U.S. stocks showed signs of a potential bounce on Tuesday morning, albeit a modest one. Stock index futures were up as much as a third of a percent shortly before the regular trading session began on Wall Street.

One factor that has weighed on investor sentiment recently has been the ongoing battle that the Chinese government has waged against the COVID-19 pandemic. China has been a lot more stringent with its lockdown measures to stem the potential spread of the disease, and that has raised concerns about how much downward pressure the government's actions could have on economic activity. With Chinese citizens now starting to protest lockdowns and other restrictions, the prospects for eliminating the zero-COVID policy in favor of a more lenient alternative are giving many well-known stocks in China a boost on Tuesday morning.

What China could do

Investors in Chinese companies got more comfortable after hearing comments from China's National Health Commission (NHC). The governmental body said that it would make a greater effort to provide COVID-19 vaccinations for its elderly population, aiming to protect those over 80 and making booster shots available sooner after primary vaccinations. The NHC is also looking to launch a campaign to convince those who are reluctant to get vaccinated that the benefits of COVID-19 vaccines outweigh any perceived downsides.

Interestingly, the reaction to recent protests in China has been mixed. At first, investors feared that the Chinese government would crack down on protestors with COVID-19-related measures that could be stricter than current guidelines. However, more market participants seem to view the protests as potentially having a positive influence in persuading government officials to loosen their zero-COVID policy.

That's a big part of why some major Chinese stocks moved higher in premarket trading Tuesday morning. Alibaba Group Holding rose 5%, matching gains from electric vehicle companies Li Auto and XPeng. Baidu climbed 6%, while JD.com moved 7% higher.

Solid earnings from Bilibili

Also boosting sentiment on Chinese stocks, Bilibili (NASDAQ: BILI) released its latest quarterly results on Tuesday, and the stock climbed 10% in response. The online gaming and digital media company reported solid gains in the third quarter, including an 11% rise in revenue year over year to $814.5 million. Net losses narrowed by 36% from year-ago levels to $241 million as Bilibili reported a 25% rise in daily active users to 90.3 million. Almost 333 million people now use the service on a monthly basis, and while less than 10% of those users actually pay for a premium subscription, Bilibili reported high levels of engagement.

Shareholders were pleased to see Bilibili responding proactively to macroeconomic threats. Already, Bilibili's numbers are reflecting more efficient operations, as gross margin improved and expenses for sales and marketing fell as a percentage of total revenue. The company anticipates continuing to control its costs strictly, with an eye toward unlocking even more savings as it aims to become consistently profitable as soon as it can.

More hurdles ahead

COVID-19 is only one of the factors that have weighed on Chinese stocks in recent years. Turbulent foreign relations between China and the U.S. have led to volatility, while structural aspects of the Chinese economy have introduced systemic risks for investors to consider. Talk of potentially delisting Chinese stocks has quieted in Washington, but it could come back in 2023 and beyond.

Nevertheless, progress toward moving beyond the zero-COVID policy seems to be giving investors more comfort in investing in Chinese stocks. Those who are comfortable with the risks could find interesting opportunities in China. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

Shares of many Chinese companies are getting hit hard today, including several of China's electric vehicle (EV) makers. Shares of Nio (NYSE: NIO), XPeng (NYSE: XPEV), and Li Auto (NASDAQ: LI) all plunged by double digits Monday morning. As of 10:53 a.m. ET, Nio shares were down 20.6%, XPeng was lower by 18.8%, and Li Auto had plunged 24.1%. 

So what

These names are reacting to news that Chinese President Xi Jinping locked in a third term and selected a group of loyalists for top leadership spots at the Communist Party Congress. Investors fret that could have negative implications for private Chinese companies as well as the country's economy in general.

It implies the continuation of Xi's zero-COVID policy that has led to lockdowns. These lockdowns have crimped both supply and demand in some areas. Xi has also sought to regulate the tech industry and attempt to restrict wealth inequality by clamping down on some successful businesses and their founders. But investors also are reacting to other news that is unique to the EV industry. 

Now what

EV bellwether Tesla announced Monday that it is cutting prices on some vehicles in China. That comes after Tesla upgraded its plant in Shanghai that now has the capacity to produce more than 1 million vehicles per year. Some investors think the price cuts could signal a demand problem, which would be highly impactful to domestic EV makers. But there are other possible reasons for the new pricing as well. 

