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View detailsEconomist: The Fed has not tamed inflation.
This article was written by PeterMorici, emeritus professor of business at the University of Maryland. The Fed should be cautious about inflation. In September, the year-on-year growth rate of the consumer price index (CPI) in the United States dropped to 2.4%, but core inflation excluding food and energy remained as high as 3.3%. Prices of necessities such as health care, cars and homeowner's insurance continue to rise rapidly. The fall in oil prices has slowed down overall inflation, but it is easy to reverse. In September, non-energy goods in the United States only reduced CPI by 0.2%, while non-energy services, which accounted for 61.3% of CPI, increased by 4.7%-including housing costs by 4.9% and other non-energy services by 4.3%. There are four points worth mentioning: First, rising prices have a lasting impact on consumers' psychology. According to the survey of the new york Federal Reserve, the World Federation of Large Enterprises and the University of Michigan, the average annual inflation rate in the United States is expected to be higher than 3%, which is consistent with the core inflation and higher than the Fed's target of 2%. It is expected to affect the positions of trade unions and individual workers in wage negotiations and business planning. For example, Boeing workers demanded that the company raise wages. Second, federal policymakers should admit their mistakes, otherwise they may repeat them and won't be praised for their success. For example, the Trump and Biden administrations spent a total of $4.5 trillion on aid during the COVID-19 epidemic, and the Federal Reserve also bought bonds and other securities with similar amounts, which greatly expanded the money supply in the United States. These measures boosted consumer demand and pushed the overall inflation to 9.1% in June 2022. Relief measures during the epidemic were too generous, and when the blockade was lifted, workers returned to work slowly, prolonging the upward pressure on wages and prices. Instead of acknowledging the cost overruns, Biden's administration further pushed up the federal deficit through the Chip and Science Act and the Inflation Reduction Act. This year, the federal budget gap accounts for 7% of GDP, compared with 4.6% before COVID-19. As enterprises increase their investment in artificial intelligence, additional private investment and federal debt will compete for new savings in financial markets. Either the Fed allows interest rates to be much higher than before the epidemic, or we will face more inflation. Harris, the US vice president and Democratic presidential candidate, blamed part of the inflation on the landlord's use of algorithms to set rents and the price manipulation of supermarket chains. However, many economists have found that the profit rate of supermarkets has not increased, and it has nothing to do with the recent increase in food prices. The new york Federal Reserve found that grocery prices are mainly driven by rising wages and fluctuating commodity prices. Supporting the prohibition of algorithmic pricing and accusing enterprises may score higher among progressive voters, but it limits Harris's appeal among moderate and swing voters. Algorithm pricing is very common-think of airlines and Amtrak. Prohibiting this practice may lead to the inefficiency of fare adjustment for rationing shortage during peak demand, and the discount will be reduced when the seats are sufficient, thus limiting the opportunities for low-income passengers. Today, the GDP of the United States has returned to the predicted trend before the epidemic, and the economy continues to increase employment strongly. In political swing states, the unemployment rate is generally lower than the pre-epidemic level. However, Biden's administration did not perform well in dealing with the economy, and Harris also encountered difficulties in the competition between the swing state and Republican presidential candidate Trump. Third, economics inevitably succumbed to the political agenda. An industry has sprung up to discredit "neo-liberal economics" and give new credibility to monetary theory, that is, large-scale deficits financed by printing money can support generous social projects. The Brookings Institution's research attempts to blame the high inflation in the United States on the shortage of supply chains, "especially the increase in corporate profit margins"-rather than excessive epidemic relief policies. When the supply is limited, the profit rate will rise. But now many companies that produce non-essential goods, such as IKEA and Nike, are under pressure to cut prices. In order to avoid the long-term trade-off between high interest rates and inflation, the federal government must either cut welfare programs that account for more than 60% of its expenditure or levy taxes similar to those in Europe. Fourth, economic growth under moderate inflation is beneficial to the stock market. The 25 years before the global financial crisis was a period of rising CPI inflation, with an average CPI of 3.1%. During this period, the S&P 500 index rose by an average of 13.7% every year. In the past two years, inflation has averaged 3.1%, while the share price has increased by more than 20% every year. Stock returns may slow down in the future, but economic growth and profits are crucial to keep stock prices rising.
2024-10-30 -
View detailsHKEx pushes virtual assets index next month.
