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A note from the editor: Happy Lunar New Year TMS readers! We'll be taking a short break from the Headlines to celebrate, and we'll be back next week on February 15. Enjoy the festivities!
To start off, we're looking into:
Mexico beats China in US trade
The backstory: China has been the top supplier of goods to the US for over a decade, beating even Canada. But tensions have risen since around 2018 over economic conflicts and a tech race between the US and China. Since the COVID pandemic, many countries have been worried about relying too much on China's factories. To reduce risks, businesses adopted strategies like "China plus one," aiming to diversify their production and where they source parts from. There's also the US and EU's "de-risking" strategy to back off from relying too much on China in the supply chain.
More recently: Mexico benefited from this shift, attracting more investment. Trade between the US and Mexico improved, partly due to the US-Mexico-Canada Agreement that kicked off in 2020, replacing the North American Free Trade Agreement (NAFTA). As a result, Mexico saw a surge in foreign investment, totaling US$32.2 billion in the first three quarters of 2023, which was almost the total for the entire year of 2022.
The development: The latest data from the US Census Bureau shows big shifts in US trade patterns. In 2023, Mexico became the top source of goods for the US, beating China for the first time in over 20 years. Click the link here for more.
China’s new CSRC chairman
The backstory: China and Hong Kong's stock markets have been on a rollercoaster over the past few years, losing over US$6 trillion since 2021. One of the big culprits is the real estate sector, which took a major hit with Evergrande's default last year, setting off a chain reaction in the industry. Plus, China's recovery from COVID has been slower than expected, not to mention the rising tensions between China and the US, which haven't helped. At the same time, high youth unemployment, sinking exports and mounting local government debt have added to the signs of economic trouble.
More recently: In late January, China's CSI 300 index hit a five-year low while manufacturing activity has been shrinking for four months straight. To ease market jitters, China has rolled out a series of measures. For example, it tightened up short-selling rules back in October, followed by imposing limits on brokerages' securities-lending businesses in November. And just last month, the China Securities Regulatory Commission (CSRC) put the brakes on lending restricted shares on mainland stock exchanges. The commission even hinted at a potential government rescue package worth about 2 trillion yuan (US$280 billion).
The development: China just made a surprising move by naming Wu Qing as the new chairman of the CSRC, replacing former head Yi Huiman, who had been in charge since 2019. Click the link here for more.
Nvidia’s market value surge
The backstory: Nvidia is a US tech firm founded in 1993, and it's one of the world's most valuable companies. As businesses across the globe race to develop artificial intelligence (AI) technology, Nvidia's chips have become a core component used to train and build this tech. It supplies major tech companies like Amazon, Microsoft, Google, Meta and Dell. And the demand has been so great that it's led to a chip shortage. But even TSMC chairman Mark Liu said last year that he thought Nvidia was on track to become the world's biggest semiconductor firm.
The development: Now, Nvidia looks to be on track to become even more valuable than Amazon. The company has seen a 40% surge in its market capitalization so far this year, bringing it to around a whopping US$1.73 trillion as of Wednesday. Click the link here for more.
To end, we'll look into:
Childcare fees skyrocket
With inflation on the rise across the world and a cost of living crisis in many places, childcare prices have skyrocketed. It comes as no surprise that this affects women the most – especially when it comes to their careers. Bloomberg recently looked at how rising childcare costs affect people and found that economies are suffering as a result.
For starters, according to mobility company ECA International, average daycare fees rose by 6% in 2023 compared to the previous year (and by 9% just in the US). The work landscape is also shifting once again now that the pandemic is over, and companies are demanding that employees spend more time in the office. Click the link here for more.
In other news ...
📉Market snapshot and key quotes:
- In the US: US stocks stayed mostly flat on Thursday, with investors focused on earnings.
- In Hong Kong: Hong Kong stocks plunged on Thursday while mainland stocks climbed as a new securities regulator took charge.
📊Top gainers/losers and company news:
- In the US: Arm surged almost 48% after beating Wall Street's earnings expectations, driven by AI demand.
- PayPal dropped over 11% due to disappointing guidance.
- Disney jumped 11.5% following increased dividends and better-than-expected earnings.
- In Hong Kong: Alibaba dropped by over 6% due to lower-than-expected earnings and revenue in the December quarter.
👀The numbers everyone is watching:
- In the US: Jobless claims totaled 218,000, indicating steady employment levels.
- In Hong Kong: China's January CPI fell 0.8% year-on-year, while PPI fell 2.5% in January.
📅To check out our economic calendar for this week, click here.
More headlines ...
📰Ukraine update: There have been ongoing reports of disagreement between Ukraine's President Zelenskiy and his top general, Valeriy Zaluzhnyi, about war strategy and how to defend the country from Russia since its 2022 invasion. Now, Zelenskiy has officially replaced Zaluzhnyi, saying he'll stay "part of the team" without specifying how. He'll be replaced by the country's land forces commander, Oleksandr Syrskyi. Meanwhile, a bill for US aid to Ukraine (which also includes aid for Israel and civilians in Gaza) that's been stuck in Congress has now officially advanced to the Senate after 17 Republicans voted in favor of moving it forward.
