Notable market news this past week (25-Aug-24)
Here is the Skeptivest roundup of the latest market headlines for the week
China to let local governments to use special bonds to buy unsold homes
- China is considering allowing local governments to issue special bonds to buy unsold homes as part of ongoing efforts to stabilize its struggling property market. These bonds are currently limited to infrastructure and environmental projects, but the new proposal would expand their use to address its real estate slump
- Despite previous rescue attempts, China’s property sector remains in distress with an oversupply of unsold homes and declining property sales. The plan faces challenges, including low rental yields and the difficulty of implementing bailout measures effectively, raising doubts about whether these new initiatives will be enough to reverse the downturn.
- Investors are skeptical as property prices continue to drop, and there are concerns that the central bank’s moderate support measures may not be sufficient to address the depth of the crisis.
- The special bonds would provide some local governments with a new financial tool, even though skepticism persists as to whether it will resolve the fundamental supply-demand mismatchin the housing sector
☕️ Quick fire happenings to note
🌏 Global macro
- EU slashes tariffs on Teslas made in China to 9%: EU cut its proposed tariffs of Tesla cars produced in China to 9%from the original 20.8%. Tesla had requested the planned tariffs to be recalculated to reflect specific subsidies that the company receives in China
- China launched anti-subisdy probes on EU dairy imports: China opened an anti-subsidy probe into dairy imports from EU, stepping up tension a day after EU published its revised tariff plan for China-made EVs. The combined value of EU pork and dairy exports to China stands ~$13.5b — are smaller than the value of China's battery EV exports to the EU. Domestic economic pressures, alongside the increasingly important role played by external demand in supporting China's economy, will keep Chinese policymakers cautious about invoking an overly confrontational approach to trade
- Canada rail shutdown: The ongoing Canadian rail shutdown, triggered by the lockout of over 9,000 rail union workers, has stranded billions of dollars in U.S.-bound trade (accounted for 14% of total bilateral trade of $382.4b between US-Canada for the first half of the year), heavily disrupting supply chains for various industries such as chemicals, auto parts, and consumer goods, with escalating economic impacts expected to grow day by day
- Rising ocean freight rate shave raised significant concerns in global trade:With costs potentially surpassing $20,000 per container and lingering through2025. Rates from the Far East to the U.S. have surged by 36%-41%month-over-month, driving the cost of a 40-foot cargo container to around$12,000. Additionally, spot ocean freight rates might hit the COVID-era peak of$30,000. Contributing factors include a container shortage, longer shipping routes due to geopolitical tensions in the Red Sea, and supply chain bottlenecks. Air freight prices have also surged, with global air cargo demand jumping 12% year-on-year, affecting products like semiconductors and electronics
🏦 Individual stocks/companies
- Apple’s iPhone will be made in India this year: The next iPhone 16 and 16 Pro is set to release on Sept 10 and will be made in Tamil Nadu. The production ofApple’s entire iPhone range in India is a major milestone for the company in efforts to diversify its production outside of China to lessen risks related to tensions between US and China
- Walmart sells stakes of JD.com: The company sold its entire stake in JD.com for $3.6b, ending an eight-year investment in the Chinese e-commerce company. JD.com’s HK shares fell 8.6% the next day. The move came about as Walmart seeks to focus on its strong operation in China and deploy the capital towards other priorities
- Nestle CEO steps down: Mark Schneider, CEO of the Swiss multinational, will leave after eight years in the position. Laurent Freixe, CEO of Nestle Zone Latin America is set to replace Schneider effective 1 Sept
🇸🇬 Singapore related
PM Wong’s first National DayRally 6 Key Takeaways:
- Shared parental leave – 10 more weeks of leave for new parents for total of 30 weeks from April 2026 and mandatory paternity leaveextended to 4 weeks
- Students no longer have to leave their primary schools to join GEP
- Temporary financial support up to $6k for thei nvoluntarily unemployed
- Lower income couples get increased CPF housing grant and singles get priority access to BTO flats near parents
- Reducing regulatory burden for SME businesses
- New indoor arena at Kallang