The Hong Kong Stock Exchange (00388) announced yesterday that it will launch the Hong Kong Stock Exchange Virtual Assets Index series on November 15th, providing a transparent and reliable reference price for virtual assets such as Bitcoin and Ethereum, solving the price difference among global exchanges and supporting Hong Kong to develop into a leading virtual asset center in Asia. Chen Yiting: Providing Transparent and Reliable Benchmarks Chen Yiting, Chief Executive Officer of HKEx, said that the series of virtual asset indexes will meet the demand of this rapidly emerging asset class in the region. By providing transparent and reliable real-time benchmarks, we hope to help investors make wise investment decisions, thus supporting the healthy development of the virtual asset ecosystem and consolidating Hong Kong's position as an international financial center. The reference index will be based on the benchmark spot price weighted by the 24-hour trading volume of Bitcoin or Ethereum, calculated according to the aggregate market price of several major virtual asset exchanges, and immediately denominated in US dollars. The reference exchange rate is designed for the settlement of financial products and is calculated at 4 pm Hong Kong time every day. In addition, this index series will be the first virtual asset index series developed in Hong Kong that conforms to the European Union Benchmark Regulation (BMR). It will be jointly managed and calculated by a benchmark management institution registered in the UK and CCData, a provider of virtual asset information and index. It is understood that at present, the United States, Japan, South Korea and Singapore have launched indices related to virtual assets, such as the Bloomberg Galaxy Crypto Index (BGCI), CryptoCompare Indices and S&P cryptocurrency index series in the United States, which track the performance of various cryptocurrencies respectively, including Bitcoin and Ethereum.
2024-10-29 -
View detailsMorgan Stanley: The order of policy changes after the US election is very important to the market.
With only about a week left before the US election, the market has already priced Trump to win the election, and the focus has turned to the order of possible policy changes after the election. Morgan Stanley believes that this is very important to the market. Recently, Vishwanath Tirupattur, an analyst at Morgan Stanley, said in a report that under the situation of Trump's victory, possible policy changes can be classified into three categories, namely fiscal policy, immigration control and tariffs, among which tariffs may be introduced first, and then immigration policy. Fiscal policy may be implemented finally because legislation is time-consuming. Morgan Stanley pointed out that major fiscal policy changes need to control the two houses of Congress. Even if the Republican Party wins a total victory, legislation will take time, so it may be finally implemented in three categories. Due to the lack of implementation details of the immigration policy, the timing is not clear. On the other hand, in view of the US President's extensive discretion in trade policy, Trump's intentions expressed in his campaign information and the precedent of his first term, Morgan Stanley believes that tariff changes may occur first. In terms of economic impact, the Morgan Stanley analysis team predicts that extensive tariffs will pose a downward risk to growth through the decline in consumption, investment expenditure, wages and labor income, and an upward risk to inflation. Morgan Stanley predicts that if the United States implements all the tariffs currently under discussion, it may drag down the real GDP growth of the United States by 1.4% and push up inflation by 0.9%. In other words, in the context of Trump's victory, the impact on the economy is negative, but US stocks have still risen recently. Morgan Stanley explained that the market may expect that all the proposed tariffs will be implemented in stages in a long period of time, and some may be introduced later. In addition, the market may pay more attention to the recovery of "animal spirit" driven by regulatory relaxation expectations. In the bond market, the result of the "Republican Party's total victory" is the most negative for US Treasury bonds. Back in the 2016 election, the yield of 2-year treasury bonds rose by 50 basis points within one month after the Republican Party's total victory, and the yield of 10-year treasury bonds increased by 80 basis points. However, Matt Hornbach, head of macro strategy of Morgan Stanley, pointed out that the Fed's monetary policy is significantly different from that before the 2016 general election, which indicates that any increase in yield will be more limited. Unlike the current market's expected interest rate cut of about 135 basis points in the next 12 months, the market was pricing a rate hike of about 30 basis points. Finally, Morgan Stanley also reminded the market that the election is a known unknown. Based on the polls, the game is still very close, and various combinations of presidential and congressional results are possible. In view of the recent market trends and their pricing expectations, if Harris wins, the market will have to rectify: So, fasten your seat belt and hold on tight. We may have a crazy journey. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.
2024-10-28 -
View detailsWen Yuan Zhixing plans to go to the US IPO to raise more than 900 million yuan.
According to the document submitted by Wen Yuan Zhixing to the US Securities and Exchange Commission on October 21st, Wen Yuan Zhixing will sell 6.45 million shares of american depository receipts (ADS), with a share price ranging from US$ 15.5 (about HK$ 120) to US$ 18.50 (about HK$ 143). In August this year, it was reported that Wen Yuan Zhixing had postponed its IPO listing plan in the United States. Wen Yuan Zhixing said in a statement: "It takes longer than expected to update the transaction documents at present, and the company is working hard to complete the documents needed to promote the transaction. 」 In addition, Pony.AI, another mainland self-driving head company, recently formally submitted an IPO prospectus to the US Securities and Exchange Commission, and plans to land on Nasdaq.
