Finance

Tema ETFs has been capitalizing on the risk appetite for weight loss stocks.
It is behind the GLP-1, Obesity & Cardiometabolic ETF (HRTS), which is up 26% since its inception last November.

The firm’s founder and CEO Maurits Pot thinks the winning weight loss trade isn’t based on just hype.
“The companies we track and the companies we invest in are looking not just at a weight loss approach, but also other approaches,” Pot told CNBC’s “ETF Edge” on Monday. “We could see a world where the majority of the world’s population takes a GLP-1, not just for weight loss, but for other diseases.”
His top holdings include Mounjaro manufacturer Eli Lilly and Ozempic and Wegovy maker Novo Nordisk. Eli Lilly is up 57% so far this year, while Novo Nordisk is up 38%.

Arrows pointing outwards

Plus, Pot does not expect the price tag for GLP-1s to discourage new patients. He thinks they will come down significantly in the next two to three years.
“We could see drug pricing come down from $12,000 to maybe $6,000 a year, so maybe $500 a month,” said Pot, who points out insurance coverage often makes the treatments more affordable to patients.

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A record number of Americans are expected to take a road trip during the July Fourth holiday week, according to AAA.
In certain cases, renting a car may be more financially savvy than using your own vehicle for a road trip.
There are many things to consider: vehicle health, rental and insurance rates, fuel efficiency, depreciation and lease contract details.

Patchareeporn Sakoolchai | Moment | Getty Images

Summer is the season of road trips.
A record 70.9 million Americans are expected to travel by car during the July Fourth holiday week alone, according to AAA.

For some car owners, it might be more financially savvy to rent a vehicle for a road trip than use their own, experts said.
“It’s going to be pretty dependent on a variety of factors,” said Greg Brannon, AAA’s director of automotive engineering research.
Those factors include your current vehicle’s gas mileage, the distance you’ll be driving, how long you’ll be gone, whether you lease or own and how big your vehicle is, among other things, according to Toyota.
Here are some key considerations.

The car’s specs

Vehicle capacity is a “no-brainer” when it comes to choosing whether to rent or not, said Brian Moody, executive editor of Autotrader, a car shopping site.

It’s easiest to say, “I have a five-passenger car and I have eight going on the trip,” Moody said.
Drivers may also need to compare specifications, such as the necessity of a two-wheel-drive versus a four-wheel-drive car, as well as storage space for luggage and gear.

Operating costs

This is where the math gets a bit trickier. There are many financial costs, some obvious and others less so.
Drivers would need to compare total rental costs — the daily rental rate and potential add-ons like insurance — versus those of operating their own car.
“Most people will be shocked at what it actually costs to own and operate their car,” Brannon said.

Fueling costs, such as gasoline or electric charging, are a financial consideration for both renters and car owners.
It may be possible to rent a more fuel-efficient vehicle and save money. For instance, renting a car that gets 40 miles per gallon versus a currently owned one that gets 20 mpg would, all else equal, cut fuel costs in half.
“If you have an old car that’s fuel inefficient, it might make sense to rent something,” Moody said.

Rental costs

The average rental cost $42 a day in the second quarter of 2024, with most travelers looking for four-day rentals, according to travel site Hopper.
The daily rate can be higher or lower based on factors like rental company, car type, and pickup and drop-off location.
The cost of rental car insurance might add $30 to $61 to the daily rate, depending on insurance type, according to Allianz Travel, citing MarketWatch data.
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Renters who want car insurance may not need to buy additional coverage through the rental company.
Car owners may already get full coverage on a rental via their own car insurance policies, or may have some coverage through credit-card benefits, Brannon said.
“Call your insurance agent and double-check your coverage,” he said. “You can save yourself a bunch of money by not double-insuring the vehicle if you don’t need to.”

Depreciation and mileage caps on leases

Alistair Berg | Digitalvision | Getty Images

Additionally, car owners who lease a vehicle should weigh factors like mileage caps before taking a long road trip. For example, the typical lease imposes financial penalties on drivers who put more than 12,000 miles a year on their vehicle, according to Kelley Blue Book.
The cost for exceeding that cap is usually about 20 to 30 cents per mile, KBB said. (At 30 cents, a driver would pay $300 for every 1,000 miles over the mileage limit.)
There are also depreciation costs to consider.
Depreciation causes a car to lose value over time. Cars famously lose about 10% to 15% of their value once they drive it off the lot, Brannon said.