Tesla dropped the prices of its Model Y by about 9% and the Model 3 by about 5% for Chinese buyers, reports The Wall Street Journal. If the reason is slowing demand, it comes at a particularly bad time for companies like Nio, XPeng, and Li, which have been adding new models and are working to earn profits for the first time. The third quarter was a good one for sales from these companies after navigating disruptions from COVID-related lockdowns.

Nio delivered 29% more vehicles in the third quarter compared to last year. XPeng and Li Auto increased deliveries by 15% and 5% year over year, respectively. Nio's record quarterly deliveries included the first shipments of its ET5 midsize sedan. XPeng started delivering its new G9 SUV in September, and Li Auto also shipped 10,123 of its new Li L9 SUVs last month. 

While it remains to be seen how China's economy will perform under President Xi's third term, the price move from Tesla might not be a sign of slowing demand right now. Rising raw material costs led to prior price increases from Tesla and Chinese EV makers alike. Some commodity costs have since come down, including costs for steel and battery materials.

Investors should rightly be focused on the long-term impacts from China's leadership, but today's stock price drops might be overdone if investors are interpreting Tesla's move as a demand problem in China. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Nio and more Chinese EV stocks crashed on Monday appeared first on The Motley Fool Australia.

Stocks in the electric vehicle (EV) sector have attracted loads of attention following the success of Tesla's (NASDAQ: TSLA) stock and now its business. Tesla reported net income of more than $5.5 billion in 2021. That helped confirm the company could profitably grow as the EV sector matures, which many supporters and shareholders have preached for several years.

That has attracted speculative investors looking for "the next Tesla" and has driven valuations to astronomical levels for several companies, like Rivian Automotive, that have barely begun delivering vehicles. But several of China's EV companies have already proven they can manufacture at scale. Although there are unique risks associated with these businesses, there are also concrete reasons why those who want exposure to the sector should consider investing in them now. 

Targeting the right markets

There's a reason why Tesla's first manufacturing facility outside the United States was built in China -- it's the largest automotive market in the world. Chinese EV makers have been working to take advantage of that, too. Nio (NYSE: NIO), XPeng (NYSE: XPEV), and Li Auto (NYSE: LI) have each been increasing sales quickly over the past two years. 

 

Data source: Company releases. Chart by author.

Although they're building off of a much smaller base than Tesla, these three Chinese EV makers increased vehicle sales between 109% and 263% in 2021 compared to 2020 levels. And though Nio, XPeng, and Li are completely focused on electrified vehicles, Chinese internal combustion and EV automotive giant BYD (OTC: BYDDY) is producing many more new energy vehicles (NEVs), which are defined as both electric and plug-in hybrid models. Sales volume for BYD new energy vehicles soared 218% to more than 600,000 in 2021. It also told investors it expects to potentially double that in 2022 to 1.2 million, reports industry follower CnEVPost.

Though focused mostly on China to this point, these companies also plan to expand beyond those borders. BYD is a global company already, and Nio has established a presence in Norway. Nio has also said it plans to move into Germany, the Netherlands, Sweden, and Denmark in 2022. The International Energy Agency (IEA) predicts China and Europe will continue to dominate EV sales over the next decade, as shown below. 

 

Date source: International Energy Agency Global EV Outlook 2021 report. Chart by author.

Competition and other risks

The IEA Global EV Outlook for 2021 predicts two scenarios for EV sales over the next decade. The first, more conservative, view is based on stated governmental policy objectives. The second assumes a more aggressive sustainable development push that results in EV sales obtaining a 34% share of the automotive market by 2030 -- more than double what the stated policy is expected to achieve. 

 

Data source: International Energy Agency. Chart by author.

Though competition is ramping up from both start-up companies and established legacy automakers, both scenarios provide ample opportunity for the Chinese EV companies to continue growing sales. 

To be sure, Chinese EV companies and their respective shares carry added geopolitical risks. For this reason, investors should size allocations appropriately. But based on businesses that have already shown they can be successful, and markets that provide ample opportunities, investors wanting exposure in the sector shouldn't overlook these companies. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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2021 was a strong year for the stock market, and investors hope that 2022 can provide a repeat performance and give them double-digit returns once again. On the first trading day of the year, the Nasdaq Composite (NASDAQINDEX: ^IXIC) seemed ready to keep up its momentum, with futures contracts on the index rising three-quarters of a percent as of 7:15 a.m. ET.

