What is Stock Market Industry Beta

Stock Market Industry Beta is the measure of how a stock’s trading price moves compared to the market as a whole. Knowing this figure one can understand how volatile a stock is. A beta of 1 means a stock’s price fluctuates exactly as much as the market. A beta less than 1 means a stock is less volatile than the market and a beta greater than 1 means that stock is more volatile than the market.

Betas can be determined for entire industries also. The “industry beta” would compare the volatility of the industry relative to the whole market. For example, technology stocks tend to be more volatile than the industry so the beta would be more than 1, generally.

To calculate industry beta you need some historical data of the price of the industry stock and historical price data of the entire market. For example if you were going to calculate beta over the last year for compare technology stocks versus the S&P 500, you would first gather the historical data you need. Next, determine the movements of the two prices after each trading day. This will give a percentage change versus the previous day. Once we have 365 of these we can average the group to determine the average move each made over the last year. We can call the average industry movement Ri and the average market movement Rm. Finally, divide the technology industry’s average movement by the S&P’s average movement and we will have an outcome that is less than 1 (less volatile), 1 (equally volatile), or greater than 1 (more volatile). Harbourfront technologies gave out this function looks like this:

Β = Ri / Rm or B = Covariance(Ri , Rm)/ Variance(Rm)

Beta can be useful in stock research when judging how risky a stock is versus a stable investment with a guaranteed rate of return. It must be noted that the longer period of time the beta is acquired the more accurate that beta will be. Also, betas are more valuable when used with stocks that have a long record of high volume trading. Smaller stocks that don’t trade a lot can fluctuate wildly on a busy day and throw the beta out of whack for the period being measured.

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Oil extends relief rally, lifted by weaker dollar

Oil rose by more than $1 a barrel on Tuesday, boosted by a weaker dollar, but gains were capped as anxieties about excess supplies continued to swirl.

Brent crude, the global benchmark, increased $1.11 a barrel to $46.95 while US marker West Texas Intermediate was up by 96 cents a barrel to $44.35 a barrel.

Oil was supported by a falling US dollar. Commodities such as crude which are priced in dollars become cheaper for holders of other currencies.

Crude prices have spent most of June sliding lower as traders questioned the effectiveness of Opec-led cuts in reducing global stockpiles in the face of rising production from the US.

Oversupply jitters continue to cast a shadow over the oil market and though selling pressures have taken a breather, bullish catalysts remain in short supply and the near-term risks are still stacked to the downside, said Stephen Brennock at London-based broker PVM.

The light at the end of the tunnel for beleaguered bulls is still pretty dim.

Hedge funds have slashed their bullish bets in Brent. Short positions a volatility futures key indicator of bearish sentiment jumped to the highest level on record to the equivalent of almost 169m barrels of crude last week.

https://www.ft.com/content/15a6b781-da0c-30d4-8a15-306ac558673a

Traders betting against restaurants are getting clobbered (CMG, SBUX, MCD, DRI, CBRL, DPZ, YUM, DNKN, CAKE, SHAK)

Shake ShackMarina Nazario/Business Insider

It was forecastto be a tough year for chain restaurants.

Cheaper groceries and more expensive food at restaurants slowed restaurant sales in 2016. Restaurants were also faced with rising pressure to raise their workers’ wages.

But traders who bet against some of the industry’s big names are mostly counting losses.

“The entire restaurant sector has not been kind to short sellers this year with only one stock in the top ten, The Cheesecake Factory, profitable in 2017,” said Ihor Dusaniwsky, the head of research at the financial-analytics firm S3, in a note on Thursday.

This year, investors placed the most bearish bets on Chipotle, the fast-casual restaurant chain that saw an exodus of customers after E-coli outbreaks in 14 states were linked to its food in late-2015.

Betting against Chipotle in 2016 was a winning move: short sellers earned $355 million, or were up 20%, on their bet.

This year, they have lost 71.4% on a mark-to-market basis, S3 said.

The stock’s 7% drop this week, however, provided some reprieve, as short sellers made back $157 million of their total $404 million losses before the slide.Chipotle said on Monday June 19 thatit expected to spend more on marketing in the second quarter than the first.

Year-to-date, Chipotle’sshares have gained 11%, a performance that’s not dissimilar to other restaurant chains that Wall Street is betting against. Starbucks, with almost $1.6 billion in short interest ranking second is up 7%, while McDonald’s has soared 27%.

