01/10/2024

BIZ & FINANCE TUESDAY | OCT 1, 2024

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Investors rush into China stocks

SHANGHAI: Animal spirits are back in China’s stock market as investors rush into equities, galvanised by Beijing’s policy bonanza and driven by fear of missing out on what some see as a rally of historic intensity. Brokerages are bustling with retail clients and a burst of orders is jamming trading systems as investors rotate money out of bonds and deposits into stocks, leading to an explosion in stock turnover and a jump in yields. “Deposit rates are too low, and real estate investment is no longer safe,” said 30-year-old office worker Darren Wang, who started buying stocks using borrowed money. “There’s no other way to be rich other than redoubling bets on stocks. The market craze you see this time could be unprecedented.” Stocks have endured three years of gloom as economic activity struggled to return to pre-pandemic buoyancy while a debt crisis among property developers rippled through markets. That gloom suddenly turned into euphoria last week as the blue-chip CSI300 Index surged 16% for its best week since 1998, after the government announced a volley of stimulus including interest rate cuts and a US$114 billion (RM470 billion) war chest to boost share prices. Many of the policies are yet to be implemented and there is no guarantee they can fundamentally improve business conditions or cure economic illnesses, including the prolonged property crisis and anaemic consumption. Even so, investors said they are following the money. “Life has been tough for so long and finally it’s time to make some money,” said Wen Hao, a manager at a tech startup in Hangzhou who bought energy stocks yesterday. He drew parallels to the bull run of 2015 when Shanghai’s stock benchmark doubled in just six months, citing huge sums of “state-backed money on their way into the stock market”. The central bank last week unveiled a swap programme initially worth 500 billion yuan With the economy slowing and consumer confidence hovering just above historic lows, they expect many travellers over the week-long National Day break will opt for cheaper domestic or short-haul overseas destinations and take advantage of a decline in airfares. The holiday period has traditionally produced peak numbers of Chinese travelling, especially abroad given the length of the break. This year, the government has forecast the daily average number of trips handled by the nation’s transport sector will rise only 0.7% year-on-year. “It would be a good result if tourism spending remains flat with last year,” said Liu Simin, an official with the tourism arm of Beijing-based research institute China Society for Futures Studies. “People are more willing to travel when the economy is good, but when there is no economic growth, there is no tourism growth.” Wang Xin, an office worker in Beijing, said she would drive with family to Yangzhou, a city near Shanghai known for its lakes, gardens and fried rice. “There is no toll fee during holiday so we’ll drive instead of taking the train,” the 45-year-old said. “Better not to spend unnecessary money when the economy is like this. Many people are losing jobs and at my age if it happened to me, I wouldn’t be able to find another one.” Before the pandemic, her family’s Golden Week destinations had included Singapore and the United States. Data from travel platform Flight Master shows domestic air ticket prices are expected

ByteDance plans new AI model trained with Huawei chips: Sources SHANGHAI: TikTok’s Chinese parent ByteDance plans to develop an AI model trained primarily with chips from compatriot Huawei Technologies, said three people familiar with the matter, as US curbs turn the social media giant homeward in search of chips. ByteDance has diversified to domestic suppliers of chips used in artificial intelligence and accelerated development of its own since the US in 2022 started restricting exports of advanced AI chips such as from market leader Nvidia. AI has become central to the technology industry with firms in sectors as varied as gaming and e-commerce differentiating offerings through the integration of custom AI models – programmes that employ pattern recognition to make decisions. ByteDance’s next step in the AI race is to use Huawei’s Ascend 910B chip to train a large-language AI model, said the people, declining to be identified as the plan is confidential. ByteDance already uses the Ascend 910B primarily for less computationally intensive inference tasks, which involve pre-trained AI models making predictions, the three people and a separate source said. Training AI models is far more demanding and requires huge amounts of data, necessitating the use of ultra-high-performance chips such as Nvidia’s premium graphics processing units. The new model’s capability and complexity, measured by its computing parameters, will be less powerful than ByteDance’s existing AI model Doubao, one of the people said. “The entire premise here is wrong. No new model is being developed,” Michael Hughes, a TikTok spokesman in Washington, said on behalf of ByteDance. ByteDance has ordered more than 100,000 Ascend 910B chips this year but has received fewer than 30,000 as of July, a pace too slow to meet company needs, one of the people said. The constrained supply and limited computing power versus Nvidia’s China-available chips have prevented ByteDance from setting a timeline for the new model, two of the people said. – Reuters BYD recalling 97,000 top-selling EVs SHANGHAI: BYD has informed Chinese authorities it is recalling nearly 97,000 electric vehicles (EVs) for a manufacturing fault involving a steering control unit that could lead to fire risks, the market regulator said on Sunday. The Chinese automaker is recalling Dolphin and Yuan Plus EVs manufactured in China between November 2022 and December 2023, according to a statement from the State Administration for Market Regulation (SAMR). BYD did not immediately respond to a request for comment. The company would ask its dealers to install a physical fix in the recalled cars, the SAMR statement added. It did not elaborate if any of the affected EVs were exported. Dolphin and Yuan Plus were BYD’s two top-selling models in 2023, which in total accounted for 26% of its three million cars sold in the year, according to data from the China Association of Automobile Manufacturers. The recall is a rare one by BYD of its pure electric and plug-in hybrid cars as the Chinese company grew rapidly to become the world’s biggest seller of such vehicles. It recalled a small batch of Tang plug-in hybrids in 2022 due to a defect in the battery pack that could cause fires. – Reuters