🌍Global warming update: In 2015, the international community agreed to try to limit the global rise in temperature to 1.5 C above pre-industrial levels to avoid the worst consequences of climate change. Over the last year, according to the EU's climate service, we've breached the critical 1.5 degrees Celsius benchmark (34 F) for the first time. It's important to keep in mind that the Paris Agreement from 2015 is aimed at a long-term temperature rise – so the average measured over 20-30 years – but, notably, this is the first year we've passed the benchmark, meaning we could be headed away from that goal.
🌋Iceland's second volcanic eruption: Iceland's Sylingarfell volcano near Grindavik is erupting again for the second time this year and the third time since December. The Icelandic Met Office said lava was flowing to the west, but there was no immediate threat to Grindavik or a major power plant in the area.
👜South Korea's Dior bag scandal: We recently reported that spy camera footage caught South Korea's first lady accepting a Dior bag valued at well over the country's annual limit for gifts. This caused a scandal, and voters were asking for an explanation. President Yoon Suk Yeol has now broken his silence and said it was a "political maneuver," pointing out that the video was released as the general election is close.
🥜Uber Eats new ad criticized: Uber Eats released an ad expected to air at the upcoming Super Bowl this weekend. It features stars like former "Friends" co-stars Jennifer Aniston and David Schwimmer, as well as David and Victoria Beckham and Jelly Roll. But the ad is facing some backlash for making light of a peanut allergy. The Food Allergy Research & Education (FARE) charity said it was "surprised and disappointed" to see the company use allergies as a joke. Check out some of the internet responses below.
⚽Refunds for Messi match?: We've been talking a lot this week about the recent Hong Kong scandal over footballer Lionel Messi. On medical advice, Messi stayed on the bench the entire game, angering fans who had come from all over to see him play. Many have been demanding refunds from the event's organizer, Tatler Asia. Things didn't get any better when Messi played with no issues in Tokyo only a few days later. Now, Lawmaker Bill Tang has threatened to take the issue to court, saying that dozens are ready to file complaints if Tatler doesn't explain why Messi stayed on the bench in Hong Kong and refund those who paid HK$3,000 (US$384) or more for tickets.
📈Singapore dollar at record high: Singaporeans have flocked to Malaysia to shop ahead of the Lunar New Year as the Singapore dollar has reached a record high exchange rate of S$1 to 3.55 ringgit. The rise has come at a time when the cost of living in Singapore is at a high, making it tempting to shop in Malaysia where things are currently much cheaper.
😎Vision Pro headset resale prices: Apple's Vision Pro headset is available to buy in the US, but people are reselling them across Asia at jacked-up prices as consumers, software developers and industry players are eager to try out Apple's latest tech. In Hong Kong's electronic market in Mong Kok, it's going for HK$35,800 (US$4580); on China's e-commerce platform Taobao, it's being sold for 36,000 yuan (US$5000); and on Japan's Mercari marketplace, it's listed for ¥800,000 (US$5,400).
🏆Guinness changes its mind: Yesterday, we reported that the Guinness World Records had disqualified Frenchman Richard Plaud, who spent over eight years building what he thought would be a record-breaking matchstick model of the Eiffel Tower, because he used the wrong type of matches. But, they've reversed the decision, saying they were too quick to deny his 7.2-meter (23.6 feet) matchstick tower.
🤢Poo stink on Everest: Due to the extreme icy temperatures on Mount Everest, the feces of climbers don't fully degrade, and "our mountains have begun to stink," said Mingma Sherpa, the chairman of Pasang Lhamu rural municipality, to the BBC. Climbers will now be ordered to bring poop bags and carry their waste back down the mountain for proper disposal, according to a new regulation.
🐔Vietnam's dragon chickens: The Lunar New Year is almost upon us, and Vietnam's dragon chickens are often given as a gift during this time of year. Known for its large feet, the Dong Tao chicken (named after the place where the chickens are from) is a festive delicacy. When fully grown, the chickens weigh up to 6 kilograms (13 pounds) and were once only something royals could get their hands on. They're believed to bring good fortune and wealth to their owners.
💼Hong Kong travel: Hong Kong will see more than a million mainland Chinese visitors over the Lunar New Year holiday, with about 130 tour groups a day expected, according to Fanny Yeung Shuk-fan, the executive director of the Travel Industry Council. Border checkpoints will have extended opening hours as visitors flock in to see the festivities, including the return of Hong Kong's massive Lunar New Year fireworks show after a four-year hiatus.
🥇Paris Olympics medals: The 2024 Summer Olympics are being held in Paris, France, starting in July, and organizers have just revealed the designs for the medals. The medals will feature hexagon-shaped (representing the shape of France) pieces of iron taken from the original Eiffel Tower. "We wanted to offer to all medal-winners at the Paris Olympics and Paralympics a piece of the Eiffel Tower from 1889," said the head of the local organizing committee, Tony Estanguet.
What country topped China as the main source of US goods last year?
- United Kingdom
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