Depreciation is “the biggest expense of owning a vehicle,” Brannon said. And that’s why it matters for road trips, he says.
“The more miles you put on a vehicle the more it depreciates,” Brannon said.
Every mile puts wear and tear on the engine, tires and other moving parts, according to Allianz.
Depreciation affects all cars differently. The average car depreciates at about 20 cents a mile, according to Toyota.
For shorter road trips — say, 1,000 to 1,500 miles in a given year — depreciation might not be a big deal relative to rental prices, said Autotrader’s Moody.
Depreciation generally only matters for people who plan to sell or trade in their vehicle in the future.

State of the vehicle

Unforeseen repairs can be costly: The average repair order on the road is “well in excess of $500,” excluding towing costs, Brannon said, citing AAA data.
The odds of a breakdown are lower with rental cars, which are generally newer models, Moody said. The average used car on the road is about 12 years old, he explained.

While a mechanical issue would be inconvenient for anyone taking a road trip, renters wouldn’t be financially liable (assuming they’re not at fault), Moody said.
Brannon points out some questions drivers should ask: Have I done a good job maintaining my car? Is it up for long days on the road? Are the tires in good shape? Is it mechanically sound? How old is it? What safety technologies does the vehicle have?

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The savings and loan (S&L) crisis terrorised America’s banks for years. Starting in the mid-1980s, a mix of aggressive lending growth, poor risk controls and a property downturn contributed to the collapse or consolidation of over 1,000 small lending institutions. China’s smallest banks are now suffering from many of the same ailments. But until recently few have collapsed or merged with others.That is starting to change. In the week ending June 24th, 40 Chinese banks vanished as they were absorbed into bigger ones. Not even at the height of the S&L crisis did lenders disappear at such a clip. More

Starbucks offers endless opportunities for innovation. Parts of social media delight in hacking the chain’s menu to create highly instagrammable drinks. Fancy a “cake batter Frappuccino”? Simply order a “vanilla bean crème Frappuccino”, add a pump of hazelnut syrup and ask the barista to put a cake pop in the blender. How about some “liquid cocaine”? That involves four shots of espresso with four pumps of white-chocolate syrup, served over ice.A new working paper suggests the purveyor of coffee-based milkshakes offers other innovation, too. Choi Jinkyong, Jorge Guzman and Mario Small, all of Columbia University, find that a new Starbucks in an American neighbourhood without a coffee shop leads to the creation of between 1.1 and 3.5 new companies a year over the next seven years. That, the authors argue, owes to the café’s role as a “third place”—somewhere people can gather without a purpose. Branches “help entrepreneurs form and mobilise networks”, they write. More

The world is still, in a sense, swimming in cash. Or at least the electronic equivalent: central-bank reserves. The Bank for International Settlements (BIS), a club of central banks, estimates that the balance-sheets of rich-country central banks amount to roughly 50% of collective GDP. That is down from 70% in 2021—a reduction which reflects quantitative tightening (QT), or the offloading of assets acquired while easing—but is still far above the pre-global-financial-crisis norm of around 10%.Qt is intended to enhance the disinflationary effect of raising interest rates. As assets roll off a central bank’s balance-sheet, the corresponding reserves are extinguished. The process should, in the words of Janet Yellen, America’s treasury secretary and a former chair of the Federal Reserve, be as interesting as watching paint dry. Yet if reserves are to return to anything like their earlier 10% level, that may not be the case. Some worry such a reduction would prompt nasty surprises in the financial system. Hawkish types nevertheless argue that central banks ought to ensure reserves once again become “scarce”. They suggest that the “abundant” era created by quantitative easing has been destabilising, since banks no longer need to economise on their holdings or rely on the disciplining effects of money markets. More

The earliest depiction of the ouroboros—a serpent coiled in a circle, eating its own tail—was found in the tomb of Tutankhamun, a pharaoh who ruled Egypt around 1320BC. It was used in his funerary texts to depict the infinite nature of time, and later cropped up all over the place. In Ancient Rome it signified the seasonal cycle of the calendar year; in Norse mythology the snake was large enough to encircle the world. The idea is also an allegory for the modern financial system. It depicts how credit risk has been cycled out of banks, only to be gobbled up by them once more.After the global financial crisis of 2007-09, lawmakers in America and Europe penned new rules to govern finance. These had two aims. First, to force banks to hold more capital against their assets, so as to cushion losses. Second, to curb the risky activities in which banks had indulged. Some, such as proprietary trading, were prohibited; others were simply discouraged, sometimes by assigning higher “risk weights” to spicier assets. Both aims are measured by “common equity tier 1 capital” or cet1, which divides bank equity by asset value, adjusted for risk weights. More

