Apr 28 FT China's falling population; why China is wrong to think the US is in decline, China in Serbia and more


28 Apr

MARKETs @ 2:15pm Hong Kong time
AUSTRALIA 
opened slightly higher and traded sideways until late morning when it rallied to 7,030 level after the inflation data was better than expected. Market then eased back slightly and traded sideways to close +35pts (+0.5%) @ 7,069
Data
Inflation Rate Q1 +1.1% YoY vs +0.9% Q4 (F/cast was +1.5%)
Inflation Rate Q1 +0;.6% QoQ vs +0.9% Q4 (F/cast was +1%)
RBA Trimmed Mean CPI Q1 +1.1% YoY vs +1.2% Q4 (Consensus was +1.2%)
JAPAN
Nikkei opened slightly lower and initially traded sideways for the first hour but then rallied over the next hour to 29,111 then eased and traded sideways into lunch.  PM opened higher but drifted lower to 29,080 mid session before working better into the close.
Topix opend higher and trended higher through the morning but traded in a similar pattern to the Nikkei in the afternoon to close +9pts (+0.5%) @ 1,912
Markets got a boost as Nexon announced buying $100m bitcoin saying it was doing so to protect against currency debasement.
DATA pre market
Retail Sales Mar +5.2% YoY vs -1.5% Feb (F/cast was +4.5%)
Retail Sales Mar +1.2% MoM vs +3.1% Feb (F/cast was +0.9%)
S KOREA  
Investors very cautious ahead of FOMC and disregarding yesterday’s good GDP data.The Samsung family announced their plans for paying the inheritance tax bill.
Kospi open flat and trended lower for the first hour to 3,190 level and then traded sideways for most of the session until the last 40 minutes when it sold off to close at the day low; -35pts (-1.1%) @ 3,178
Kosdaq traded in a similar pattern to close -24pts (-2.3%) @ 997; dipping below 1,000 in the last 45 minutes.
TAIWAN 
Opened slightly higher and traded sideways for the first hour but then sold down to 17,500 before bouncing. Then traded sideways around 17,550 but around 12:50 dipped to 17,516 but rallied back and closed -28pts (-0.2%) @ 17,568
Again good local macro data being ignored.
CHINA 
CSI300 opened lower and tested 5,050 in early trades then shot up to 5,096, dipped to 5,080 and rallied to 5,105 before easing back into lunch at 5,090 (flat). PM opened higher but trended down to 5,087 before rebounding. Currently +9pts (+0.2%) @ 5,099Looks like Team China in support.
HONG KONG 
Pre mareket opened 28,992 +50pts vs +119pts ADR’s but initial sold down to 28,890 before bouncing backhand working to test 29,050 around 10:30am, then trended lower to 28,980 at lunch. PM opened higher but dipped to 28,960 a couple of times; currently +62pts (+0.2%) @ 29,006
EUROPE 
Expect a mixed open FTSE +19 points at 6,948, DAX -4 points at 15,241, CAC 40 +9 points at 6,271 and Italy’s FTSE MIB -8 points at 24,235, according to IG.
German Consumer confidence missed but Deutsche Bank just released its highest quarterly profit since 2014;a net profit of €908m in the first three months of 2021, compared to €43m in the first quarter of 2020.
Earnings from Deutsche Bank, Sanofi, Dassault Systemes, Banco Santander, Spotify, French Connection, GlaxoSmithKline and Lloyds Banking Group, among others
Data out
GERMANY Gfk Consumer Confidence May -8.8 vs -6.1 April (F/cast was -3.8)
Due
FRANCE Consumer Confidence Apr (Mar was 94, F/cast is 95)
US Futures 
Opened in Asian time  Dow +50pt, S&P +0.05%, NDX +0.1%
Data due MBA Mortgage Applications and 30 yr Mortgage Rate, Wholesale Inventories, Goods Trade Balance, EIA Oil Report, FOMC Rate Decision and Press Conference.
Earnings: Apple, Boeing, Facebook, Qualcomm, Ford, MGM Resorts, Humana, Norfolk Southern, General Dynamics, Boston Scientific, eBay, Samsung Electronics, GlaxoSmithKline, Yum Brands, SiriusXM, Aflac, Cheesecake Factory, Community Health System, CIT Group, Entergy, CME Group, Hess, Ryder System

