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Semiconductor Stocks Soar, Tariff Deadline Extended (Again)

usncan 4 weeks ago

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📝 usncan Note: Semiconductor Stocks Soar, Tariff Deadline Extended (Again)

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Key News

Asian equities were mostly higher overnight on the US’ decision to extend the tariff “deadline” once again (shocking), as Indonesia and Japan outperformed, while Korea and Thailand underperformed.

Hong Kong and Mainland markets were both higher overnight, though the Hang Seng Tech Index closed lower by the end of the session on mixed performance from internet name, though technology hardware names largely did well. Alibaba’s Hong Kong-listed shares were slightly lower overnight, Kuaishou was sharply lower, and Meituan was slightly higher. Mainland investors had another billion-plus day, in dollar terms, of net buying of Hong Kong-listed stocks and ETFs via Southbound Stock Connect.

Trump extended the tariff “deadline” once again for another three months or 90 days. Why does this keep getting extended? Likely because the Trump team knows that $3,000 to $5,000 iPhones would be highly destabilizing to the US economy. It’s the Art of the Deal! The deadline is likely to continue to get extended until we get a deal. There remain many chances for a Trump-Xi Summit in the fall, including the September 9^th commemoration of the end of World War II in Beijing, the UN General Assembly (UNGA), also in September, and APEC in October. We will see, though it looks like the president will be meeting Puttin first.

Kuaishou fell nearly -10% in Hong Kong overnight after the video platform added a food delivery section to its “super app” that links to Meituan. The sell-off was likely overblown, but investors have become very sensitive to the potential margin impact of instant commerce and food delivery promotions. Thankfully, Kuaishou does not appear to be starting its own business in the space.

Wang Yiming from the PBOC commented on instance commerce price wats and China’s anti-involution policy to combat this, explaining that it is not anticompetitive. Per the South China Morning Post, he said that “It [the policy]

is not against competition itself, but against behaviors that undermine fair competition. Instead, the goal is to raise competition to a higher level – moving away from a zero-sum mindset towards a win-win approach through innovation, quality upgrades and a better industrial ecosystem.” His comments may have helped Meituan’s stock remain positive for the session.

Semiconductor companies Cambricon Technologies, which is listed on the STAR Market and gained +20% overnight, Foxconn Industrial, which gained +9%, were higher on government guidance against the use of Nvidia’s H20 chips in China, for which the American semiconductor maker just secured an export license. It is likely stemming from the US government’s demand to take a cut of Nvidia’s China sales revenue.

Internet earnings will kick off this week with Tencent, which will report second quarter results tomorrow.

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