China’s Ministry of Commerce said Thursday it hoped to reach an agreement soon with the European Union on the bloc’s planned tariffs for imported Chinese electric cars.
The EU started an investigation last year into the role of subsidies in China’s electric vehicle production.
The new energy vehicle industry, which includes hybrid and battery-only cars, has grown rapidly in China and automakers such as BYD have started to export the vehicles to Europe and other regions.

Employees work on the assembly line of electric vehicles in a digital automotive factory of Jiangling Motors on May 17, 2024. 
Vcg | Visual China Group | Getty Images

BEIJING — China hopes to reach an agreement with the European Union soon on the bloc’s planned tariffs for imported Chinese electric cars, the Ministry of Commerce said Thursday.
The European Commission announced in mid-June that if discussions with China did not go well, the bloc would start to impose additional duties on imported Chinese EVs on Thursday, July 4. “Definitive measures” would take effect four months after that date, according to a press release.

“We hope that the European side will work with China to meet each other halfway, show sincerity, speed up the consultation process, and, on the basis of rules and reality, reach a mutually acceptable solution as soon as possible,” Chinese Commerce Ministry spokesperson He Yadong told reporters in Mandarin, according to a CNBC translation.
He reiterated China’s opposition to the European Union’s anti-subsidy probe and pointed out the two sides still have a four-month window.

China’s Minister of Commerce Wang Wentao and European Commission Trade Commissioner Valdis Dombrovskis met virtually on June 22 to discuss the EU probe, according to the commerce ministry.
Spokesperson He said Thursday that the two sides had held multiple rounds of talks at a technical level, but he did not specify whether the talks were ongoing or had ended.
The EU started an investigation last year into the role of subsidies in China’s electric vehicle production. The new energy vehicle industry, which includes hybrid and battery-only cars, has grown rapidly in China and automakers such as BYD have started to export the vehicles to Europe and other regions.
The Chinese government spent $230.8 billion over more than a decade to develop its electric car industry, according to an analysis by the U.S.-based Center for Strategic and International Studies. More

The market for initial public offerings in Hong Kong is set to improve significantly over the next five years, said George Chan, global IPO leader at EY.
“I would say if the interest rate can be further cut down, 1 percent maybe, that would have a significant effect on the IPO market,” Chan said.
“Our HK cap markets team is very busy and has a strong pipeline for H2.  We expect to see many HKSE listings,” Marcia Ellis, global co-chair of private equity practice at Morrison Foerster in Hong Kong, said in an email Wednesday.

Hong Kong Exchanges and Clearing celebrates the 24th anniversary of its listing on June 21, 2024.
China News Service | China News Service | Getty Images

BEIJING — The market for initial public offerings in Hong Kong is set to improve significantly over the next five years, starting in the second half of this year, George Chan, global IPO leader at EY, told CNBC in an interview Wednesday.
“I think it will take a couple years to go back to the peak [in 2021] but the trend is there,” Chan said. “I can see the light at the end of the tunnel.”

High U.S. interest rates, regulatory scrutiny, slower economic growth and U.S.-China tensions have constrained Greater China IPOs in the last three years.
EY said in a report that while the volume of IPOs and proceeds in the U.S. increased significantly in the first half of 2024 compared to the same period a year ago, mainland China and Hong Kong saw a sharp decline in listings.
Many of the macro trends are now starting to turn around, which can support more IPOs in Hong Kong, said Chan, who is based in Shanghai.
“We are seeing a reversing trend,” he told CNBC. “We are seeing more of these [U.S. dollar] funds, they are moving back to Hong Kong. The main reason is that Hong Kong has already factored in these uncertainties.”
The Hang Seng Index is up more than 5% year-to-date after four straight years of decline — which was the worst such losing streak in the history of the index, according to Wind Information.

