[Eng] 2024/08/02 - CSOP Regional Market Report

Singapore’s employment growth strengthens in Q2 despite seasonal dip in resident employment. Total employment – excluding migrant domestic workers – grew by 11,300 in Q2 2024, more than double the increase of 4,700 charted in Q1.

On last Saturday, July 27, the National Bureau of Statistics released data showing that the profits of China's industrial enterprises above designated size in June were 3.6% year-on-year, 2.9 percentage points faster than the previous value of 0.7%. From January to June, the total profit of industrial enterprises above designated size reached 3.51 trillion yuan, a year-on-year increase of 3.5%, and the growth rate was 0.1 percentage points faster than that from January to May.

In the first half of the year, the equipment manufacturing industry contributed more than 60% to the growth of industrial profits above the designated size, the profits of the consumer goods manufacturing industry still grew at a relatively fast rate, the profits of the mining industry and the raw material manufacturing industry narrowed significantly, and the steel industry turned losses into profits

Most Bank of Japan watchers are reassessing the trajectory of interest rates and bringing forward their forecasts after Governor Kazuo Ueda’s hawkish messaging Wednesday and his earlier-than-expected rate hike.

Some 68% of 41 economists see the policy rate rising to 0.5% from 0.25% by the end of this year, according to a Bloomberg survey conducted Thursday. Just under a quarter predicts the hike to come in October, while 44% opt for December. Another fifth expects the move to take place in January.

Japanese shares tumbled the most since 2020, with the benchmark Topix index sinking more than 10% from its July peak as the fallout from tighter monetary policy roiled one of the world’s best-performing markets.

Exporters took a hit from the yen’s recent rally while financials retreated on concerns that their recent gains may have been excessive.

The benchmark sank as much as 5.7%, heading for a two-day drop of about 8% in the wake of Bank of Japan’s earlier-than-expected rate hike Wednesday and Governor Kazuo Ueda’s hawkish messaging. If the Topix closes at current levels, it will join the Nikkei 225 Stock Average in entering a technical correction.

Singapore state investor Temasek plans to invest up to $30 billion over the next five years in the U.S. in sectors such as healthcare, financial services and technology.

About 22% of Temasek's investments are in the Americas, or $63 billion, and 19% in China. Its exposure to the Americas surpassed China in the last financial year for the first time in a decade.

The Federal Open Market Committee held the federal funds rate in a range of 5.25% to 5.5% on Wednesday. Powell said a rate cut could happen as early as the next meeting, in September, and the committee's overall view is that the economy is approaching a level where rate cuts are appropriate. The benchmark U.S. 10-year note yield fell 9.8 basis points to 4.043%.

On Thursday, August 1, data released by ISM showed that the ISM manufacturing industry in the United States in July was significantly worse than expected, with the largest contraction in eight months. New orders and output fell, causing the largest decline in employment in four years.

Samsung Electronics announced that its second-quarter profit increased more than five times year-on-year to 9.64 trillion won, the fastest growth rate since 2010. Revenue increased 23.42% to KRW 74.07 trillion (approximately US$53.45 billion), beating expectations, and operating profit increased 14.58 times to KRW 10.44 trillion, also better than expected, as demand for advanced chips used in AI remains strong.

Last quarter, Samsung's chip division's operating profit was 6.45 trillion won, beating expectations. This was also the second consecutive quarter of profit after four consecutive losses. It benefited from rising memory chip prices and the demand for high-bandwidth memory chips (HBM). strong demand.

TSMC's mainland customers have been stocking up on chips over the on-going rising tensions between the US and China escalate, companies from mainland China buying chips made at TSMC are expecting a big impact from the 2024 US presidential election to have (more) negative effects on China's access to the latest chips, according to CNyes. TSMC's main mainland customers include the likes of Bitmain, Alibaba, and ZTE.

SK Hynix's plant will be in the Yongin Semiconductor Cluster where the South Korean government is looking to build a massive complex of chip operations.

SK Hynix has been riding the AI wave and its partnership with Nvidia. The company reported last week that second quarter profit came in at its highest level in six years.

Operating profit was ¥1.31 trillion for the April-June period, up 17% from a year earlier. That was mostly in line with the ¥1.32 trillion projected, on average, by analysts.

Hybrids are selling well in North America, making up for sluggish demand for Toyota’s vehicles in Japan and China. At the same time, a weaker yen is helping to boost income in the carmaker’s home currency.

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