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Australian prime minister to bring up China, Trans-Pacific trade deal during Trump talks

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China’s rising power and a resurgent Trans-Pacific trade pact will be at the top of the agenda when Australian Prime Minister Malcolm Turnbull and U.S. President Donald Trump meet in Washington this week, an Australian official said on Thursday.

The meeting comes as both leaders seek to repair a relationship damaged last year by a row over asylum seekers, in which Trump lambasted Turnbull over a resettlement arrangement that he labelled a “dumb” deal.

Washington will honour the deal to take up to 1,250 asylum-seekers held in Australian detention centres on remote Pacific islands. So Trump and Turnbull will now seek to find common ground on China and the Trans-Pacific trade pact, which aims to cut barriers in some of the region’s fastest-growing economies.

“The prime minister is travelling with a large delegation of business leaders and he is very keen to talk trade opportunities, while China will obviously be an important element of the talks,” said the Australian government official, who declined to be identified because he is not authorised to talk to the media.

Trump threw the original 12-member Trans-Pacific Partnership into limbo last year when he withdrew the United States to concentrate on protecting U.S. jobs.

Turnbull is still keen to promote the pact, the official said, even though it is likely to receive a lukewarm reception from Trump.

The remaining 11 members published an amended agreement on Wednesday that suspends or changes more than 20 provisions from the original pact, many of which had been inserted into the “TPP 12” at the insistence of U.S. negotiators. The revised deal is expected to be signed on March 8.

As an incentive, Turnbull will also propose spending an unspecified amount of Australia’s pension pool to fund Trump’s $1.5 trillion infrastructure plan, the official said.

The White House wants to use $200 billion in federal funding to try to encourage infrastructure improvements over 10 years, by relying on state and local governments as well as the private sector.

Turnbull and executives from several Australian pension funds will address a meeting of U.S. governors on Saturday.

“Infrastructure in a growing and secure economy like the United States is often attractive for those funds,” said Andrew Shearer, senior adviser on Asia Pacific Security at the Center for Strategic and International Studies in Washington.

Regional security is also set to dominate talks, with a particular focus on China, the Australian official said.

Trump, a harsh critic of China’s trade policies, named U.S. Pacific Commander Admiral Harry Harris, known for his hawkish views on Beijing’s military expansion, earlier this month as the next U.S. ambassador to Australia.

Australia’s approach to China, easily its largest trading partner, has typically been more circumspect.

However, Sino-Australia relations soured in December when Turnbull said his government would introduce new laws to clamp down on improper interference by Beijing in Australian politics.

China denies the claim, and lodged an official complaint against the allegation.

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China to boost R&D spending in push for tech breakthroughs

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Integrated circuits on a circuit board.

filonmar | E+ | Getty Images

Li said China’s research and development spending will increase by more than 7% per year between 2021 and 2025. R&D will account for a higher percentage of gross domestic product (GDP) than in the previous 5 years. He did not give details on how much the government would spend in absolute terms.

China’s spending on R&D climbed 10.3% to 2.44 trillion Chinese yuan ($378 billion) and accounted for 2.4% of GDP in 2020, according to official statistics.

Meanwhile, central government expenditures on basic research will increase by 10.6%, Li said.

The Two Sessions this year marks the start of China’s 14th five-year development plan which lays out priorities and goals over the coming years. The current plan runs from 2021 to 2025.

In the past, the annual gathering of delegates has overseen major changes including President Xi Jinping‘s abolition of term limits in 2018.

In his report, Li laid out China’s vision for the next five years.

“To improve China’s innovation system, we will work faster to enhance our strategic scientific and technological capability underpinned by the development of national laboratories, strive to make major breakthroughs in core technologies in key fields, and formulate and implement a ten-year action plan for basic research,” he said.

China is going to focus on developing a number of technology areas including semiconductors, health care, quantum computing and cloud computing, according to a draft of its five-year plan.

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China proposes changes to Hong Kong’s electoral system

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The flag of Hong Kong flies from a ferry boat on July 2, 1997, a day after the former British colony returned to Chinese rule.

Romeo Gacad | AFP | Getty Images

Beijing on Friday proposed changes to “improve” Hong Kong’s electoral system as Chinese Premier Li Keqiang said China will “resolutely guard against and deter external forces’ interference” in the city.

The announcement was made at the start of China’s annual “Two Sessions” parliamentary meeting.

The Chinese government had earlier hinted at potential changes to Hong Kong’s electoral system, which critics said could hold back the city’s pro-democracy politicians.

