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Tuesday, 17 August 2021

China’s tech regulatory crackdown is driving investors towards semiconductors

2022 may see shipping bottlenecks as a terminal at the world’s third-busiest container port in China remains shut for a sixth consecutive day, marking an incoming shortage in overseas shipping, the Financial Times reports. The Chinese port was shut due to a covid-19 outbreak, leading to a 20% reduction in its capacity. Global logistics, trade, and economic growth have been affected, with 4.6% of the global fleet currently idle.

Shipping prices have already been surging due to shortages ahead of the peak shopping season. Shipping costs have risen tenfold from their pre-pandemic levels, increasing by 50% last month alone. Shipping disruptions have grown during 2H2020, but were hit severely this year due to Suez Canal blockage in March, with some 12% of the world’s trade volume affected, including 30% of the world’s container ship capacity.

US Federal Reserve officials are lobbying for an end to their asset-purchase program by mid-2022 under plans to phase out easy monetary policy in about three months should the US economy continue recovering, the Wall Street Journal reports. Fed officials think tapering bond buying sooner could provide more flexibility to raise interest rates from the current near-zero, especially if inflation stays high and unemployment keeps dropping to pre-pandemic levels. The central bank had last year said the pace of bond purchases would be revised downward when officials conclude achieving “substantial further progress” toward their 2% target average inflation. “These purchases are very well designed to stimulate demand, but we don’t have a demand problem,” Dallas Fed President Robert Kaplan said, arguing that the bond program may be nearing a point of diminishing returns.

Investors are turning to Chinese semiconductors as a safe-harbor from China’s regulatory crackdown on tech, which has hammered shares in global ecommerce and tech industries, the Financial Times reports. The value of venture capital investment into Chinese chip companies in the second quarter of the year saw a 446% q-o-q surge to a record USD 8.9 bn, buoyed by a multi bn-USD government plan for a tech revolution. “When President Xi talks about the importance of technology, he has expressly elevated the manufacturing industry over digital goods,” one analyst says. On the other hand, investments in Chinese fintech companies fell 36% q-o-y to USD 360 mn in 2Q2021, compared to the preceding year.

Up

EGX30

11,046.15

+0.15% (YTD: +1.9%)

Up

USD (CBE)

Buy 15.65

Sell 15.75

None

USD at CIB

Buy 15.65

Sell 15.75

None

Interest rates CBE

8.25% deposit

9.25% lending

Down

Tadawul

11,321.85

-0.26% (YTD: +30.29%)

Up

ADX

7,662.86

+0.81% (YTD: +51.88%)

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DFM

2,824.97

+0.32% (YTD: +13.36%)

Up

S&P 500

4,479.71

+0.26% (YTD: +19.27%)

Down

FTSE 100

7,153.98

-0.90% (YTD: +10.73%)

Down

Brent crude

USD 69.51

-1.53%

Up

Natural gas (Nymex)

USD 3.95

+0.03%

Down

Gold

USD 1,788.70

-0.06%

Down

BTC

USD 46,112.86

-1.69% (as of midnight)

THE CLOSING BELL-

The EGX30 rose 0.1% at yesterday’s close on turnover of EGP 2 bn (33.2% above the 90-day average). Local investors were net sellers. The index is up 1.9% YTD.

In the green: Egyptian Resorts Company (+5.7%), Credit Agricole (+2.8%), and Orascom Development (+2.0%).

In the red: CIRA (-2.6%), GB Auto (-2.2%), and AMOC (-2.1%).

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