2024-10-25 -
View details"A Brother of Medicine" Hengrui went public in Hong Kong for the second time? The "A+H" craze has indeed hit.
In this regard, Hengrui Pharma responded to Tradewind (ID:TradeWind01) and said "no comment". In the first half of 2024, the revenue of innovative drugs in Hengrui Pharma has reached 6.612 billion yuan, accounting for 48.61% of the revenue. At the same time, Hengrui Pharma continues to seek overseas cooperation to promote innovative drugs to the sea. In this context, listing in Hong Kong can not only enhance financial strength, but also enhance international visibility. On May 13th, Reuters's IFR reported that Bailey Tianheng (688506.SH) would go public in Hong Kong. With the accelerated pace of domestic pharmaceutical enterprises going to sea, financing in Hong Kong may be becoming a more efficient option. "It is not excluded that there are currently the fifth set of standard listed companies in science and technology innovation board that are considering the possibility of listing on the Hong Kong Stock Exchange." An investment banker in Beijing told Tradewind (ID:TradeWind01). "Not only A-share companies, but now a large part of the wait-and-see groups are still enterprises that have been withdrawn from IPO before. They are hesitant to go to the Hong Kong Stock Exchange, but they are worried about falling into the dilemma of not being able to get money and breaking after listing, so everyone is still watching the opportunity." An investment banker in Shanghai told Tradewind (ID:TradeWind01). Judging from the listing of new shares, it is true. Wind data shows that the total amount of IPO financing of the Hong Kong Stock Exchange in September and October this year (as of October 24) has reached 47.925 billion Hong Kong dollars, which is 4.43 times that of the same period last year. On September 17th this year, Midea Group landed on the Hong Kong Stock Exchange, raising HK$ 31.014 billion, which is expected to become the IPO project with the highest financing amount in the year. Risk warning and exemption clause
2024-10-24 -
View detailsIt's a showdown Arm threatened to revoke the Qualcomm license, which may affect the entire AI computer and mobile phone industry.
The technology licensing litigation of the two giants in the chip supply chain for several years has ushered in new progress. According to media reports on Wednesday, Arm has issued an "ultimatum" to Qualcomm, saying that it will cancel the design architecture authorization of the latter within 60 days. As the dominant player in the era of mobile Internet, Arm almost monopolized the IP supply of chip design in the semiconductor industry, and Qualcomm has always been the core customer of Arm. However, in August, 2022, after Qualcomm acquired the chip startup Nuvia the year before, Arm took its ally Qualcomm to court for breach of contract and trademark infringement, licensing rate, and Nuvia's IP ownership. The reason is that after acquiring Nuvia, which is also an Arm licensor, Qualcomm announced plans to introduce the CPU design version (Oryon) of Nuvia into its Snapdragon X processor. However, Arm believes that the Arm license of Nuvia will expire from the moment it officially becomes a part of Qualcomm, and Qualcomm violated the license agreement. Arm tears Qualcomm at the expense of the entire AI PC industry? Over the past two years, the above litigation has made substantial progress. Arm said that the focus of the disagreement was that Qualcomm failed to renegotiate the terms of the contract after acquiring Nuvia; Qualcomm argued that its acquisition of Nuvia was already covered by the existing agreement. Arm also pointed out that the processor architecture of Microsoft Copilot+ notebook computer is a direct technical descendant of Nuvia chip, and said that the license for these chips has been cancelled. It is worth noting that Snapdragon X is the only chip approved for the Microsoft AI PC ecosystem. Moreover, Qualcomm also publicly stated that it will use its technology from Nuvia to manufacture chips in smart phones, cars, augmented reality devices and other hardware. According to some analysts, if Arm finally wins the case, it may force Qualcomm and about 20 suppliers equipped with Snapdragon X processors to stop the delivery of new AI PC, resulting in losses of billions of dollars. Doug O'Laughlin, founder of the chip financial analysis company Fabricated Knowledge, said: "This is definitely a real risk." "The more successful [the new laptop], the more money Arm will eventually get." At the same time, some media analysts believe that this will not happen. "Major manufacturers have invested such a large amount of money in the Windows on Arm and Copilot+ ecosystems. If Arm succeeds in the legal battle, it may trigger a series of new lawsuits against it by companies such as Microsoft." "And it will also discourage any company that wants to use Arm architecture in the PC industry for a long time." This person speculates that the most likely outcome of this lawsuit is that Arm and Qualcomm reach an out-of-court settlement, and the latter will pay a considerable compensation to the former, or the former will get the profit share of Snapdragon X series products. In December, the final trial of Arm and Qualcomm will be held in the federal court in Delaware. It is worth noting that the exclusive agreement of Arm to supply chips to Qualcomm is likely to expire this year, which may give Qualcomm's competitors a lot of opportunities to enter the market and take market share from Qualcomm. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.
