2024-07-23 17:23:13
The US is considering export controls
US President Joe Biden’s administration is considering imposing export controls, the so-called foreign direct product rule, which would have a huge impact on companies such as Japan’s Tokyo Electron and Dutch chipmaker ASML, Bloomberg reported last week. This rule allows the US to control products made abroad if they incorporate American technology.
ASML’s growing sales to China accounted for nearly half of the Dutch company’s revenue in the second quarter, and further tightening of US measures could limit China’s access to cutting-edge semiconductor technology. At that time, the increasing export of ASML equipment to China could turn into a more intense diplomatic incident between the US and Dutch governments.
These events directly affected Tokyo Electron, which develops semiconductor manufacturing equipment and more than 40 percent of receives sales revenue in China – the value of the company’s shares fell by 14 percent on the Japanese stock exchange. In turn, the share of US-listed ASML fell by 16 percent last Wednesday.
The shock did not escape American chipmakers either, with Nvidia shares down 6 percent, Broadcom down 7.6 percent, Qualcomm down 9.5 percent and Micron down 13 percent. Only one of the worst performers this year, Intel’s share managed to remain unaffected – its price increased by about 3 percent in two weeks.
Looking at U.S. stock indexes, the Dow rose 2.4 percent over the two-week period on Friday (July 19), the S&P 500 ended the session down 1.2 percent, and the technology Nasdaq Composite dropped by as much as 3.7 percent.
China is throwing forces into high technology
China’s CPI unexpectedly contracted 0.2 percent in June, signaling deflationary risks to the economic recovery, while factory output prices fell 0.8 percent, extending 2022. the beginning of the recession. According to analysts at Swedbank, this reinforces the need for monetary stimulus and could force the People’s (Central) Bank of China (PBOC) to cut its one-year interest rate in September.
China’s exports, in dollar terms, rose 8.6 percent in June compared to the same period a year ago. With imports down 2.3 percent, the country’s trade surplus was the largest in more than three decades.
China’s GDP grew by 4.7 percent compared to the previous quarter. Industrial output prices continued to decline, housing prices also fell, and growth in retail sales and investment in fixed assets slowed. The PBOC kept its key lending rate under the Medium-Term Facility (MLF) at 2.5 percent. level, and the central bank withdrew cash from its system for the fifth month in a row.
Xi Jinping’s economic focus on electric cars, solar power and semiconductors is helping China overcome a real-estate slump and, if Beijing can resist US efforts to slow these initiatives, the country’s high-tech sector will grow by 2026. will make up 19 percent GDP compared to 11 percent In 2018, at least that’s what Bloomberg Economics predicts.
The author of the text is Matas Laukevičius, Financial Products Sales Specialist of Swedbank.
2024-07-23 17:23:13