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South Korea's Chip Exports Headed for Rebound as Trade War Eases

Semiconductor shipments, South Korea’s biggest source of income, rose 12% in the first 10 days of January from a year earlier, data from the Customs Service showed Monday. That’s the first time the preliminary figure posted growth since October 2018.

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Comments of the Day

14 January 2020

 

Video commentary for January 13th 2020

 

Eoin Treacy's view

A link to today's video commentary is posted in the Subscriber's Area. 

Some of the topics discussed include: momentum remains a significant force with stock markets almost universally breaking on the upside and led by large cap tech, global reflation trade gaining traction with Dollar weak, gold and Treasuries easing. 

 

South Korea's Chip Exports Headed for Rebound as Trade War Eases

This article by Sam Kim for Bloomberg may be of interest to subscribers. Here is a section:

Semiconductor shipments, South Korea’s biggest source of income, rose 12% in the first 10 days of January from a year earlier, data from the Customs Service showed Monday. That’s the first time the preliminary figure posted growth since October 2018.

While the expansion benefits from a base effect of poor performance last year, it suggests global tech demand is improving after being battered by the U.S.-China trade war. The two countries entering a phase-one trade deal later this week should further support demand.

“It’s definitely a positive signal,” said Lim Hye-youn, an economist at KTB Investment & Securities, referring to the chip shipment in South Korea’s preliminary trade data. “But it’s still difficult to see the growth big enough to be leading Korea’s strong economic recovery. The base effect played a large role.”


Eoin Treacy's view

The global semiconductor sector is a lead indicator for corporate spending and tends to suffer when expectations for future economic potential are weak. All we hear right now is about the negative expectations for future growth among CEOs. If that were the full story then chips sales would not be turning higher.


Concentration Should Lead to Opportunities

Thanks to a subscriber for this report from Morgan Stanley which may be of interest. Here is a section:

 

Eoin Treacy's view

A link to the full report is posted in the Subscriber's Area.

The 10 biggest companies in the world by market cap are Saudi Aramco, Apple, Microsoft, Alphabet, Amazon, Facebook, Alibaba, Berkshire Hathaway, Tencent and JPMorgan. To be part of the list a minimum market cap of $426 billion is required.

 

China's Strengthening Yuan Is Smashing Every Key Level in Sight

This article from Bloomberg news may be of interest to subscribers. Here is a section:

While analysts say the exchange rate is being driven by improving market sentiment as China’s economy steadies and trade tensions ease, the recent bout of strength comes at a pivotal time for U.S.-China negotiations. Chinese Vice Premier Liu He is expected to sign the long-awaited phase one agreement in Washington Wednesday.

Some now predict the currency will touch 6.8 per dollar within three months -- a level not seen since May last year.

“Having a stronger currency is one way to show good will,” said Mitul Kotecha, a senior emerging-markets strategist at Toronto-Dominion Bank in Singapore. “Signs of a gradual, as opposed to rapid, slowdown in China’s economy and limited decline in China rates will provide support to the currency.”

 

Eoin Treacy's view

I did not think we were going to see the Renminbi trade stronger than the trend mean but it is now clearly breaking out. That is as much about the willingness of China to tolerate a stronger currency as it is about the supply of Dollars resulting from the ongoing repo operations.

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