Tesla (NASDAQ: TSLA) put in another amazing performance in 2021, with its stock adding another 50% for the year. The growth of its electric vehicle (EV) business has been stellar, and over the weekend, Tesla reported impressive delivery numbers that complemented the numbers from its Chinese competitors quite well.

More records fall for Tesla

Shares of Tesla climbed more than 7% in premarket trading on Monday morning. The EV manufacturer's fourth-quarter delivery and production numbers came out, and they marked another high note for bullish shareholders in the stock.

Tesla's Sunday report showed it produced almost 306,000 vehicles in the fourth quarter of 2021. That brought its total production for the year to more than 930,000 vehicles, most of which were mass-market Model 3s and Model Ys. Delivery figures were even more impressive, with 308,600 cars and SUVs going out in the fourth quarter, bringing the total for the year to 936,172.

Many had thought that Tesla's initial hope for a 50% rise from the 500,000 vehicles it delivered in 2020 was overly ambitious. However, the final numbers show the huge demand for Tesla EVs as well as the company's ability to get its manufacturing capacity up. Investors are hoping for similar outperformance in 2022.

Chinese EV makers weigh in

Also on the rise were shares of EV manufacturing companies located in China. Tesla's numbers helped lift the whole industry, but its competitors also reported solid production and delivery numbers of their own.

Nio (NYSE: NIO) shares were up more than 2% in premarket trading. The company delivered nearly 10,500 vehicles in December, up 50% year over year, and topped the 25,000 mark for quarterly deliveries. All told, Nio delivered 91,429 vehicles in 2021, which was more than double its 2020 count.

XPeng (NYSE: XPEV) delivered vehicles at an even faster rate. The Chinese company reported 16,000 deliveries in December, up 181% year over year. That marked more than 41,750 vehicles in the fourth quarter, which was more than triple the year-ago figure, and total deliveries for 2021 came in at 98,155. That prompted a nearly 3% rise in the stock price in premarket trading Monday.

Finally, Li Auto (NASDAQ: LI) saw its shares also rise almost 3%. Li delivered 14,087 of its electric cars during the month of December. Fourth-quarter deliveries came in at 35,221, up 144% from year-earlier levels. For the year, Li delivered almost 90,500 EVs.

The future of EVs

Despite the fundamental success of all of these businesses, stock performance among EV companies has been mixed. XPeng and Li have managed to post gains over the past year, but Nio lost 35% of its stock price as investors seemed surprised that its Chinese competitors' delivery figures raced past its own.

The growth of the entire EV industry is likely to continue in 2022, and the question will be who benefits the most from that growth. As new players like electric truck disruptor Rivian Automotive (NASDAQ: RIVN) and established automakers like Ford Motor Company (NYSE: F) start moving toward bringing more EVs to market, Tesla will have to maintain its immense customer loyalty and first-mover advantage to produce the sort of gains shareholders have gotten used to seeing. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The stock market is giving incredibly high valuations to electric vehicle stocks, whether the companies have proven themselves effective manufacturers or not. Tesla (NASDAQ: TSLA) is one of the most valuable companies in the world, while start-ups like Lucid Motors (NASDAQ: LCID), NIO (NYSE: NIO), and Xpeng (NYSE: XPEV) are worth tens of billions of dollars with very little production, and a company like Rivian is eyeing a potential $80 billion valuation in an IPO. 

Meanwhile, older manufacturers like General Motors (NYSE: GM), Ford (NYSE: GM), Toyota (NYSE: TM), Honda (NYSE: HMC), and Volkswagen are trading for less than the market's price-to-earnings ratio, as you can see below, indicating that investors don't think highly of their earnings growth potential. Is this because EV companies are disrupting the old guard or because EV stocks are overvalued? Let's take a look. 

GM Net Income (TTM) data by YCharts

EV valuations versus the old auto industry

If you had invested in traditional auto stocks since the start of 2000, your performance would hardly be impressive. General Motors, Toyota, Honda, Ford, and Volkswagen have all underperformed the market, and you could buy all five manufacturers for less than $600 billion, based on today's market capitalizations. Their valuations haven't fallen relative to historical valuations as EVs have hit the market -- automakers have always had relatively low valuations because of the boom-and-bust nature of the business. 