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“Our HK cap markets team is very busy and has a strong pipeline for H2.  We expect to see many HKSE listings,” Marcia Ellis, global co-chair of private equity practice at Morrison Foerster in Hong Kong, said in an email Wednesday.
Many companies that were waiting for a listing in mainland China’s A share market have decided to switch to one in Hong Kong, she said. “Previously [China Securities Regulatory Commission] approval was slowing things down but recently our team has gotten CSRC approvals pretty quickly.” 
In June, China issued new measures to promote venture capital, and authorities spoke publicly about supporting IPOs, especially in Hong Kong. Investors and analysts said they are now looking at the speed of IPO approvals for signs of a significant change.
Chan said another supportive factor for Hong Kong IPOs is that many of the companies listed in the market are based in mainland China, where economic growth is “quite satisfactory.”
He expects consumer companies could be among the near-term IPO beneficiaries.
“As the economy slowly recovers, a lot of people in China are willing to spend,” he said, noting that was especially the case in less developed parts of the country.
Official national-level data have showed that retail sales are growing more slowly in China — up by just 3.7% in May from a year ago versus growth of nearly 10% or more in prior years.
Also significant for global asset allocation, the U.S. Federal Reserve and other major central banks are pulling back from aggressive interest rate hikes. High rates have made Treasury bonds a more attractive investment for many institutions instead of IPOs.
“I would say if the interest rate can be further cut down, 1% maybe, that would have a significant effect on the IPO market,” Chan said.
Hong Kong IPOs raised $1.5 billion during the first half of the year, a 34% drop from a year ago, EY said in a report released late last month. Back in 2021 and 2020, the Hong Kong Stock Exchange saw nearly 100 or more IPOs a year raising tens of billions of dollars, according to the report.
In comparison, mainland China IPOs raised $4.6 billion in the first six months of 2024 — a drop of 85% from the year-ago period, according to EY.

Bonnie Chan, CEO of Hong Kong Exchanges and Clearing Limited, said during a conference last week that so far this year, the Hong Kong exchange has received 73 new listing applications — a 50% increase compared to the second half of last year. She is not related to EY’s George Chan.
“The pipeline is building up nicely,” she said, noting about 110 IPOs in total are in line for a Hong Kong listing. “All we need is a set of good market conditions so these things get to launch and price nicely,” she added.

Improving post-IPO performance

“What we need is a strong pipeline,” EY’s Chan said. “We need an interested investor with the money to invest, and we need a good aftermarket performance.”
Hong Kong IPO returns are improving. The average first-day return of new listings on the Hong Kong stock exchange in the first half of 2024 was 24%, far more than the average of 1% in the same period last year, according to EY.
“The aftermarket performance of Hong Kong IPOs has been doing quite good compared to the past five years,” Chan said. “These things added together are projecting an upward trend for the Hong Kong market [in the] next 5 years.”
Chan said he expects the number of deals to pick up in the second half of 2024.

He said those will likely be medium-sized — between 2 billion Hong Kong dollars to 5 billion Hong Kong dollars ($260 million to $640 million) — but added he expects better market momentum in 2025.
Slowing economic growth and geopolitical uncertainty have also weighed on early-stage investment into Chinese startups.
Total venture funding from foreign investors into Greater China deals plunged to $19 billion in 2023, down from $67 billion in 2021, according to Preqin, an alternative assets research firm.
U.S. investors have not participated in the largest deals in recent years, while investors from Greater China have remained involved, the firm said in a report last month.

U.S. IPO outlook

As for IPOs of China-based companies in the U.S., EY’s Chan said he expects current scrutiny on the listings to be “temporary,” although data security rules would remain a hurdle.
In early 2023, the China Securities Regulatory Commission formalized new rules that require domestic companies to comply with national security measures and the personal data protection law before going public overseas. A China-based company with more than 1 million users must pass Beijing’s cybersecurity review to list overseas.
“As time goes on, when people are more familiar with the Chinese [securities regulator] approval process and they are more become comfortable with geopolitical tensions, more of the large companies … would consider [the] U.S. market as their final destination,” Chan said.
“When the time comes I think the institutional investors would be interested in these sizeable Chinese companies, as they pretty much want to make money.”
He declined to comment on specific IPOs, and said certain high-profile listing plans are “isolated incidents.”
Chinese ride-hailing company Didi, which delisted from New York in 2021, has denied reports it plans to list in Hong Kong next year. Fast-fashion company Shein, which does most of its manufacturing in China, is trying to list in London following criticism in the U.S., according to a CNBC report. More