How to play the outperforming financials sector as the second half of 2025 kicks off
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CNBC
4 hours ago
- CNBC
‘This market is pricing in perfection,' warns Verdence Capital CIO as tariff deadline looms
The market may be trading around record highs, but the Verdence Capital Advisors CIO is worried trouble is lurking. Megan Horneman, who oversees $4.1 billion in assets under management, thinks there's too much complacency around the Aug. 1 U.S. trade deadline. "This market is pricing in the perfect situation," she told CNBC's "Fast Money" on Monday. In addition to tariff concerns, she lists uncertainty regarding Federal Reserve policy and overbought conditions from a technical perspective as potential issues. "Once we see that [rate cuts] might be priced off the table, coinciding with the fact that we're not quite sure what's going to happen with the tariff perspective, I think you can see a bit of a valuation correction," said Horneman, who's a former Deutsche Bank senior investment strategist. Horneman is particularly concerned that technical levels are signaling overbought conditions in growth stocks — including Big Tech. "These are things that we think might upset the rally that we're seeing here," she said. Despite her short-term caution, Horneman considers herself a long-term bull and views pullbacks as opportunities. She lists international stocks among her top plays on market weakness. "I'd warn that right now, they're expensive from a valuation perspective [but] cheap compared to the U.S.," she said. "They've been underloved for way too long, and I think you're seeing some of that rotation just begin. I think that can continue." To navigate the uncertainty, her key advice to investors right now: Make sure you're allocated appropriately. "Fast Money" trader Guy Adami also sees concerns, citing the number of retail investors driving recent market gains."Just in terms of valuation, things have gotten a tad frothy here," he said on Monday's show. The S&P 500 closed at record highs every day last week. As of Friday's close, the index is 16% over the past three months while the tech-heavy Nasdaq is up 21% over the same period. The Nasdaq is also atDisclaimer
Yahoo
7 hours ago
- Yahoo
Global money chases world's hottest major stock market in Korea
(Bloomberg) — South Korean stocks, already this year's best performers among the world's major markets, are becoming a magnet for foreign investors as bold regulatory reforms to lift valuations and empower minority shareholders gain traction. Trump Awards $1.26 Billion Contract to Build Biggest Immigrant Detention Center in US The High Costs of Trump's 'Big Beautiful' New Car Loan Deduction Can This Bridge Ease the Troubled US-Canadian Relationship? Trump Administration Sues NYC Over Sanctuary City Policy Just this month, policymakers voted in favor of pivotal law changes to make board members legally accountable to all shareholders. They are now focusing on the next wave of reforms — including improvements to the voting system for selection of board members, and reducing treasury stock holdings — all with the goal of reining in the nation's many family-run conglomerates, or chaebols. From Wall Street to London, investors are taking notice. Overseas funds, which dumped Korean stocks for nine straight months through April, are piling back into the market. Strategists at global banks including Goldman Sachs Group Inc (GS)., JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Morgan Stanley (MS) are among those who have upgraded Korea since the start of June. The benchmark Kospi has surged 33% in 2025, helping propel the equity market's value above $2 trillion for the first time in three years. Reforms 'will contribute to the continuation of a culture shift already underway and will reduce the ability of controlling shareholders to compel restructurings that benefit them at the expense of minority shareholders,' said Jonathan Pines of Federated Hermes, whose $4.5 billion Asia Ex-Japan equity fund has beaten 92% of its peers over one year. 'We remain very significantly overweight Korean stocks.' South Korean authorities have been seeking to replicate the success seen in Japan, where a push for corporate reforms helped boost valuations and spur a world-beating equity rally. Optimism that the nation is serious about tackling the so-called 'Korea discount' has grown since newly elected President Lee Jae Myung made raising governance standards and improving stock-market returns one of his top priorities. Net inflows from foreign funds have crossed $3 billion in July alone. That's more than their combined purchases in the previous two months. 'We're seeing a big change in the corporate governance,' said Joshua Crabb, head of Asia Pacific equities at Robeco Hong Kong Ltd., noting more capital discipline, buybacks and dividends. 'This does not require a great global environment. These are things that are almost like a bit of self-help.' After having discussed the latest round of commercial code revisions earlier this month, lawmakers plan on voting for them on Aug. 4. During this round, they will be pushing to mandate a cumulative voting system for listed firms in an effort to promote board diversity. Cumulative voting has become a cornerstone of the ruling Democratic Party's corporate governance agenda. In such a system, a shareholder typically receives votes equal to the number of shares they hold multiplied by the number of board seats up for election. This would enable minority shareholders to pool votes and elect at least one board member aligned with their interest — such as advocating for more share buybacks or dividends. Another proposal that will be considered for this round would be to cap the number of audit committee members that major shareholders can nominate. Treasury Stock Then there is the issue of treasury shares, which have become a flashpoint in South Korea. Such stock can be transferred by companies to friendly parties, such as family members or affiliates — who then can vote with them to give the controlling family more power without increasing actual ownership. While not directly part of the agenda for this round of corporate code revisions, a proposal to mandate the cancellation of treasury stock remains a key focus for Lee and his allies as they pursue their ambitious goal of 'Kospi 5000.' The proposal has drawn strong opposition from conglomerates. It should be phased in 'to avoid instability,' Lee Han-joo, a senior aide to Lee and the head of the State Affairs Planning Committee, told Bloomberg in a recent interview. At a minimum, companies may push to preserve existing treasury shares while agreeing to cancel those acquired going forward, said Seokkeun Ha, chief investment officer at Eugene Asset Management. 