FRONT PAGE
China braced for population fall
• Census shows first drop in 60 years • Beijing delays data release • Big impact on economy
The first drop since the famine after Mao’s disastrous ‘Great Leap Forward’. It comes despite China relaxing its one child policy in the hope of reversing the decline. The trouble was that having indoctrinated people since 1980 that one child was the right way now getting them to believe it’s not is difficult. Official’s however blame a shrinking number of women and the surging costs of raising children.
It notes that the data is very sensitive '“The census results will have a huge impact on how the Chinese people see their country and how various government departments work,” said Huang Wenzheng, a fellow at the Center for China and Globalization, a Beijing-based think-tank. “They need to be handled very carefully.”’
The government has already come under criticism on social media for the delay in releasing the data.
The decline will impact a wide range of factors in the economy; from consumption to providing care for the elderly.
I would think the fact that the PBoC already raised the matter shows how concerned Beijing is about the issue. It has been simmering for some time and the government has been trying to encourage families to have more children but many are happy with either one child or increasingly a pet. Plus more women are putting their careers first which is no doubt another factor adding to the problem.

Nomura and UBS losses from Archegos crash push lenders’ total hit past $10bn
Bank losses from Archegos Capital’s implosion have surpassed $10bn, after Nomura yesterday reported a $2.9bn hit and UBS revealed a $861m loss from the debacle. The Japanese bank also suspended the head of its prime brokerage unit that serviced the hedge fund.
The question that really needs to be answered was why was everyone chasing Bill Hwang? Was there a lack of other potential clients? Was he offering better commissions than anyone else?

INSIDE 
Brussels to curb non-EU state subsidies
Proposed law would allow intervention in takeover of bloc companies'
Brussels is close to finalising new legislative powers that would enable it to crack down on market-distorting subsidies from foreign governments, as the EU seeks to defend itself from perceived unfair competition from capitals such as Beijing.
’Current rules only govern directly targeted cash handouts by EU states the new rules will cover non EU states.'
'Under the new system, the largest and potentially most distorting takeovers or procurement bids would have to be notified to the commission in advance. These involve mooted takeovers of companies worth at least €500m, or procurement contracts worth at least €250m, according to two people familiar with the discussions.’'
Certain kinds of subsidies, such as unlimited guarantees, will be seen as particularly distorting.Remedies would include behavioural or structural fixes, such as prohibiting a deal or selling off assets, and the repayment of subsidies received, together with interest.’
China is the one most likely to be impacted by the new rules which is likely to put further strain on the recently signed but not yet ratified trade deal.

Serbs fret about environmental costs of Chinese investment
Looks at Hebei Iron & Steel Group (HBIS) purchase of a former US Steel business for €46m in 2016 which is one of China’s biggest investments in Serbia.
US Steel sold the loss making business to the Serbian government in 2008 for $1.HISG is now running the plant but using out dated and polluting technology.
You wonder whether China’s commitment to cleaner standards applies to overseas investments because at home its steel industry is being hit hard as yesterday’s LEX article showed.
The article says that the current pollution is worse than when it was operated by US Steel because the government allows HBIS to 'breach national environmental standards. The government has declared some Chinese infrastructure projects as being fundamental to the national interest, a move that allows more lax application of environmental and other laws.
Before HBIS bought the factory, the Serbian parliament passed legislation exempting it from some laws on hazardous waste disposal.’
It also looks at 'the northern town of Zrenjanin, Dusan Kokot has been campaigning against a $1bn tyre factory being built by China’s Shandong Linglong Tire Co. Belgrade has also classified this project as in the national interest, and Kokot said the government had not made public the plant’s environmental impact assessment study, usually a prerequisite before construction of industrial facilities.'
The article mentions how 'Belgrade has fostered ties with Beijing, collaborating on infrastructure, tourism and technology. Between 2005 and 2019, China invested $10.3bn in Serbia — 20 per cent of total FDI in the entire western Balkans.’
China has strengthened relations by supplying Serbia its Sinopharm covid vaccines. The close relationship ‘prompted the US-based Center for Strategic and International Studies to say last year Serbia was becoming a Chinese “client state”.’
The support of China has helped Vucic to consolidate his power and control but there was a protest on April 10 over environmental degradation with drew thousands to the streets of Belgrade. That seems to have worried the government because a few days later it ordered the Chinese-run Zijin copper mine in the southern town of Bor to halt work for failing to comply with environmental standards.
So things may be changing but it seems to indicate that China is still not fully committed to the best practices on the environment and its companies will take advantage of any loop holes they can find or negotiate.