GM Market Cap data by YCharts

Compare these valuations to five of the most valuable EV manufacturers today. 

TSLA Market Cap data by YCharts

This chart doesn't even include Rivian, which could go public with an $80 billion valuation, or Nikola, Workhorse Group, Canoo, Fisker, and a number of start-ups that are effectively pre-revenue. This is a very crowded field today. 

Tesla is relatively established as a manufacturer, but companies like Lucid are still in pre-production and many manufacturers are just starting to ramp up operations in a meaningful way. Clearly, the market thinks the economics of manufacturing EVs long term is going to be far better than the economics of the traditional auto industry over the last century. I think we should be skeptical of that. 

Why the auto business has traditionally been a terrible place to invest money

A good way to understand the strategic position of auto manufacturers is to consider Porter's Five Forces for the industry. Porter's Five Forces is a method for analysing a business's competitive position developed by Michael Porter at Harvard University and is commonly taught in business schools today. 

I have laid out the five forces below and how I see the traditional auto fits into this analysis today, based on a low/medium/high level. You can adjust any of these factors if you disagree with my analysis. 

Data sources: Michael Porter, author's analysis. 

The threat of new entrants to the auto business is low and has been for decades, given the high cost to design vehicles and build manufacturing capacity. Suppliers have some power in the market because many are large and have significant scale, but there's a limit to their power. Buyers do have bargaining power because they can simply go to any other automaker for a vehicle. The threat of substituting one brand for another is also high. And given relatively low margins for automakers and the money spent on advertising vehicles, we know that rivalry among competitors is high.

The same forces don't hold for the EV industry today, where economics will likely be far better for the next few years for some very critical reasons. 

EV financials may never be better than they are today

Looking at the same five forces for the EV industry, we see a much more attractive environment. 

Data sources: Michael Porter, author's analysis. 

There's a bigger potential threat of new entrants today than there was in the traditional auto industry, partially because many of these new entrants are public and can raise capital from equity markets relatively easily. But it's still extremely difficult to establish an auto company today -- so I only made that a medium threat level. But it's also clear that the intensity of rivalry among EV manufacturers is nearly nonexistent, there are very few substitutable options for customers given a limited number of models available, and buyers have little bargaining power because there are so few options. 

To add to the improved position of EV companies today, they're getting a financial windfall from government regulations and tax incentives, and benefiting from disrupting a slow-moving legacy business. 

• EVs have a tax credit windfall for buyers in the U.S. 
• EV manufacturers are getting a regulatory credit windfall
• There is limited competition from any EV manufacturer
• EV start-ups are competing against a legacy cost structure (dealerships and unions) 
• EV companies like Tesla are starting to charge a premium for technology like self-driving features

What I see from both the Porter's Five Forces analysis above and the five bullet points is there are tailwinds behind EV companies today. But in every single case, I think the tailwind has an end date. 

• Eventually, all automakers will make enough EVs to render regulatory credits negligible
• Tax credits will (likely) expire
• Competition from start-ups and legacy companies is launching regularly, and eventually there will be ample supply of EVs for anyone who wants one
• Most new start-ups are not using a traditional dealer model, reducing the benefit of any single company (Tesla) disrupting the dealer model
• Premium features like self-driving are a novelty today, but they'll eventually be standard and -- depending on how autonomous driving technology and business models develop -- may make the idea of purchasing a vehicle in the first place obsolete

Add all of this up and I think we will see an increased level of rivalry, a bigger threat of substitutes from one EV to the next, and more bargaining power from buyers. Long term, Porter's Five Forces and the strategic position of EV manufacturers resemble that of auto companies over the last 50 years. In all likelihood, EV manufacturers will face the same rise and fall of demand during recessions and ultimately pricing pressure that will hurt margins. Some of that threat will come from traditional auto companies themselves, but some competition will be EV-maker versus EV-maker in the marketplace. 

Are EV manufacturers playing a new game? 

When I consider EV companies over the long term, they look a lot like traditional automakers. They are manufacturers just like traditional automakers and some haven't even proven the ability to be world-class manufacturers. They need to grow, develop technology, market products, hold off competitors, and at the end of the day hope they can make enough money on vehicle sales to cover enormous fixed costs associated with operating an auto company.