Last week, Xia Baolong, director of the Hong Kong and Macao Affairs Office of China’s State Council, said in a Mandarin-language statement translated by CNBC that “legal loopholes” in Hong Kong’s electoral system should be closed so that the city is governed only by “patriots.”

Hong Kong is a former British colony that returned to Chinese rule in 1997. The city is governed under a “one country, two systems” principle that gives it greater autonomy than other mainland Chinese cities, including limited election rights.

Beijing has been criticized internationally — by countries including the U.S. and the U.K. — for undermining Hong Kong’s autonomy that was promised under the “one country, two systems” framework.

Last year, Beijing bypassed Hong Kong’s legislation to enact a controversial national security law. The move followed months of pro-democracy protests in the city that sometimes turned violent.

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‘Buzz’ ETF tracking social media talk launches amid Reddit manias in stocks

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The logos of Google, Facebook, Instagram, Twitter, Snapchat and TikTok displayed on a computer screen.

Denis Charlet | AFP via Getty Images

Is it time for an ETF that measures hype?

Measuring the buzz around stocks mentioned in social media is all the rage. Now, there’s an exchange-traded fund for that.

The Van Eck Vectors Social Sentiment ETF (BUZZ) selects 75 stocks with the most bullish social media sentiment and packages them into an ETF.  

This is essentially a momentum index, but instead of tracking stocks that are moving on price, BUZZ tracks stocks that are getting a lot of social media hype.

The ETF is based on the Buzz NextGen AI U.S. Sentiment Leaders Index. What goes in the index is based on an initial list of stocks that meet two criteria: those with a $5 billion minimum market capitalization and getting consistent and diverse mentions on social media over the past year. The 250-350 stocks that meet that initial criteria are ranked each month from highest sentiment to lowest, with the top 75 going in the index.

Not a Reddit meme stock ETF

If you’re looking for something that captures Reddit sentiment around small stocks like GameStop, you might be disappointed.

“This is not a Reddit meme stock ETF,” said Jamie Wise, CEO of Buzz Holdings and the originator of the index. “This is about the broader conversation around stocks mentioned on social media platforms. We are using broad social media sources, principally Twitter and StockTwits.” Wise said it also uses Yahoo Finance, Benzinga and Reddit.

How to determine “social media buzz?” Wise says the index uses natural language algorithms that examines whether the comment is positive, negative or neutral, then ranks each stock based on the degree of positive sentiment and breadth of discussion. That’s key to understanding the index: stocks are weighted by sentiment, not market capitalization, and no one stock can exceed 3% of the index. It is rebalanced every month. 

“We are aggregating the collective sentiment of the community” that comments on stocks on social media, Wise said.

Initially, the largest holdings include Twitter, DraftKings, Ford, American Airlines, and Facebook. Tesla is number 10. The $5 billion minimum market cap criteria would exclude Reddit names like Gamestop, Express or AMC Entertainment from the mix.

Wise says the stocks in the index are proof they are not chasing the latest Reddit craze. “These are not the kind of stocks that are being promoted by celebrities,” Wise said. “These are everyday stocks being promoted by people with a wide variety of viewpoints, and is not focused on a narrow group of Reddit names.”

Is social media popularity a good way to pick stocks?

Measuring stocks by price momentum has been around a long time, and many ETFs already do that. The largest, iShares Momentum ETF (MTUM), selects stocks based on price appreciation over six- and 12-month periods and low volatility over the past three years.

Measuring momentum based on social media hype has not been around that long. The index BUZZ is built on has been live only since December 2015.

Wise says the index has outperformed the S&P 500 in four of the last five calendar years.

BUZZ vs. Momentum (since inception: 12/18/15)

  • BUZZ index:                    up 215%
  • Momentum ETF (MTUM) up 119%
  • S&P 500:                        up 113%

 Source: Buzz Holdings

Much of that outperformance came in 2020. Wise says that is not an accident because social media has exploded in the last year and a half, corresponding with that outperformance.

“This shows that sentiment momentum has outperformed price momentum and market cap momentum” in the last five years, Wise said.

Can stocks be manipulated on social media?

Chat rooms are full of investors with many different motives, including some likely trying to manipulate stocks. 

Wise says the index’s focus on stocks with a market capitalization of more than $5 billion helps reduce the chances that stocks in the index could be manipulated. “The market cap size and volume of discussions taking place around these companies makes them difficult targets for manipulation by any bad actors,” a FAQ sheet provided by Van Eck states.

Portnoy buys in

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