The table below shows the most shorted restaurant stocks, and the losses that short sellers have incurred year-to-date:

Screen Shot 2017 06 22 at 1.46.18 PM S3 Partners

And the chart below shows that most of the most shorted restaurant stocks have traded the other way:

dfa Google Finance

http://www.businessinsider.com/restaurant-stocks-short-sellers-losing-money-2017-2017-6

Chinese bankers flock to Hong Kong as expats retreat

A flood of Chinese bankers is changing the social fabric of Hong Kong, as they rapidly expand their footprint in one of the world’s premier financial centres, even as Beijing struggles to tame the former British colony politically.

Twenty years after Hong Kong’s handover to Chinese rule, scores of mainland professionals are filling the elite financial ranks of Hong Kong, while a series of lay-offs at Western banks has led to an exodus of expatriates.

The largest increase in mainland staff over the past decade has come in investment banks, with 80 percent seeing an increase of at least 20 percent, according to a 2015 Financial Services Development Council survey.

“It has a much better environment than Beijing where I used to work,” said Hong Hao, a managing director at BOCOM International, who has lived in Hong Kong for five years. “The food is good, and the tax rate is also good.”

Tax rates in Hong Kong are around 15-17 percent, while they can be as much as 45 percent in mainland China.

Chinese initial public offerings (IPO) dominate the Hong Kong market, the world’s largest IPO market in 2016 when mainland offerings represented 80 percent of all new listings, according to Thomson Reuters data.

Hong Kong’s financial services industry accounts for 18 percent of the territory’s economy, compared with just 10.4 percent in 1997 when the city returned to Chinese rule.

Expat customers fall

Evan Zhang, a 26-year-old from Guangdong province, is one of those new kids on the block in Hong Kong. For Zhang, one of the younger hires at CITIC Securities International, the increasing outward flow of Chinese capital in recent years is an opportunity.

“With Chinese people more willing now to allocate assets overseas, and overseas investors willing to invest in China, I can play a go-between role to help them,” he said.

As top banks such as Goldman Sachs , UBS, and Bank of America trim their Asia headcount, businesses across Hong Kong have taken a direct hit.

Bo Innovation, a Michelin-star restaurant, said its Western expat customers fell roughly 10 percent in the last 10 years, according to owner and executive chef Alvin Leung. Mainland clients increased by about the same percentage, he added.

Western companies are also increasingly turning to more affordable locations such as Quarry Bay, at a time when Chinese companies are boosting their presence in the prime Central district, according to Tom Gaffney, a managing director at real estate services firm CBRE.

The value of a typical expat package for middle managers in Hong Kong, has fallen by two percent in U.S. dollar terms over the past five years, while the value of their benefits has fallen five percent over the same period, according to consultancy firm ECA International.

“I have seen an enormous change in the expat landscape and packages offered,” said Christine Davis, a manager at international relocation firm The Santa Fe Group who was an expat in Hong Kong in 1999-2001 and again since 2011.

Everything was paid for by hosting companies in the past, she said, but now expat terms had been reduced “drastically”.

Hong Kong dropped two places to 13th in the world in HSBC’s 2016 Expat Explorer Survey, which measures various aspects of expat life.

Easier to recruit

The new expat environment is making its easier to recruit talent. Several Chinese brokerages, asset management firms, and a Big Four Chinese bank told Reuters in recent months they intend to https://harbourfronttechnologies.tumblr.com/post/161074723729/low-volatility-and-the-danger-of-increased expand and hire more people in Hong Kong.

“When I first joined the company 14 years ago, we could barely recruit the right people as we couldn’t offer a good salary,” said Chen Shuang, chief executive of China Everbright Ltd, the Hong Kong investment arm of state-owned China Everbright Group.

“But now, it’s much easier to recruit top talent, even those from large Wall Street banks, which was unimaginable in the past.”

Some senior Chinese bankers, such as managing directors and department heads, now earn more than their Western counterparts, which offer compensation of about $1 million a year, including base salary and cash bonus, according to executive recruiter Bernard Yeo of Bo Le Associates.

On the flip side, junior Chinese bankers are typically paid 20 to 30 percent less than their foreign counterparts and enjoy a less generous package that excludes housing, school fees, and club memberships enjoyed by many Western expats, Yeo said.

The changing demographics of the financial industry is reflected in the local economy.

Restaurants featuring provincial mainland Chinese cuisine, like Old Beijing restaurant and San Xilou, which offers spicy Sichuanese fare, are doing well, restaurant managers say. So are serviced apartment companies, English learning programs, and Audis, a popular car brand among Chinese.

In contrast, Trattoria Doppio Zero, a popular Italian restaurant in the central business district, has seen over a 10-percent drop in its customers the last three years, said manager Jeffrey Ko.

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http://www.cnbc.com/2017/06/18/chinese-bankers-flock-to-hong-kong-as-expats-retreat.html