EV companies will face the same challenges in the future that traditional auto companies have been facing for a century -- which makes me wonder why EV companies are so highly valued compared to how traditional auto companies have been valued for decades? 

Add it up and this looks like EV stocks are much more fallible than investors think right now, which makes me very hesitant about investing in this space at all. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Stocks got back into the groove on Monday, and the Nasdaq Composite (NasdaqINDEX: ^IXIC) helped lead the way higher. Even as other major market benchmarks gave up much of their daily gains, the Nasdaq was still up a third of a percent as of 12:30 p.m. EDT.

Electric vehicles have been a hot area of the market lately, and Tesla (Nasdaq: TSLA) remains the leader in that high-profile industry. Even though Chinese competitors were the ones doing most of the talking on Monday, Tesla's stock continued to move higher as investors seemed confident in the company's ability to remain atop the fast-growing market. Below, we'll look at what China's EV companies said and what it means for Tesla and the broader industry.

China loves electric vehicles

Several Chinese electric automakers reported their latest monthly results. They all showed continuing growth, albeit at different rates.

Shares of Nio (NYSE: NIO) were up nearly 3% Monday afternoon. The company reported delivering 7,931 vehicles in July, jumping almost 125% compared to the same month a year ago. Nio shipped 3,669 ES6 five-seat SUVs, 2,560 EC6 coupe-model SUVs, and 1,702 ES8 six- and seven-seat SUVs. That brought the total number of vehicles that Nio has delivered in its history above the 125,500 mark.

XPeng (NYSE: XPEV) saw an even bigger rise, with its stock climbing 6%. The automaker reported deliveries of 8,040 vehicles in July, rising 228% year over year. Deliveries of the P7 midsized sedan hit 6,054, while XPeng sent out 1,986 of its compact SUV model, the G3. 2021 has been an exceptional year for XPeng, with year-to-date deliveries through seven months almost quintupling the same figure from 2020. The company attributed much of the popularity of the P7 to its navigation-guided pilot driver assistance platform, and ongoing technological innovation could make that feature even more valuable to drivers.

Lastly, Li Auto (Nasdaq: LI) led the pack with 8,589 deliveries in July. The company's Li ONE has been a massive hit, with year-to-date deliveries of nearly 38,750. July marked a record month for deliveries once again, and co-founder Yanan Shen predicted that new upgrades by the end of 2021 will further support the positive perception of Li Auto's vehicle model for consumers. Li's shares were up 2% on the day.

Tesla keeps winning

Some might have thought that gains for Chinese EV stocks would mean losses for Tesla, but that's not how investors looked at it. Instead, Tesla stock rose 5%, as shareholders seemed to assume that if China's own domestic automakers are having success, so too is Tesla in serving the Chinese market through vehicles from its Shanghai Gigafactory facility.

Tesla did get a vote of confidence from KGI Securities Monday. Analysts gave Tesla an outperform rating and set a price target of $855 per share, implying almost 20% further upside from where the stock trades currently.

The other news item affecting Tesla came from Piedmont Lithium (Nasdaq: PLL), which said it would delay lithium shipments to the automaker. Piedmont shares were up even though the supplier didn't specify a date on which it could make good on its agreement with Tesla.

As the leader in the EV space, Tesla has been able to keep competition at bay while steadily growing the addressable market for electric vehicles of all kinds. That's a positive for the entire industry, and it means Chinese EV stocks can win without endangering Tesla's key role in driving innovation forward in the industry.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Tesla Motors (NASDAQ: TSLA) is moving past a legal dispute it got into with one of its former engineers. The company settled a lawsuit it brought in 2019 against Cao Guangzhi, accusing him of copying the source code of its Autopilot assisted driving software platform. Tesla had alleged Cao had done so before joining XMotors, the U.S. business of China-based autonomous-driving company Xpeng (NYSE: XPEV).

Under the terms of the settlement, Cao will financially compensate Tesla for his actions. The precise amount has not been disclosed.

Autopilot is a high-profile feature in Tesla automobiles. Although the name implies an autonomous driving system, Autopilot is actually a set of assisted-driving solutions including next-generation cruise control and parking assist. The company has intimated that, in time, Autopilot will include self-driving functionalities.

