What’s Going On Here?

Salesforce is making the most of its unlimited power: the software empire reported a better-than-expected quarter late on Tuesday, and its shares initially rose 15% on Wednesday.

What Does This Mean?

Take that, analysts’ forecasts: Salesforce announced its profit was much higher than the same time last year, and revenue was up by a better-than-expected 29%. More importantly, the company’s billings – which reflect future sales not yet paid for – were up 34% (tweet this). That’s more than twice the growth analysts had forecast, and bodes well for its upcoming earnings.

Speaking of which, Salesforce is expecting this quarter’s revenue to be 5% higher than analysts predicted. And while it admitted its quarterly profit might come in a bit lower, the company reckons it’ll make up for it by earning more for the rest of the year – in both revenue and profit – than analysts think.

Why Should I Care?

For markets: Right as rain.
Last quarter proved to be a perfect storm for Salesforce, and the company was wearing the right booties for the weather. For one thing, the pandemic drove its enterprise customers to upgrade their business-critical tech systems, leading to more new business and less customer turnover than expected. Mix in favorable currency fluctuations that boosted the company’s bottom line, and you start to see why investors were so keen to buy Salesforce shares on Wednesday. In fact, they were probably all the keener because of its better-than-expected earnings forecast – something fellow investor darling Apple opted not to make.

The bigger picture: Cloud and proud.
Another American tech company, Hewlett Packard Enterprise, reported its own stronger-than-expected quarterly update late on Tuesday, coupled with a positive forecast for this year’s earnings. Like Salesforce, Hewlett benefited from the cloud computing boom: it’s been helping customers with analytics, secure connectivity, and remote work capabilities. That’s one more company to thank for all those Zoom socials, then.

3/3

Tug Of ‘Pore

What’s Going On Here?

There’s a lot of heated back and forth between investment analysts about whether Singaporean stocks – which have fallen about 20% this year – are now worth buying into.

What Does This Mean?

UBS Global Wealth Management is all for buying into Singapore, and says this year’s selloff has left the country’s shares undervalued. Banks in particular – which represent a significant chunk of Singapore’s stock market – look cheap, especially when you compare their share prices to the value of their assets (i.e. their “price-to-book value”). That, UBS reckons, is reason enough to start buying Singaporean. And it isn’t alone: investment bank Morgan Stanley mentioned back in June that investors should expect the country’s stocks to rise as much as 14% in the following 12 months.

Goldman Sachs disagrees: it figures banks will struggle to turn a profit while interest rates are so low globally, which means any “cheapness” is probably justified. Instead, the firm is backing countries with an emphasis on tech and “digital economy” stocks, like China and South Korea.

Why Should I Care?

For markets: Speak Singlish, please.
UBS might’ve been inspired by Malaysia: it’s been one of Southeast Asia’s best-performing stock markets this year, partly thanks to the government support that gave retail investors extra cash to use. Seeing as Singaporeans are on average six times wealthier than Malaysians, UBS might be hoping the country’s investors follow a similar path. And if economic uncertainty elsewhere in Asia encourages global investors to move money into “safe haven” Singapore, all the better…

The bigger picture: Break in case of emerging-cy.
While emerging markets like Singapore are risky, investment manager Invesco thinks they’re an attractive investment. That’s partly because the falling value of the US dollar tends to boost economic growth in the regions – their goods and government bonds are typically priced in dollars, after all – and partly because investors who are fed up with low interest rates will be looking for returns outside the States.

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