Investors eye Washington talks after big rally in infrastructure shares

Investors eye Washington talks after big rally in infrastructure shares
Among the biggest winners have been shares of United States Steel Corp., while Nucor Corp’s stock has gained around 104%. (AP)
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Updated 06 June 2021

Investors eye Washington talks after big rally in infrastructure shares

Investors eye Washington talks after big rally in infrastructure shares
  • Republican leaders have endorsed roughly $257 billion in new spending

NEW YORK: Investors will watch Washington in the coming week for clues on whether an outsized rally in shares of companies that would benefit from President Joe Biden’s proposed $1.7 trillion infrastructure plan has more room to run.

Expectations of spending from Washington on bridges, roads, and tunnels bolstered so-called value stocks, especially the industrials and materials sectors, both up around 20 percent this year, ahead of the 12.5 percent gain for the S&P 500.

Among the biggest winners have been shares of United States Steel Corp., up nearly 200 percent since the start of the year, while steel producer Nucor Corp.’s stock has gained around 104 percent.

Those large gains may leave many industrials and materials stocks vulnerable to a selloff if a large spending bill in Washington fails to materialize, said John Mowrey, chief investment officer of NFJ Investment Group, which manages $8.2 billion in assets.

“It’s scary how much of (the spending bill) is already priced into the market,” he said.

US Transportation Secretary Pete Buttigieg circled June 7 as the date by which negotiations with Senate Republicans must have a “clear direction.” If not, he suggested, Senate Democrats could propose a more targeted infrastructure bill.

Republican leaders have endorsed roughly $257 billion in new spending, while calling major tax hikes to finance the construction of roads, bridges, water pipes and other projects a non-starter.

Progressive Democrats, meanwhile, are warning they would block any bill they view as inadequate.

Talks continued between Biden and Senator Shelley Capito, the main Republican negotiator.

Mowrey is focusing on companies he believes are undervalued that would benefit from an upgrade of technology-focused infrastructure like cell phone towers and data centers.

Shares of American Tower Corp., one of Mowrey’s holdings, are up 17 percent for the year.

Investors have embraced infrastructure stocks at a time when concerns about rising inflation, lingering disruptions in global supply chains from the coronavirus pandemic and accommodative central bank policies have helped push prices for raw materials to multi-year highs.

Investors trying to gauge the inflation threat will keep a close eye on US consumer price data, to be released on June 10.

A much stronger than expected CPI number sparked a selloff in the market last month, bringing infrastructure stocks down with it, as many worried rising inflation could force the Federal Reserve to begin unwinding stimulus soon.

Still, exchange-traded funds that bet on infrastructure stocks were the only type of thematic ETFs to attract positive net inflows in May, according to data from State Street Corp. Infrastructure ETFs were up 76.1 percent for the year through May, more than double the return of other thematic bets such as robotics or digital security.

The utilities sector may have the most to gain over the long term from roughly $384 billion in federal spending from Biden’s proposed bill, Wells Fargo noted in an analyst report. However, rising Treasury yields will likely leave the sector unattractive over the next six to 18 months, the firm said.

“The full ramifications of the American Jobs Plan will take multiple years to convert to growth for utilities firms,” the firm said.

Investors who are skeptical that Congress will pass an infrastructure bill should focus on areas such as clean energy, automotive parts and manufacturing, and agricultural machinery, which have not had the same run-up as commodity-tied businesses, said Brian Sponheimer, a portfolio manager of the $2.4 billion Gabelli Dividend & Income Trust fund.

Automotive companies will likely continue benefiting from above-trend demand through at least 2023 as the global semiconductor shortage and a lack of inventory keeps supplies low, said Sponheimer, whose position in parts supplier Genuine Parts Co. is among his fund’s 10-largest holdings.

If lawmakers cannot reach a bipartisan agreement on infrastructure, “there are reasons to think that there are supply chain challenges that push out growth for pockets of the market through 2022 and 2023,” he said.


Fertiglobe IPO on track for $6 billion valuation as share subscription ends

Fertiglobe IPO on track for $6 billion valuation as share subscription ends
Updated 11 sec ago

Fertiglobe IPO on track for $6 billion valuation as share subscription ends

Fertiglobe IPO on track for $6 billion valuation as share subscription ends
  • The firm, a joint venture between Abu Dhabi National Oil Co and chemical producer OCI formed in 2019, plans to raise between $765 million and $827 million giving it a valuation of $5.5 billion and $6 billion.

Demand for shares in fertilizer group Fertiglobe ended on Monday, with 114.6 million shares allocated on the Abu Dhabi stock market, and the firm on track for a $6 billion valuation, Al-Arabiya reported.

The firm, a joint venture between Abu Dhabi National Oil Co and chemical producer OCI formed in 2019, plans to raise between $765 million and $827 million giving it a valuation of $5.5 billion and $6 billion.

It has set a price range of 2.45 to 2.65 dirhams for the stock, with Al-Arabiya reporting it is on track to price its shares at the top of the range, citing unnamed sources.

The amount of shares allocated is equivalent to 13.8 percent of the business.

Subscription for Fertiglobe shares began on 13 October, with two tranches, of stock offered to investors.

Final pricing of the stock will be set on 20 October, with shares scheduled to start trading on the Abu Dhabi Securities Exchange on 27 October, according to a company statement.