World ports grapple with backlog from Suez Canal blockage
As expected ports are now struggling to cope with an influx of traffic both on the delivery of full containers to be forwarded and those being off loaded.
It says 'Meanwhile, eurozone supplier delivery times are at their longest in 23 years, according to the IHS Markit purchasing managers’ index, a survey of business activity. As a result, eurozone factory input cost inflation has accelerated to its highest level in a decade.’
Another inflationary pressure to add to the mix.
Read also Maersk boosts forecast after Suez blockage'“The continued strong performance is mainly driven by the continuation of the exceptional market situation with surging demand leading to bottlenecks in the supply chain and equipment (containers) shortage,” Maersk said as it revealed its first-quarter results early.’

Younger voters split over Macron and Le Pen
Far-right leader focuses on jobless but incumbent makes gains among under-25s
Hungary law hands cultural assets to allies of Orban, claim critics
Hungary’s parliament approved a law yesterday creating a group of foundations which, critics allege, hands control of key cultural and higher education institutions to allies of nationalist prime minister Viktor Orban.

Biden faces tricky political path in drive to transform crisis-hit economy
Recovery quickens as president’s 100th day nears, but next push is set to be more fraught.Stimulus bill passed, vaccination roll out ahead of schedule and the economy rebounding a good first 100 day record. Now the difficult part; getting 'plans to spend billions more on infrastructure, education and childcare’ passed in Congress.
A good read about the potential problems ahead; especially on the matter of taxes.

US relaxes guidelines on face coverings in outdoor settings
Fully vaccinated people could go without face coverings in many outdoor settings, can attend small outdoor gatherings or dine outdoors with people from other households “safely, unmasked”.A significant step towards loosening social-distancing guidelines as more Americans are inoculated.Masks will still be recommended in crowded outdoor settings, like sports stadiums, where physical distancing may be harder to achieve and some people may not be vaccinated.

France and Germany back US global tax plan
The finance ministers of France and Germany gave their backing to US president Joe Biden’s global corporate tax plan, as they made a joint pitch for a quick approval in Brussels of member states’ spending programmes that are needed before the EU can put into effect its €750bn recovery plan.
Brussels urged to intervene in Polish media takeover dispute
Polish media group Agora has called on the EU’s competition supremo to speak out against the “unjustifiable” blocking of its deal to take over rival Eurozet as concern grows over press freedom in the central European country.
Russia attacks Brazil’s rejection of Sputnik V vaccine
Watchdog signals risks and says too little detail available about safety
The Russian sovereign wealth fund backing the country’s Sputnik V corona-virus vaccine said a decision from Brazil’s health regulator not to authorise imports of the jab was politically motivated.
India surge Sharp rise in infections prompts global concern
The bewildering speed with which coronavirus has overwhelmed India’s health systems has sparked global alarm over the viral variant that emerged in the subcontinent.Tries to look at the detail of what caused the spread but the reality is few facts are actually available.
New Delhi deploys army to bolster Covid fight
India has called in security forces to bolster its fight against Covid-19, deploying soldiers and building field hospitals as the country’s health system threatens to collapse under a deluge of infections.

COMPANIES & MARKETS 
HSBC profit surges 79% on improving global outlook
• Bank releases $400m of reserves
• Asian wealth management buoyant
More confident now than in February. But whilst earnings were up but revenue was down. It mentioned a surge in trading and advisory revenues, as was seen by US banks. The less than expected credit losses allowed for the writing back of $400m in provisions.
They warned of risks and mentioned the possibility regarding covid of a new super-variant that might be vaccine-resistant; which I haven’t heard anybody mention before. But it was given as the reason for holding on to 70% of the loan-loss provisions made in 2020.
The good performance in Asia has prompted the redeployment of $100bn of risk-weighted assets from underperforming businesses in Europe and the US to Asia. It cut costs and jobs and has pledged to do more.
Interestingly it said it had no plans for share buybacks preferring to keep the capital.