2024-10-23 -
View detailsPolitics: Excellent business environment HSBC is optimistic about Hong Kong's development
Photo: Multinational enterprises express their optimism about the long-term development of Hong Kong with practical actions, and strongly refute the unreasonable smearing of Hong Kong by western society. Xia Baolong, Director of the Hong Kong and Macao Affairs Office of the Central Committee and Director of the Hong Kong and Macao Affairs Office of the State Council, met with Du Jiaqi, Chairman of HSBC Group, and his party in Beijing on the 18th. Xia Baolong expressed his appreciation to HSBC Group for always being optimistic about the development of China and Hong Kong, focusing on the long-term and future-oriented, and actively participating in the economic construction of the Mainland and Hong Kong. He emphasized that the comprehensive, accurate and unswerving implementation of the principle of "one country, two systems" is a long-standing basic national policy of China, which has never changed and will never change. As always, the Central Committee will fully support Hong Kong to maintain its unique position and advantages, maintain a free, open and standardized business environment, and create better conditions for enterprises from various countries and regions to develop in Hong Kong. It is hoped that HSBC will continue to give full play to its advantages, actively participate in China's high-quality development and high-level opening up, and make more contributions to the prosperity and development of Hong Kong. Financial circles and politicians in Hong Kong pointed out that the state actively promotes high-quality development and high-level opening up, and fully supports Hong Kong to give full play to its unique advantages. Many foreign investors are optimistic about China's economic development prospects, and famous international brands have settled in Hong Kong. In fact, a number of authoritative international indicators show that international finance centre's status, world competitiveness and talent competitiveness are excellent. Multinational banking groups such as HSBC have long been rooted in Hong Kong and expressed their optimism about Hong Kong's long-term development with practical actions, all of which have played a good demonstration role and strongly refuted the unreasonable smearing of Hong Kong by western society. Hong Kong has a first-class business environment. Chen Keqin, a member of the Legislative Council and chairman of the Democratic Alliance for Betterment of Hong Kong (DAB), believes that Xia Baolong's meeting with HSBC and his party not only affirms that HSBC will continue to invest in Hong Kong and develop its business in the Mainland, but also sends a clear signal to foreign investors once again, proving that the central government is firmly committed to ensuring the stability and long-term development of "one country, two systems" in Hong Kong, and its support for international finance centre and its position as an international trade center will not change. As a matter of fact, international finance centre ranks among the top three in the world and has a first-class business environment. It has always welcomed foreign investment, and it also welcomes these funds to explore a broader market in the Mainland through Hong Kong. He believes that foreign investors are smart people who can understand the affirmation and support of the central authorities and see the bright investment prospects of Hong Kong. Huang Guo, a member of the Legislative Council and chairman of the Federation of Trade Unions, pointed out that HSBC, as an international bank rooted in Hong Kong for a long time, is representative. Director Xia Baolong's meeting is an affirmation that HSBC is optimistic about the development of Hong Kong and China. The Central Committee has always supported Hong Kong to give full play to its unique advantages of "relying on the motherland and connecting with the world". The Third Plenary Session of the Central Committee released a signal to welcome foreign investment. Hong Kong can play its unique advantages and play the role of "super contact", which will not only help the country develop with high quality, but also develop the economy and improve people's livelihood. Welcome foreign financial institutions to Hong Kong. Mingde Wei, member of Chinese People's Political Consultative Conference Port and chairman of the Hong Kong Financial Development Association, pointed out that in recent years, more and more foreign financial institutions have entered the China market, and mainland banks have also developed internationally. China is willing to share the dividend of economic development with the world, and is open and welcoming to foreign financial institutions. As an international financial center, Hong Kong can make full use of its openness and internationality, continue to play its unique advantage of "relying on the motherland and connecting the world" and actively integrate into the overall situation of the country's high-level reform and opening up. For example, he said that Hong Kong can actively embrace green finance, promote the innovative development of the local financial industry, and provide more diversified investment options for international investors. Moreover, Hong Kong is consistent with the country's green development strategy and goals, and it is also in line with the green development trends and needs of the international community. Chen Zhenying, a deputy to the National People's Congress in Hong Kong and a member of the financial sector of the Legislative Council, said that as an international financial center, multinational banking groups like HSBC have long been operating in Hong Kong and have continuously increased their investment in the Mainland, thus serving their global customers, playing a good demonstration role and enhancing the confidence of other multinational banks in developing their business in Hong Kong. Liang Xi, a member of the Legislative Council, believes that, as Director Xia Baolong said, with the full support of the central authorities, enterprises in Hong Kong can obtain the best business environment and explore a larger market, which is conducive to their own development. As an important leader of foreign investment, HSBC's trip to Beijing reflects their confidence in the China market and Hong Kong's comprehensive, accurate and unswerving implementation of the principle of "one country, two systems", and effectively refutes the smearing of the country and Hong Kong by western society with practical actions.