'That would disappoint the market,' he said. Authorities are discussing various options in this regard, according to a person familiar with the matter. Options range from creating a model similar to that of Germany's to using a more stringent approach that requires all existing treasury shares to be retired within six months, the person said, asking not to be identified as negotiations are ongoing. The German model requires companies to sell treasury shares that exceed 10% of the capital stock within three years of purchase, according to information on a government website. 'If we're aiming for Kospi 5,000, I believe treasury share cancellation is essential,' Ha said. 'That's how return-on-equity increases and higher ROE drives up the price-to-book ratio.' Lee's crusade to protect minority shareholders' rights relies on lawmakers delivering substantive changes at a credible pace while resisting pushback from entrenched interests. With markets having rallied so hard on expectations, the bar for disappointment is low. In a recent survey of 300 listed companies released by the Korea Chamber of Commerce and Industry, about 77% said further commercial code revisions could have 'negative impact on business growth.' 'Big bang gains were quite a bit driven by sentiment, and that's gone,' said Xin-Yao Ng, investment director at Aberdeen Investments. 'Going forward, we'll need better delivery of legislation to incentivize value-up and companies themselves delivering actual changes.' —With assistance from Charlotte Yang. Burning Man Is Burning Through Cash It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan Confessions of a Laptop Farmer: How an American Helped North Korea's Wild Remote Worker Scheme Elon Musk's Empire Is Creaking Under the Strain of Elon Musk A Rebel Army Is Building a Rare-Earth Empire on China's Border ©2025 Bloomberg L.P. 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Yahoo
8 hours ago
- Yahoo
Humanoid robots embodiment of China's AI ambitions
Serving craft beer, playing mahjong, stacking shelves and boxing, the dozens of humanoid robots at Shanghai's World AI Conference (WAIC) this weekend were embodiments of China's growing AI prowess and ambition. The annual event is primed at showcasing China's progress in the ever-evolving field of artificial intelligence, with the government aiming to position the country as a world leader on both technology and regulation as it snaps at the United States' heels. Opening the event on Saturday, Premier Li Qiang announced China would set up a new organisation for cooperation on AI governance, warning the benefits of development must be balanced with the risks. But in the cavernous expo next door, the mood was more giddy than concerned. "Demand is currently very strong, whether in terms of data, scenarios, model training, or artificial construction. The overall atmosphere in all these areas is very lively," said Yang Yifan, R&D director at Transwarp, a Shanghai-based AI platform provider. This year's WAIC is the first since a breakthrough moment for Chinese AI this January when startup DeepSeek unveiled an AI model that performed as well as top US systems for an apparent fraction of the cost. Organisers said the forum involved more than 800 companies, showcasing over 3,000 products -- the undeniable crowd pleasers being the humanoid robots and their raft of slightly surreal party tricks. At one booth, a robot played drums, half a beat out of time, to Queen's "We Will Rock You" while a man in safety goggles and a security vest hyped up a giggling crowd. Other droids, some dressed in working overalls or baseball caps, manned assembly lines, played curling with human opponents or sloppily served soft drinks from a dispenser. While most of the machines on display were still a little jerky, the increasing sophistication year-on-year was clear to see. The Chinese government has poured support into robotics, an area in which some experts think China might already have the upper hand over the United States. At Hangzhou-based Unitree's stall, its G1 android -- around 130 centimetres (four feet) tall, with a two-hour battery life -- kicked, pivoted and punched, keeping its balance with relative fluidity as it shadowboxed around a ring. Ahead of the conference's opening, Unitree announced it would launch a full-size humanoid, the R1, for under $6,000. - 'Digital humans' - Most high-tech helpers don't need hardware though. At the expo, AI companions -- in the form of middle-aged businessmen, scantily clad women and ancient warriors -- waved at people from screens, asking how their day was, while other stalls ran demos allowing visitors to create their own digital avatars. Tech giant Baidu on Saturday announced a new generation of technology for its "digital humans" -- AI agents modelled on real people, which it says are "capable of thinking, making decisions, and collaborating". The company recently ran a six-hour e-commerce broadcast hosted by the "digital human" of a well-known streamer and another avatar. The two agents beat the human streamer's debut sales in some categories, Baidu said. Over ten thousand businesses are using the technology already, the department's head Wu Chenxia told AFP. Asked about the impact on jobs -- one of the major concerns raised around widespread AI adoption -- Wu insisted that AI was a tool that should be used to improve quality and save time and effort, which still required human input. For now, few visitors to the WAIC expo seemed worried about the potential ramifications of the back-flipping dog robots they were excitedly watching. "When it comes to China's AI development, we have a comparatively good foundation of data and also a wealth of application scenarios," said Transwarp's Yang. "There are many more opportunities for experimentation." reb/sco