Huarong hit by first rating agency downgrade since brutal debt sell-off
Fitch Ratings late on Monday downgraded Huarong’s issuer rating from A to triple B, its lowest investment grade category; saying it “believes the government sponsor’s indication of support has not been as forthcoming”.
A big worry for investors although there is more confidence than a couple of weeks ago; ‘A Huarong bond maturing in 2022 was trading at 85 cents on the dollar yesterday, above the lows of 67 cents in mid-April.’But its not just about Huarong but other companies too and the willingness of the government to support them.
It quotes 'Brad Tank, chief investment officer for fixed income at Neuberger Berman, said in a note that the government was likely to “engineer a soft landing”.He added: “As such a huge owner of distressed assets at the heart of an economy that is likely to experience a rise in non-performing loans over the coming months, we think Huarong’s policy significance is too high for the government to allow any doubt about its stability.”’
The fact that the government hasn’t been more forthcoming I think is a worry. We did have a notice from the PBoC telling other Financials institutions to continue to deal with Huarong; which suggests it is a least a 'going concern’. But nothing more.
It has stated the past that investors must take responsibility and that the government would not always be the backstop. At the same time it is keen to attract foreign money especially into its bond market. The fact that Fitch said it didn’t believe support is forthcoming is a big concern and suggests that the government will not bail it out but may look to the other bad debt managers to step in; probably with investors taking a small haircut.

Iron ore price beats record high as China steelmaking demand jumps
'Iron ore has gained 130 per cent in the past year and copper 90 per cent.''
The iron ore market has drawn support from Beijing’s efforts to clean up its highly polluting steel industry. Production curbs in Tangshan, China’s top steelmaking city, have cut capacity and pushed up domestic steel prices.
Steel mills in other parts of the country have rushed to make the most of high returns by boosting production ahead of possible further restrictions or moves by Chinese authorities to scale back pandemic stimulus measures.’
Mentions +VE for Anglo American, BHP, Rio Tinto and Glencore.But with China curtailing the property developers and talk of easing back on stimulus that current demand could ease for iron ore.
The demand for copper I think is much more sustainable.

Eye-opener Gem grower Diamond Foundry valued at $1.8bn after $200m fundraising
Diamond Foundry has notched up a $1.8bn valuation after a $200m investment by Fidelity that the lab-grown diamond start-up will use to boost its output to compete with gemstone miners such as De Beers.
An interesting read as manufactured diamonds can now be produced on the same scale as mining them and with no new diamond mines coming on line is will make them competitive.
Also because diamond wafers can be used instead of silicon in semiconductors they 'can help increase their performance because they are good conductors of heat. Data centres will probably be the first companies to use diamond-wafer chips but in future they could be used in electric vehicles as well as 5G technology, Roscheisen said.“All the largest technology companies in the world are looking at doing diamond wafers,” he said.’

Bond investing needs to have a complete rethink. By Dan Fuss is a senior adviser and vice-chair at Loomis Sayles. He managed mainly bond funds at the group from 1976 to this year
Key Current liquidity is high because of the poor returns from Government debt but that money could disappear is markets get worried by something.
That liquidity is outside of the control of Central Banks.
Increasingly climate change and geopolitical risk are preoccupying portfolio managers, that will influence where and how money is invested.
Past investments need to be researched to see if they are still viable too.
He says 'In addition, government debt around the world is rising. There will be more pressure for large countries to assist small governments. Overall, government balance sheets will be harder to keep in balance. Inflation is very likely to become more difficult to control.’
So bond portfolio manager will have to devote more effort to determining credit risk/reward and for the balance of different maturities of assets in portfolios.
The other big change is changes in notional tax structures as US taxes look set to change.
So he recommends 'Unless investors have to meet specific fixed payments in the future, such as for defined benefit pension payments, maturities should be shorter than normal. Further analysis of individual credit risk is very necessary and should have a cautious bias. Liquidity of individual holdings will be increasingly important as we move forward.The bottom line is to hold the bulk of a fixed income portfolio with a spread of maturities over three to 12 years and a bias towards companies with improving creditworthiness.
Some longer term investments may be made when unique situations appear with the promise of improving credit and price relative to the market.
In a few cases, there may be attractive opportunities in bonds that can convert into equity and other fixed income assets with special features.’
A good read.


