Auquan's Weekly Wrap | 11 - 15 July: What you might have missed

Recap of the week's market activity: Consumer debt default risks, electronics companies profit pressures, copper demand slowdown, global polysilicon shortage, Alibaba Taiwan cloud services shut down, and more.

Auquan's Weekly Wrap | 11 - 15 July: What you might have missed
Photo by Ra Dragon / Unsplash

Top Themes

Consumer Debt Default Risks

Source: Reuters/Neil Hall.

Large banks have started to report sharp falls in profits this quarter due to the increased loan loss reserves and the rising threat of a global recession. JPMorgan also pointed out the need to build capital reserves amidst quantitative tightening, Russia's war on Ukraine and record high inflation which threaten the global economy.

Inflation Crisis: Electronics Profit Pressure

Source: Reuters/Ann Wang.

Electronics companies are feeling the effects as record global inflation and China's Covid-19 curbs are leading to a fall in consumer demand for mobile phones and other electronic gadgets.

Some semiconductors companies like TSMC are posting record profit, yet with signals that there's a cooling of demand from consumer electronic customers who are expected to decrease their chip inventories over the next few quarters into 2023.

Global Copper Demand Slowdown

Source: Andrey Rudakov/Bloomberg.

Despite the copper prices have been at surge since the start of the pandemic, due to the rising interest rates and fears that a recession would hit demand for metals, the copper prices have been plummeting. Copper is believed to be an indicator of economic health as it's one of the main materials for a wide range of industries; from consumer goods and infrastructure projects to the electrification of green energy initiatives.

Themes to Watch Out

Cholesterol CRISPR Treatment

Source: Charlotte Pollet for Bloomberg Businessweek.

In a first, a patient in New Zealand has undergone gene-editing to lower their cholesterol by using a version of the gene-editing tool CRISPR. This DNA editing may lower blood cholesterol and may be a step that may foreshadow wide use of the technology to prevent heart attacks and other common diseases.

Global Polysilicon Shortage

Source: Martin Leissl/Bloomberg.

The key solar panel material has seen prices rise for the sixth week in a row due to plant outages, putting solar panels on the threshold of becoming too costly. The extreme shortage is due to worsen with a major manufacturer in Xinjiang unexpectedly shutting for repairs, along with other producers outside the region scheduling maintenance in the coming quarter.

Alibaba Taiwan Cloud Services Shut Down

Source: Taiwan News.

Alibaba Cloud has prevented users in Taiwan from connecting to its cloud services, disconnecting the country from its private network. This service halt could potentially be one of many to come as tensions in the South China Seas grow with China looking to increase its influence in the area. This could also mean a takeover the world’s foremost chip manufacturing hub.

Foxconn China Chip Investment Restriction

Source: CNBC.

The world's largest contract electronics maker Foxconn has a China-listed unit Foxconn Industrial Internet Co Ltd - and planning to spend 9.8 billion yuan ($1.46 billion) for a stake in chip conglomerate Tsinghua Unigroup. However, Taiwan's government would need to approve this, and has become increasingly cautious about China's ambition to boost its semiconductor industry: Taipei prohibits companies from building their most advanced foundries in China to ensure they do not offshore their best technology.

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