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Car finance market up slightly in August despite drop in demand

Car finance market up slightly in August despite drop in demand

The consumer new car finance deals agreed in August were worth more than £1bn,

The UK consumer car finance market grew slightly in August despite a decline in the overall new car market, according to new figures. Data from the Finance and Leasing Association (FLA) showed a small increase in the number of cars acquired by private customers using finance deals.

Over the course of the month, private consumers agreed finance deals on almost 178,000 cars, up one percent on the same month in 2019. In total, FLA members dished out more than £2.7 billion in advances – an increase of eight percent on August last year.

The lion’s share of the growth was found in the used car market, where private customers acquired some 128,126 cars on finance last month. That’s a two-percent increase on the same period in 2019, but the value of those deals shot up by a massive 10 percent. As a result, the total value of advances came to £1.67 billion.

More on the car finance market:

The new car market saw more modest results, with the number of cars acquired on finance fell by one percent to just over 49,500. That is, perhaps, no surprise given figures from the Society of Motor Manufacturers and Traders (SMMT) showed a drop in new car sales of almost six percent during August.

More surprising, though, is that the value of advances still rose by five percent to hit £1.04 billion, despite the doom and gloom surrounding the market. But figures also show finance deals have accounted for around 93.5 percent of new car sales in the past 12 months.

New cars in car dealership showroom

But with the impact of coronavirus, the lockdown and the current economic uncertainty shrouding the country and the car industry, the

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Worried About a U.S. Stock Market Drop? Buy Alibaba Options.

Worried About a U.S. Stock Market Drop? Buy Alibaba Options.

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The Alibaba building in Beijing.


Gilles Sabrie/Bloomberg

China might be the best hedge for U.S. stocks.

Key Chinese indexes and stocks are outperforming their U.S. counterparts, and investor sentiment suggests that Asia might even emerge as an economic haven, as America and Europe are still struggling with the Covid-19 pandemic.

The

Xtrackers Harvest CSI 300 China A-Shares

exchange-traded fund (ticker: ASHR), a proxy for mainland China’s stocks, is up 18% this year, compared with 6% for the

S&P 500 index.

Shares of

Alibaba Group Holding

(BABA), one of China’s most important companies, are up 36% this year. Alibaba, given its broad scope, might just help investors insulate their portfolios at a time of unusual duress in U.S. history—acting in the role once occupied by fixed income when it was an effective offset to equity weakness.

When President Donald Trump surprisingly ended stimulus negotiations with a Tuesday tweet, U.S. stocks sank. Many Chinese stocks, notably Alibaba, held up.

Hedging U.S. portfolios with Chinese stocks, particularly Alibaba, might seem outlandish, but Susquehanna Investment Group, a top options-trading firm that seeks out noncorrelated U.S. equity investments, has significant China exposure. The secretive trading company owns a huge piece of ByteDance, the parent company of TikTok, that could be worth more than $15 billion. The investment would probably dwarf anything the firm’s partners have ever realized in a long history of extraordinary success.

Alibaba will never protect a portfolio the way traditional hedges, such as S&P 500 options, do, but Alibaba’s options premiums and stock price aren’t as distorted ahead of the bizarre U.S. presidential election. Trading volumes on the

Cboe Volatility Index,

or VIX, are stunningly anemic during the oddest trading year since the 2008-09 financial crisis, suggesting that investors have little faith that VIX derivatives will work as expected.

But

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U.S. Consumer Sentiment Strong Despite Drop in Financial Comfort

U.S. Consumer Sentiment Strong Despite Drop in Financial Comfort

(Bloomberg) — A weekly measure of U.S. consumer confidence remained close to the highest level since early April despite a retreat in sentiment about personal finances.



a person walking a dog on a leash in front of a store: A customer waits to enter The RealReal Inc. store on Madison Avenue in New York, U.S., on Saturday, Sept. 26, 2020. The pandemic has battered New York City businesses, with almost 6,000 closures, a jump of about 40% in bankruptcy filings across the region and shuttered storefronts in the business districts of all five boroughs.


© Bloomberg
A customer waits to enter The RealReal Inc. store on Madison Avenue in New York, U.S., on Saturday, Sept. 26, 2020. The pandemic has battered New York City businesses, with almost 6,000 closures, a jump of about 40% in bankruptcy filings across the region and shuttered storefronts in the business districts of all five boroughs.

The Bloomberg Consumer Comfort Index declined 0.5 point to 49.3 in the week ended Sept. 27, data released Thursday showed, the first decrease since mid-August. The measure remains well below the pre-pandemic level.

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A gauge of comfort in personal finances decreased 2.1 points, the largest decline since early May, as the stock-market selloff drove the S&P 500 to close lower for the fourth consecutive week. The subindex of the economy rose slightly to a fresh five-month high, while a measure of the buying climate was little changed.

The sentiment gap between the low- and high-income workers narrowed as the comfort among Americans with annual household incomes more than $100,000 dropped 2.8 points to 63.3. The partisan divide widened to a two-year high as sentiment among Republicans rose, while falling for Democrats.

The data echoed the Conference Board’s monthly confidence measure published Tuesday, which soared to a six-month high in September despite a reduction in unemployment benefits and worries about an increase in Covid-19 cases this fall.

For more articles like this, please visit us at bloomberg.com

©2020 Bloomberg L.P.

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