CSOP Regional Market Report - 20240708

Goldman Sachs expects US companies to achieve their highest quarterly profits in 3 years, which will ultimately lead to an increase in the performance of US stock market indices.

US Labor Market Losing Steam As Unemployment Rate Climbs To 4.1%

The U.S. Department of Labor reported robust job growth in June, with non-farm payrolls increasing by 206,000, compared to an estimated 190,000. Average hourly earnings rose by 0.3% month-over-month and 3.9% year-over-year, marking the smallest year-over-year increase since June 2021.

Following the report, federal funds rate futures traders assessed that there is approximately a 77% chance that the Federal Reserve will cut interest rates at its September 17-18 meeting. They also believe that the likelihood of a second rate cut in December is rising.

South Korea's automobile export value for the first half of the year increased by 3.8% year-on-year to $37.01 billion, setting a record high for the same period. The Korea Automobile Manufacturers Association predicts that South Korea's automobile export value for the entire year is expected to reach $74.7 billion.

The Japanese Nikkei 225 Index closed at their highest levels yesterday, at 40,913.65 points, exceeding the record recorded on March 22, with investors seizing on technology issues and exporters on the optimism of achieving strong profits against the backdrop of a weak yen.

Japan’s headline wage growth is 5.1%, the highest rise in 33 years. The real wage is expected to turn positive for the first time in four years.

Japan’s household spending unexpectedly fell in May, raising the likelihood that consumption won’t be a key driver for the economy in the second quarter, and complicating the prospects for the central bank’s next interest rate hike.

Japan Chip Gear Sales Seen Climbing 15% This Fiscal Year on AI.

· Base pay increased 2.5% in May from a year ago, the fastest growth since 1993, outpacing the 1.9% gain in the headline figure, the labor ministry reported Monday.

· Monday’s figures may bolster confidence in the view that a virtuous cycle is emerging of wage and consumption growth that generates demand-led inflation. That’s a dynamic that would support moves by the BOJ to further normalize policy including the possibility of raising rates as soon as this month after it hiked in March for the first time in 17 years.

· GPIF's investment income for the last fiscal year reached a record 45.4 trillion yen, with a return rate of 22.7%. However, due to the yen's depreciation against the U.S. dollar, reaching a 38-year low, GPIF's total assets in dollar terms were 245.98 trillion yen (approximately $1.53 trillion) as of the end of March. This caused GPIF to lose its position as the world's largest retirement fund.

· For the fourth fiscal quarter ending in March, GPIF's investment income reached 21.4 trillion yen (approximately $133.3 billion), setting a new high with a return rate of 9.5%.

· In 2023, over 140,000 companies were established, an increase of nearly 10% from the previous year. Closures also rose, partly due to the phaseout of COVID-19 pandemic support for smaller businesses.

· With wages, interest rates and inflation all rising, price mechanisms and other market disciplines are beginning to drive swift adaptation among businesses. These developments may finally signal an end to Japan's prolonged period of low economic growth.

Vietnam to Be Samsung’s Biggest Display Module Output Base. Samsung plans to invest in Vietnam in the next 3 years to make it the company’s biggest display module manufacturing base globally, according to a posting on the government’s website. Samsung plans to invest $1B a year in Vietnam.

VIETNAM’S Ministry of Planning and Investment is finalising a draft plan to set up a fund to help attract foreign investment and maintain the country’s competitiveness, according to a ministry document reviewed by Reuters.

Vietnam's economic growth is accelerating and may reach or exceed the government's target of 6.5% this year, potentially even reaching 7%. This forecast surpasses the International Monetary Fund's (IMF) earlier prediction, which estimated that Vietnam's economic growth could be close to 6% in 2024.

TSMC (2330.TT) is likely to spend $32 billion on capex in 2024 and $37 billion in 2025, according to UBS, which raises the estimates given the landscape in AI equipment.

Apple May Adopt TSMC (2330.TT) Product For Next-Generation AI Chips: Morgan Stanley

· The world’s largest maker of memory chips and smartphones said operating profit grew more than 14-fold to 10.4 trillion won ($7.5 billion) in its preliminary results for the June quarter, outstripping market projections. Sales grew around 23%, the biggest rise since Covid-era highs clocked in 2021. Samsung is slated to announce final earnings with divisional breakdowns on July 31.

· Samsung’s stock gained 1.7% during early morning trade in Seoul on Friday, set for a fresh 2024 high.

TSMC(2330.TT) has sent out a significant signal. Macquarie released a report stating that, based on supply chain investigations, most of TSMC's customers have agreed to higher foundry prices in exchange for reliable supply. This is expected to further boost TSMC's gross margin. According to analysts' calculations, TSMC's gross margin is projected to rise to 55.1% in 2025, and approach 60%, reaching 59.3%, in 2026.

Samsung Electronics Co. (005930.KP) will hold a major product launch event on July 10 in Paris, where they will introduce the new foldable smartphones Galaxy Z Flip and Fold6. In addition to smartphones, Samsung will also unveil various wearable devices at the event.

Shin-Etsu Chemical (4063.JT) will start mass production of manufacturing equipment that can simplify semiconductor post-processing as early as 2028

Fast Retailing (6288.JT) reported Uniqlo sales for June of +14.9%.

Baidu(9888.HK) Intelligent Cloud announced the full-scale availability of the ERNIE 4.0 Turbo model for enterprise customers. Additionally, the flagship models ERNIE 4.0 and ERNIE 3.5 have seen significant price reductions; Baidu Intelligent Cloud's Qianfan Model Platform has introduced more than a dozen new upgrades targeting the large model toolchain and AI-native applications.

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