Novartis fears for cancer patients in Covid’s wake
Novartis has warned of a worrying delay in cancer diagnoses because of the Covid-19 pandemic as the Swiss drugmaker missed expectations in the first quarter.Noted that 'Diagnoses have fallen as healthcare systems are stretched by Covid-19 and some patients are reluctant to visit doctors for screenings.’Late diagnoses generally means less chance of survival so a cause for concern.
Also noted 'Antibiotic sales at Novartis’s Sandoz unit were also hit by a “historically weak” cough and cold season because of social-distancing measures.’

Bailout package for Qantas puts rivals on the back footA good read; when competitor Virgin Australia wanted government aid it was against it.  When it needed help it was all of government aid.  But looks at the fact that the Australian government didn’t take a stake despite giving it money or impose stringent conditions.Now its rivals are complaining.
For investors in Qantas it is good news.
It concludes with a quote '“Joyce has used Covid to kill off any real competition by putting its snout in the public trough on an unprecedented scale,” says Tony Sheldon, a Labor party senator leading a parliamentary inquiry into the aviation sector. “This enabled the destruction and outsourcing of thousands of jobs — the redundancies all paid for by the Australian taxpayer.”’

DoorDash shakes up restaurant fees
Hope is to push more merchants into paying as much as 30% of each order
The biggest food delivery app in the US is shaking up the fees it charges restaurants, in the hope that it can push more merchants into paying it as much as 30 per cent of each order.
DoorDash yesterday said restaurants would be able to choose from three new tiers of commission — 15, 25 or 30 per cent — with different levels of service, depending on whether they wanted to focus on “profitability or growth”.
The company is facing pressure in several cities where officials are concerned that the app would start to raise prices after winning market share. Obviously the low fee means things like 'tightly restricted delivery radius, less prominence on the app, and additional fees forced on to customers.’
Notes the company is still not profitable and obviously more regulation would not help its cause.
Interestingly also mentioned that larger restaurant businesses with multiple locations could negotiate a different fee. Key because in California, there is a bill seeking to force delivery apps to give a full cost breakdown of each transaction; something DoorDash is resisting.
The bottom line is that these businesses struggle to make money, they are priced for convenience but that doesn’t cover the labour costs. The tech side is minimal once the app has been designed. They need to be able to add and offer other services to their client base; which essentially is what Grab did the problem is there isn’t much room for competition.

China brainchild Yalla advances in Arab world
App’s highly localised style reaps rewards with monthly users up fivefold in a year
An interesting read that reveals that it is possible to find a niche by localising and adapting local habits. Basically the app enables groups of friends to socialise.
'Yang described the idea as a virtual majlis — describing the social gatherings he used to attend in Abu Dhabi. And, like a majlis, guests bring gifts: Yalla’s profits come from the in-app virtual presents that users send to one another.’
Its now expanded into games which now contributes the majority of revenues.It has policy of no politics, no religion, no porn which is has to monitor real time which is costly.
Interestingly its available in a number of languages but not Uyghur, presumably because the Chinese authorities didn’t want them them have a potential forum.
It concludes 'Tired of being asked why he didn’t expand into the much bigger Chinese market, he referred to the dominance of China’s big tech companies, as well as the high cost of user acquisition.“China’s domestic internet industry is brutal, because nearly all of its traffic is in the grips of a few giants,” he said.'

Toyota buys Lyft’s self-driving unit for $550m
Lyft is selling its autonomous driving unit to Toyota for $550m, in another example of dashed hopes among ride-sharing groups hoping to build a robotaxi network.
Worth a read, it really illustrates that getting to autonomous driving is much more complicated than people thought. For Toyota it looks like a good deal because much of the technology that the Lyft team have developed can be integrated into Toyota’s cars

US post-pandemic boom overcomes volatility fears
Decline in Vix reflects bet on calm conditions and optimism about economic bounceback
An interesting read essentially saying that people are more confident that the economy is recovering.
Key points retail traders activity has dropped but more importantly it reflects 'optimistic fund managers have become more willing to navigate markets without a safety net. As their confidence grows, some funds have been selling the insurance contracts they had sought out as a protection against market turmoil over the past year, according to traders and money managers.’
It also says that 'Instead of relying on equity derivatives, fund managers were returning to relatively cheap 10- and 30-year Treasuries to provide ballast to their portfolios, said Rish Bhandari, a senior portfolio manager at hedge fund Capstone.’
Worth a read, investors certainly seem more confident about the future although as ever the unknown remains just that.

