U.S. President Biden officially signed the “CHIPS and Science Act 2022”. This bill, which uses huge amounts of money to promote individual industries, failed to make the stock prices of U.S. chip companies rebound. With a low close, the Hong Kong stock market followed suit and fell below the psychological barrier of 20,000 points, which makes people worry that Washington’s continuous policy against China will eventually become a “lose-lose bill”.
The “Chip Act” passed by Washington this time fully reflects the double standards of the United States. In the past, the West often used the banner of free trade to target other countries’ subsidy policies. , ignoring the moral high ground of the past, and generously passed a funding bill of up to 280 billion US dollars. The measures in the bill are expected to be implemented in five years, involving subsidies to the chip industry, a 25% investment tax credit for semiconductor and equipment manufacturing, and support policies such as R&D investment in wireless broadband technology. , HP and AMD and other company executives attended the signing ceremony. Along with the bill, Micron announced plans to invest $40 billion and create as many as 40,000 jobs between now and the end of 2030, which it said was the largest investment ever made in U.S. memory chip manufacturing.
Hemisphericization is bad for investment sentiment
In addition to subsidizing domestic companies, the new bill also adds a trick to crack down on China. According to the provisions of the bill, if the subsidized manufacturers are aware of the fact that they cooperate with “foreign entities of concern” such as China and conduct cooperative research or technology authorization activities, and the related technology or products can cause national security concerns, the US Department of Commerce has the right to fully recover the subsidies.
There are traces of U.S. targeting of China’s semiconductor industry, with President Donald Trump’s crackdown on Huawei and restrictions on chip sales, which have exposed Washington’s desire to use this indispensable component of the modern industry as a weapon to suppress rivals. As the effect of restricting the sale of chips has diminished, the United States has tightened restrictions on the export of upstream technologies, including production equipment, to China, and has tried to form a chip alliance to exclude China. A heavy stroke.
The passage of the new bill is naturally bad news for the mainland. The measures not only deal a blow to China’s semiconductor industry, but also mark the vicious development of Sino-US industrial competition, and the friction between the two sides has a great chance to escalate in the future.
The government threw a lot of silver bullets to subsidize the semiconductor industry, which should have driven the stock price of the sector to explode. However, this did not happen. On the contrary, technology stocks were weak before the bill was introduced. There are several explanations for the performance of the US stock market. First, after a round of rebound, the valuation of technology stocks has risen to a high level; second, market participants are skeptical about the ability of the United States to rebuild production. Increased resistance to entry into the world’s largest consumer market is not good for stock valuations.
The signs of vicious competition between China and the US economy are bad signals for the global investment sentiment. Since the opening and reform of the mainland in the last century, a large amount of productivity has been released, and the world has enjoyed the peace dividend of high growth and low inflation. At present, the United States is instigating the West to turn the world back into a hemisphere, which will inevitably increase production costs and push up inflation. If the United States wants to rebuild its factories to produce chips, even if it adopts a large number of automated production facilities, it cannot escape the effect of pushing up wages. Washington is burning money to boost the grain industry and at the same time stimulate inflation. Of course, the effect is not as good as the politicians describe it, and the technology stocks cannot be excited and become a reasonable response.
Chinese property stocks are not low
Geopolitics is unfavorable to the general economic climate. The market pays attention to the macro data released by China and the United States. The National Bureau of Statistics of the Mainland announced the CPI data for July. Both CPI and PPI were lower than expected. %, hitting a low of nearly three months, the Hang Seng Index closed at 19,610 points, down 392 points; the State-owned Enterprises Index closed at 6,644 points, down 150 points; the Kezhi Index fell 121 points, to close at 4,173 points, with a turnover of 89.2 billion yuan.
Blue-chip stocks generally fell. Alibaba (9988) fell 1.8% to close at 87.95 yuan; JD.com (9618) fell 4.64% to close at 218.4 yuan; Meituan (3690) fell 3.64% to close at 169.6 yuan. Biotechnology stocks and auto stocks saw selling pressure. WuXi Biologics (2269) jumped 9% to close at 67.6 yuan. NIO (9866) fell 7% to close at 146.5 yuan; BYD (1211) fell 3.5% to close at 279.6 yuan; Xiaopeng Motors (9868) fell 5% to close at 86.45 yuan; Li Auto (2015) fell 5% to close at 120.6 Yuan.
The lows of Chinese property stocks are not considered low, especially the selling pressure of private enterprises in the property market. The blue-chip property developers Country Garden (2007) and Longfor (960) were downgraded to “Neutral” by UBS, and their target prices were cut by 59% and 51.5% to RMB 2.7 and RMB 25.7 respectively. The two stocks underperformed their peers on Wednesday, and Longfor’s losses widened in the afternoon, falling nearly 20% at one point, the lowest since November 2018. Longfor closed down 16.4% at 20.9 yuan, and its market value evaporated by 24.9 billion yuan in a single day, which is quite shocking. Country Garden closed down 7% at 2.33 yuan, the lowest since February 2017. According to internal media reports, Longfor’s sharp decline was mainly due to a rumor that Longfor commercial papers were overdue, but the report said that after checking the Shanghai Bills Exchange’s bill information disclosure platform, it was found that Longfor had no overdue commercial papers. According to a source close to Longfor, “Longfor did not issue commercial bills last year, and no commercial bills were overdue. (The rumors) are pure rumors, but as soon as there is trouble, the stock price has already fallen as a tribute.
Jin Riku