Tesla has not commented on its settlement with Cao. The former employee's legal representative, in a statement sent to Reuters, claimed that Cao did not provide any Tesla data to Xpeng or any other entity. In addition, said the representative, Cao didn't personally access any of Tesla's information.

The news agency added that XMotors "said it respected intellectual property rights and relied on its in-house developed proprietary R&D and intellectual property." XMotors was not a party in the lawsuit brought by Tesla. Cao is no longer employed at the Chinese company.

Although this can't be considered a major legal issue -- and therefore a big victory -- for Tesla, it is an encouraging sign that the company is ready and able to vigorously defend its business. Autopilot is an attractive feature that helps draw customers, and as such it's worth protecting.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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CommSec is one of the largest online brokers in the country. As such, this data can be a nice gauge of general investing trends in our market. This week's data covers 7-11 December.

So here are the top 10 United States shares CommSec customers were buying last week:

Most traded US shares on the ASX

1. Tesla Inc (NASDAQ: TSLA) – representing 9% of total trades with a 77%/23% buy-to-sell ratio.
2. Nio Inc (NYSE: NIO) – representing 2.9% of total trades with an 80%/20% buy-to-sell ratio.
3. AirBnB Inc (NASDAQ: ABNB) – representing 2.4% of total trades with a 97%/3% buy-to-sell ratio.
4. Apple Inc (NASDAQ: AAPL) – representing 2.3% of total trades with a 69%/31% buy-to-sell ratio.
5. Palantir Technologies Inc (NYSE: PLTR) – representing 1.5% of total trades with an 83%/17% buy-to-sell ratio.

   The next five most traded shares were these:

6. Pfizer Inc (NYSE: PFE)
7. Xpeng Inc (NYSE: XPEV)
8. Microsoft Corporation (NASDAQ: MSFT)
9. Moderna Inc (NASDAQ: MRNA)
10. Zoom Video Communications Inc (NASDAQ: ZM)

What can we learn from these trades?

Well, a notable inclusion this week is AirBnB, which had a very publicised initial public offering (IPO) last week (meaning AirBnB launched on the share market for the first time). AirBnB shares rocketed as high as 142.6% at one point on IPO day, surging past the opening price of US$68. The following day, the shares climbed as high as US$165, but have since cooled somewhat and last traded for US$130 per share a the time of writing.

AirBnB is one of those 'unicorn' businesses, similar to Uber Technologies Inc (NYSE: UBER), that people right around the world have become familiar with long before they achieved 'public company' status. As such, these IPOs often attract a lot of attention. AirBnB was evidently no different, including for Aussie investors. We can see this on CommSec's list, where it usurped the No.3 spot last week.

In other news, electric car/battery manufacturers Tesla and Nio seem to be unstoppable. These 2 companies have been swapping the top positions with each other for most of the year, with Tesla stealing back much of the interest last week. That might have had something to do with Tesla's upcoming inclusion in the S&P 500 Index (SP: .INX), or perhaps Tesla shares appreciating more than 56% in the past month alone. Tesla trades were almost as popular as those of the other top 5 stocks combined, which says something.

Notably, only one of the famous 'FAANG' stocks made the top ten at all – Apple. It seems ASX investors are losing their appetite for Amazon, Alphabet and Facebook, at least for now. And almost a third of Apple trades were 'sells' (far more than the others).

The post Here are the US shares ASX investors are buying appeared first on The Motley Fool Australia.

Because CommSec is one of the largest online brokers in the country, this data can be indicative of general investing trends in our market. This week's data covers 9-13 November.

So here are the top 10 United States shares that CommSec customers were buying last week:

Most traded US shares on the ASX

The five most traded international shares last week were the following:

1. Nio Inc (NYSE: NIO) – representing 6.4% of total trades with an 81%/19% buy-to-sell ratio.
2. Tesla Inc (NASDAQ: TSLA) – representing 4.7 % of total trades with a 77%/23% buy-to-sell ratio.
3. Alibaba Group Holding Ltd (NYSE: BABA) – representing 2.9% of total trades with an 82%/18% buy-to-sell ratio.
4. Pfizer Inc (NYSE: PFE) – representing 2.6% of total trades with a 90%/10% buy/sell ratio.
5. Apple Inc (NASDAQ: AAPL) – representing 4.2% of total trades with a 57%/43% buy-to-sell ratio.

