers exposure to a high-growth, profitable food delivery platform in the Middle East. However, with recent IPOs in the region underperforming initially, investors should weigh the short-term market sentiment against long-term growth potential.

Conclusion:

In conclusion, the newsletter highlights a mix of optimism and caution in global markets. While Goldman Sachs and Morgan Stanley project strong U.S. economic growth, risks loom from potential tariff policies and bond yield fluctuations. In China, SF Holding’s IPO and restrictions on LGFV bond purchases underscore the complex interplay between market opportunities and regulatory challenges. Delivery Hero’s Talabat IPO offers a bright spot in the Middle East, while Asian markets remain sensitive to global trade tensions and China’s economic uncertainties. As investors navigate these dynamics, a balanced approach that considers both short-term sentiment and long-term potential is crucial.

Upcoming Dates to Watch:

• November 20, 2024: U.S. Federal Open Market Committee (FOMC) meeting minutes
• November 22, 2024: Japan National CPI release
• November 28, 2024: Eurozone Economic Sentiment Indicator release

Find below some of our Buy/Sell Recommendations. Balfour Capital Group is a distinguished global boutique investment management firm with $400 million AUM and over 1000 Clients.

Disclaimer: This post provides financial insights for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.