A morning analysis of international financial news, focusing on US-China negotiations, market trends, and key economic indicators.
US-China Negotiations and Trade
Progress and Potential Outcomes
The US-China negotiations are ongoing and expected to conclude today. The S&P 500 index has seen consistent gains, nearing its historical high. The focus is on whether agreements on equal tariffs with the US and other countries will be signed in early July.
Key points of interest include:
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The extent to which US export controls will be loosened.
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Potential widening of controls on chemical and nuclear materials.
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The Chinese government's efforts to secure a release of technology controls and export supervision.
Negotiation Details and Leadership
While negotiations are in progress, a key figure, Bechengte, has left to return to London for government administration. The details of the US negotiations are being finalized by the United Nations. The Chinese side is led by the Deputy Prime Minister of the State Council, and a specific agreement is expected around noon today. Bechengte's departure suggests that the agreement is nearing completion.
Huawei's Perspective
Ren Zhengfei, the founder of Huawei, stated that Huawei's chips are a generation behind the United States. However, he emphasized that through stacking and grouping technologies, their computing ability can still compete with advanced chips. While acknowledging the technological gap, he suggested that open-source software could address societal needs. This statement serves to both reassure the Chinese public and signal China's technological limitations to the US, potentially influencing negotiation outcomes.
Market Trends and Analysis
S&P 500 and Market Sentiment
The S&P 500 is nearing its historical high, with the top showing reduced selling pressure and significant support at the bottom. The market is awaiting the outcome of the US-China meeting and is concerned about potential tariff increases after 30 days.
US Agricultural Exports and Tariffs
China's agricultural product purchases are crucial for US-China relations. Reduced tariffs may depend on China's willingness to buy more US agricultural products. Key exports include feed, meat, family products, and cotton.
Geopolitical Tensions
Geopolitical tensions, including those between Japan, Russia, China, North Korea, and India, contribute to market uncertainty. The tensions between China and India are significant, particularly concerning strategic routes and energy production.
US Stock Market Performance
Major Index Performance
The Dow Jones and other major indices have been rising.
Market Strategy and Investor Behavior
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The market anticipates a second correction for long-term growth.
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Foreign exchange rates are weak, but US stock creation forces funding regulation.
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The S&P 500 is less than 2% from its historical high.
Performance of Major Companies
While some tech giants like Meta and Microsoft have shown strong performance, others such as Apple and Tesla have lagged. Meta and Huyda are particularly driving overall performance.
Retail Investor Trends
Retail investors are shifting their holdings to institutions and buying ETFs with Tesla, indicating specific investment strategies and confidence in certain sectors.
Taipei Stock Market Analysis
Market Dynamics
The Taipei stock market is challenging the annual line, showing resilience. Unlike the US market, the Taipei market's rise isn't driven by retail investors, suggesting a more cautious approach.
Financing and Investment Strategies
Financing has not significantly increased since April, indicating a lack of aggressive borrowing. Long-term investment strategies involve reserving cash during market upswings for future short-term cycle changes.
TSMC Performance
TSMC's May revenue decreased due to New Taiwan dollar appreciation, but still shows significant year-over-year growth.
Cathie Wood's Perspective on TSMC
Cathie Wood's increased attention to TSMC ADR has sparked market interest. She believes in TSMC's long-term potential and sees strategic deployment in the AI sector.
ETF Performance
Active ETFs have shown mixed performance, with some struggling to outperform the stock market index.
Valuation and Investment Rationale
TSMC's valuation is relatively low compared to other tech stocks. Using projected EPS growth, its share price appears increasingly attractive. The discussion around Tesla and TSMC are provided to give investors guidance on the valuation of current growth rates.
Resource Allocation and Cost Efficiency
The core logic of investment should also incorporate resources and costs. Investors should focus on low-cost, direct hunting methods rather than high-cost strategies like frequent trading or chasing hot spots. Focus on the cost efficiency of resource allocation.
Closing Remarks
The analysis covers a wide range of topics, from US-China negotiations to the performance of US and Taipei stock markets. Overall, both sides seem to be awaiting a market prosperity, with the US and European markets anticipating institutional investment and the Taipei market awaiting the return of retail investors.
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