China imposed fresh export restrictions amidst tech arms race, while simultaneously rebuffed decoupling. Pressure is now on China to make more substantive actions to revive confidence. We expect such announcements to be short-term catalysts for the Chinese markets
Some interesting happenings in the past week in China;
Imposed new restrictions...: Amidst the US-China Tech arms race, China has imposed export controls (from 1-Aug) on gallium and germanium, vital metals for semiconductors, telecommunications, and electric vehicles to safeguard Chinese national security.
...Yet rebuffs decoupling: 1 day after, Xi Jinping urged nations to spurn decoupling and cutting supply chains, instead advocating for increased cooperation among countries
Critical stage of economic recovery: China Premier Li Qiang recently pledged to “spare no time” in implementing a batch of targeted policies to strengthen the economy’s recovery from the pandemic. This yet again highlights pressure on the Chinese government to make substantive actions to revive confidence
Talks with Yellen: Keep a lookout on the outcome of US Treasury Secretary Yellen's visit to Beijing for more clarity on the continued US-China tension and trade war
A reminder that Meta is still king in social media despite its failing metaverse focus. Meta's clone-and-kill strategy of replicating key features of rival platforms has a proven track record and appears to be working in the case of Twitter/Threads
Twitter clone: Meta's newly launched app Threads has garnered over 30 million users, posing a significant challenge to Elon Musk's ailing social media platform and positioning itself as a direct competitor to Twitter
Superb timing: The launch comes right after Twitter implemented a slew of unpopular changes to further monetize the platform - such as a limit on no. of post views for users - causing significant frustration across Twitter's user base
Musk fights back: Twitter threatens to sue Meta for allegedly hiring ex-Twitter employees with highly confidential information about Twitter to build Threads
Meta's social media reign: Despite massive share price tank late last year due to Meta's failing metaverse pivot, share price has largely recovered since. This is a reminder that Meta is still king in social media with its clone-and-kill strategy - Copying key features from rival platforms to attract their user base. (E.g. Insta Stories from Snap, Insta Reels from TikTok and Facebook being a copy of Myspace)
Perhaps now is an opportune window to seek FX trade ideas and identify undervalued currencies, considering that the SGD is likely to experience reduced volatility arising from the MAS halting tightening measures while continuing to adopt a hawkish stance
Caused by strengthening SGD: 70% of which was reportedly caused by currency translation loss on our official foreign reserves due to SGD appreciation
SGD appreciation: The steep SGD appreciation was due to the 5 consecutive monetary policy tightening since Oct-21 (i.e. MAS increasing slope of the S$NEER policy band) to combat inflation
Unlikely to continue appreciating: Today, inflation seems to have peaked. The MAS has just announced that prevailing monetary policy stance is sufficiently tight - which was already hinted in April, when the MAS decided to keep monetary policy settings unchanged
Opportune window to seek FX trade ideas: While the SGD is unlikely to appreciate significantly anytime soon, the MAS also does not seem to be switching to a growth supporting mode. Thus, volatility should be manageable. This could then mean an opportune window to look into undervalued currency pairs.