Tether claims $10bn monthly growth after New York fine
Cryptocurrency operator Tether says it has doubled the number of its digital tokens in circulation in three months, taking their total value to $50bn, just weeks after the New York attorney-general fined the company and banned it from the US state.
An interesting read and key will be when it delivers a breakdown of the assets backing the coin by May 19. I guess everyone will be interested to see how much is in cash, other crypto, etc.

Space race against Musk intensifies as Eutelsat takes OneWeb stakeEutelsat, the European satellite operator 20 per cent owned by the French state, is paying $550m for a 24 per cent stake in OneWeb, the space-based internet pioneer.
An interesting read 'OneWeb and SpaceX’s Starlink aim to launch mega constellations of low-earth orbit (Leo) satellites to deliver high-speed broadband from space.'
OneWeb and SpaceX’s Starlink aim to launch mega constellations of low-earth orbit (Leo) satellites to deliver high-speed broadband from space.'By the end of this year OneWeb intends to offer a more limited internet service to the UK, Alaska, northern Europe, Greenland, Iceland, the Arctic and Canada. On Monday, OneWeb launched a further 36 satellites, bringing its total fleet in orbit to 182.
For Eutelsat the investment is a means to catch up in the race to deliver internet access from orbits closer to the earth than the traditional fixed satellite services. These lower-earth orbit services are seen as the answer to providing high-speed internet to the most remote parts of the planet.’
The global provision of broadband from space could have a significant impact on internet usage in the third world but as ever it will be a matter of how it gets paid for.

GE cites aviation sector woes as revenue drops
Revenues at General Electric fell and the company reported a loss in the first quarter owing in part to what it described as a “still difficult environment for aviation” as the pandemic weighs on air travel.

Hackers devise ever more elaborate hoaxes to cheat smaller businesses
Cases involving a London private investor and a Sydney hedge fund highlight scale of fraud threat
Covers two cases and illustrates that move care needs to be taken. It highlights that hedge funds and family offices do not spend as much as banks on cyber security and hence are attractive targets.Also that whilst there are safety steps involved in the processes, like phone calls, sometimes these go unanswered.

BP commits to buybacks after robust first quarter
BP pulled out the stops to woo investors, saying it was committed to buying back shares this year after cutting debt faster than expected in a quarter when earnings trebled.

DSV seals $4.1bn deal for Agility logistics unit
Denmark’s rapidly expanding DSV Panalpina has agreed to buy Kuwait-based Agility’s logistics business for $4.1bn in an all-share deal to create the world’s third-largest group by revenue among organisers of freight shipments.
KEY 'It is the latest example of dealmaking heating up in the logistics sector as companies seek greater economies of scale following a boom in ecommerce during the pandemic.’
Leaders are DHL Supply Chain & Global Forwarding and Kuehne+Nagel.

FT BIG READ. US BUSINESS The fight to flip the ‘eyes and ears’ of Trump
Allen Weisselberg is considered to be the key to unlocking the finances of the former president’s complex business empire. But some legal observers say getting him to switch sides could be an uphill battle.
Well worth a read; I would imagine the film companies or Netflix are clamouring to have the film rights to this saga.

Editorial A new deal for the young: building better jobs
Today’s youth want the stability and prospects their parents enjoyed
Worth a read sets out some requisites '..countries will need a macroeconomic stance that views running the economy cold as a greater risk than that of running it hot. Young people, in particular, lose badly from the former, and a tough start in the labour market casts a long shadow on lifetime earnings and productivity prospects.’
'Second, employers should be dissuaded from operating two-tier workforces with protected insiders and precarious outsiders.'
Finally 'Third, as companies try to become more diverse they should take seriously what younger staff tell them about toxic work cultures, long hours and the requirement to be “always on”. These generations grew up with digital technology and are more alive to its risks and possibilities. They have a gift for talking openly about mental health. If we are willing to listen, they might help to save us from ourselves.'

