(Bloomberg) — As a sense of euphoria sweeps through global equity markets propelling stocks to regain $21 trillion in value from a March low, the asset class is looking increasingly frothy.While stock luminaries who had advocated for a bull zone look like winners in hindsight, the debate goes on about whether the rally is a bear market bounce, doomed to end. Asia still looks set to end the day with a gain, but stocks in Europe have turned lower, poised for the worst performance in more than a week.Global equities have climbed back to levels last seen in February, when the coronavirus began spreading rapidly outside of China. The 42% surge from a March low is the best advance over an equivalent time-frame since 2009 for the MSCI ACWI Index that includes stocks in both the emerging and developed world. The gauge is now trading at 20 times next year’s profits, the most expensive since 2002.“This rally is a function of government support being thrown behind the economy,” said Paul Sandhu, head of multi-asset quant solutions and client advisory for Asia Pacific at BNP Paribas Asset Management. “There are key risks that could lead to more volatility ahead over the short term, which is why we continue to hedge our portfolios on the downside while still looking for opportunities to add risk for the medium to long term.”So far bulls are in charge. U.S. stocks just crossed an important psychological milestone of recouping this year’s losses. Asia’s equity benchmark is having its seventh straight day of gains, the longest streak in more than two years. And European shares are on course for the best monthly gain since 2009.Factors including a wall of money from the guardians of global economies, the easing of lockdowns and the shockingly positive employment numbers in the U.S. are drawing more buyers to participate, picking up cheaper sectors and adding more fuel to the rally. Yet caution still abounds with some investors increasing hedges for potential volatility ahead.“The risk of a correction will rise if investors continue to price in a rapid recovery, especially for sectors that are vulnerable to another wave of infections or an escalation of tensions between the U.S. and China,” said Tai Hui, chief Asia market strategist at JPMorgan Asset Management.In another sign that the rally is stretched, global share-price gains in the past month have purely come from multiple expansion as earnings forecasts have barely budged since May. Adding to that is the fact the MSCI world measure has been in overbought territory since the start of the month, with the relative strength gauge on the index reaching the highest since January, which is considered a bearish signal by some.Meanwhile, speculative excess has surged to the highest in at least 20 years among U.S. options traders, a negative for stocks over the medium term, according to Sundial Capital Research Inc. And a time-honored strategy of hedging stocks with government bonds has become questionable now that bond yields have plummeted thanks to policy easing across the world.“If everyone is holding stocks just to pass on to the next greater fool, and if the greatest fool is a central bank with infinite liquidity to buy them, then, yes, prices will keep going up,” according to a note from Rabobank on Tuesday.(Adds market performance in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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Baillie Gifford has invested $35 million in Germany-based air-taxi startup Lilium, the Financial Times reported.What Happened The United Kingdom-based private investment firm holds a nearly 4% stake in Lilium as a result of the investment that valued the startup at more than $1 billion, according to the Financial Times.Baillie Gifford is looking for "situations where there is the potential for a really transformative new market or product in the long term, while recognising that these will often take a lot of time to come to fruition," investment manager Michael Pye told the Financial Times.The firm is best-known for being the largest external investor in electric vehicles maker Tesla Inc. (NASDAQ: TSLA) and was also an early investor in Amazon.com Inc. (NASDAQ: AMZN), the Space Exploration Company (or SpaceX), Spotify Technology SA (NYSE: SPOT), and Airbnb Inc.Baillie Gifford, earlier this year, invested in California-based Lilium rival Joby. Pye told the Financial Times that the firm's Lilium funding is higher than what it invested in Joby.Lilium, which is aiming to launch five-seater city-to-city air taxis, has raised $375 million to date, according to the Financial Times.Image Credit: Lilium.See more from Benzinga * IBM Discontinues Facial Recognition Technology, Says It Can't Condone 'Racial Profiling' Or 'Mass Surveillance' * Facebook-Backed Jio Platforms Gets 0M From Abu Dhabi Sovereign Fund As It Looks To Challenge Amazon, Walmart In India * Chinese Online Grocery Seller Dada Welcomes 'Better Auditing And Regulation,' As Company Starts Trading At Nasdaq(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
(Bloomberg) — Occidental Petroleum Corp. is reviewing options for its Middle Eastern assets as it seeks ways to reduce its debt pile, people familiar with the matter said.Houston-based Occidental is considering reducing its stakes in oil and natural gas fields in Oman, according to the people, who asked not to be identified because the information is private. Its holdings in the Gulf sultanate could be valued at more than $1 billion, the people said.The company is also open to divesting other assets in the Middle East, though it isn’t formally soliciting interest, the people said. Outside of Oman, it has a presence in the United Arab Emirates and Qatar.Occidental was saddled with about $40 billion of debt after its purchase of Anadarko Petroleum Corp. last year. It has gone from being a steady, diversified producer to a shale-focused driller that has seen its shares fall more than 40% this year. A slump in energy demand worsened Occidental’s financial situation, forcing it in May to cut a quarterly dividend to the lowest level in decades.Failed DealsThe company has been producing in Oman for more than 30 years, according to Occidental’s website. It has operations at the Safah Field and Block 62 in the north of the country and at the Mukhaizna Field in the south.Occidental has a 40% holding in Abu Dhabi National Oil Co.’s Al Hosn project in the United Arab Emirates and a 24.5% interest in Qatar’s North Field, which both rank among the region’s biggest gas reservoirs. It also owns a stake in Dolphin Energy Ltd., which processes gas from the Qatar project and transports it by pipeline to the UAE.No final decisions have been made, and there’s no certainty the deliberations will lead to a transaction, the people said. A representative for Occidental declined to comment.Occidental shares extended gains in Monday afternoon trading. They were up 17% to $24.40, the highest in more than three months, at the close in New York.The explorer previously tried in 2014 to raise as much as $8 billion by selling a stake in its Middle Eastern business. At the time, it was in talks to sell a 40% interest in the operations to a consortium of government-backed firms from Oman, Abu Dhabi and Qatar. That attempt fell apart amid political turmoil in the region, Bloomberg News reported at the time.More recent divestment plans were derailed when Total SA abandoned a purchase of Occidental assets in Ghana and Algeria.(Updates with closing share price in seventh paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.