Notable market news this past week (31-Mar-24)
Here is the Skeptivest roundup of the latest market headlines for the week
📱 President Xi tells US CEOs in a rare meeting that Chinese economy hasn't "peaked"
1.5h meeting with reps from US business, strategic and academic communities: President Xi Jinping met a group of ~20 in Beijing including Stephen Schwarzman (Blackstone) and Cristiano Amon (Qualcom), Raj Subramaniam (FedEx).
An effort to restore confidence in the Chinese economy: Beijing wants to regain investor confidence after foreign direct investment shrank 8% in 2023 amid heightened concerns over structural issues of the Chinese economy. During the meeting, Xi acknowledged issues with the economy and added that officials can handle them and that the Chinese economy hasn't "peaked" and its growth prospects remain "bright".
No need for Washington and Beijing to decouple: Xi also said that he doesn't see the need for Washington and Beijing to decouple, and that he wants US businesses to invest in China. He also pledged that Beijing would keep working to improve the business environment.
☕️ Quick fire happenings to note
🌏 Global macro
- Yen drops to weakest since 1990: Japan's potential currency intervention looms as the yen hits its lowest level in about 34 years against the dollar. Finance Minister Shunichi Suzuki expresses vigilance, hinting at market intervention. Later, yen sees a rally amid reports of upcoming meetings among finance ministry, central bank, and financial regulator officials.
- S&P500 had its best Q1 since 2019: Thursday, the final trading day of the quarter, saw the S&P 500 closing with over a 10% increase, signaling its strongest year start since 2019. Key contributors were - (i) AI hype, (ii) optimism surrounding cooling inflation and potential rate cuts. The Bureau of Economic Analysis also reported that several key gauges, including GDP and consumer spending, grew in Q4 of last year.
- Dim Sum bonds are back in the spotlight: Dim Sum bonds are offshore RMB debt issued outside of mainland China, mainly in HK. The amount of outstanding bonds broke through the RMB1trn barrier in 2022 and reached RMB1.6trn on 15 March 2024, up around 150% from the end of 2021. What's driving this is likely China's desire and efforts to raise RMB's international profile.
🏦 Individual stocks/companies
- Alibaba shelving IPO for its Cainiao logistics arm: Alibaba is calling off the ~$1b HK IPO for its logistics arm, Cainiao. This comes shortly after its decision to shelve the IPO of its $11b cloud unit. Alibaba Chair Joseph Tsai described the market as “pretty depressed” and said it wouldn’t have afforded Cainiao the kind of “patient capital” it needed to pull off a global expansion.
- Krispy Kreme and MacDonald's team up: Krispy Kreme stocks are up 23.26% in the past 5 days as their donuts are getting added to the menu of McDonald's across the US. By end 2026, McDonald's plans to offer the donuts at all of its 13.5k US locations, which could also lift its coffee business. This deal will more than 2x the locations where Krispy Kreme donuts are sold.
- Trump Media and Technology Group is officially public: Digital World Acquisition Corp announced that its de-SPAC with Trump Media and Technology Group (TMTG) on 21-Oct-21 has finally completed. TMTG is meant to be an alternative tech platform looking to combine aspects of Meta (with Truth Social) and Netflix.
- Lululemon plunges on management weak guidance: Lulu stocks are down 16% month to date. Poor macro conditions are largely blamed as US and Chinese consumers pull back on spending. After all, quite a fair but of Chinese expansion bullishness (esp as a Canadian coy that is more immune to US-China geopolitical tension) were baked into their price. P/E of 32x is a lot more palatable and fairly priced now.
- Visa and Mastercard agree to settlement that limits swipe fees: In the settlement, Visa and Mastercard will reduce fees by 0.04% until 2030, potentially saving merchants $30b in swipe fees. Additionally, small merchants gain the ability to negotiate fees directly with the credit card companies, similar to large retailers.
- UMG strengthened its collaboration with Spotify amidst battle with TikTok: Universal Music Group unveiled several new initiatives with Spotify, enabling artists to share pre-release teasers and offering users the option to pre-save songs. This strategic move coincides with UMG's ongoing conflict with TikTok, which escalated in February when UMG removed approximately 3m songs from the platform due to failed royalty negotiations.
🇸🇬 Singapore related
- Baltimore bridge collapse: The collapse of Baltimore's Francis Scott Key Bridge due to the collision by Singapore-flagged container ship on Tuesday puts at risk up to 2.5m tons of coal, numerous cars manufactured by Ford and General Motors, along with lumber and gypsum, facing potential disruption. Note that Baltimore has long been the biggest port for car imports and exports in the US; almost 850k vehicles passed through its waters last year.