UK should pay damages for postmaster scandal
Wrongful theft convictions ruined lives and damaged public trust
A worrying read but also I would think -VE for Fujitsu who provided the system known as Horizon that is a the heart of the problem. The fact that the bosses knew there was a problem and didn’t solve it is equally worrying.

OPINION
Republicans win too often to ever change. By Janan Ganesh

China is wrong to think the US faces decline By Martin Wolf
Its economic assets are too great and, while America could falter, that would be its choice and not its fate.
China's view comes from the last few years under Trump. The article looks at reason why the US is not in decline.
It remains innovative, its stock markets are at highs a sign of public belief (the article excludes SOE’s) and in terms of company rankings.
It has more ‘valuable’ tech companies than China and those are global leaders rather that just dominant in their home markets. In terms of just tech companies the 'US has 12 of the top 20; China (with Hong Kong but excluding Taiwan) has three; and there are two Dutch companies, one of which, ASML, is the largest manufacturer of machines that make integrated circuits. Taiwan has the Taiwan Semiconductor Manufacturing Company, the world’s biggest contract computer chipmaker, and South Korea has Samsung Electronics.'
'Life sciences are another crucial sector for future prosperity. Here there are seven European companies (with Switzerland and the UK included) in the top 20. But the US has seven of the top 10, and 11 of the top 20. There is also one Australian and one Japanese company, but no Chinese businesses.’
'China claims leadership in other areas, notably high-speed rail. But the origin of that technology was elsewhere. Rather, China’s success in rail and several other areas is in building infrastructure at speed and at scale.’
Also in venture capital, Universities (interestingly Xi’s daughter went to an American university rather than a Chinese one).
So America especially when viewed with its allies is far from being in decline.
He notes that 'Even if China soon has the world’s biggest economy on all measures, it will still not be the most productive or innovative. Moreover, the US and its allies should remain ahead for a long time, even if Xi’s rule does not in fact ossify China’s economy.
The biggest threat to the US role in the world lies in itself, not China. If it elects leaders who despise democracy, ethnic diversity, global alliances, science and reason, it will surely decline. Republicans’ failure to repudiate the former president makes that more likely. Yet that would be the self-inflicted result of a failure to create a shared vision of a better future.
Chinese elites would then be correct that the US is on a path to ruin.
But they might still be wrong to assume their own direction is better. Putting 1.4bn intelligent humans under the control of one party, controlled by one man, cannot be the best way.’
He concludes
'A great US asset has been its ability to attract the world’s best and brightest. Two men born in India now run Microsoft and Alphabet. One of Google’s two co-founders was an immigrant from the Soviet Union. The nativism now on display runs against this. But diversity, within a framework of shared institutions and values, could still be a huge source of vitality in US strength in business, culture and politics.
The US is unlikely to remain the world’s dominant power, simply because China’s population is over four times bigger. Yet, provided the US remains democratic, free and open, it has a good chance of staying the world’s most influential country far into the future. If it decides instead to be what its reactionaries desire, it will fail. But that would be its own choice, not its fate.’
A good read and some useful graphs.

The EU must be bold and defend its digital sovereignty. By Francesca Bria the president of Italy’s National Innovation Fund
'Sovereignty has transcended geopolitics and economics to acquire a digital dimension. This is due to the rise of the technology giants whose influence is now impossible to deny. In the past year, five US tech companies — Amazon, Google, Facebook, Apple and Microsoft — saw their revenue grow by a fifth, reaching $1.1tn. US tech stocks are worth more than the entire European stock market. And Chinese companies operate at a similar scale.''The world has had a taste of Big Tech’s surveillance capitalism, and of how technology can abet the Big State, for instance with China’s digital authoritarianism. Now it is Brussels’ turn to lead the way to Big Democracy. Europe must harness its digital sovereignty to offer the world a new kind of humanism, combining innovation and dynamism with an uncompromised defence of autonomy, sustainability and self-determination.’

LEX UBS/Archegos: prone brokerage. 'The bank won credit for speed and skill with which it shrunk its investment bank in the wake of the financial crisis. The onus is now on Hamers to prove that the unit has not exploited better conditions to stretch the boundaries of the business it is permitted to undertake.’
LEX HSBC: political capital. Quinn is right to double down on Asia. But investors who go along for the ride should be braced for political volatility.


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