2024-10-21 -
View detailsThe premium is only half the reasonable level! Pimco: The hottest investment at present is too expensive.
Recently, the Pacific Investment Management Company (Pimco) warned that the current return on private corporate bonds could not justify the growing risks. Mohit Mittal, chief investment officer of Pimco's core strategy, said: Since 2019, the market size of private corporate bonds has doubled and expanded to a market of 1.7 trillion US dollars. At the same time, compared with direct loans, the return rate of listed corporate bonds has been greatly reduced. "At present, the excess premium for leveraged investment with poor liquidity is about 190 basis points on average. In investment-grade bonds, the premium paid by private corporate bonds is about 50 basis points higher than that of listed corporate bonds, which is half of the 100 basis points return they should provide." Mittal said, "As the rate of return has increased in the past two or three years, the opportunity cost of switching from public fixed income to private fixed income has also increased. This is one of the reasons why we strongly prefer high-quality public fixed income to private fixed income. " "What you have observed is that 40% of companies now have a fixed fee coverage rate of less than 1, which means that the cash flow they generate is not enough to pay interest expenses. “ Mittal also pointed out that in the next three to five years, the performance of asset-backed loans will be very different from that of private corporate bonds. The company is optimistic about the markets of the United States, Britain, Australia and Canada, while in terms of industries, it prefers finance, public utilities, consumer goods and telecommunications, as well as technology and medical care in leveraged finance. But he is cautious about the debts of the retail and automobile industries. "This is a spread product that can perform well in all situations." The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.
2024-10-18 -
View detailsWall Street revived and Morgan Stanley hit a new high. The CEO asserted that it was difficult for competitors to catch up with big banks.
Q3, the head bank stock in the United States, has a bright earnings report. The CEO of Morgan Stanley said that the distance between big banks and small banks is widening. Since this fiscal quarter, JPMorgan Chase, Bank of America, Qualcomm and Citigroup have all produced excellent "transcripts", indicating that the banking industry in the United States has picked up significantly. Morgan Stanley Q3' s performance is also very gratifying. The financial report shows that Morgan Stanley's net revenue in the third quarter increased by 16% year-on-year to $15.38 billion, and its net profit in the third quarter increased by 33% year-on-year to $4.221 billion. This is mainly due to the strength of its wealth management business and investment banking business. Ted Pick, CEO of Morgan Stanley, said in a statement that the rising stock market and the net inflow of funds provided support for the assets of the wealth management and investment management departments, and the total asset management of the two departments reached about 7.5 trillion US dollars. According to the financial report data, the revenue of Morgan Stanley's wealth management department reached a record high in the third quarter, accounting for about half of the total revenue; The revenue of institutional securities department (where investment banks and trading businesses are located) increased by 20% to $6.815 billion, of which the revenue of investment banking business increased by 56% year-on-year, mainly due to the increase in underwriting business. CEO Ted Pick, CEO of Morgan Stanley, also said in an interview with the media on Wednesday: "(Also) another factor is that it is difficult for competitors to catch up with big banks now, because the cost of running these enterprises is high every year." After the financial report was released, Morgan Stanley's share price once rose by 8.2%, the biggest increase in the market in the past four years. Since the beginning of this year, Morgan Stanley's share price has risen by more than 27%, with a market value of US$ 193.3 billion. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.
2024-10-17 -
View detailsThe attractiveness of more than 2,700 Hong Kong-run companies continues to rise.
It is mentioned in the 2022 policy address that the goal is to promote no less than 200 family offices to come to Hong Kong by the end of 2025. Subsequently, in March last year, the SAR Government issued the Policy Declaration on the Development of Family Office Business in Hong Kong, announcing eight measures to create a favorable environment for the development of family offices. In addition, the New Capital Investor Entry Scheme began to accept applications in March this year. Eligible applicants are required to invest at least $30 million in permitted investment assets and can bring their dependants to Hong Kong. Xu Zhengyu, director of the Treasury Bureau, said earlier that he would study policy measures to attract family offices and form more linkages with the plan.
2024-10-16