The 3 Biggest Surprises so Far in 2023
While the new year is still in its infancy, the first fifteen days have already provided investors with surprising performance from some unexpected sectors. Here are the three biggest surprises so far:
Argentina’s Stock Market is Up 15% so far in 2023
In recent years, the first things that come to investors’ minds when the word “Argentina” is mentioned are that of economic peril, hyperinflation, and tough times. That is why Argentina’s stellar performance this year is the biggest surprise in markets thus far. To the shock of many, the Global X MSCI Argentina ETF ARGT is higher by 15.63% in 2023 and minted fresh all-time highs in Friday’s session.
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What’s behind the performance? Earlier this month, Argentinian Economy Minister Sergio Massa boldly predicted that Argentina’s economy will grow by “significantly more than 5%” in 2023. While the forecast is bold, it is not unprecedented. Last year Argentina grew its GDP by nearly 6%. Though hyperinflation continues to plague the Latin American country, Argentinian central bankers now seem intent on acting to bring it down. In September, the country’s central bank hiked interest rates to 75% after inflation estimates came in higher than expectations.
Because Argentina was already suffering from economic peril before the pandemic, Covid-19 protocols only intensified the country’s economic issues. However, there are signs that the worst may be over. Mercadolibre Inc MELI, also known as “the Amazon AMZN of Latin America,” is the largest company based in Argentina. The company is a market leader in e-commerce in Brazil, Argentina, Colombia, Chile, Ecuador, Costa Rica, Peru, Mexico, and Uruguay. During the pandemic, the company saw a string of losses but is now back to being profitable. In the past two quarters, EPS growth soared 33% and 77% on revenue growth of 45% and 52%. MELI is an attractive option for investors looking to bet on the Argentinian economy and Latin America’s shift from traditional commerce to e-commerce.
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Pictured: Despite tough economic times in Argentina, MELI has seen outstanding growth. A further recovery in Argentina has potential to send this stock soaring.
Crypto: What Doesn’t Kill You Makes You Stronger.
2022 was the roughest year on record for the crypto industry. Cryptocurrency Luna suffered a complete collapse, Bitcoin dropped by 65%, and crypto exchange giant FTX went bankrupt (and saw its CEO Sam Bankman-Fried get arrested). Coinbase (COIN), the largest publicly traded crypto exchange, went from having the most popular Super Bowl advertisement to laying off thousands of workers. Unsurprisingly, crypto-related stocks mirrored the action in falling cryptocurrencies and were some of the worst performers.
Thus far in 2023, that narrative has been completely flipped. The Valkyrie Bitcoin Miners ETF WGMI tracks publicly traded Bitcoin Miners and is up 73.1% year-to-date (yes, you read that correctly). The eye-popping performance so far this year is enough to make it the best-performing ETF.
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However, like anything in life, context is essential. Since its inception, WGMI has lost 72.9% of its value (that includes this year’s gains). Over the holiday-extended weekend, crypto assets rose strongly once again, with Bitcoin recapturing the psychologically important $20,000 mark. While it can be tempting to chase, investors should watch these stocks for more proof in the form of price rotation and earnings expectations. Crypto-related stocks such as Riot Platforms RIOT, Coinbase Global COIN, andMicrostrategy (MSTR) hold mediocre Zack’s Rankings – although the first few days of the year show how quickly things can change. Investors interested in taking advantage of the crypto crisis should look for stocks like Riot Blockchain to retake the overhead 200-day moving average. For now, the rebound may simply be a short covering rally in highly beaten down stocks. Investors should view any bets in this sector as highly speculative.
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The Re-emergence of China
As late as October, the Kraneshares CSI ETF KWEB was as low as $17. Fast forward to today, and the ETF which tracks popular Chinese internet stocks, is back to $35. Though U.S. stocks had a rough 2022, the poor performance was a walk in the park compared to that of the swooning Chinese equity market. For example, Alibaba BABA, “the Chinese Amazon,” traded as high as $319 in 2020 and as low as $58 in late 2022 – briefly surrendering all its gains since its IPO in 2014.
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The drop in Chinese stocks was due to a poor world economy (China has a massive global presence), a crumbling real estate market, and stringent government-imposed Covid-19 lockdowns. In the past few months, all three of these issues began to move in the right direction. Global economies are starting to show signs of recovery, the Chinese government is aiding its ailing real estate market with stimulus, and Covid-19 lockdowns have been lifted. Stocks such as Atour Lifestyle ATAT, a Chinese hotel operator, have benefitted greatly.
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Other past winners, such as JD.com (JD), Vipshop Holdings VIPS, and Tencent Music TME have turned the corner and have rewarded investors with stellar performance. However, presently, many stocks are extended in the short term and should be purchased on pullbacks rather than chased. For example, VIPS is up for 11 straight weeks and has doubled in that time frame.
This Little-Known Semiconductor Stock Could Be Your Portfolio’s Hedge Against Inflation
Everyone uses semiconductors. But only a small number of people know what they are and what they do. If you use a smartphone, computer, microwave, digital camera or refrigerator (and that’s just the tip of the iceberg), you have a need for semiconductors. That’s why their importance can’t be overstated and their disruption in the supply chain has such a global effect. But every cloud has a silver lining. Shockwaves to the international supply chain from the global pandemic have unearthed a tremendous opportunity for investors. And today, Zacks' leading stock strategist is revealing the one semiconductor stock that stands to gain the most in a new FREE report. It's yours at no cost and with no obligation.
>>Yes, I Want to Help Protect My Portfolio During the RecessionAmazon.com, Inc. (AMZN) : Free Stock Analysis Report
Vipshop Holdings Limited (VIPS) : Free Stock Analysis Report
MercadoLibre, Inc. (MELI) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
Global X MSCI Argentina ETF (ARGT): ETF Research Reports
KraneShares CSI China Internet ETF (KWEB): ETF Research Reports
Riot Platforms, Inc. (RIOT) : Free Stock Analysis Report
Tencent Music Entertainment Group Sponsored ADR (TME) : Free Stock Analysis Report
Coinbase Global, Inc. (COIN) : Free Stock Analysis Report
Valkyrie Bitcoin Miners ETF (WGMI): ETF Research Reports
Atour Lifestyle Holdings Limited Sponsored ADR (ATAT) : Free Stock Analysis Report