   The next five most traded shares were these:

6. Xpeng Inc (NYSE: XPEV)

7. Zoom Video Communications Inc (NASDAQ: ZM)

8. Microsoft Corporation (NASDAQ: MSFT)

9. Amazon.com Inc (NASDAQ: AMZN)

10. Palantir Technologies Inc (NYSE: PLTR)

What can we learn from these trades?

We noted last week that the bullish patterns we had been used to seeing had been moderating somewhat. I wrote then that "our coverage of the US shares ASX investors were buying from 19-23 October shows none of the top 5 US shares having a buy-sell ratio of less than 80%/20%, yet 4 out of 5 of the top shares this week are below this ratio".

This week, we are continuing to see this trend play out. Only one stock in the top 5 this had a buy/sell ratio at or better than 90%/10%, which was Pfizer.

Interestingly, Pfizer is a company that rarely features on this list. We can probably put its enthusiastic presence this week down to one factor: the company's announcement of a more-successful-than-hoped coronavirus vaccine candidate last week.

Other than that, we see similar trends playing out this week compared to last week. Electric vehicle companies Nio and Tesla continue to compete for that top spot. Last week saw Nio pip Tesla for the first time, and it's notable to see this continue this week. Nio shares are up 65% over the past month though, so it's not hard to guess where this interest is coming from. Investors seem to be cooling on big tech though. Only one FAANG stock makes the top 5 this week (Apple), and frequent 'top 5er' Amazon barely scraped in the top 10.

The post Here are the US shares that CommSec customers are buying appeared first on The Motley Fool Australia.

How has the market reacted to this news? Very well, if the numbers are anything to go by.

Since 4 November (the date of the election in Australia), the S&P/ASX 200 Index (ASX: XJO) is up 6.1%. That's pretty close to the long-term average the ASX 200 delivers in an entire year (according to State Street Global Advisors, the ASX 200 has returned an average of 7.53% per annum since 2001). And since Biden's win was called, the ASX 200 is up 4.4%.

So clearly the US election was a major market-moving force. But how exactly have ASX investors really responded to the changing of the guard at the White House?

Reporting in the Australian Financial Review (AFR) this week answers that question.

Biden win leads investors to China… and cannabis

Cannabis and China: not a combination of words we see too often. But that's where the AFR tells us investors are parking their money at the dawn of the Biden administration.

According to the AFR article, analysis of trading activity on poplar brokering platform Stake over the past week or so has come up with some interesting results. Chief amongst those is that investors are suddenly far more bullish on Chinese companies (at least those listed in the US).

Stake lists Chinese electric car maker Nio Inc (NYSE: NIO) as the most popular share its investors have been buying in the wake of Biden's win. That displaces long-running favourite Tesla Inc (NASDAQ: TSLA).

It also notes that other Chinese companies like e-commerce giant Alibaba Group Holding Ltd (NYSE: BABA) and electric vehicle company Xpeng Motors (NYSE: XPEV) were also in Stake investors' 'top 5' shares.

Why China? Well, according to the AFR article, investors are likely to be "reacting positively to a potential end to the so-called trade war and the Trump administration's tough stance on China."

Stake investors were also giving the green light to cannabis stocks. Canadian marijuana company Aurora Cannabis Inc (NYSE: ACB) was reportedly the second-most popular share on Stake in the wake of Biden's win, after multiple US states also legalised recreational cannabis in last week's elections. According to the AFR article, Biden's attitude towards the sector is also much more lenient than Trump's.

It will be interesting to see whether these trends hold up over the coming weeks and months, or if this surge in interest in cannabis and Chinese companies is more of a flash in the pan.

The post Here's how ASX investors have reacted to a Biden win appeared first on The Motley Fool Australia.

So here are the top 10 United States shares that CommSec customers were buying last week:

Most traded US shares on the ASX

The five most traded international shares last week were the following:

1. Nio Inc (NYSE: NIO) — representing 6.4% of total trades with an 84%/16% buy-to-sell ratio.
2. Tesla Inc (NASDAQ: TSLA) — representing 5.8% of total trades with a 72%/28% buy-to-sell ratio.
3. Apple Inc (NASDAQ: AAPL) — representing 4.2% of total trades with a 73%/27% buy-to-sell ratio.
4. Alibaba Group Holding Ltd (NYSE: BABA) — representing 2.9% of total trades with an 84%/16% buy-to-sell ratio.
5. Amazon.com Inc (NASDAQ: AMZN) — representing 2.4% of total trades with a 75%/25% buy-to-sell ratio.

