Post by Dave on May 19, 2020 2:42:55 GMT -8
Good morning. The pre-market is red at -$1.31 at this moment. Which direction is the roller coaster ride going to go today?
What Investors Need to Know as the U.S. Targets Chip Sales to Huawei
What Investors Need to Know as the U.S. Targets Chip Sales to Huawei
The latest technology restrictions, though, make an already volatile situation even more so. Relations between the U.S. and China have hit a low point as both countries’ leaders try to manage the fallout from the Covid-19 pandemic, including the economic devastation it has brought. Nationalism in both countries has been heightened. In the U.S., the pandemic has intensified calls for tougher action against China on multiple fronts.
China-watchers expect a measured and targeted response from Beijing, especially given its own weakened economy and the global backlash from its early handling of the coronavirus. On the technology front, China still relies heavily on U.S. technology, making it harder to take major steps against U.S. technology companies.
That likely leaves it with the option of beefing up its investments to become more self-sufficient . Indeed, China’s Semiconductor Manufacturing International (SMICY) said Friday it had received $2.2 billion in investment.
China has threatened to impose an unreliable-entities list before, including when tensions escalated last fall, before Washington and Beijing reached their Phase One trade deal. But Gavekal Research’s Arthur Kroeber and Dan Wang wrote in a client note on Monday that it wouldn’t be in China’s interest to really damage any of the companies that it might choose to list, especially given that so far, it isn’t clear how the latest regulations will affect Huawei.
“Probably Beijing’s best option is to keep doing what it has been doing: dropping barriers to investment and increasing incentives for U.S. companies to expand their presence in China,” the men wrote.
The incentives are most visible in finance, where Beijing has dropped most of its caps on ownership by foreign financial firms and taken steps to make portfolio investments in China more attractive, Still, Chinese banks also offered Tesla $1.4 billion in financing to build its megaplant in Shanghai, making it the first wholly-owned U.S. factory in China, they said.
China is also becoming more active on the diplomatic front as it tries to respond to the backlash, which has included calls for an investigation, over its early handling of the pandemic. President Xi Jinping pledged $2 billion for the World Health Organization on Monday and said China would make any vaccine it develops available globally.
China-watchers expect a measured and targeted response from Beijing, especially given its own weakened economy and the global backlash from its early handling of the coronavirus. On the technology front, China still relies heavily on U.S. technology, making it harder to take major steps against U.S. technology companies.
That likely leaves it with the option of beefing up its investments to become more self-sufficient . Indeed, China’s Semiconductor Manufacturing International (SMICY) said Friday it had received $2.2 billion in investment.
China has threatened to impose an unreliable-entities list before, including when tensions escalated last fall, before Washington and Beijing reached their Phase One trade deal. But Gavekal Research’s Arthur Kroeber and Dan Wang wrote in a client note on Monday that it wouldn’t be in China’s interest to really damage any of the companies that it might choose to list, especially given that so far, it isn’t clear how the latest regulations will affect Huawei.
“Probably Beijing’s best option is to keep doing what it has been doing: dropping barriers to investment and increasing incentives for U.S. companies to expand their presence in China,” the men wrote.
The incentives are most visible in finance, where Beijing has dropped most of its caps on ownership by foreign financial firms and taken steps to make portfolio investments in China more attractive, Still, Chinese banks also offered Tesla $1.4 billion in financing to build its megaplant in Shanghai, making it the first wholly-owned U.S. factory in China, they said.
China is also becoming more active on the diplomatic front as it tries to respond to the backlash, which has included calls for an investigation, over its early handling of the pandemic. President Xi Jinping pledged $2 billion for the World Health Organization on Monday and said China would make any vaccine it develops available globally.