 


Mobily profits up by 40% in first nine months of 2021

Mobily profits up by 40% in first nine months of 2021
Updated 4 min 10 sec ago

Mobily profits up by 40% in first nine months of 2021

Mobily profits up by 40% in first nine months of 2021

RIYADH: Etihad Etisalat Co. (Mobily) profits jumped by 40 percent to SR751 million ($200.2 million) by the end of the first nine months of 2021, Argaam reported.

Mobily recorded profits of SR537 million during the same period in 2020.

Saudi Arabia's second mobile service provider witnessed profits of SR281 million in the third quarter.

 


Fashion firm Rent the Runway aims for nearly $1.3bn valuation in U.S. IPO

Fashion firm Rent the Runway aims for nearly $1.3bn valuation in U.S. IPO
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Updated 21 min 4 sec ago

Fashion firm Rent the Runway aims for nearly $1.3bn valuation in U.S. IPO

Fashion firm Rent the Runway aims for nearly $1.3bn valuation in U.S. IPO
  • Rent the Runway plans to sell 15 million shares priced between $18.00 and $21.00 apiece in its IPO

Rent the Runway is aiming for a valuation of nearly $1.3 billion in its U.S. initial public offering, as the fashion rental company looks to cash in on the rising interest in pre-owned clothing.


The company, founded in 2009, lets users rent and shop second-hand clothes and accessories such as handbags and jewelry in over 18,000 styles from more than 750 designer brands. It also allows customers to rent and shop home goods.


Rent the Runway plans to sell 15 million shares priced between $18.00 and $21.00 apiece in its IPO, raising $315 million, according to a filing.


Earlier this month, the Brooklyn, New York-based company disclosed a near 39 percent drop in revenue for the fiscal year 2020. Its top line also took a hit in the first half of this fiscal year, with revenue down 9 percent for the period ended July 31.


Rent the Runway said its active subscribers more than doubled to 111,732 in the first nine months of 2021.


Demand for second-hand clothes has jumped in recent months as customers become increasingly conscious about their carbon footprint, boosting revenues at styling service Stitch Fix and online resale shop ThredUp.


Goldman Sachs & Co, Morgan Stanley and Barclays are the lead underwriters for the offering. Rent the Runway will list its stock on the Nasdaq under the symbol "RENT".


Bitcoin nears record high ahead of futures ETF listing

Bitcoin nears record high ahead of futures ETF listing
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Updated 43 min 42 sec ago

Bitcoin nears record high ahead of futures ETF listing

Bitcoin nears record high ahead of futures ETF listing
  • ProShares' Bitcoin Strategy ETF is expected to list on Tuesday under the ticker BITO

Bitcoin hit a six-month high and was within striking distance of a record on Tuesday as traders bet an anticipated listing of a futures-based U.S. exchange traded fund could herald investment flows into bitcoin and cryptocurrency assets.


Bitcoin, the world's biggest cryptocurrency by market value, rose as far as 1.5 percent during the Asia session to $62,991, its strongest level since the record peak of $64,895 in April.


It is up some 40 percent in October on hopes that the advent of bitcoin exchange traded funds (ETF), of which several are in the works, will allow billions of dollars managed by pension funds and other institutional investors to flow into the sector.


ProShares' Bitcoin Strategy ETF is expected to list on Tuesday under the ticker BITO, provided the U.S. regulator, the Securities and Exchange Commission, does not object.


Analysts cautioned that the fund will not invest directly in bitcoin - rather in Chicago-traded futures - and so may not have any immediate implications for flows. But speculators have been wagering its launch is a positive signal for spot prices anyway.


Bitcoin futures rose on Tuesday, last trading at $62,690, and spot prices could rise if cash keeps flowing in, said cryptocurrency analysts at Arcane Research.


"This could lead to more constant buying pressure on CME, causing the open interest to rise. This will attract more cash and carry opportunities, leading to buying pressure in the spot market," they said in a note.


Crypto ETFs have launched this year in Canada and Europe amid surging interest in digital assets. VanEck and Valkyrie are among fund managers pursuing U.S.-listed ETF products, although Invesco on Monday dropped its plans for a futures-based ETF.


The Nasdaq on Friday approved the listing of the Valkyrie Bitcoin Strategy ETF and Grayscale, the world's largest digital currency manager, is planning to convert its Grayscale Bitcoin Trust into a spot bitcoin ETF, CNBC has reported.


ProShares ETF is set to begin trade on Tuesday after a 75-day period during which the SEC could object to its listing elapsed on Monday.


Ether the second-largest cryptocurrency, has tracked bitcoin's rise and also traded firmly on Tuesday. It was last up 1.2 percent at $3,790.
 


ACWA Power among bidders of 1,200 MW Saudi renewable energy projects 

ACWA Power among bidders of 1,200 MW Saudi renewable energy projects 
Updated 19 October 2021

ACWA Power among bidders of 1,200 MW Saudi renewable energy projects 

ACWA Power among bidders of 1,200 MW Saudi renewable energy projects 

RIYADH: The Saudi Ministry of Energy announced the list of candidates for bids received from developers, participating in the third phase of renewable energy projects in the Kingdom, consisting of four independent generation projects (IPP) for solar photovoltaic energy with a total capacity of 1200 MW.

French Total Solar and ACWA Power are both candidates for the Wadi Al-Dawasir project with a capacity of 120 MW, while ACWA Power and AlFanar Energy Company are candidates for the Laila project with a capacity of 80 MW, under Category A.