The next five most traded shares were these:

      6. Microsoft Corporation (NASDAQ: MSFT)

      7. Xpeng Inc (NYSE: XPEV)

      8. Advanced Micro Devices, Inc (NASDAQ: AMD)

      9. Square Inc (NYSE: SQ)

      10. Facebook Inc (NASDAQ: FB)

What can we learn from these trades?

It's a very interesting report this week, especially when we compare it to previous weeks' patterns. For example, we see significantly more selling pressure evident in these numbers. Our coverage of the US shares ASX investors were buying from 19-23 October shows none of the top 5 US shares having a buy-sell ratio of less than 80%/20%, yet 4 out of 5 of the top shares this week are below this ratio.

Further, this is the first week in a while that electric vehicle and battery manufacturer, Tesla, isn't at the top of the totem pole. It's been usurped by Nio this week, another electric vehicle manufacturer. My Fool colleague, Tony Yoo, discusses why Nio is driving investors wild right now here.

The data also showcases the popularity of Chinese shares for Aussies right now as well. Nio, Alibaba and Xpeng are all popular Chinese (though US-listed) companies. Alibaba is an e-commerce giant often described as the 'Amazon of China', whereas Xpeng is yet another electric vehicle manufacturer that has been causing quite a stir on the US markets. Xpeng shares are up more than 70% in the past month, and up 59% in the past week.

However, the US 'big tech'/FAANG companies like Apple, Amazon, and Facebook remain as popular as ever, as does Microsoft. Fintech company, Square, and high-flying chip maker AMD are also regular guests on this list, so no surprises seeing these names pop up as well.

The post Here are the US shares that CommSec customers are buying appeared first on The Motley Fool Australia.

First quarter results 

The first quarter update was a catalyst for recent broker updates for the Woolworths share price. This update revealed a 12.3% increase in total group sales in Q1 to $17.9 billion and an 86.7% increase in group e-commerce sales to $1.5 billion.

Its total Australian food sales for the quarter increased 12.9% to $12.0 billion. Sales continued to benefit from COVID-19-driven higher in-home consumption as well as the success of its Disney Ooshies. Sales growth in Victoria was approximately 20% higher in the quarter due to the more stringent restrictions in place. Excluding Victoria, Australian food total sales increased by 10.6%. 

In October, Australian food comparable sales growth was in the high single-digits, moderating over the month. For the rest of the calendar year, it expects elevated sales and costs to continue as customers spend more time at home and continue to embrace e-commerce. 

Big broker updates for the Woolworths share price 

Credit Suisse Group AG raised its Woolworths share price target from $40.43 to $40.80 and retains a neutral rating. It describes the quarterly trading update as solid with online sales channels ahead of competitors. It sees this as an advantage for Woolworths going forward but does raise concern for higher costs. 

Macquarie Group Ltd (ASX: MQG) raised its Woolworths share price target from $42.00 to $42.50 and retains an outperform rating. The broker was impressed with its first quarter sales update which were ahead of expectations and better than its main rival Coles Group Ltd (ASX: COL). Macquarie expects a strong Christmas trading period for the supermarket leader. 

Morgan Stanley raised its Woolworths share price target from $43.50 to $44.00 and retains its overweight rating. The investment bank reacted positively to its first quarter sales update with growth being better than expected. The liquor segment surprised to the upside but hotels continue to drag on earnings, but offer upside when Melbourne re-opens. Similarly, Morgan Stanley expects a strong Christmas trading period. 

UBS AG (USA) retained a buy rating with a $44.00 price target. It didn't change its rating or price target after reviewing the September quarter trading update. The strong performance was in-line with expectations, outlook remains solid but notes higher costs could be a risk to earnings. 

Citi retained its buy rating and $44.50 price target. It sees favourable conditions leading into Christmas and Woolworths to outperform supermarket rivals. 

The general consensus amongst brokers is a 5–10% upside for the Woolworths share price with anticipated strong earnings growth throughout the Christmas period. 

The post Why big brokers are bullish about the Woolworths (ASX: WOW) share price  appeared first on The Motley Fool Australia.