curbed investment and damaged sentiment. Brokerages nationwide, which were quiet just a week ago, are now brimming with investors eager to open accounts or borrow money to trade. Such is the demand that clearing services were unusually open at the weekend approving new accounts. Guotai Junan Securities has arranged additional staff at branches to handle surging account opening requests for the upcoming National Day golden week holiday and to cover non-working hours, showed an internal notice seen by Reuters. Zion Zhong, a customer manager at Citic brokerage’s Suzhou branch, said the margin financing business has suddenly become busy. Another manager at a Citic outlet in Shanghai also described a surge in activity. “More people are opening stock accounts; more queries about margin financing. We’re many times busier than previously.” “A money migration of epic scale is coming – trillions are shifting out of bond funds, wealth management and other fixed-income products, into equities,” Zhao Jian, head of Atlantis Finance Research Institute, wrote in a client note on Sunday. Three years of bear market has fostered tens of millions of short-term investors who yearn to have their money back, so “the bull run will power ahead with few decent corrections”, Zhao said, predicting many will end up out of pocket when the market inevitably turns. – Reuters

o Bull run driven by govt policy, state money and fear of missing out (RM294 billion) to fund stock purchases by brokers, funds and insurers. It will also create a 300 billion yuan re-lending facility to fund share buy-backs by listed companies. Both schemes are set to be expanded. China’s CSI300 Index surged more than 8% yesterday, extending last week’s 16% jump. Shanghai stocks shot up more than 7% while Shenzhen shares soared more than 10%, with combined turnover of 2.6 trillion yuan exceeding the bull run a decade ago. “The 2014-15 bull run was funded by illegal margin financing. This time, the central bank is offering the leverage,” said a hedge fund manager who declined to be identified. “Investors are rushing into stocks because there’s state backing,” the manager said, adding that difficulty making macro economic projections means the rally is more about liquidity and mood than fundamental conditions or corporate prospects. Signalling official assent for the rally, the China Securities Journal said in an editorial on yesterday that reviving stocks and boosting investor confidence will aid the country’s economic recovery, breaking a vicious cycle of

Chinese tourists look to affordable options BEIJING: Chinese tourists are expected to take longer trips than last year during the Golden Week holiday that kicks off today, but that will not necessarily lead to a bump in spending, travel industry experts said.

People walking underneath hung up flags of Hong Kong and China across a street in Hong Kong yesterday to commemorate the upcoming National Day. – AFPPIC

“Travellers will likely take advantage of lower ticket prices to travel further, stay longer and upgrade to a higher starred hotel,” HSBC analysts said in a note. While last week’s large-scale stimulus may have some impact on spending, it would likely be limited, the analysts said, predicting purchases were likely to meet but not exceed 2023 levels for the holiday period. Some foreign airlines such as British Airways and Qantas Airways have cut or halted China flights this year amid insufficient demand as well as fierce price competition from local carriers. – Reuters

to be 21% cheaper than the same period last year, while international economy class airfares will be 25% lower than 2023 and 7% lower than 2019. It predicts international destinations of choice for outbound travellers will continue to be short-haul Asian hubs, such as Japan, South Korea, Thailand and Singapore. Trip.com, China’s largest online travel agency, also said the top destinations were in Asia, but it had seen a significant shift toward long-haul destinations like Australia, New Zealand, Britain and France this year with longer stays.